H 4687 Session 109 (1991-1992)
H 4687 General Bill, By J.G. Felder
A Bill to amend Section 38-77-10, Code of Laws of South Carolina, 1976,
relating to the declaration of purpose under the State's Automobile Insurance
Law, so as to delete provisions, including reference to the South Carolina
Reinsurance Facility, provide reference to an underwriting association, and to
make changes to the declaration; to amend Section 38-77-30, as amended,
relating to definitions under the Automobile Insurance Law, so as to delete
the definition of "facility" and to define "underwriting association", delete
the definition of "quota share reinsurance" and to define "shared risk
pooling", provide a definition for "weighted bureau rate", change the
definition of "specialized insurer", and provide a definition for "allocation
fee" and "allocation credit"; to change the title of Article 3, Chapter 77,
Title 38 from "Mandate To Write and Insurance Coverage" to "Certain
Requirements To Insure and Insurance Coverage"; to change the title of Section
38-77-110 from "Insurers Required to Insure; Exceptions" to "Prohibition
Against Discriminatory Underwriting Practices", delete provisions of that Code
Section, as amended, and add new provisions, including the provision that a
refusal to write an automobile insurance policy must be in writing stating the
cause of the refusal if requested by the applicant; to amend Section
38-77-112, as amended, relating to the requirement that an applicant for
automobile insurance or a policyholder is required to have a driver's license
and exceptions, so as to delete the reference to Section 38-77-280; to amend
Section 38-77-115, relating to automobile insurance and the provision that
signs are required in an agent's place of business, so as to delete the
provisions of that Section, require that authorized agents for every insurer
covered by Section 38-77-110 shall post a sign which is to be titled
"Prohibition Against Discriminatory Underwriting Practices", and provide for
the contents of the sign; to amend Section 38-77-140, relating to the bodily
injury and property damage limits under the Automobile Insurance Law, so as to
change the amounts of certain of the limits; to amend Section 38-77-280, as
amended, relating to automobile collision coverage and comprehensive coverage,
so as to delete certain provisions and provide that no policy of insurance
which provides automobile physical damage coverage only may be transferred to
the underwriting association for shared risk pooling; to amend Section
38-77-285, as amended, relating to the requirement that all automobile
coverages be in one insurance policy, so as to delete certain language and
provide that this Code Section applies only to insurance policies covering
private passenger vehicles; to change the title of Article 5, Chapter 77,
Title 38 from "Reinsurance Facility and Designated Producers" to "Underwriting
Association; Servicing Carriers and Producers"; to amend the 1976 Code by
adding Section 38-77-511 so as to create the nonprofit, unincorporated legal
entity known as the South Carolina Automobile Underwriters Association and
provide for related matters; to amend Section 38-77-520, relating to the
requirement that automobile insurers must become members of the Reinsurance
Facility, so as to replace the references to the Facility with references to
the Underwriting Association; to amend Section 38-77-530, relating to the plan
of operation by the Reinsurance Facility and approval by the Chief Insurance
Commissioner, so as to delete the existing provisions of the Code Section and
provide instead for the plan of operation of the Underwriting Association; to
amend Section 38-77-540, relating to the duties of the ceding insurer under
the automobile insurance laws, so as to delete the existing provisions of the
Code Section, provide that the Underwriting Association shall accept the
transfer of risk on any policy of automobile insurance at the option of any
insurer but only at the rate or premium charge as determined under the rating
plans established by the governing board and approved by the Commissioner,
subject to certain provisions of law, and provide for related matters; to
amend Section 38-77-550, relating to automobile insurance and the provision
that legal rights of the insured and the insurer are not affected by
reinsurance, so as to delete the existing provisions of the Code Section and
provide for the effect of the transfer of risk under a policy of automobile
insurance to the Underwriting Association for shared risk pooling; to amend
Section 38-77-560, relating to deductions to a ceding insurer under the
automobile insurance laws, so as to delete the existing provisions of the Code
Section and provide that an insurer transferring risks on automobile insurance
policies to the Underwriting Association shall receive credit by way of
deduction from its unearned premium liability as calculated in accordance with
Section 38-9-170; to amend Section 38-77-570, relating to investment and
distribution of funds of the Reinsurance Facility, so as to delete the
existing provisions of the Code Section and provide for the investment and
distribution of the funds and reserves of the Underwriting Association; to
amend Section 38-77-580, as amended, relating to the governing board of the
Reinsurance Facility, so as to delete references to the Facility and replace
them with references to the Underwriting Association, and delete references to
"designated agents" and replace them with references to "servicing agents"; to
amend Section 38-77-585, as amended, relating to additional board members of
the Reinsurance Facility, so as to, among other things, delete references to
the Reinsurance Facility and designated insurers and provide references to
Underwriting Association contracted insurers; to amend Section 38-77-590, as
amended, relating to designated producers under the automobile insurance laws,
so as to delete certain provisions, add provisions, including the requirement
that the governing board of the Underwriting Association contract with
domestic insurers meeting eligibility requirements promulgated by the board to
act as servicing carriers for the writing of automobile insurance through
producers assigned to the servicing carrier by the board, change the
qualifications for an applicant for assignment to a servicing carrier and
provide for related matters; to amend Section 38-77-630, as amended, relating
to policies ceded to the Reinsurance Facility, so as to delete reference to
the Reinsurance Facility and replace it with reference to the Underwriting
Association, delete certain provisions, and provide that a risk, other than at
renewal, may be transferred to the Underwriting Association only when the
application is accompanied by either a renewal notice from another insurer or
a motor vehicle report (MVR) issued at the point of sale, together with the
full premium correctly reflecting the facts shown on the MVR or consistent
with the premium quoted in the renewal notice; to amend Section 38-77-910,
relating to the automobile insurance laws and unlawful distinctions between
policyholders or applicants, so as to provide that any violation of this Code
Section or the prohibition against discriminatory underwriting practices as
described under Section 38-77-110 may be cause for revocation or suspension of
the insurer's or agent's license by the Chief Insurance Commissioner; to amend
Section 38-77-920, as amended, relating to the provision that automobile
insurers and agents may not refuse acceptance of insurance, the property
rights of certain agents, and the restriction of mailings to certain areas, so
as to delete certain provisions and add provisions, including the provision
that 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 in another insurer; to amend Section 38-77-940, relating to the
automobile insurance laws, avoiding certain classes or types of risks,
exceptions, and canceling an agent's representation, so as to, among other
things, delete certain language and provisions and replace the references to
the Reinsurance Facility with references to the Underwriting Association; 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 delete certain provisions, replace
