H 3831 Session 110 (1993-1994)
H 3831 General Bill, By Richardson
A Bill to amend Section 38-73-10, as amended, Code of Laws of South Carolina,
1976, relating to property, casualty, and inland marine insurance, surety
rates, rate-making organizations, and the declaration of the purpose and the
construction of Chapter 73 of Title 38, so as to delete certain language and
provisions and provide that one of the purposes of the Chapter is to encourage
reasonable competition so as to provide rates that are responsive to
competitive market conditions by allowing insurance companies to use their own
rates and classification plans and to allow affiliate companies to do the
same.-short title
04/01/93 House Introduced and read first time HJ-12
04/01/93 House Referred to Committee on Labor, Commerce and
Industry HJ-20
A BILL
TO AMEND SECTION 38-73-10, AS AMENDED, CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO PROPERTY,
CASUALTY, AND INLAND MARINE INSURANCE, SURETY
RATES, RATE-MAKING ORGANIZATIONS, AND THE
DECLARATION OF THE PURPOSE AND THE CONSTRUCTION
OF CHAPTER 73 OF TITLE 38, SO AS TO DELETE CERTAIN
LANGUAGE AND PROVISIONS AND PROVIDE THAT ONE OF
THE PURPOSES OF THE CHAPTER IS TO ENCOURAGE
REASONABLE COMPETITION SO AS TO PROVIDE RATES THAT
ARE RESPONSIVE TO COMPETITIVE MARKET CONDITIONS BY
ALLOWING INSURANCE COMPANIES TO USE THEIR OWN
RATES AND CLASSIFICATION PLANS AND TO ALLOW
AFFILIATE COMPANIES TO DO THE SAME; TO AMEND
SECTION 38-73-450, RELATING TO FAIRNESS OF AUTOMOBILE
INSURANCE RATES OR PREMIUM CHARGES, BURDEN ON
INSURER TO PROVE FAIRNESS, AND FACTORS TO BE
CONSIDERED BY THE CHIEF INSURANCE COMMISSIONER, SO
AS TO, AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE
AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS,
THAT, IN CONSIDERING ANY RATE FILING OR IN REVIEWING
ANY RATE IN EFFECT FOR AUTOMOBILE INSURANCE, THE
COMMISSIONER SHALL REVIEW THE RATE EXPERIENCE, AND
MAKE ANY DETERMINATION WHETHER RATES OR
PREMIUMS MEET THE REQUIREMENTS OF THIS SECTION IN
ACCORDANCE WITH GENERALLY-ACCEPTED AND
REASONABLE ACTUARIAL TECHNIQUES, INCLUDING
CONSIDERATION OF CERTAIN SPECIFIED FACTORS; TO
AMEND SECTION 38-73-457, RELATING TO FILING
INFORMATION ON BASE INSURANCE RATES AND THE
EFFECTIVE DATE OF RATES, SO AS TO DELETE THE EXISTING
PROVISIONS OF THE SECTION, AND PROVIDE, AMONG OTHER
THINGS, THAT THE CONSUMER ADVOCATE, UPON REQUEST
TO THE CHIEF INSURANCE COMMISSIONER, MUST BE
PROVIDED BY THE LATTER WITH A COPY OF ANY RATE
FILED WITH THE COMMISSIONER ALONG WITH ANY
SUPPORTING MATERIALS, DOCUMENTS, OR STUDIES
UTILIZED TO SUPPORT THE FILED RATE; TO AMEND SECTION
38-73-460, RELATING TO THE EFFECT OF GAINS AND LOSSES
INCURRED BY MEMBERS OF THE SOUTH CAROLINA
REINSURANCE FACILITY ON AUTOMOBILE INSURANCE
RATES, SO AS TO PROVIDE FOR THE MAKING OF RATES,
RATHER THAN THE MAKING AND APPROVAL OF RATES; TO
AMEND SECTION 38-73-520, RELATING TO REQUIRED
INSURANCE RATE FILINGS, SO AS TO PROVIDE THAT EVERY
FILING SHALL STATE THE EFFECTIVE DATE THEREOF,
RATHER THAN THE PROPOSED EFFECTIVE DATE THEREOF,
AND SHALL INDICATE THE CHARACTER AND EXTENT OF
THE COVERAGE CONTEMPLATED AND MUST BE FILED NOT
LATER THAN FIFTEEN DAYS AFTER THE EFFECTIVE DATE;
TO AMEND SECTION 38-73-730, RELATING TO INSURANCE,
STATE RATING AND STATISTICAL DIVISION, RISK
CLASSIFICATION PLANS, DISTINCTION IN VIOLATION OF
PLAN, AND ESTABLISHMENT OF PLANS, SO AS TO DELETE
PROVISIONS AND LANGUAGE, AND PROVIDE THAT NO RISK
CLASSIFICATION PLAN OR AUTOMOBILE INSURANCE CREDIT
OR DISCOUNT PLAN MAY BE USED UNLESS THE CRITERIA
USED FOR CLASSIFYING RISKS ARE OBJECTIVE, CLEAR, AND
UNEQUIVOCAL AND BASED UPON FACTUALLY OR
STATISTICALLY SUPPORTED DATA OR PROBABLE
VARIATION IN LOSSES OR EXPENSES; TO AMEND SECTION
38-73-750, AS AMENDED, RELATING TO THE REQUIREMENT
THAT CERTAIN INSURANCE PLANS MUST BE FILED BY
INSURERS AND THAT CERTAIN PLANS MAY NOT BE FILED OR
APPROVED AND THE DISAPPROVAL OF PLANS BY THE CHIEF
INSURANCE COMMISSIONER, SO AS TO DELETE THE
REQUIREMENT THAT AUTOMOBILE INSURERS FILE WITH
THE STATE RATING AND STATISTICAL DIVISION THEIR
PLANS OR SYSTEMS FOR ALLOCATING EXPENSES AND
PROFIT AS RESPECTS THE VARIOUS KINDS OR TYPES OF
AUTOMOBILE INSURANCE RISKS AND THE CLASSES OF
RISKS THEREUNDER AND THE PROVISION THAT NO PLAN OR
SYSTEM MAY BE FILED WHICH IS INCONSISTENT WITH THE
CLASSIFICATION OF RISKS PROMULGATED BY THE
COMMISSIONER; TO AMEND SECTION 38-73-760, AS
AMENDED, RELATING TO THE STATE RATING AND
STATISTICAL DIVISION AND UNIFORM STATISTICAL PLANS,
SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN
PROVISIONS, ALLOW, RATHER THAN REQUIRE, THE CHIEF
INSURANCE COMMISSIONER, THROUGH THE DIVISION, TO
FIX, ESTABLISH, AND PROMULGATE ANY UNIFORM
STATISTICAL PLAN THAT MAY BE NECESSARY OR
APPROPRIATE FOR THE GATHERING AND COMPILATION OF
STATISTICAL DATA FROM INSURERS, RATING
ORGANIZATIONS, OR ADVISORY ORGANIZATIONS
TRANSACTING OR OTHERWISE ENGAGED IN THE
AUTOMOBILE INSURANCE BUSINESS IN THE STATE; TO
AMEND SECTION 38-73-950, RELATING TO INSURANCE RATES,
RATE-MAKING, AND RATE-FILING GENERALLY AND THE
PROVISION THAT ADDITIONAL INFORMATION MAY BE
REQUIRED, SO AS TO DELETE LANGUAGE REGARDING THE
WAITING PERIOD; TO AMEND SECTION 38-73-1020, RELATING
TO DISAPPROVAL OF A RATE-FILING AFTER THE APPLICABLE
REVIEW PERIOD, SO AS TO DELETE LANGUAGE REGARDING
THE APPLICABLE REVIEW PERIOD PROVIDED FOR IN
SECTIONS 38-73-990 TO 38-73-1010; TO AMEND SECTION
38-73-1350, AS AMENDED, RELATING TO RATING
ORGANIZATIONS AND COOPERATION, SO AS TO DELETE A
REFERENCE TO SECTION 38-73-1420 AND THE PROVISION
THAT ALL PROPERTY/CASUALTY FILINGS ARE SUBJECT TO
PRIOR APPROVAL BY THE CHIEF INSURANCE
COMMISSIONER; TO AMEND SECTION 38-73-1370, RELATING
TO THE PROVISION THAT RATING ORGANIZATIONS ARE NOT
PERMITTED TO FILE CERTAIN RATE INCREASES, FILING PURE
LOSS COMPONENT OF RATE OR PREMIUM, AND USE OF
APPROVED PURE LOSS COMPONENT BY MEMBERS OR
SUBSCRIBERS, SO AS TO DELETE CERTAIN LANGUAGE AND
PROVISIONS, AND PROVIDE THAT NOTHING IN THIS SECTION
SHALL BE CONSTRUED TO PREVENT A RATING
ORGANIZATION FROM FILING A RATE INCREASE FOR
PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGE
ON BEHALF OF THE REINSURANCE FACILITY; TO AMEND
SECTION 38-73-1380, AS AMENDED, RELATING TO THE
REQUIREMENT OF THE APPROVAL OF A FINAL INSURANCE
RATE OR PREMIUM CHARGE, COMPUTATION OF SAME, AND
APPROVAL OF EXPENSE COMPONENT FILED
INDEPENDENTLY, SO AS TO DELETE CERTAIN LANGUAGE
AND PROVISIONS, INCLUDING, CERTAIN REFERENCES TO
APPROVAL AND THE PROVISION THAT AFTER JUNE 30, 1989,
NO MEMBER OR SUBSCRIBER OF A RATING ORGANIZATION
MAY UTILIZE A RATE OR PREMIUM CHARGE FOR ANY
PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGE
UNLESS AND UNTIL THE FINAL RATE OR PREMIUM CHARGE
HAS BEEN FILED AND APPROVED BY THE CHIEF INSURANCE
COMMISSIONER; TO AMEND SECTION 38-73-1400, RELATING
TO THE DEFINITION OF PURE LOSS COMPONENT, EXPENSE
COMPONENT, AND FINAL INSURANCE RATE OR PREMIUM
CHARGE, SO AS TO CHANGE THE DEFINITION OF "FINAL
RATE OR PREMIUM CHARGE"; TO AMEND SECTION
38-73-1410, RELATING TO THE PROVISION THAT REFILING OF
FINAL RATES OR PREMIUM CHARGES PREVIOUSLY
APPROVED IS NOT REQUIRED, SO AS TO DELETE THE
EXISTING PROVISIONS OF THE CODE SECTION, AND PROVIDE
THAT, AFTER JUNE 30, 1993, UPON THE EFFECTIVE DATE OF
THIS SECTION, NOTHING IN THE SECTION SHALL BE