references to the Facility with references to the Underwriting Association
instead, and add provisions, including the provision for making a prima facie
case of excessive or unreasonable utilization; to amend Section 38-77-960,
relating to automobile insurance agent's business, so as to delete the
existing provisions of that Code Section and add provisions, including the
provision that when dealing with the agents of the company, who are licensed
to sell automobile insurance, the company may not use any business transferred
to the Underwriting Association in determining the profitability of that
agent's business; to amend Section 38-73-10, as amended, relating to the
declaration of purpose and construction of Chapter 73 of Title 38, dealing
with property, casualty, inland marine, and surety rates and ratemaking
organizations, so as to delete reference to the Reinsurance Facility and
replace it with reference to the South Carolina Automobile Underwriters
Association; to amend Section 38-73-455, as amended, relating to automobile
insurance rates, so as to delete the existing provisions of that Code Section,
and add provisions, including a provision that an automobile insurer shall
file and offer for automobile insurance a rate as defined in Section
38-73-457, which rate is subject to all surcharges or discounts, if any,
applicable under any approved merit rating plan, credit or discount plan
promulgated or approved by the Chief Insurance Commissioner and a provision
that no policy may be endorsed during a policy period to reflect factors or
conditions occurring during that policy period; to amend Section 38-73-457,
relating to insurance casualty and surety rates, filing information on base
rates, and the effective date of rates, so as to, among other things, delete
certain provisions and add provisions, including a provision that every
automobile insurer and rating organization shall file with the Chief Insurance
Commissioner a rate for automobile insurance by coverage calculated solely
upon the experience generated by the insurer in its book of business and which
must not include experience generated by risks transferred to the Underwriting
Association for shared risk pooling, and including a provision that effective
October 1, 1992, the Commissioner shall disallow the further use of the
objective standards rate previously filed in accordance with this Section; to
amend Section 38-73-460, relating to insurance casualty and surety rates and
the effect of gains and losses incurred by members on rates, so as to delete
the reference to the Reinsurance Facility and replace it with reference to the
Automobile Underwriters Association, and provide that it is the intent of the
plan of operation of the Underwriters Association pursuant to Section
38-77-530 that the allocation fee or credit be utilized to recover or disburse
the allocated net losses or gains of the Underwriters Association distinctly
and separately from the rate filings of individual insurers or rating
organizations; to amend Section 38-73-520, relating to insurance casualty and
surety rates and the requirement of rate filings, so as to provide for the
exception of an insurer's use of the rate plans of the Automobile Underwriters
Association pursuant to Section 38-77-455; to amend Section 38-73-735, as
amended, relating to the State Rating and Statistical Division and the plan
for credits and discounts, so as to delete the provision that if an insurance
credit or discount plan is given to an insured pursuant to this Section, the
policy may be ceded to the Reinsurance Facility in accordance with the
Facility's plan of operation; to amend Section 38-73-750, as amended, relating
to the State Rating and Statistical Division, the requirement that plans must
be filed by insurers, the provision that certain plans may not be filed or
approved, and the disapproval of plans by the Chief Insurance Commissioner, so
as to delete certain language, including the reference to the South Carolina
Reinsurance Facility; to amend Section 38-73-760, as amended, relating to the
State Rating and Statistical Division and Uniform Statistical Plans, so as to
delete certain language, including reference to the Reinsurance Facility; to
amend Section 38-73-920, relating to insurance rates, rate making, rate
filing, and the provision that no insurance may be issued except on rates
filed, so as to delete certain provisions and add certain language and
provisions, including the provision that this Section does not apply to
contracts or policies for inland marine risks and to the apportionment of
gains or losses of the Underwriting Association in the form of allocation fees
or credits as to which filings are not required; to amend Section 38-73-1420,
relating to insurance rating organizations, the requirement that the Board of
Governors of the Reinsurance Facility shall file the expense component, and
use of the component after approval, so as to delete the existing provisions
of that Code Section and add provisions, including a provision requiring the
Board of Governors of the South Carolina Automobile Underwriters Association
to file an expense component for rate or premium charges developed under rate
plans approved by the Chief Insurance Commissioner, and including a provision
that automobile insurers contracted to the South Carolina Automobile
Underwriters Association pursuant to Section 38-77-590(a) and all insurers on
policies of automobile insurance transferred to the Underwriting Association
for shared risk pooling shall utilize the final rate or premium charges under
the applicable rate plan approved by the Chief Insurance Commissioner for the
Underwriting Association comprising these filed rates; to require the Chief
Insurance Commissioner to conduct a study to determine whether there are more
equitable territories in this State, where private passenger automobile
insurers compete, than now exist which would allow a greater degree of
open-market competition; to provide that any person who shall operate or allow
an uninsured motor vehicle to be operated shall suffer the immediate
impoundment of such vehicle until such time as he posts liability insurance in
the amount required by Chapter 77, Title 38, and pays any storage and
impoundment fees, together with any other fines or fees imposed for the
operation of an uninsured motor vehicle; provide that no newly licensed driver
who has obtained his driver's license after successfully completing a duly
licensed course in driver training shall be deprived of the benefit of a safe
driver discount for automobile insurance purposes, and provide that no student
who successfully completes a recognized and approved course in driver
education in the school he attends and obtains his driver's license following
such completion of the course shall have his policy of automobile insurance
ceded to the Reinsurance Facility or be deprived of any discount he receives
or is entitled to receive as a result of the successful completion of such
course; and to repeal Sections 38-73-1410, relating to insurance rating
organizations and the provision that the refiling of final rates or premium
charges previously approved is not required, 38-73-1425, relating to insurance
rating organizations and the provisions regarding the final rate or premium
charge for 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, 38-77-510, relating to the
Reinsurance Facility, 38-77-595, relating to the Reinsurance Facility and
conditions for designation of otherwise ineligible applicants for designation,
38-77-600, relating to the Reinsurance Facility recoupment charge, 38-77-605,
relating to the requirement that the Facility recoupment charge be displayed,
38-77-610, relating to automobile insurance and the filing of recoupment
charges, 38-77-620, relating to the inclusion of recoupment charges in
automobile insurance rates, 38-77-625, relating to automobile insurance and
the provision that there shall be no increase in the recoupment charge under
certain conditions, and 38-77-930, relating to the provision that no
automobile insurer which is a member of a group of affiliated automobile
insurance insurers may make or adopt certain rules.
04/07/92 House Introduced and read first time HJ-17
04/07/92 House Referred to Committee on Labor, Commerce and
Industry HJ-25
05/12/92 House Recalled from Committee on Labor, Commerce and
Industry HJ-31
05/21/92 House Objection by Rep. Felder, McAbee, J. Bailey,
Cato, Marchbanks, HJ-81
05/21/92 House Objection by Rep. TC Alexander, Cobb-Hunter,
Fulmer, Hallman, HJ-81
05/21/92 House Objection by Rep. McGinnis & Rama HJ-81
Indicates Matter Stricken
Indicates New Matter
RECALLED
May 12, 1992
H. 4687
Introduced by REP. Felder
S. Printed 5/12/92--H.
Read the first time April 7, 1992.
A BILL
TO AMEND SECTION 38-77-10, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO THE DECLARATION OF
PURPOSE UNDER THE STATE'S AUTOMOBILE INSURANCE
LAW, SO AS TO DELETE PROVISIONS, INCLUDING REFERENCE
TO THE SOUTH CAROLINA REINSURANCE FACILITY,
PROVIDE REFERENCE TO AN UNDERWRITING ASSOCIATION,
AND TO MAKE CHANGES TO THE DECLARATION; TO AMEND
SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS
UNDER THE AUTOMOBILE INSURANCE LAW, SO AS TO
DELETE THE DEFINITION OF "FACILITY" AND TO
DEFINE "UNDERWRITING ASSOCIATION", DELETE
THE DEFINITION OF "QUOTA SHARE
REINSURANCE" AND TO DEFINE "SHARED RISK
POOLING", PROVIDE A DEFINITION FOR
"WEIGHTED BUREAU RATE", CHANGE THE
DEFINITION OF "SPECIALIZED INSURER", AND
PROVIDE A DEFINITION FOR "ALLOCATION FEE"
AND "ALLOCATION CREDIT"; TO CHANGE THE
TITLE OF ARTICLE 3, CHAPTER 77, TITLE 38 FROM
"MANDATE TO WRITE AND INSURANCE
COVERAGE" TO "CERTAIN REQUIREMENTS TO
INSURE AND INSURANCE COVERAGE"; TO CHANGE THE
TITLE OF SECTION 38-77-110 FROM "INSURERS
REQUIRED TO INSURE; EXCEPTIONS" TO
"PROHIBITION AGAINST DISCRIMINATORY
UNDERWRITING PRACTICES", DELETE PROVISIONS OF
THAT CODE SECTION, AS AMENDED, AND ADD NEW
PROVISIONS, INCLUDING THE PROVISION THAT A REFUSAL
TO WRITE AN AUTOMOBILE INSURANCE POLICY MUST BE IN
WRITING STATING THE CAUSE OF THE REFUSAL IF
REQUESTED BY THE APPLICANT; TO AMEND SECTION
38-77-112, AS AMENDED, RELATING TO THE REQUIREMENT
THAT AN APPLICANT FOR AUTOMOBILE INSURANCE OR A
POLICYHOLDER IS REQUIRED TO HAVE A DRIVER'S LICENSE
AND EXCEPTIONS, SO AS TO DELETE THE REFERENCE TO
SECTION 38-77-280; TO AMEND SECTION 38-77-115, RELATING
TO AUTOMOBILE INSURANCE AND THE PROVISION THAT
SIGNS ARE REQUIRED IN AN AGENT'S PLACE OF BUSINESS,
SO AS TO DELETE THE PROVISIONS OF THAT SECTION,
REQUIRE THAT AUTHORIZED AGENTS FOR EVERY INSURER
COVERED BY SECTION 38-77-110 SHALL POST A SIGN WHICH
IS TO BE TITLED "PROHIBITION AGAINST
DISCRIMINATORY UNDERWRITING PRACTICES", AND
PROVIDE FOR THE CONTENTS OF THE SIGN; TO AMEND
SECTION 38-77-140, RELATING TO THE BODILY INJURY AND
PROPERTY DAMAGE LIMITS UNDER THE AUTOMOBILE
INSURANCE LAW, SO AS TO CHANGE THE AMOUNTS OF
CERTAIN OF THE LIMITS; TO AMEND SECTION 38-77-280, AS
AMENDED, RELATING TO AUTOMOBILE COLLISION
COVERAGE AND COMPREHENSIVE COVERAGE, SO AS TO
DELETE CERTAIN PROVISIONS AND PROVIDE THAT NO
POLICY OF INSURANCE WHICH PROVIDES AUTOMOBILE
PHYSICAL DAMAGE COVERAGE ONLY MAY BE
TRANSFERRED TO THE UNDERWRITING ASSOCIATION FOR
SHARED RISK POOLING; TO AMEND SECTION 38-77-285, AS
AMENDED, RELATING TO THE REQUIREMENT THAT ALL
AUTOMOBILE COVERAGES BE IN ONE INSURANCE POLICY,
SO AS TO DELETE CERTAIN LANGUAGE AND PROVIDE THAT
THIS CODE SECTION APPLIES ONLY TO INSURANCE POLICIES
COVERING PRIVATE PASSENGER VEHICLES; TO CHANGE THE
TITLE OF ARTICLE 5, CHAPTER 77, TITLE 38 FROM
"REINSURANCE FACILITY AND DESIGNATED
PRODUCERS" TO "UNDERWRITING ASSOCIATION;
SERVICING CARRIERS AND PRODUCERS"; TO AMEND
THE 1976 CODE BY ADDING SECTION 38-77-511 SO AS TO
CREATE THE NONPROFIT, UNINCORPORATED LEGAL ENTITY
KNOWN AS THE SOUTH CAROLINA AUTOMOBILE
UNDERWRITERS ASSOCIATION AND PROVIDE FOR RELATED
MATTERS; TO AMEND SECTION 38-77-520, RELATING TO THE
REQUIREMENT THAT AUTOMOBILE INSURERS MUST
BECOME MEMBERS OF THE REINSURANCE FACILITY, SO AS
TO REPLACE THE REFERENCES TO THE FACILITY WITH
REFERENCES TO THE UNDERWRITING ASSOCIATION; TO
AMEND SECTION 38-77-530, RELATING TO THE PLAN OF
OPERATION BY THE REINSURANCE FACILITY AND
APPROVAL BY THE CHIEF INSURANCE COMMISSIONER, SO
AS TO DELETE THE EXISTING PROVISIONS OF THE CODE
SECTION AND PROVIDE INSTEAD FOR THE PLAN OF
OPERATION OF THE UNDERWRITING ASSOCIATION; TO
AMEND SECTION 38-77-540, RELATING TO THE DUTIES OF
THE CEDING INSURER UNDER THE AUTOMOBILE INSURANCE
LAWS, SO AS TO DELETE THE EXISTING PROVISIONS OF THE
CODE SECTION, PROVIDE THAT THE UNDERWRITING