CONSTRUED TO REQUIRE A RATING ORGANIZATION OR ITS
MEMBERS OR SUBSCRIBERS OR ANY INSURER TO
IMMEDIATELY REFILE FINAL RATES, PREMIUM CHARGES, OR
CLASSIFICATION PLANS PREVIOUSLY APPROVED BY THE
CHIEF INSURANCE COMMISSIONER FOR PRIVATE
PASSENGER AUTOMOBILE INSURANCE COVERAGES AND
THAT INSURERS ARE AUTHORIZED TO CONTINUE TO USE
AUTOMOBILE INSURANCE RATES, PREMIUM CHARGES, AND
CLASSIFICATION PLANS APPROVED BEFORE THE EFFECTIVE
DATE OF THIS SECTION; TO AMEND THE 1976 CODE BY
ADDING SECTION 38-73-1600 SO AS TO PROVIDE, AMONG
OTHER THINGS, THAT BY JANUARY 1, 1994, AND ANNUALLY
THEREAFTER, THE BOARD OF GOVERNORS OF THE
REINSURANCE FACILITY SHALL FILE WITH THE CHIEF
INSURANCE COMMISSIONER EVERY MANUAL OF
CLASSIFICATIONS, RULES, AND RATES, EVERY RATING
PLAN, POLICY FORMS, AND EVERY MODIFICATION OF ANY
OTHER FOREGOING WHICH IT PROPOSES TO USE FOR
PRIVATE PASSENGER AUTOMOBILE INSURANCE PROVIDED
BY THE FACILITY AND THAT EVERY SUCH FILING SHALL
INDICATE THE CHARACTER AND EXTENT OF THE COVERAGE
CONTEMPLATED AND SHALL BE ACCOMPANIED BY THE
INFORMATION UPON WHICH THE BOARD SUPPORTS THE
FILING; TO AMEND THE 1976 CODE BY ADDING SECTION
38-73-1620 SO AS TO PROVIDE THAT THE BOARD OF
GOVERNORS OF THE REINSURANCE FACILITY SHALL
PROVIDE RATES AND RULES FOR THE WRITING OF CERTAIN
SPECIFIED PRIVATE PASSENGER COVERAGES, LIMITS, AND
DEDUCTIBLES, THAT THE BOARD IS EMPOWERED, WITH THE
APPROVAL OF THE CHIEF INSURANCE COMMISSIONER, TO
EXPAND THE COVERAGE OFFERINGS UPON THE PETITION OF
FIFTY PERCENT OF THE MEMBERS OF THE FACILITY, AND
THAT ANY COVERAGE WRITTEN PURSUANT TO THIS
SECTION BY ANY INSURER MUST BE CEDED; TO AMEND
SECTION 38-77-10, RELATING TO THE DECLARATION OF THE
PURPOSES OF CHAPTER 77 OF TITLE 38 ON AUTOMOBILE
INSURANCE, SO AS TO DELETE CERTAIN LANGUAGE AND
PROVISIONS, INCLUDING THE STATED PURPOSE TO PROVIDE
MEDICAL, SURGICAL, FUNERAL, AND DISABILITY
INSURANCE BENEFITS WITHOUT REGARD TO FAULT TO BE
OFFERED UNDER AUTOMOBILE INSURANCE POLICIES THAT
PROVIDE BODILY INJURY AND PROPERTY DAMAGE
LIABILITY INSURANCE, OR OTHER SECURITY, FOR MOTOR
VEHICLES REGISTERED IN THIS STATE; TO AMEND SECTION
38-77-30, AS AMENDED, RELATING TO DEFINITIONS FOR
PURPOSES OF CHAPTER 77 OF TITLE 38 ON AUTOMOBILE
INSURANCE, SO AS TO REDEFINE "RENEWAL" AND
"TO RENEW"; TO AMEND SECTION 38-77-110, AS
AMENDED, RELATING TO AUTOMOBILE INSURANCE AND
THE REQUIREMENT UPON INSURERS TO INSURE AND
EXCEPTIONS, SO AS TO DELETE THE EXISTING PROVISIONS
OF THE SECTION, AND PROVIDE THAT NO INSURER MAY
REFUSE TO WRITE A POLICY, COVERAGE, OR ENDORSEMENT
OF AUTOMOBILE INSURANCE BECAUSE OF THE RACE,
COLOR, CREED, NATIONAL ORIGIN, OR ANCESTRY OF
ANYONE WHO SEEKS TO BECOME INSURED; TO AMEND
SECTION 38-77-115, RELATING TO AUTOMOBILE INSURANCE
AND THE SIGNS REQUIRED IN AN INSURANCE AGENT'S
PLACE OF BUSINESS, SO AS TO DELETE CERTAIN LANGUAGE,
AND REFERENCE THE REASONS SPECIFIED IN SECTION
38-77-110; TO AMEND SECTION 38-77-120, RELATING TO
AUTOMOBILE INSURANCE AND THE REQUIREMENTS FOR
NOTICE OF CANCELLATION OF OR REFUSAL TO RENEW A
POLICY, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT A
NOTICE OF CANCELLATION BY AN INSURER OF A POLICY IS
EFFECTIVE ONLY IF THE CANCELLATION IS FOR ONE OR
MORE OF CERTAIN ENUMERATED REASONS; TO AMEND
SECTION 38-77-280, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE AND COLLISION AND
COMPREHENSIVE COVERAGE, SO AS TO DELETE THE
EXISTING PROVISIONS, AND PROVIDE, AMONG OTHER
THINGS, THAT IT IS AN UNFAIR TRADE PRACTICE, AS
DESCRIBED IN SECTIONS 38-57-30 AND 38-57-40, FOR AN
INSURER OR AN AGENT TO SELL COLLISION INSURANCE,
COMPREHENSIVE COVERAGE, OR FIRE, THEFT, AND
COMBINED ADDITIONAL COVERAGES UNLESS THE INSURED
IS NOTIFIED AT THE TIME OF APPLICATION OF THE SAVINGS
WHICH MAY BE REALIZED IF THE APPLICANT OR THE
INSURED SELECTS A HIGHER DEDUCTIBLE; TO AMEND
SECTION 38-77-510, AS AMENDED, RELATING TO THE SOUTH
CAROLINA REINSURANCE FACILITY, SO AS TO GIVE THE
INSURANCE AGENT THE ABILITY TO REQUIRE THE FACILITY
TO REINSURE THE RISK COVERED UNDER ANY POLICY OF
INSURANCE; TO AMEND THE 1976 CODE BY ADDING SECTION
38-77-515 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT
"AN INDICATED CESSION" IS A POLICY THAT AN
INSURER CEDES TO THE REINSURANCE FACILITY AT THE
DIRECTION OF THE AGENT WHO PRODUCES THE
APPLICATION WHICH LEADS TO THE POLICY'S ISSUANCE
AND THAT, IN ORDER TO SECURE THE PLACEMENT OF A
RISK IN THE FACILITY, AN AGENT MUST APPEND AN
"INDICATED CESSION FORM" TO THE
APPLICATION; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-77-596 SO AS TO PROVIDE, AMONG OTHER
THINGS, THAT, NOTWITHSTANDING SECTION 38-77-590, UPON
NOTIFICATION TO THE GOVERNING BOARD OF THE
REINSURANCE FACILITY, DESIGNATED PRODUCERS MAY
CONTRACT WITH A VOLUNTARY MARKET OUTLET FOR ANY
TYPE OF AUTOMOBILE INSURANCE CEDEABLE TO THE
FACILITY AND THAT, UPON THE EFFECTIVE DATE OF SUCH
A CONTRACT, THE DESIGNATED PRODUCER MAY NO
LONGER WRITE NEW BUSINESS WITH A DESIGNATED
CARRIER; TO AMEND SECTION 38-77-600, AS AMENDED,
RELATING TO THE REINSURANCE FACILITY RECOUPMENT
CHARGE, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT
THE RATE OR PREMIUM CHARGED BY INSURERS OF PRIVATE
PASSENGER AUTOMOBILE INSURANCE MUST INCLUDE A
FACILITY RECOUPMENT CHARGE, WHICH MUST BE ADDED
TO THE APPROPRIATE PREMIUM RATE FILED IN
ACCORDANCE WITH SECTION 38-73-520, RATHER THAN
"THE APPROPRIATE BASE RATE OR OBJECTIVE
STANDARDS RATE PRESCRIBED IN SECTIONS 38-73-455 AND
38-73-457"; TO AMEND SECTION 38-77-620, AS AMENDED,
RELATING TO THE INCLUSION OF RECOUPMENT CHARGES IN
AUTOMOBILE INSURANCE RATES, SO AS TO, AMONG OTHER
THINGS, DELETE REFERENCE TO THE "APPROVED BASE
RATE AND OBJECTIVE STANDARDS RATE", PROVIDE
REFERENCE TO "THE PREMIUM RATE", AND
PROVIDE THAT THE PREMIUM RATE CHARGED BY INSURERS
MAY CHANGE IN ACCORDANCE WITH SECTION 38-73-520; TO
AMEND SECTION 38-77-910, RELATING TO AUTOMOBILE
INSURANCE AND UNLAWFUL DISTINCTIONS BETWEEN
POLICYHOLDERS OR APPLICANTS, SO AS TO ELIMINATE
"RATES" FROM THE LIST OF PROHIBITED BASES OF
UNLAWFUL DISTINCTIONS, AND PROVIDE FOR RATING
PLANS FOR THE CLASSIFICATION OF RISKS AND
TERRITORIES "USED BY THE INSURER" RATHER
THAN "PROMULGATED BY THE CHIEF INSURANCE
COMMISSIONER"; TO AMEND SECTION 38-77-920, AS
AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE
PROVISION THAT INSURERS AND AGENTS MAY NOT REFUSE
ACCEPTANCE OF INSURANCE, PROPERTY RIGHTS OF
CERTAIN AGENTS, AND THE RESTRICTION OF MAILINGS TO
CERTAIN AREAS, SO AS TO DELETE CERTAIN PROVISIONS,
INCLUDING THE PROVISION THAT NO AGENT WHO
REPRESENTS MORE THAN ONE INSURER OF AUTOMOBILE
INSURANCE MAY REFUSE TO ACCEPT IN BEHALF OF AN
INSURER REPRESENTED BY HIM AUTOMOBILE INSURANCE
FOR AN INSURABLE RISK WHERE THE APPLICANT FOR
INSURANCE DESIGNATES BY NAME OR DESCRIPTION THE
INSURER OF HIS CHOICE; TO AMEND SECTION 38-77-950, AS
AMENDED, RELATING TO UNREASONABLE OR EXCESSIVE
USE OF THE REINSURANCE FACILITY BY AN INSURER AND
NOTICE TO A POLICYHOLDER THAT HIS POLICY IS IN THE
FACILITY, SO AS TO, AMONG OTHER THINGS, DELETE THE
REQUIREMENT THAT INSURERS SHALL GIVE WRITTEN
NOTICE TO THE POLICYHOLDER OF A RISK CEDED TO THE
FACILITY WHICH DOES NOT QUALIFY FOR THE SAFE DRIVER
DISCOUNT IN SECTION 38-73-760; TO AMEND SECTION
38-77-960, RELATING TO AUTOMOBILE INSURANCE AGENT'S
BUSINESS, SO AS TO DELETE THE PROVISION THAT AN
INSURANCE COMPANY SHALL NOT ASK ANY AGENT NOT TO