ASSOCIATION SHALL ACCEPT THE TRANSFER OF RISK ON
ANY POLICY OF AUTOMOBILE INSURANCE AT THE OPTION
OF ANY INSURER BUT ONLY AT THE RATE OR PREMIUM
CHARGE AS DETERMINED UNDER THE RATING PLANS
ESTABLISHED BY THE GOVERNING BOARD AND APPROVED
BY THE COMMISSIONER, SUBJECT TO CERTAIN PROVISIONS
OF LAW, AND PROVIDE FOR RELATED MATTERS; TO AMEND
SECTION 38-77-550, RELATING TO AUTOMOBILE INSURANCE
AND THE PROVISION THAT LEGAL RIGHTS OF THE INSURED
AND THE INSURER ARE NOT AFFECTED BY REINSURANCE,
SO AS TO DELETE THE EXISTING PROVISIONS OF THE CODE
SECTION AND PROVIDE FOR THE EFFECT OF THE TRANSFER
OF RISK UNDER A POLICY OF AUTOMOBILE INSURANCE TO
THE UNDERWRITING ASSOCIATION FOR SHARED RISK
POOLING; TO AMEND SECTION 38-77-560, RELATING TO
DEDUCTIONS TO A CEDING INSURER UNDER THE
AUTOMOBILE INSURANCE LAWS, SO AS TO DELETE THE
EXISTING PROVISIONS OF THE CODE SECTION AND PROVIDE
THAT AN INSURER TRANSFERRING RISKS ON AUTOMOBILE
INSURANCE POLICIES TO THE UNDERWRITING ASSOCIATION
SHALL RECEIVE CREDIT BY WAY OF DEDUCTION FROM ITS
UNEARNED PREMIUM LIABILITY AS CALCULATED IN
ACCORDANCE WITH SECTION 38-9-170; TO AMEND SECTION
38-77-570, RELATING TO INVESTMENT AND DISTRIBUTION OF
FUNDS OF THE REINSURANCE FACILITY, SO AS TO DELETE
THE EXISTING PROVISIONS OF THE CODE SECTION AND
PROVIDE FOR THE INVESTMENT AND DISTRIBUTION OF THE
FUNDS AND RESERVES OF THE UNDERWRITING
ASSOCIATION; TO AMEND SECTION 38-77-580, AS AMENDED,
RELATING TO THE GOVERNING BOARD OF THE
REINSURANCE FACILITY, SO AS TO DELETE REFERENCES TO
THE FACILITY AND REPLACE THEM WITH REFERENCES TO
THE UNDERWRITING ASSOCIATION, AND DELETE
REFERENCES TO "DESIGNATED AGENTS" AND
REPLACE THEM WITH REFERENCES TO "SERVICING
AGENTS"; TO AMEND SECTION 38-77-585, AS AMENDED,
RELATING TO ADDITIONAL BOARD MEMBERS OF THE
REINSURANCE FACILITY, SO AS TO, AMONG OTHER THINGS,
DELETE REFERENCES TO THE REINSURANCE FACILITY AND
DESIGNATED INSURERS AND PROVIDE REFERENCES TO
UNDERWRITING ASSOCIATION CONTRACTED INSURERS; TO
AMEND SECTION 38-77-590, AS AMENDED, RELATING TO
DESIGNATED PRODUCERS UNDER THE AUTOMOBILE
INSURANCE LAWS, SO AS TO DELETE CERTAIN PROVISIONS,
ADD PROVISIONS, INCLUDING THE REQUIREMENT THAT THE
GOVERNING BOARD OF THE UNDERWRITING ASSOCIATION
CONTRACT WITH DOMESTIC INSURERS MEETING
ELIGIBILITY REQUIREMENTS PROMULGATED BY THE BOARD
TO ACT AS SERVICING CARRIERS FOR THE WRITING OF
AUTOMOBILE INSURANCE THROUGH PRODUCERS ASSIGNED
TO THE SERVICING CARRIER BY THE BOARD, CHANGE THE
QUALIFICATIONS FOR AN APPLICANT FOR ASSIGNMENT TO
A SERVICING CARRIER, AND PROVIDE FOR RELATED
MATTERS; TO AMEND SECTION 38-77-630, AS AMENDED,
RELATING TO POLICIES CEDED TO THE REINSURANCE
FACILITY, SO AS TO DELETE REFERENCE TO THE
REINSURANCE FACILITY AND REPLACE IT WITH REFERENCE
TO THE UNDERWRITING ASSOCIATION, DELETE CERTAIN
PROVISIONS, AND PROVIDE THAT A RISK, OTHER THAN AT
RENEWAL, MAY BE TRANSFERRED TO THE UNDERWRITING
ASSOCIATION ONLY WHEN THE APPLICATION IS
ACCOMPANIED BY EITHER A RENEWAL NOTICE FROM
ANOTHER INSURER OR A MOTOR VEHICLE REPORT (MVR)
ISSUED AT THE POINT OF SALE, TOGETHER WITH THE FULL
PREMIUM CORRECTLY REFLECTING THE FACTS SHOWN ON
THE MVR OR CONSISTENT WITH THE PREMIUM QUOTED IN
THE RENEWAL NOTICE; TO AMEND SECTION 38-77-910,
RELATING TO THE AUTOMOBILE INSURANCE LAWS AND
UNLAWFUL DISTINCTIONS BETWEEN POLICYHOLDERS OR
APPLICANTS, SO AS TO PROVIDE THAT ANY VIOLATION OF
THIS CODE SECTION OR THE PROHIBITION AGAINST
DISCRIMINATORY UNDERWRITING PRACTICES AS
DESCRIBED UNDER SECTION 38-77-110 MAY BE CAUSE FOR
REVOCATION OR SUSPENSION OF THE INSURER'S OR
AGENT'S LICENSE BY THE CHIEF INSURANCE
COMMISSIONER; TO AMEND SECTION 38-77-920, AS
AMENDED, RELATING TO THE PROVISION THAT
AUTOMOBILE INSURERS AND AGENTS MAY NOT REFUSE
ACCEPTANCE OF INSURANCE, THE PROPERTY RIGHTS OF
CERTAIN AGENTS, AND THE RESTRICTION OF MAILINGS TO
CERTAIN AREAS, SO AS TO DELETE CERTAIN PROVISIONS
AND ADD PROVISIONS, INCLUDING THE PROVISION THAT 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 IN ANOTHER INSURER; TO AMEND SECTION 38-77-940,
RELATING TO THE AUTOMOBILE INSURANCE LAWS,
AVOIDING CERTAIN CLASSES OR TYPES OF RISKS,
EXCEPTIONS, AND CANCELING AN AGENT'S
REPRESENTATION, SO AS TO, AMONG OTHER THINGS,
DELETE CERTAIN LANGUAGE AND PROVISIONS AND
REPLACE THE REFERENCES TO THE REINSURANCE FACILITY
WITH REFERENCES TO THE UNDERWRITING ASSOCIATION;
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 DELETE
CERTAIN PROVISIONS, REPLACE REFERENCES TO THE