WRITE ANY KIND OF AUTOMOBILE BUSINESS OR HOLD THE
REINSURANCE FACILITY BUSINESS AGAINST ANY AGENT IN
ANY MANNER WHICH COULD BE CONSTRUED AS BEING
DETRIMENTAL TO THE AGENT; TO AMEND THE 1976 CODE
BY ADDING SECTION 38-73-725 SO AS TO PROVIDE, AMONG
OTHER THINGS, THAT THE CHIEF INSURANCE
COMMISSIONER MAY, THROUGH ORDER, FIX, ESTABLISH,
AND PROMULGATE A FAIR AND REASONABLE MERIT
RATING PLAN FOR AUTOMOBILE INSURANCE RISKS IN
ACCORDANCE WITH THE CRITERIA AND STANDARDS
MENTIONED IN SECTION 38-73-730 AND CONSISTENT WITH
THE PURPOSES OF CHAPTERS 73 AND 77 OF TITLE 38 AND
THAT, AT LEAST BI-ANNUALLY, THE COMMISSIONER SHALL
REVIEW THE SOUTH CAROLINA MERIT RATING PLAN FOR
AUTOMOBILE INSURANCE AND ISSUE A REPORT TO THE
GENERAL ASSEMBLY STATING HIS CONCLUSION THAT THE
PLAN COMPLIES WITH CERTAIN STATUTORY PROVISIONS OR
STATING ANY RECOMMENDED CHANGES SO THAT THE PLAN
DOES COMPLY WITH THE STATUTORY PROVISIONS; TO
REPEAL ITEM (12) OF SECTION 38-77-30, RELATING TO THE
DEFINITION OF "SPECIALIZED INSURER" FOR
PURPOSES OF THE AUTOMOBILE INSURANCE LAW; TO
REPEAL SECTIONS 38-73-455, RELATING TO AUTOMOBILE
INSURANCE RATES, 38-73-465, RELATING TO INSURANCE,
CASUALTY AND SURETY RATES, UNFAIRLY
DISCRIMINATORY, EXCESSIVE OR UNREASONABLE PROFITS
AND RATES, REVIEW OF RATES, AND RATE EXPERIENCE,
38-73-720, RELATING TO THE STATE RATING AND
STATISTICAL DIVISION AND THE POWER TO ESTABLISH RISK
AND TERRITORIAL CLASSIFICATIONS, 38-73-735, RELATING
TO THE STATE RATING AND STATISTICAL DIVISION AND
PLAN FOR CREDITS AND DISCOUNTS, 38-73-770, RELATING TO
THE STATE RATING AND STATISTICAL DIVISION AND THE
REQUIREMENT THAT CLASSIFICATION PLANS MUST BE
STRUCTURED TO PRODUCE FAIR RATES, 38-73-910, RELATING
TO NOTICE OF HEARING AS A PREREQUISITE TO THE
GRANTING OF AN INSURANCE RATE INCREASE AND
EXCEPTIONS, 38-73-920, RELATING TO THE PROVISION THAT
NO INSURANCE MAY BE ISSUED IN THE STATE EXCEPT ON
RATES WHICH ARE FILED, 38-73-960, RELATING TO THE
EFFECTIVE DATE OF FILING OF INSURANCE RATES, SECTION
38-73-990, RELATING TO THE DISAPPROVAL OF INSURANCE
RATE FILINGS, 38-73-1420, RELATING TO THE REQUIREMENT
THAT THE BOARD OF GOVERNORS OF THE REINSURANCE
FACILITY FILE AN EXPENSE COMPONENT FOR PRIVATE
PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM
CHARGES, AND USE OF THE COMPONENT AFTER APPROVAL,
38-73-1425, RELATING TO THE FINAL RATE OR PREMIUM
CHARGE FOR A PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE REINSURANCE FACILITY,
38-77-111, RELATING TO AUTOMOBILE INSURANCE POLICIES
WHICH MAY BE CEDED TO THE REINSURANCE FACILITY,
38-77-112, RELATING TO THE PROVISION THAT AN
APPLICANT FOR OR POLICYHOLDER OF AUTOMOBILE
INSURANCE IS REQUIRED TO HAVE A DRIVER'S LICENSE AND
EXCEPTIONS, AND 38-77-940, RELATING TO AUTOMOBILE
INSURANCE, AVOIDING CERTAIN CLASSES OR TYPES OF
RISKS, EXCEPTIONS, AND CANCELING AN AGENT'S
REPRESENTATION; AND TO PROVIDE A SEVERABILITY
PROVISION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-73-10 of the 1976 Code, as last amended by
Act 148 of 1989, is further amended to read:
"Section 38-73-10. (a) The purposes of this chapter are to:
(1) promote the public welfare by regulating insurance rates to the
end that they may not be excessive, inadequate, or unfairly
discriminatory and to authorize and regulate cooperative action among
insurers in rate making and in other matters within the scope of this
chapter;
(2) empower the commissioner to fix, establish, and promulgate
any uniform statistical plan necessary or appropriate to obtain all
automobile insurance loss and loss adjustment expense experience, other
expense experience, and all other appropriate statistical and financial
data from insurers, rating organizations, and advisory organizations
engaged in an automobile insurance business in this State to the end
that the commissioner shall promulgate the risk classification and
territorial plans to be used by all insurers of automobile insurance in this
State and in order that the commissioner may test the risk and territorial
differentials previously established against the most recently available
loss experience;
(3) provide that investment income accruing to automobile
insurers is taken into consideration in the approval of rates or
premium charges and in the determination of any net loss incurred by the
South Carolina Reinsurance Facility and to make provision for the
securing by the Department of all necessary or appropriate financial data
for purposes of ascertaining and determining the investment income and
the profits from realized and unrealized capital gains of each automobile
insurer doing business in this State.;
(4) encourage reasonable competition so as to provide rates that
are responsive to competitive market conditions by allowing companies
to use their own rates and classification plans and to allow affiliate
companies to use their own rates and classification plans.
Nothing in this chapter is intended to prohibit or discourage
reasonable competition.
(b) This chapter must be liberally interpreted to carry into effect the
purposes of this chapter."
SECTION 2. Section 38-73-450 of the 1976 Code is amended to read:
"Section 38-73-450. (a) Every final rate or premium charge
proposed to be used by an automobile insurer may not be
used unless it has first been filed with and approved by the
Commissioner as being must be adequate, not excessive,
and not unfairly discriminatory. In connection with any hearing, action,
suit, proceeding, or judicial review respecting the approval or
disapproval of these rates or premium charges, the burden of
persuasion falls upon the affected insurer or insurers to establish that the
challenged rates or premium charges are adequate, not excessive, and
not unfairly discriminatory.
(b) In the approval of automobile insurance rates and in
determining whether the final rates or premium charges for automobile
insurance are adequate, not excessive, and not unfairly discriminatory,
the commissioner shall take into account investment income from
unearned premium and loss reserves as well as profits from investment
income. Every insurer writing automobile insurance in this State shall
file with the commissioner, in a form the commissioner orders, complete
financial records showing the amount of profit on every line of
automobile insurance during the previous year and shall also file records
showing profits or losses from such investment income, which records
shall include investment income or profit on net realized and unrealized
capital gains. However, unrealized capital gains or losses may not be
considered in the rate-making process.
(c) In considering any rate filing or in reviewing any rate in effect
for automobile insurance, the commissioner shall review the rate
experience and make any determination whether rates or premiums meet
the requirements of this section in accordance with generally accepted
and reasonable actuarial techniques, including consideration of the
following factors:
1. past and prospective loss experience within and without this
State;
2. past and prospective expenses;
3. the degree of competition among insurers for the risk insured;
4. investment income;
5. reasonableness of the judgement reflected in the filing;
6. a reasonable margin for underwriting profits;
7. a provision for contingencies; and
8. all other relevant factors."
SECTION 3. Section 38-73-457 of the 1976 Code is amended to read:
"Section 38-73-457. Notwithstanding Sections 38-73-920
and 38-73-1210, every automobile insurer and rating organization shall,
prior to October 1, 1987, file with the Commissioner a base rate, which
is defined as a rate by coverage calculated solely upon the experience
generated by the risk for each class and territory retained by the insurer
in its voluntary book of business and which must not include experience
generated by risks ceded or assumed from the Reinsurance Facility
established under Section 38-73-1030. An objective standards rate by
coverage must also be filed which is twenty-five percent above the base
rate previously described for each class and territory. The base rate must
be calculated by removing from the rate or premium charge, then in
effect for the automobile insurer, that portion of the rate or premium
charge attributable to the net gain or loss of the insurer as a result of
participation in the operating results of the Facility as required by
Section 38-77-760. In determining the base rate and objective standards
rate, by coverage, the Commissioner, in order that no extra premium
revenue is generated by this section, shall require that the insurer's
average rate, by coverage, on October 1, 1987, (computed as a weighted
average of the base rate and objective standards rate, by coverage, as
determined by the Commissioner), not exceed the insurer's average rate,
by coverage, prior to October 1, 1987, as determined by the
Commissioner. The provisions of the Administrative Procedures Act
apply to any court appeal of a base rate or objective standards rate
brought thereunder. The base rate or objective standards rate approved
by the Commissioner may be put into effect under bond in a similar
manner that a public utility may put a proposed rate increase into effect
under bond as provided by law. No insurer may file a base rate for any
class or territory which is higher than the rate or premium charge,
exclusive of that portion required by Section 38-73-460, approved by the
Commissioner for use on October 1, 1987. As a result of this section,
no insured may receive an increase in rates for other than an increase in
coverage or due to the provisions of Section 38-77-280, 38-77-610, or
38-73-455, unless the insurer files additional rates in accordance with
this title.
The base rate and objective standards rate filed by each insurer of
automobile insurance are effective if they meet the requirements of this
section, on or after July 1, 1988, for all eligible applicants and upon the
renewal date, on or after July 1, 1988, for all eligible existing
policyholders. If the base rate and objective standards rate filed by an
automobile insurer do not meet the requirements of this section, the
Commissioner shall suspend the authority of that insurer to write
automobile insurance until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the
Facility recoupment charge approved or established pursuant to Section
38-77-610 may be approved for an insurer of automobile insurance
unless that rate or premium charge is calculated in accordance with this
section and meets the other applicable requirements of this title
pertaining to the approval of rates or premium charges.
The Consumer Advocate, upon request to the Commissioner, must be
provided by him with a copy of any base rate filed with the
Commissioner along with any supporting materials, documents, or
studies utilized to support the filed base rate. In addition, every
automobile insurer and rating organization shall promptly respond to
requests for information and data requested by the Consumer Advocate
relating to the filed base rate. The Consumer Advocate must be afforded
an opportunity for a hearing before the Commissioner on any filed base
rate before it takes effect that he believes does not meet the requirements
of this section. Final decisions of the Commissioner regarding this
hearing are subject to the provisions of the State Administrative
Procedures Act.
The Consumer Advocate, upon request to the commissioner, must
be provided by him with a copy of any rate filed with the commissioner
along with any supporting materials, documents, or studies utilized to
support the filed rate. In addition, every automobile insurer and rating
organization shall promptly respond to requests for information and data
requested by the Consumer Advocate which is necessary for review of
the filed rate. The Consumer Advocate must be afforded an opportunity
for a hearing before the commissioner on any filed rate that he believes
does not meet the requirements of this chapter. Final decisions of the
commissioner regarding this hearing are subject to the provisions of the
Administrative Procedures Act and Section 38-73-1020. Nothing in this
section shall be construed to allow the Consumer Advocate an
opportunity for a hearing on any rate filed for use by the South Carolina
Reinsurance Facility under Section 38-73-1600 and approved by the
commissioner."
SECTION 4. Section 38-73-460 of the 1976 Code is amended to read:
"Section 38-73-460. In the making and approval of
rates for automobile insurance, consideration must be given to the net
gains or losses incurred by insurers as a result of participation in the
operating results and expenses, respectively, of the South Carolina
Reinsurance Facility."
SECTION 5. Section 38-73-520 of the 1976 Code is amended to read:
"Section 38-73-520. Every insurer shall file with the
commissioner every manual of classifications, rules, and rates, every
rating plan, and every modification of any of the foregoing which it
proposes to use. Every filing shall state the proposed effective
date thereof and shall indicate the character and extent of the coverage
contemplated and must be filed not later than fifteen days after the
effective date."
SECTION 6. Section 38-73-730 of the 1976 Code is amended to read:
"Section 38-73-730. No distinctions are permitted nor may be
made between policyholders or applicants for automobile
insurance as respects coverages, policy terms, rates, premium payment
arrangements, claim services, or other services provided by the insurer
directly or through its agents or employees except as the distinctions are
relevant to and reflected in insurers' rating classifications under risk
and territorial classification plans promulgated by the
Commissioner. No risk classification plan or automobile
insurance credit or discount plan may be promulgated
used unless the criteria used for classifying risks are objective,
clear, and unequivocal and based upon factually or statistically
supported data or probable variation in losses or expenses, nor
unless the classifications in the rating plan are calculated to render
possible the compilation of credible statistical data both for purposes of
determining premiums and losses and for comparing the relative
relationships between the loss or expense experience or both of the
respective classes. The legislative intent is to make it possible for
the Commissioner to determine the total profit or loss and expense
operating results of the entire line of automobile insurance and each
component thereof and of each automobile insurer transacting insurance
within the line and each component and to make price comparisons
between the rates and premium charges of the various insurers. It is
further the policy of this chapter to render possible the evaluation by the
Commissioner of the performance of the total insurance market and to
enable him thereby to assist automobile insurance consumers in making
appropriate consumer decisions."
SECTION 7. Section 38-73-750 of the 1976 Code, as last amended by
Act 148 of 1989, is further amended to read:
"Section 38-73-750. Automobile insurers shall file with the
State Rating and Statistical Division their plans or systems for allocating
expenses and profit as respects the various kinds or types of automobile
insurance risks and the classes of risks thereunder. However, no plan or
system may be filed which is inconsistent with the classification of risks
promulgated by the commissioner. No plan or system may be filed
or approved if the purpose or effect is to discriminate unfairly or
unreasonably in respect to the allocation of expenses or profit between
classes of risks or if the purpose or effect is to impose a burden or
detriment upon the South Carolina Reinsurance Facility or to secure to
the insurer using the plan or system an unfair or unreasonable
competitive advantage to the detriment of the South Carolina
Reinsurance Facility or other insurers. The commissioner after due
notice and hearing, shall disapprove and disallow the further use
of an inconsistent, discriminatory, burdensome, or competitively unfair
plan or system for the allocation of expenses and profit."
SECTION 8. Section 38-73-760 of the 1976 Code, as last amended by
Act 148 of 1989, is further amended to read:
"Section 38-73-760. (a) The commissioner, through the State
Rating and Statistical Division, shall may fix, establish,
and promulgate any uniform statistical plan that may be necessary or
appropriate for the gathering and compilation of statistical data from
insurers, rating organizations, or advisory organizations transacting or
otherwise engaged in the automobile insurance business in the State. In
promulgating any uniform statistical plan, consideration may
be given to the extent reasonable or practicable to the rules and forms of
the plans used for rating systems in other states. Upon the promulgation
of any statistical plan for automobile insurance in this State, the same
must be adopted allow for reporting on a unit transaction or
summary basis at each insurer's or organization's discretion, and
be used by every automobile insurer in this State, and
every automobile insurer shall constitute the State Rating and Statistical
Division its statistical agent for automobile insurance in this State.
(b) The statistical plan may be promulgated so as to provide for any
and all statistical and financial data necessary or appropriate to the
implementation of the policy of this chapter or Chapter 77 of this title or
to yield statistical data reasonably and fairly related to any of the
purposes of this article, including, but not limited to, the fixing,
establishing, and promulgating of risk and territorial classification plans
for automobile insurance; determining the pure loss rate level indications
for automobile insurance in South Carolina based upon all South
Carolina loss experience and assisting in the translating of this
information into usable form for insurance consumers in terms of the
final rates or premium charges of each insurer of automobile insurance,
determining the reasonability of loss adjustment expenses, other
expenses and profit factors applied by insurers to their pure loss
components in arriving at their final rates or premium charges for
automobile insurance both for purposes of ensuring that the final rates
or premium charges are adequate, not excessive, and not unfairly
discriminatory and for ensuring that improper and undue burdens are not
imposed upon the South Carolina Reinsurance Facility by way of
excessive ceding commissions to ceding insurers; determining the
amount, validity, and propriety of class and territorial differentials
applied to the general pure loss rate levels and testing not less than
annually the appropriateness of the existing differentials in the light of
the most recent available loss experience data; determining the amount,
validity, and propriety of surcharges and discounts referable to any
uniform merit rating plan or system which may have been promulgated
by the commissioner or which may be under consideration for
promulgation, the appropriateness of the surcharges and discounts in the
light of the most recent available loss experience data; determining the
propriety or validity of any plan for the classification of risks which may
be in effect or under consideration based upon the propensities of motor
vehicles or classes or types of motor vehicles or their equipment to
shield occupants from death or serious injury as a result of crash or
based upon the relative invulnerability of the motor vehicles or classes
or types of motor vehicles to extensive damage as a result of crash or
their repairability at modest expense; or obtaining data relevant to
studies being made or to be made by the State Rating and Statistical
Division in connection with any of the foregoing or in connection with
means and methods for providing appropriate rates for insurance
consumers or fostering and encouraging competition among
insurers.