FACILITY WITH REFERENCES TO THE UNDERWRITING
ASSOCIATION INSTEAD, AND ADD PROVISIONS, INCLUDING
THE PROVISION FOR MAKING A PRIMA FACIE CASE OF
EXCESSIVE OR UNREASONABLE UTILIZATION; TO AMEND
SECTION 38-77-960, RELATING TO AUTOMOBILE INSURANCE
AGENT'S BUSINESS, SO AS TO DELETE THE EXISTING
PROVISIONS OF THAT CODE SECTION AND ADD PROVISIONS,
INCLUDING THE PROVISION THAT WHEN DEALING WITH THE
AGENTS OF THE COMPANY, WHO ARE LICENSED TO SELL
AUTOMOBILE INSURANCE, THE COMPANY MAY NOT USE
ANY BUSINESS TRANSFERRED TO THE UNDERWRITING
ASSOCIATION IN DETERMINING THE PROFITABILITY OF
THAT AGENT'S BUSINESS; TO AMEND SECTION 38-73-10, AS
AMENDED, RELATING TO THE DECLARATION OF PURPOSE
AND CONSTRUCTION OF CHAPTER 73 OF TITLE 38, DEALING
WITH PROPERTY, CASUALTY, INLAND MARINE, AND SURETY
RATES AND RATEMAKING ORGANIZATIONS, SO AS TO
DELETE REFERENCE TO THE REINSURANCE FACILITY AND
REPLACE IT WITH REFERENCE TO THE SOUTH CAROLINA
AUTOMOBILE UNDERWRITERS ASSOCIATION; TO AMEND
SECTION 38-73-455, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE RATES, SO AS TO DELETE THE
EXISTING PROVISIONS OF THAT CODE SECTION, AND ADD
PROVISIONS, INCLUDING A PROVISION THAT AN
AUTOMOBILE INSURER SHALL FILE AND OFFER FOR
AUTOMOBILE INSURANCE A RATE AS DEFINED IN SECTION
38-73-457, WHICH RATE IS SUBJECT TO ALL SURCHARGES OR
DISCOUNTS, IF ANY, APPLICABLE UNDER ANY APPROVED
MERIT RATING PLAN, CREDIT OR DISCOUNT PLAN
PROMULGATED OR APPROVED BY THE CHIEF INSURANCE
COMMISSIONER AND A PROVISION THAT NO POLICY MAY BE
ENDORSED DURING A POLICY PERIOD TO REFLECT FACTORS
OR CONDITIONS OCCURRING DURING THAT POLICY PERIOD;
TO AMEND SECTION 38-73-457, RELATING TO INSURANCE
CASUALTY AND SURETY RATES, FILING INFORMATION ON
BASE RATES, AND THE EFFECTIVE DATE OF RATES, SO AS TO,
AMONG OTHER THINGS, DELETE CERTAIN PROVISIONS AND
ADD PROVISIONS, INCLUDING A PROVISION THAT EVERY
AUTOMOBILE INSURER AND RATING ORGANIZATION SHALL
FILE WITH THE CHIEF INSURANCE COMMISSIONER A RATE
FOR AUTOMOBILE INSURANCE BY COVERAGE CALCULATED
SOLELY UPON THE EXPERIENCE GENERATED BY THE
INSURER IN ITS BOOK OF BUSINESS AND WHICH MUST NOT
INCLUDE EXPERIENCE GENERATED BY RISKS TRANSFERRED
TO THE UNDERWRITING ASSOCIATION FOR SHARED RISK
POOLING, AND INCLUDING A PROVISION THAT EFFECTIVE
OCTOBER 1, 1992, THE COMMISSIONER SHALL DISALLOW
THE FURTHER USE OF THE OBJECTIVE STANDARDS RATE
PREVIOUSLY FILED IN ACCORDANCE WITH THIS SECTION;
TO AMEND SECTION 38-73-460, RELATING TO INSURANCE
CASUALTY AND SURETY RATES AND THE EFFECT OF GAINS
AND LOSSES INCURRED BY MEMBERS ON RATES, SO AS TO
DELETE THE REFERENCE TO THE REINSURANCE FACILITY
AND REPLACE IT WITH REFERENCE TO THE AUTOMOBILE
UNDERWRITERS ASSOCIATION, AND PROVIDE THAT IT IS
THE INTENT OF THE PLAN OF OPERATION OF THE
UNDERWRITERS ASSOCIATION PURSUANT TO SECTION
38-77-530 THAT THE ALLOCATION FEE OR CREDIT BE
UTILIZED TO RECOVER OR DISBURSE THE ALLOCATED NET
LOSSES OR GAINS OF THE UNDERWRITERS ASSOCIATION
DISTINCTLY AND SEPARATELY FROM THE RATE FILINGS OF
INDIVIDUAL INSURERS OR RATING ORGANIZATIONS; TO
AMEND SECTION 38-73-520, RELATING TO INSURANCE
CASUALTY AND SURETY RATES AND THE REQUIREMENT OF
RATE FILINGS, SO AS TO PROVIDE FOR THE EXCEPTION OF
AN INSURER'S USE OF THE RATE PLANS OF THE
AUTOMOBILE UNDERWRITERS ASSOCIATION PURSUANT TO
SECTION 38-73-455; TO AMEND SECTION 38-73-735, AS
AMENDED, RELATING TO THE STATE RATING AND
STATISTICAL DIVISION AND THE PLAN FOR CREDITS AND
DISCOUNTS, SO AS TO DELETE THE PROVISION THAT IF AN
INSURANCE CREDIT OR DISCOUNT PLAN IS GIVEN TO AN
INSURED PURSUANT TO THIS SECTION, THE POLICY MAY BE
CEDED TO THE REINSURANCE FACILITY IN ACCORDANCE
WITH THE FACILITY'S PLAN OF OPERATION; TO AMEND
SECTION 38-73-750, AS AMENDED, RELATING TO THE STATE
RATING AND STATISTICAL DIVISION, THE REQUIREMENT
THAT PLANS MUST BE FILED BY INSURERS, THE PROVISION
THAT CERTAIN PLANS MAY NOT BE FILED OR APPROVED,
AND THE DISAPPROVAL OF PLANS BY THE CHIEF INSURANCE
COMMISSIONER, SO AS TO DELETE CERTAIN LANGUAGE,
INCLUDING THE REFERENCE TO THE SOUTH CAROLINA
REINSURANCE FACILITY; TO AMEND SECTION 38-73-760, AS
AMENDED, RELATING TO THE STATE RATING AND
STATISTICAL DIVISION AND UNIFORM STATISTICAL PLANS,
SO AS TO DELETE CERTAIN LANGUAGE, INCLUDING
REFERENCE TO THE REINSURANCE FACILITY; TO AMEND
SECTION 38-73-920, RELATING TO INSURANCE RATES, RATE
MAKING, RATE FILING, AND THE PROVISION THAT NO
INSURANCE MAY BE ISSUED EXCEPT ON RATES FILED, SO AS