(c) The functions and responsibilities of the State Rating and
Statistical Division acting as statistical agent for automobile insurers
may not be delegated, except that the commissioner may, as the result
of competitive bidding, make an agreement with some suitable person,
firm, corporation, or other organization for the gathering, compilation,
recordation, or computerization of the statistical data. However, these
functions are always subject to the supervision, direction, and control of
the commissioner and the examination and oversight of insurers in
respect to their obligations to furnish statistical data to him remain the
direct responsibility of the commissioner and may never be delegated
other than to the State Rating and Statistical Division.
(d) Any merit rating plan or system promulgated by the
commissioner pursuant to the authority contained in subsection (b)
likewise extends to and includes automobile collision insurance.
However, nothing contained in this subsection (d) requires that the same
percentage or dollar amounts for discounts or surcharges apply to
collision coverage nor does it require that surcharges already assessed
in respect to the liability coverages of the policy again be assessed in
respect to the collision coverage afforded by the same policy.
(e) The commissioner shall require all insurers transacting
automobile insurance business in this State to assess surcharges and
grant safe driver discounts of no less than twenty percent.
(f) All policies of automobile insurance issued in South Carolina
must show on the initial policy or on an attachment to the initial policy
and on all premium invoices or attached to all premium invoices, in a
form to be approved by the commissioner, the amount of any surcharge
(including loss of safe driver discount) that may be applicable to the
policy as a result of any merit rating plan or system promulgated by the
commissioner. Also to be included, presented in a fashion that is readily
understandable, is the reason for the applicable surcharge or the loss of
safe driver discount. The amount of the applicable safe driver discount
also must be shown."
SECTION 9. Section 38-73-950 of the 1976 Code is amended to read:
"Section 38-73-950. When a filing is not accompanied by the
information upon which the insurer supports the filing and the
commissioner does not have sufficient information to determine whether
the filing meets the requirements of this chapter, he shall require the
insurer to furnish the information upon which it supports the filing,
and in this event the waiting period commences as of the date the
information is furnished."
SECTION 10. Section 38-73-1020 of the 1976 Code is amended to
read:
"Section 38-73-1020. If at any time after the applicable
review period provided for in Sections 38-73-990 to 38-73-1010 the
commissioner finds that a filing does not meet the requirements of this
chapter, he shall, after a hearing held upon not less than thirty days'
written notice to every insurer and rating organization which made the
filing, specifying the matters to be considered at the hearing, issue an
order specifying in what respects he finds that the filing fails to meet the
requirements of this chapter and stating when, within a reasonable
period thereafter, the filing is considered no longer effective. Copies of
the order must be sent to every insurer and rating organization which
made the filing. The order does not affect any contract or policy made
or issued prior to the expiration of the period set forth in the
order."
SECTION 11. Section 38-73-1350 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-73-1350. Notwithstanding the provisions of
Sections 38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410,
38-73-1420, and 38-73-1430, after public hearing the Chief
Insurance Commissioner may prohibit cooperation among or within
property/casualty rating or advisory organizations by insurers or among
or within these rating or advisory organizations and insurers in rate
making or in other matters within the scope of this chapter, except to the
extent that these organizations may compile and disseminate only
historic loss data with no mathematical trending or analytical
methodologies, upon a finding by the commissioner that the
anti-competitive effects of this cooperation outweigh practical
constraints of prohibitions. All property/casualty filings are subject
to prior approval by the Chief Insurance Commissioner. The
provisions of Title 1, Chapter 23 (Administrative Procedures Act) apply
to all property/casualty rate filings."
SECTION 12. Section 38-73-1370 of the 1976 Code, as added by Act
148 of 1989, is amended to read:
"Section 38-73-1370. After June 30, 1989, no rating
organization may file a rate increase with the commissioner for any
previously approved final rate or premium charge for any private
passenger automobile insurance coverage. A rating organization may
file the pure loss component of the rate or premium charge for any
private passenger automobile insurance coverage, by class and
territory, for the approval of the commissioner. After a public
hearing, the commissioner may approve the pure loss component of the
rate or premium charge for use by the members or subscribers of the
rating organization. No member or subscriber may use the approved
pure loss component of the rate or premium charge unless and until the
expense component of the rate or premium charge has also been filed
with and approved by the commissioner pursuant to Section
38-73-1380.
Nothing in this section shall be construed to prevent a rating
organization from filing a rate increase for private passenger automobile
insurance coverage on behalf of the South Carolina Reinsurance Facility
pursuant to Section 38-73-1600."
SECTION 13. Section 38-73-1380 of the 1976 Code, as added by Act
148 of 1989 and last amended by Act 129 of 1991, is further amended
to read:
"Section 38-73-1380. After June 30, 1989, no member or
subscriber of a rating organization may utilize a rate or premium charge
for any private passenger automobile insurance coverage unless and
until the final rate or premium charge has been filed and approved by the
commissioner. After the effective date of this section, the final rate
or premium charge is the pure loss component filed and
approved by a rating organization on behalf of its members or
subscribers added to the expense component of the rate or premium
charge, filed with and approved by the commissioner, by each
member or subscriber of a rating organization independently.
No expense component filed by a member or subscriber of a rating
organization may be approved by the commissioner unless it has been
the subject of a public hearing, if that member's or subscriber's total
written private passenger automobile insurance premium during the
previous calendar year equaled or exceeded one percent of the total
written private passenger automobile insurance premium in this State
during the previous calendar year.
For other lines of insurance the requirements of this section are not
activated unless the members' or subscribers' total written premium
during the previous calendar year equaled or exceeded three percent of
the total written insurance premium for that specific line of insurance in
this State during the previous calendar year."
SECTION 14. Section 38-73-1400 of the 1976 Code, as added by Act
148 of 1989, is amended to read:
"Section 38-73-1400. (1) After June 30, 1989, the `pure loss
component' of the final rate or premium charge for private passenger
automobile insurance is that portion of the final rate or premium charge
applicable to calendar/accident year incurred losses (the sum of paid
losses plus loss reserves including incurred but not reported loss
reserves) and loss adjustment expense (those expenses directly related
to the payment of claims) in this State, trended to include both the past
and prospective loss experience. If the insurer writes one percent or
more of the written premium for automobile insurance during the
previous calendar year, that insurer must file its own trending
methodology as independently derived.
(2) The `expense component' of the final rate or premium charge for
private passenger automobile insurance is that portion of the final rate
or premium charge applicable to production costs (including
commissions and other acquisition expenses), underwriting costs,
administrative costs (including the actual costs of taxes,
licenses, and fees), and profit margin in this State.
(3) The `final rate or premium charge' is the approved pure
loss component added to the approved expense component. In
the determination of whether the pure loss component should be
approved disapproved and in the determination of
whether the expense component should be approved
disapproved, neither may be inadequate, excessive, nor unfairly
discriminatory and the commissioner shall take into account investment
income from unearned premium and loss reserves, surplus, and
realized capital gains."
SECTION 15. Section 38-73-1410 of the 1976 Code, as added by Act
148 of 1989, is amended to read:
"Section 38-73-1410. After June 30, 1989, upon the
effective date of this section, nothing herein should be construed to
require a rating organization or its members or subscribers to
immediately refile final rates or premium charges previously approved
by the commissioner for private passenger automobile insurance
coverages. Members or subscribers of a rating organization are
authorized to continue to use automobile insurance rates or premium
charges, approved before the effective date of this section, or decreases
from those rates or premium charges filed by the rating organization and,
subsequently, approved after the effective date of this section.
After June 30, 1993, upon the effective date of this section,
nothing herein shall be construed to require a rating organization or its
members or subscribers or any insurer to immediately refile final rates,
premium charges, or classification plans previously approved by the
commissioner for private passenger automobile insurance coverages.
Insurers are authorized to continue to use automobile insurance rates,
premium charges, and classification plans approved before the effective
date of this section."
SECTION 16. The 1976 Code is amended by adding:
"Section 38-73-1600. (A) By January 1, 1994, and annually
thereafter, the Board of Governors of the South Carolina Reinsurance
Facility shall file with the commissioner every manual of classifications,
rules, and rates, every rating plan, policy forms, and every modification
of any of the foregoing which it proposes to use for private passenger
automobile insurance provided by the facility. Every such filing shall
indicate the character and extent of the coverage contemplated and shall
be accompanied by the information upon which the board supports the
filing. The rates filed by the board shall be effective on July first
immediately following.
(B) The board may satisfy its obligation to make such filings by
authorizing the commissioner to accept on its behalf the filing made by
a licensed rating organization.
(C) Any filing made pursuant to this section shall be approved by the
commissioner unless the commissioner finds that such filing does not
meet the requirements of Section 38-73-10 and 38-73-450. Unless there
is any conflict between the rate levels prescribed in this section and the
provision of another section, this section prevails. As soon as
reasonably possible after the filing has been made, the commissioner
shall in writing approve or disapprove the same, except that any filing
shall be deemed approved unless disapproved within thirty days.
(D) In the event that the commissioner disapproves a filing, the
commissioner shall specify in what respect such filing does not meet the
requirements of law. In any administrative proceeding under this
chapter, the board or the rating organization shall carry the burden of
proof to show that the rate is not excessive, inadequate, or unfairly
discriminatory.
(E) If at any time the commissioner finds that a filing so approved
no longer meets the requirements of this chapter, the commissioner may,
after a hearing conducted in accordance with the provisions of Section
38-73-1020, issue an order withdrawing approval thereof. The order
shall specify in what respects the commissioners finds such filing no
longer meets the requirements of this chapter and shall be effective not
less than sixty days after its issuance.
(F) Any person or organization aggrieved by the action of the
commissioner with respect to any filing may, within fifteen days after
such action, make written request to the commissioner for a hearing
thereon. Upon receipt of a timely request, the commissioner shall hear
such aggrieved party within thirty days after receipt of such request in
accordance with the provisions of the Administrative Procedures Act
(Title 1, Chapter 23). If, after hearing, the commissioner finds that a rate
or rate change is excessive, inadequate, or unfairly discriminatory, the
commissioner shall issue an order disapproving such rate or rate change
to be effective not sooner than sixty days after the date of the order.
However, for purposes of this section rates are not to be considered
excessive, inadequate, or unfairly discriminatory if they meet the target
rates described in subsection (H).
(G) No insurer shall make or issue a ceded contract or policy except
in accordance with filings which have been approved for the facility as
provided in this chapter.
(H) (1) For the year beginning July 1, 1994, the facility rates shall
be established at a level such that the sum of the pure loss component
and the expense component do not exceed the anticipated final rate or
premium charge by more than twenty-eight percent.
(2) For the year beginning July 1, 1995, the facility rates shall be
established at a level such that the sum of the pure loss component and
the expense component do not exceed the anticipated final rate or
premium charge by more than twenty-one percent.
(3) For the year beginning July 1, 1996, the facility rates shall be
established at a level such that the sum of the pure loss component and
the expense component do not exceed the anticipated final rate or
premium charge by more than fourteen percent.
(4) For the year beginning July 1, 1997, the facility rates shall be
established at a level such that the sum of the pure loss component and
the expense component do not exceed the anticipated final rate or
premium charge by more than seven percent.
(5) For the year beginning July 1, 1998, and for subsequent years,
the facility rates shall be established at a level such that the sum of the
pure loss component and the expense component provide for a
reasonable rate of return. Due consideration shall be given to the
investment earnings on unearned premium and loss reserves, and
realized capital gains."
SECTION 17. The 1976 Code is amended by adding:
"Section 37-73-1620. (A) The Board of Governors shall
provide rates and rules for the writing of the following private passenger
coverages, limits, and deductibles:
(1) bodily injury liability up to and including limits of
$250,000/$500,000;
(2) property damage liability up to and including a limit of
$100,000;
(3) uninsured motorists coverage and underinsured motorists
coverage as set forth in Sections 38-77-150 and 38-77-160;
(4) collision coverage, comprehensive coverage, and fire, theft,
and combined additional coverage on an actual cash value basis.
Deductibles of $250, $500, and $1,000 shall be available. This
deductible may not apply to loss of auto safety glass;
(5) such ancillary coverage as the board shall deem appropriate.
Ancillary coverage is coverage that is attendant to, or an extension of,
the foregoing coverage. This includes coverage such as nonowned
liability coverage;
(6) any coverage that is required by law.
(B) The board is empowered, with the approval of the commissioner,
to expand the coverage offerings upon the petition of fifty percent of the
members of the South Carolina Reinsurance Facility.
(C) Any coverage written pursuant to this section by any insurer
must be ceded."
SECTION 18. Section 38-77-10 of the 1976 Code is amended to
read:
"Section 38-77-10. In order to effect a complete reform of
automobile insurance and insurance practices in South Carolina, the
purposes of this chapter are:
(1) To provide that every automobile insurance risk which is
insurable on the basis of the criteria established in this chapter is entitled
to automobile insurance from the automobile insurer of the applicant's
choice on the basis of the same rates, policy forms, claims service, and
other services provided by the insurer to all other applicants or insureds
falling within the classification of risk and territory under the applicable
risk and territorial classification plan promulgated by the Commissioner
so long as all these applicants or insureds have satisfied the same
objective standards as established in Sections 38-77-280 and 38-73-455;
(2) (1) To provide a Reinsurance Facility for automobile
insurers in which all automobile insurers must participate to the end that
the operating expenses and net profit or loss of the facility may be
shared equitably by all the insurers transacting automobile insurance
business in this State giving appropriate consideration to degrees of
utilization of the facility by the several insurers of automobile insurance
and to provide prohibitions or penalties in respect to excessive
utilization of the Facility.
(3) (2) To provide prohibitions and penalties in
respect to unfairly discriminatory or unfairly competitive practices
having as their purpose or effect evasion of the statutory mandate of
coverage provided in this chapter or imposing an undue or unfair burden
upon other automobile insurers through excessive utilization of the
Facility.
(4) To provide medical, surgical, funeral, and disability insurance
benefits without regard to fault to be offered under automobile insurance
policies that provide bodily injury and property damage liability
insurance, or other security, for motor vehicles registered in this
State."
SECTION 19. Section 38-77-30(10) of the 1976 Code is amended to
read:
"(10) `Renewal' or `to renew' means the issuance and delivery
by an insurer of a policy superseding at the end of the policy period a
policy previously issued and delivered by the same insurer or that
insurer's affiliate, the renewal policy to provide types and limits
of coverage at least equal to those contained in the policy being
superseded, or the issuance and delivery of a certificate or notice
extending the terms of a policy beyond its policy period or term with
types and limits of coverage at least equal to those contained in the
policy being extended. However, any policy with a policy period
or term of less than six months or any period with no fixed expiration
date is considered as if written for successive policy periods or terms of
six months."
SECTION 20. Section 38-77-110 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-110. (A) Automobile insurers other than
insurers designated and approved as specialized insurers by the
commissioner may not refuse to write or renew automobile insurance
policies for individual private passenger automobiles or small
commercial risks. These policies may not be cancelled except for
reasons which had they existed or been known when the policy was
written would have rendered the risk not an insurable risk. Every
automobile insurance risk constitutes an insurable risk unless the
operator's permit of the named insured has been revoked or suspended
and is at the time of application for insurance so revoked or suspended.
However, no insurer is required to write or renew automobile insurance
on any risk if there exists a valid and enforceable outstanding judgment
secured by an insurer, an agent, or licensed premium service company
on account of automobile insurance premiums which the applicant or
insured or any principal operator who is a member of the named
insured's household has failed or refused to pay unless the applicant or
insured pays in advance the entire premium for the full term of the
policy sought to be issued or renewed or the annual premium, whichever
is the lesser. An insurer is not precluded from effecting cancellation of
an automobile insurance policy, either upon its own initiative or at the
instance of an agent or licensed premium service company, because of
the failure of any named insured or principal operator to pay when due
any automobile insurance premium or any installment payment.
However, notice of cancellation for nonpayment of premium notifies the
person to whom the notice is addressed that the notice is void and
ineffective if payment of the full amount of the premium or premium
indebtedness, whichever is the greater, is made to the insurer, agent, or
licensed premium service company named in the notice by the otherwise
effective date of cancellation. This notice of cancellation is not
considered ineffective for being conditional, ambiguous, or indefinite.
(B) Notwithstanding subsection (A) of this section, no insurer is
required to write private passenger automobile insurance with higher
limits of coverage than:
(1) two hundred fifty thousand dollars, for bodily injury liability
to one person in one accident,
(2) subject to the limit for one person, five hundred thousand
dollars because of bodily injury to two or more persons in one accident,
(3) fifty thousand dollars because of injury to or destruction of
property of others in any one accident,
(4) five hundred thousand dollars combined single limits for
either or both bodily injury and property damage, if any applicant or
existing policyholder, on renewal, for a motor vehicle customarily
operated by an individual, either the named insured or any other operator
not excluded in accordance with Section 38-77-340 and who resides in
the same household, has one or more of the conditions or factors
prescribed in Section 38-73-455(A) existing and if an insurer, at its
option, writes such a policy, the policy may not be ceded to the
Reinsurance Facility.
(C) With regard to any coverage not required to be written by an
insurer under the mandate to write, no insurer may refuse to write such
policy, coverage, or endorsement of automobile insurance because of the
race, color, creed, national origin, or ancestry of anyone who seeks to
become insured.
No insurer may refuse to write a policy, coverage, or endorsement
of automobile insurance because of the race, color, creed, national
origin, or ancestry of anyone who seeks to become insured."
SECTION 21. Section 38-77-115 of the 1976 Code is amended to
read:
"Section 38-77-115. The authorized agents for every insurer
covered by the provisions of Section 38-77-110 shall post in a
conspicuous location in their office or place of business a sign
containing language to be required by regulation of the Chief Insurance
Commissioner that stipulates that insurer and agent may not refuse to
write or renew that type of insurance, that tactics designed to avoid
writing or renewing that type of insurance are not permissible including
unreasonable delays in meeting with applicants, and that violations of
the above should be reported to the commissioner for appropriate
action for the reasons specified in Section
38-77-110."
SECTION 22. Section 38-77-120 of the 1976 Code is amended by
adding:
"(c) A notice of cancellation by an insurer of an automobile
insurance policy shall be effective only if such cancellation is for one or
more of the following reasons:
(1) nonpayment of premium which is defined to mean, for the
purposes of this chapter, the failure of the named insured to discharge
when due any of his obligations in connection with the payment of
premiums on a policy, or any installment of such premium, whether the
premium is payable directly to the insurer or its agent or indirectly under
any premium finance plan or extension of credit;
(2) the driver's license or motor vehicle registration of the named
insured or of any other operator who either resides in the same
household or customarily operates an automobile insured under the
policy has been denied or has been under suspension or revocation
during the policy period or the existence of one or more grounds for
such denial, suspension, or revocation has become known;
(3) fraud, wilful misrepresentation, or concealment on the part of
any insured in respect to any material fact or circumstance relating tot
he issuance or continuance of the policy or relating to a loss; or
(4) violation of any terms or conditions of the policy.
However, a change or substitution in policy form shall not be deemed
to be a cancellation within the intent of this section. Further, nothing in
this section shall apply to nonrenewals. This subsection shall not apply
to any policy or coverage which has been in effect less than sixty days
at the time notice of cancellation is mailed or delivered by the insurer
unless it is a renewal policy.
(d) For each calendar year period, an insurer may issue notices of
intention not to renew an automobile insurance policy in an amount not
to exceed two percent of the total number of automobile insurance
policies or automobiles insured, whichever is less, of the insurer, which
are in force at the end of the previous calendar year in this State.