TO DELETE CERTAIN PROVISIONS AND ADD CERTAIN
LANGUAGE AND PROVISIONS, INCLUDING THE PROVISION
THAT THIS SECTION DOES NOT APPLY TO CONTRACTS OR
POLICIES FOR INLAND MARINE RISKS AND TO THE
APPORTIONMENT OF GAINS OR LOSSES OF THE
UNDERWRITING ASSOCIATION IN THE FORM OF
ALLOCATION FEES OR CREDITS AS TO WHICH FILINGS ARE
NOT REQUIRED; TO AMEND SECTION 38-73-1420, RELATING
TO INSURANCE RATING ORGANIZATIONS, THE
REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE
REINSURANCE FACILITY SHALL FILE THE EXPENSE
COMPONENT, AND USE OF THE COMPONENT AFTER
APPROVAL, SO AS TO DELETE THE EXISTING PROVISIONS OF
THAT CODE SECTION AND ADD PROVISIONS, INCLUDING A
PROVISION REQUIRING THE BOARD OF GOVERNORS OF THE
SOUTH CAROLINA AUTOMOBILE UNDERWRITERS
ASSOCIATION TO FILE AN EXPENSE COMPONENT FOR RATE
OR PREMIUM CHARGES DEVELOPED UNDER RATE PLANS
APPROVED BY THE CHIEF INSURANCE COMMISSIONER, AND
INCLUDING A PROVISION THAT AUTOMOBILE INSURERS
CONTRACTED TO THE SOUTH CAROLINA AUTOMOBILE
UNDERWRITERS ASSOCIATION PURSUANT TO SECTION
38-77-590(a) AND ALL INSURERS ON POLICIES OF
AUTOMOBILE INSURANCE TRANSFERRED TO THE
UNDERWRITING ASSOCIATION FOR SHARED RISK POOLING
SHALL UTILIZE THE FINAL RATE OR PREMIUM CHARGES
UNDER THE APPLICABLE RATE PLAN APPROVED BY THE
CHIEF INSURANCE COMMISSIONER FOR THE UNDERWRITING
ASSOCIATION COMPRISING THESE FILED RATES; TO
REQUIRE THE CHIEF INSURANCE COMMISSIONER TO
CONDUCT A STUDY TO DETERMINE WHETHER THERE ARE
MORE EQUITABLE TERRITORIES IN THIS STATE, WHERE
PRIVATE PASSENGER AUTOMOBILE INSURERS COMPETE,
THAN NOW EXIST WHICH WOULD ALLOW A GREATER
DEGREE OF OPEN-MARKET COMPETITION; TO PROVIDE THAT
ANY PERSON WHO SHALL OPERATE OR ALLOW AN
UNINSURED MOTOR VEHICLE TO BE OPERATED SHALL
SUFFER THE IMMEDIATE IMPOUNDMENT OF SUCH VEHICLE
UNTIL SUCH TIME AS HE POSTS LIABILITY INSURANCE IN
THE AMOUNT REQUIRED BY CHAPTER 77, TITLE 38, AND
PAYS ANY STORAGE AND IMPOUNDMENT FEES, TOGETHER
WITH ANY OTHER FINES OR FEES IMPOSED FOR THE
OPERATION OF AN UNINSURED MOTOR VEHICLE; PROVIDE
THAT NO NEWLY LICENSED DRIVER WHO HAS OBTAINED HIS
DRIVER'S LICENSE AFTER SUCCESSFULLY COMPLETING A
DULY LICENSED COURSE IN DRIVER TRAINING SHALL BE
DEPRIVED OF THE BENEFIT OF A SAFE DRIVER DISCOUNT
FOR AUTOMOBILE INSURANCE PURPOSES, AND PROVIDE
THAT NO STUDENT WHO SUCCESSFULLY COMPLETES A
RECOGNIZED AND APPROVED COURSE IN DRIVER
EDUCATION IN THE SCHOOL HE ATTENDS AND OBTAINS HIS
DRIVER'S LICENSE FOLLOWING SUCH COMPLETION OF THE
COURSE SHALL HAVE HIS POLICY OF AUTOMOBILE
INSURANCE CEDED TO THE REINSURANCE FACILITY OR BE
DEPRIVED OF ANY DISCOUNT HE RECEIVES OR IS ENTITLED
TO RECEIVE AS A RESULT OF THE SUCCESSFUL COMPLETION
OF SUCH COURSE; AND TO REPEAL SECTIONS 38-73-1410,
RELATING TO INSURANCE RATING ORGANIZATIONS AND
THE PROVISION THAT THE REFILING OF FINAL RATES OR
PREMIUM CHARGES PREVIOUSLY APPROVED IS NOT
REQUIRED, 38-73-1425, RELATING TO INSURANCE RATING
ORGANIZATIONS AND THE PROVISIONS REGARDING THE
FINAL RATE OR PREMIUM CHARGE FOR 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, 38-77-510, RELATING TO
THE REINSURANCE FACILITY, 38-77-595, RELATING TO THE
REINSURANCE FACILITY AND CONDITIONS FOR
DESIGNATION OF OTHERWISE INELIGIBLE APPLICANTS FOR
DESIGNATION, 38-77-600, RELATING TO THE REINSURANCE
FACILITY RECOUPMENT CHARGE, 38-77-605, RELATING TO
THE REQUIREMENT THAT THE FACILITY RECOUPMENT
CHARGE BE DISPLAYED, 38-77-610, RELATING TO
AUTOMOBILE INSURANCE AND THE FILING OF RECOUPMENT
CHARGES, 38-77-620, RELATING TO THE INCLUSION OF
RECOUPMENT CHARGES IN AUTOMOBILE INSURANCE
RATES, 38-77-625, RELATING TO AUTOMOBILE INSURANCE
AND THE PROVISION THAT THERE SHALL BE NO INCREASE
IN THE RECOUPMENT CHARGE UNDER CERTAIN
CONDITIONS, AND 38-77-930, RELATING TO THE PROVISION
THAT NO AUTOMOBILE INSURER WHICH IS A MEMBER OF A
GROUP OF AFFILIATED AUTOMOBILE INSURANCE INSURERS
MAY MAKE OR ADOPT CERTAIN RULES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. 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; 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 an
insurer on the basis of the same rates, policy forms, claims service, and
other services provided by the insurer to all other applicants or insureds
following within the classification of risk and territory under the
applicable risk and territory classification plan promulgated by the Chief
Insurance Commissioner without rejection, cancellation, or nonrenewal
based on anything other than objective criteria.