(e) If one company which is a member of a group of affiliated
companies refuses to write, cancels, or refuses to renew a particular
policy but, at the same time, offers to arrange insurance for the applicant
or insured with another member of the same group, there has not been
a refusal to write, a cancellation, or a refusal to renew by the first
company. The movement of a policy from one company to another
company of the same group, resulting in a different rate for the insured,
may only occur after written notice of such action to the policyholder.
The notice shall contain premiums for coverage with the new affiliate
company.
(f) The provisions of this section shall have no applicability to a
company exiting the market."
SECTION 23. Section 38-77-280 of the 1976 Code, as last amended
by Act 113 of 1991, is further amended to read:
"Section 38-77-280. (A) Except as provided in subsection
(B), all automobile insurers, including those insurance companies
writing private passenger physical damage coverages only, shall make
collision coverage and either comprehensive or fire, theft, and combined
additional coverage available to an insured or qualified applicant who
requests the coverage.
Collision coverage must have a mandatory deductible of two hundred
fifty dollars, but an insured or qualified applicant, at his option, may
select an additional deductible in appropriate increments up to one
thousand dollars.
Comprehensive coverage or fire, theft, and combined additional
coverages must have a mandatory deductible of two hundred fifty
dollars, but an insured, at his option, may select an additional deductible
in appropriate increments up to one thousand dollars. This deductible
does not apply to auto safety glass. It is an unfair trade practice, as
described in Sections 38-57-30 and 38-57-40, for an insurer or an agent
to sell collision insurance, comprehensive coverage, or fire, theft, and
combined additional coverages unless the insured is notified at the time
of application of the savings which may be realized if the applicant or
the insured selects a higher deductible. This notice is required only at
the time of the initial sale and must be in a form approved by the Chief
Insurance Commissioner. An insurer may offer insureds lower
deductibles at the insurer's option.
(B) Notwithstanding subsection (A) and Sections 38-77-110 and
38-77-920, automobile insurers may refuse to write automobile physical
damage insurance coverage, including automobile comprehensive
physical damage, collision, fire, theft, and combined additional
coverage, for an applicant or existing policyholder, on renewal, for a
motor vehicle customarily operated by an individual, either the named
insured or another operator not excluded in accordance with Section
38-77-340 and who resides in the same household, where one or more
of the conditions or factors prescribed in Section 38-73-455 exist. In
addition, automobile insurers may refuse to write physical damage
insurance coverage to an applicant or existing policyholder, on renewal,
who has collected benefits provided under automobile insurance
physical damage coverage during the thirty-six months immediately
preceding the effective date of coverage, for two or more total fire losses
or two or more total theft losses. Automobile insurers may refuse to
write for private passenger automobiles physical damage insurance
coverage, including automobile comprehensive physical damage,
collision, fire, theft, and combined additional coverage, for an applicant
or existing policyholder, on renewal, for a motor vehicle customarily
operated by an individual, either the named insured or another operator
not excluded in accordance with Section 38-77-340 and who resides in
the same household, which does not qualify for the safe driver discount
in Section 38-73-760(e).
(C) Notwithstanding Section 38-77-110, automobile physical
damage coverage in an automobile insurance policy may be cancelled
at any time during the policy period by reason of the factors or
conditions described in Section 38-73-455(A) or Section 38-77-280(B)
which existed before the commencement of the policy period and which
were not disclosed to the insurer at the commencement of the policy
period.
(D) No policy of insurance which provides automobile physical
damage coverage only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for physical
damage insurance coverages different than those provided for in Section
38-73-457 if the rates are filed and approved by the Chief Insurance
Commissioner. Any applicant or existing policyholder, to be charged
this different rate, must be denied the coverage pursuant to subsection
(B) at the rate provided in Section 38-73-457.
(F) A carrier may not cede collision coverage, comprehensive
coverage, or fire, theft, and combined additional coverages with a
deductible of less than two hundred fifty dollars. An insured or qualified
applicant may select an additional deductible in appropriate increments
up to one thousand dollars. However, the mandatory deductible does not
apply to safety glass.
It is an unfair trade practice, as described in Sections 38-57-30
and 38-57-40, for an insurer or an agent to sell collision insurance,
comprehensive coverage, or fire, theft, and combined additional
coverages unless the insured is notified at the time of application of the
savings which may be realized if the applicant or the insured selects a
higher deductible. This notice is required only at the time of the initial
sale and must be n a form approved by the Chief Insurance
Commissioner."
SECTION 24. Section 38-77-510 of the 1976 Code, as last amended
by Act 150 of 1989, is further amended to read:
"Section 38-77-510. There is created a nonprofit,
unincorporated legal entity known as the South Carolina Reinsurance
Facility which is subject to regulations and orders promulgated by the
commissioner which are not inconsistent with the purposes of this
chapter.
The facility shall reinsure, at the option of the insurance agent
or the ceding automobile insurer and subject to the provisions of
this chapter, the risk covered under any policy of automobile insurance.
However, these cessions must be confined to quota share reinsurance of
either a one hundred percent quota share of the risk or to any other
percentage of quota share reinsurance the commissioner may permit by
regulations promulgated by him."
SECTION 25. A. The 1976 Code is amended by adding:
"Section 38-77-515. (a) `An indicated cession' is a policy
that an insurer cedes to the South Carolina Reinsurance Facility at the
direction of the insurance agent who produces the application which
leads to the policy's issuance. In order to secure the placement of an
automobile insurance risk in the South Carolina Reinsurance Facility, an
agent must append an `indicated cession form' to the application. The
indicated cession form used by the agent must be prescribed by the
insurer who is to process the indicated cession and may be a separate
application. Insurers shall file a sample copy of their indicated cession
forms with the commissioner. Indicated cession forms shall state that
the insurance agent wants the attached automobile insurance application
to be processed by the insurer and ceded to the facility. If the indicated
session form is a separate form from the insurance application, the agent
shall sign and date the form and submit it with the application to the
insurer.
(b) Only insurance agents with a voluntary market outlet for
automobile insurance shall have the option to make an indicated cession.
(c) For the purposes of this section, insurance agents with a
voluntary market outlet for automobile insurance shall be assigned, by
the commissioner, to the insurer with whom the insurance agent has
written the most automobile insurance applications in the year of
assignment. Insurance agents who represent one insurer and its affiliates
exclusively shall be assigned to the insurer whom they exclusively
represent for purposes of making indicated cessions.
(d) Insurance agents may indicate that a risk be ceded to the facility
if the agent knows, after completion of the automobile insurance
application, that the risk is not eligible for any of the voluntary market
outlets available to the agent based on the objective underwriting
standards of all of the insurers in their voluntary market outlet.
Insurance agents may not indicate that a risk be ceded to the facility
because of the race, color, creed, national origin, or ancestry of anyone
who seeks to become insured.
(e) The indicated cessions made by insurance agents shall not limit
the ability of insurers to cede business to the facility in accordance with
Section 38-77-510.
(f) All indicated cessions shall be written at the facility rate
established pursuant to Section 38-73-1600.
(g) Nothing in this section shall be construed to allow an agent to be
assigned to an insurer when the agent does not have an existing
voluntary market relationship with the insurer.
(h) Nothing in this section shall be construed to limit the rights of
any producer to apply for assignment as a designated producer under
Section 38-77-590, nor shall anything in this section prohibit a
designated producer from producing business through his existing
facility marketing outlet.
(i) Policies that were ceded to the South Carolina Reinsurance
Facility prior to July 1, 1994, shall be terminated and offered coverage
in the South Carolina Reinsurance Facility on the first policy renewal
date after July 1, 1994, and such initial termination and offer shall not
be considered a notice of intention not to renew for purposes of Section
38-77-120(d). They are to be offered coverages available in the facility
that are similar to those previously carried and at facility rates in effect
at the time of the offer. Upon written acceptance of the offer, the risk
must be written in the facility without the need for the risk to complete
a new application."
B. Section 38-77-515 of the 1976 Code is effective July 1, 1994.
SECTION 26. The 1976 Code is amended by adding:
"Section 38-77-596. Notwithstanding Section 38-77-590, upon
notification to the governing board, designated producers may contract
with a voluntary market outlet for any type of automobile insurance
cedeable to the facility. Upon the effective date of such a contract, the
designated producer may no longer write new business with a designated
carrier. The producer is permitted to retain all existing policies in the
facility until such time as these policies lapse, cancel, nonrenew, or
cease to remain in effect for any reason. For the purposes of this section,
vehicles written as an addition to a multi-car policy in the facility do not
constitute `new business'."
SECTION 27. Section 38-77-600 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-600. The rate or premium charged by insurers
of private passenger automobile insurance must include a facility
recoupment charge, which must be added to the appropriate base rate
or objective standards rate prescribed in Sections 38-73-455 and
38-73-457 premium rate filed in accordance with Section
38-73-520. The operating losses of the facility for a twelve-month
period must be recouped in the subsequent twelve-month period.
(1) Prior to December first of each year, the governing board of the
facility shall calculate the recoupment amount, by coverage, by dividing
the net facility operating loss, adjusted to reflect prudently incurred
expenses, consistent with the provisions of Section 38-73-465,
and the time value of money, by mandated coverage for the
preceding facility accounting year, by the total number of earned car
years in South Carolina, by coverage, for the same period of time. .386
multiplied by the recoupment is to be bourne by risks having zero
surcharge points under the Uniform Merit Plan promulgated by the
commissioner. The remainder of the recoupment (.614 multiplied by the
recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X +
4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(1)+I0X
= R. In this formula to be utilized in determining the facility
recoupment charge:
(a) P(1) is the percentage of risks which have one surcharge point
under the Uniform Merit Rating Plan;
(b) P(2) is the percentage of risks which have two surcharge
points under the Uniform Merit Rating Plan;
(c) P(3) is the percentage of risks which are subject to a surcharge
of three points under the Uniform Merit Rating Plan;
(d) P(4) is the percentage of risks which are subject to a surcharge
of four points under the Uniform Merit Rating Plan;
(e) P(5) is the percentage of risks subject to a surcharge of five
points under the Uniform Merit Rating Plan;
(f) P(6) is the percentage of risks subject to a surcharge of six
points under the Uniform Merit Rating Plan;
(g) P(7) is the percentage of risks subject to a surcharge of seven
points under the Uniform Merit Rating Plan;
(h) P(8) is the percentage of risks subject to a surcharge of eight
points under the Uniform Merit Rating Plan;
(i) P(9) is the percentage of risks subject to a surcharge of nine
points under the Uniform Merit Rating Plan;
(j) P(I0) or more is the percentage of risks subject to a surcharge
of ten or more points under the Uniform Merit Rating Plan;
(k) X is the dollar amount by coverage, to be charged all risks
having one surcharge point under the Uniform Merit Rating Plan
promulgated by the commissioner. This dollar amount, by coverage, is
the facility recoupment charge to be added to the base rate or
objective standards rate prescribed in Sections 38-73-455 and
38-73-457 premium rate, filed in accordance with Section
38-73-520; for all risks which have one surcharge point.
(2) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which have one surcharge point under the Uniform Merit Rating
Plan is calculated by multiplying X by a factor of one.
(3) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which have two surcharge points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of two.
(4) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of three points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
three.
(5) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of four points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
four.
(6) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of five points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
five.
(7) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of six points under the Uniform
Merit Rating Plan is calculated by multiplying X by a factor of six.
(8) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of seven points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
seven.
(9) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of eight points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
eight.
(10) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of nine points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
nine.
(11) The facility recoupment charge by coverage to be added to the
base rate or objective standards rate premium rate for
all risks which are subject to a surcharge of ten or more points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor of
ten.
(12) In determining the number of surcharge points a risk has for the
purposes of this section, no surcharge points assigned under the Uniform
Merit Rating Plan because the principal operator of the automobile has
not been licensed in any state for at least one year immediately
preceding the writing of the risk or as a result of a failure of any motor
vehicle equipment requirement may be considered.
(13) This section applies to all private passenger automobile
insurance policies issued or renewed after June 30, 1989. However,
insurers unable to comply with the provisions of this section and renewal
provisions required by law may comply with this section at any time
after June 30, 1989, but in no event later than October 1, 1989."
SECTION 28. Section 38-77-620 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-620. The facility recoupment charges approved
or established pursuant to Section 38-77-610 must be added to the
approved base rate and objective standards rate premium
rate in effect for each automobile insurer. The combined rate or
premium charge is effective on July first of each year and the
recoupment charges must remain constant until July first of the
following year. The base rate and objective standards rate may
change in accordance with Section 38-73-457 and the other applicable
requirements of this title pertaining to the approval of rates or premium
charges The premium rate charged by insurers may change in
accordance with Section 38-73-520. Facility recoupment charges
must be considered in accordance with:
(1) Any recoupment charge paid by policyholders must be
considered premium for the purpose of calculating premium taxes and
commissions and is subject to normal policy cancellation procedures.
(2) Any net operating gains resulting from the operation of the
facility must be retained by the facility, and the gains and any
investment income derived from the gains must be used to offset future
operating losses.
(3) The total funds recouped by all insurers less commission and
premium tax expenses and time value of money considerations must be
paid to the Reinsurance facility in accordance with the plan of operation.
The governing board shall redistribute the funds to the insurers based
upon each insurer's share of the Reinsurance Facility losses.
Recoupment must be used solely for the purpose of recovering past
facility operating deficits. The plan of operation must provide that the
amount ultimately received by an individual company is not more than
the company's share of the Reinsurance Facility losses, plus the time
value of money.
(4) In the making and approval of rates for small commercial
automobile risks, as defined in Section 38-77-30, consideration
must be given to the net gains or losses incurred by insurers as a result
of participation in the operating results and actual, prudently incurred
expenses, respectively, of the facility."
SECTION 29. Section 38-77-910 of the 1976 Code is amended to
read:
"Section 38-77-910. It is an act of unlawful discrimination for
an automobile insurer to make any distinction between automobile
insurance policyholders or applicants for automobile insurance with
respect to coverage, rates, claims, or other services except as the
distinctions are provided for in the rating plans for the classification of
risks and territories promulgated by the commissioner used
by the insurer."
SECTION 30. Section 38-77-920 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-920. Except as provided for in Section
38-77-110 and as is specifically provided for otherwise by law, no
automobile insurer may refuse acceptance of automobile insurance for
an insurable risk from any applicant nor require that certain classes or
types of risks be placed through some particular agent or employee.
This section is not intended to preclude any insurer from recognizing
and giving effect to the property rights of agents in expirations or
renewals.
No agent who represents more than one insurer of automobile
insurance may refuse to accept in behalf of an insurer represented by
him automobile insurance for an insurable risk where the applicant for
insurance designates by name or description the insurer of his choice.
If the applicant relies upon the skill and judgment of the agent to place
the risk in any insurer represented by the agent, the agent may place the
risk in the insurer which he considers appropriate. No insurer may
agree, collude, or conspire with an agent or give, offer, or promise an
agent anything of value to place any risk or any class or type of risk
under such circumstances in another insurer. Every such agreement is
utterly void and every act of collusion or conspiracy constitutes an act
of unfair competition by both the insurer and agent which, if proved,
must result in the suspension or revocation of the license of each for not
less than one year, in addition to any other penalties or liabilities
applicable.
No automobile insurer authorized to transact automobile insurance in
this State which offers automobile insurance through the mails or uses
the mails in transacting automobile insurance on insurable risks situate
in this State may restrict its mailings or offerings to certain counties,
areas, or zip-code territories of this State. The commissioner is directed
to examine an insurer's records at any time the commissioner considers
it necessary to determine that the insurer is not so restricting or limiting
its offerings."
SECTION 31. Section 38-77-950 of the 1976 Code, as last amended
by Act 113 of 1991, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the
facility must not be excessively nor unreasonably utilized by automobile
insurers for unfairly competitive purposes or for purposes of unfairly
discriminating against certain classes or types of automobile insurance
risks having the same or similar objective risk characteristics as
other risks in the same class under the insurer's rating plan for
the classification of risks promulgated by the department, nor for
the purpose of discriminating against the risks or risks in certain rating
territories. The commissioner shall prohibit unreasonable or excessive
utilization of the facility.
A prima facie case of excessive or unreasonable utilization is
established upon a showing that an automobile insurance insurer or a
group of insurers under the same management has ceded or is about to
cede more than thirty-five percent of total direct cedeable written
premiums on South Carolina automobile insurance as reported in the
most recently filed annual statement of the insurer or group.
Upon the written request of the policyholder, insurance companies
doing business in this State shall give written notice to the policyholder
informing him whether or not he and a driver under the policy is in the
facility. Insurers shall give written notice to the policyholder of a
risk ceded to the facility which does not qualify for the safe driver
discount in Section 38-73-760(e)."
SECTION 32. Section 38-77-960 of the 1976 Code is amended to
read:
"Section 38-77-960. When dealing with the agents of the
company, who are licensed to sell automobile insurance, the company
may not use any of the business placed in the facility in determining the
profitability of that agent's business. Further, the company shall not
ask any agent not to write any kind of automobile business or hold the
Facility business against any agent in any manner which could be
construed as being detrimental to the agent."
SECTION 33. The 1976 Code is amended by adding:
"Section 38-73-725. (a) The commissioner may, through
order, fix, establish, and promulgate a fair and reasonable Merit Rating
Plan for automobile insurance risks in accordance with the criteria and
standards mentioned in Section 38-73-730 and consistent with the
purposes of this chapter and Chapter 77 of this title.
(b) At least bi-annually, the commissioner shall review Regulation
69-13.1, the South Carolina Merit Rating Plan for automobile insurance,
and issue a report to the General Assembly stating the commissioner's
conclusion that the regulation complies with this article or stating any
recommended changes, so that the regulation does comply with this
article. The effective date of any change in Regulation 60-13 shall be
set to provide insurers with adequate time to implement the changes in
an orderly way.
The commissioner's review shall include, but not be limited to, the
following:
(1) All surcharges for traffic violations shall be listed in
Regulation 69-13.1 with the appropriate statutory citation and motor
vehicle record code.
(2) All surcharges for accidents shall be based upon the fault of
the operator. Payment of a claim exceeding seven hundred fifty dollars
under a liability coverage is evidence of fault.
(3) The merit plan shall be reasonably simple to administer to
avoid unnecessary expense to the insurers and to be easily understood
by the public.
(4) The surcharges and discounts for accidents and violations
shall reflect the expected cost of providing insurance to the risks that
receive the surcharges and discounts.
(5) All requests to the commissioner for interpretations of the
regulation shall be in written form. Any changes in interpretation of the
regulation shall be communicated to all automobile insurers."
SECTION 34. Item (12) of Section 38-77-30 and Sections 38-73-455,
38-73-465, 38-73-720, 38-73-735, 38-73-770, 38-73-910, 38-73-920,
38-73-960, 38-73-990, 38-73-1420, 38-73-1425, 38-77-111, 38-77-112,
and 38-77-940 of the 1976 Code are repealed.
SECTION 35. If any provision of this act or the application of any
provision of this act to any person or circumstance is held to be
unconstitutional or otherwise invalid, the remainder of this act and the
application of such provision to other persons or circumstances are not
affected thereby, and it is to be conclusively presumed that the
Legislature would have enacted the remainder of this act without such
invalid or unconstitutional provisions, except that if Section 38-73-1600
is found to be unconstitutional or otherwise invalid it is to be
conclusively presumed that the Legislature would not have enacted the
remainder of this act without such limitations and the entire act is
invalid.
SECTION 36. Except as otherwise specifically provided herein, this
act takes effect October 1, 1993.
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