(2) To provide a Reinsurance Facility an
Underwriting Association 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
Association 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
Association by the several insurers of automobile insurance and
to provide prohibitions or penalties in respect to excessive utilization of
the Facility Association.
(3) 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 To provide
prohibitions and penalties in respect to unfairly discriminatory or
unfairly competitive practices.
(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 2. Section 38-77-30(5) of the 1976 Code is amended to
read:
"(5) "Facility" means the unincorporated,
nonprofit, legal entity created by this chapter to reinsure policies of
automobile insurance known as the South Carolina Reinsurance
Facility. `Underwriting Association' means the unincorporated,
nonprofit, legal entity created by this chapter for shared risk pooling of
policies of automobile insurance known as the South Carolina
Automobile Underwriters Association."
SECTION 3. Section 38-77-30(9) of the 1976 Code is amended to
read:
"(9) "Quota share reinsurance" means that
form of reinsurance in which the reinsurer assumes a fixed percentage
of the insured risk. `Shared risk pooling' means that method
used by member insurers of the Underwriting Association to transfer
risks to a common pool of shared market consumers with the experience
of the pool allocated among the members."
SECTION 4. Section 38-77-30 of the 1976 Code is amended by
adding:
"(9.5) `Weighted bureau rate' means the final rate or premium
charge, including applicable safe driver discount, determined for drivers
with no merit rating plan points by calculating the mean average of the
loss components filed for private passenger automobile insurance by the
seven largest writers of that type of insurance and averaging that
resulting loss component with the pure loss component filed by the
rating organization in South Carolina with the largest number of
members or subscribers and adding to that final pure loss component the
expense component filed by the board of governors of the Underwriting
Association."
SECTION 5. Section 38-77-30(12) of the 1976 Code is amended to
read:
"(12) `Specialized insurer' means an insurer which
specializes in certain types of business such as, but without limitation on
the generality, commercial automobile business, and which may be
relieved, with the approval of the commissioner, of the obligation to
write types of business inconsistent with this specialty, such as private
passenger automobile business. However, no insurer may be approved
as a specialized insurer or continue to be so approved unless it accepts
all insurable risks falling within the types of business to which it
confines its writings without distinctions among applicants or
policyholders as to policy forms, terms, rates, or services other
than as the distinctions are reflected in the approved rating plan for the
classification of risks. No insurer may be approved as a specialized
insurer because it specializes in or purports to specialize in select or
preferred risks. A specialized insurer may not cede risks to the
Reinsurance Facility and thus does not recoup losses of the Facility
A specialized insurer may not transfer risks to the Underwriting
Association and is exempt from participating as a member
company. Specialized insurers may be excused from using the
merit rating plan and the uniform classification and territorial plans upon
approval by the commissioner."
SECTION 6. Section 38-77-30 of the 1976 Code is amended by
adding:
"(15) `Allocation fee' or `allocation credit' means the net loss
(or gain) of the Underwriting Association apportioned to member
companies on a unit basis."
SECTION 7. The title of Article 3, Chapter 77, Title 38 of the 1976
Code is amended to read:
"MANDATE TO WRITE AND INSURANCE
COVERAGE CERTAIN REQUIREMENTS TO INSURE AND
INSURANCE COVERAGE".
SECTION 8. The title of Section 38-77-110 of the 1976 Code is
amended to read:
"Insurers required to insure; exceptions Prohibition
against discriminatory underwriting practices.".
SECTION 9. 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 canceled 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. With the exception of insurers designated and
approved as specialized insurers by the commissioner, no automobile
insurer or agent may refuse to write, cancel, or nonrenew any policy,
coverage, or endorsement of automobile insurance for individual private
passenger automobile risks and small commercial risks as defined in
Section 38-77-30 because of the age, sex, marital status, race, religion,
national origin, employment, or place of residence of any applicant for
insurance or any existing insured. A refusal to write an automobile
insurance policy must be in writing stating the cause of the refusal if
requested by the applicant. 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."
SECTION 10. Section 38-77-112 of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"Section 38-77-112. Notwithstanding Sections
38-77-110, and 38-77-920, and 38-77-280, no
automobile insurer is required to write coverage for automobile
insurance as defined in Section 38-77-30 for any applicant or existing
policyholder who does not at the time of application or renewal possess
a valid South Carolina motor vehicle or special restricted driver's
license. This section does not apply to an individual who is handicapped
and who owns a vehicle in this State but who does not have a valid
driver's license. If an automobile is principally garaged and operated in
this State, the owner of the vehicle must be offered coverage thereon
regardless of whether or not he possesses a valid South Carolina driver's
license if he designates to the insurer who the principal operator of the
vehicle will be and this person has a valid South Carolina driver's license
or otherwise meets the requirements of this section. This requirement
does not apply to personnel of the Armed Forces of the United States on
active duty and officially stationed in this State who possess a valid
motor vehicle driver's license issued by another state or territory of the
United States or the District of Columbia. This requirement is waived
ninety days for individuals who move into South Carolina with the intent
of making South Carolina their place of residence if they possess a valid
driver's license issued by another state or territory of the United States
or the District of Columbia."
SECTION 11. 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 commission for appropriate
action. 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 which is to be titled `Prohibition
Against Discriminatory Underwriting Practices' and to read as follows:
`NO INSURER OR AGENT MAY REFUSE TO WRITE, CANCEL,
OR NONRENEW ANY POLICY, COVERAGE, OR ENDORSEMENT
OF AUTOMOBILE INSURANCE FOR INDIVIDUAL PRIVATE
PASSENGER AUTOMOBILE RISKS BECAUSE OF THE AGE, SEX,
MARITAL STATUS, RACE, RELIGION, NATIONAL ORIGIN,
EMPLOYMENT, OR PLACE OF RESIDENCE OF ANY APPLICANT
FOR INSURANCE OR ANY EXISTING POLICYHOLDER. A
REFUSAL TO WRITE AN AUTOMOBILE INSURANCE POLICY
MUST BE IN WRITING STATING THE CAUSE OF THE REFUSAL
IF REQUESTED BY THE APPLICANT.'"
SECTION 12. Section 38-77-140 of the 1976 Code is amended to
read:
"Section 38-77-140. No automobile insurance policy may be
issued or delivered in this State to the owner of a motor vehicle or may
be issued or delivered by an insurer licensed in this State upon any
motor vehicle then principally garaged or principally used in this State,
unless it contains a provision insuring the persons defined as insured
against loss from the liability imposed by law for damages arising out of
the ownership, maintenance, or use of these motor vehicles within the
United States or Canada, subject to limits exclusive of interest and costs,
with respect to each motor vehicle, as follows: fifteen
ten thousand dollars because of bodily injury to one person in
any one accident, and, subject to the limit for one person, thirty
twenty thousand dollars because of bodily injury to two or more
persons in any one accident, and five thousand dollars because of injury
to or destruction of property of others in any one accident. Nothing in
this article prevents an insurer from issuing, selling, or delivering a
policy providing liability coverage in excess of these
requirements."
SECTION 13. 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 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, 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 any applicant or existing
policyholder, on renewal, who has collected benefits provided under any
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. (C) Notwithstanding Section 38-77-110, automobile physical damage
coverage in an automobile insurance policy may be canceled 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.
(B) No policy of insurance which provides automobile
physical damage coverage only may be transferred to the Underwriting
Association for shared risk pooling.
(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."
SECTION 14. Section 38-77-285 of the 1976 Code, as last
amended by Act 146 of 1991, is further amended to read:
"Section 38-77-285. All automobile insurance coverages
written by an insurer for an insured's automobile must be written in the
same policy except that all automobile insurance policies in effect on the
effective date of this section may continue in force until the expiration
date of the policy. This section applies only to insurance policies
covering vehicles eligible to be ceded to the Reinsurance Facility.
This section applies only to insurance policies covering private
passenger vehicles."
SECTION 15. The title of Article 5, Chapter 77, Title 38 of the
1976 Code is amended to read:
"REINSURANCE FACILITY AND DESIGNATED
PRODUCERS UNDERWRITING ASSOCIATION;
SERVICING CARRIERS AND PRODUCERS".
SECTION 16. The 1976 Code is amended by adding:
"Section 38-77-511. There is created a nonprofit,
unincorporated legal entity known as the South Carolina Automobile
Underwriters Association which is subject to regulations and orders
promulgated by the commissioner which are not inconsistent with the
purposes of this chapter. The Underwriting Association shall accept at
the option of the automobile insurer, and subject to the provisions of this
chapter, the risk covered under any policy of automobile insurance. An
insurer transferring a risk to the Underwriting Association shall transfer
the risk as a unit and may not transfer certain coverages while retaining
others.
At the effective date of this section, the Underwriting Association
shall assume all assets, liabilities, accounts, and contracts of the former
South Carolina Reinsurance Facility, and its prior rules and regulations
are adopted and effective until any relevant changes are approved by the
governing board of the Underwriting Association. Additionally, the
governing board members of the former Reinsurance Facility at the
effective date of this section immediately become the members of the
governing board of the Underwriting Association to serve until the
expiration of their prior appointment. Insurers who were members of the
former Reinsurance Facility at the effective date of this section
immediately become participating members of the Underwriting
Association as required under Section 38-77-520 with any and all
obligations to the former Reinsurance Facility to continue with the
Underwriting Association.
Any assumed, outstanding operating deficit of the former South
Carolina Reinsurance Facility at the effective date of this section must
be recouped as provided by law and regulation prior to the effective date
of this section, with the exception that the governing board of the
Underwriting Association shall develop and implement a plan to level
remaining recoupment charges and extend the recoupment period. Any
assumed operating surplus will be retained by the Underwriting
Association."
SECTION 17. Section 38-77-520 of the 1976 Code is amended to
read:
"Section 38-77-520. No automobile insurer may be licensed
to transact automobile insurance in this State unless it becomes a
participating member of the Facility Underwriting
Association with respect to automobile insurance and thereafter
continues participation so long as it transacts automobile insurance in
this State. Every member is bound by the plan of operation of the
Facility Underwriting Association as approved or
promulgated by the commissioner and by any rules the governing board
of the Facility Underwriting Association lawfully
prescribes.
If the authority of an insurer to transact automobile insurance in this
State terminates for any reason its obligations as a member of the
Facility Underwriting Association nevertheless continue
until all obligations have been fulfilled and the commissioner has so
found and certified to the governing board of the Facility
Underwriting Association.
If an insurer merges into or consolidates with another insurer
authorized to transact automobile insurance in this State, or another
insurer authorized to transact automobile insurance in this State has
reinsured the insurer's entire automobile insurance business in this State,
both the insurer and its successor or the assuming reinsurer, as the case
may be, are liable for the insurer's obligations in respect to the
Facility Underwriting Association.
Any unsatisfied net liability to the Facility Underwriting
Association of an insolvent insurer which is a member of the
Facility Underwriting Association must be assumed by
and apportioned among the remaining members in the same manner in
which assessments or gain and loss are apportioned. The
Facility Underwriting Association thereupon acquires
and has all rights and remedies allowed by law in behalf of the
remaining members against the estate or funds of the insolvent insurer
for sums due the Facility Underwriting
Association."
SECTION 13. Section 38-77-530 of the 1976 Code is amended to
read:
"Section 38-77-530. The plan of operation of the Facility
is subject to the Commissioner's approval which may be granted only if
the plan provides for equitable apportionment of the operating expenses
and profits or losses among the members. The plan may, if the
Commissioner considers it feasible and equitable, make provision for
separate apportionments between private passenger automobile
insurance business and commercial automobile insurance business, or,
alternatively or in addition to that division, the plan may make provision
for separate apportionments between automobile liability insurance
business, including medical payments and uninsured motorist insurance,
and automobile physical damage insurance business. Any such
apportionments shall give consideration to a comparison between the
writings or car-year exposures of each insurer of automobile insurance
and the total writings or car-year exposures of all automobile insurers or,
in the case of any separate apportionments approved by the
Commissioner, a comparison between the writings or car-year exposures
of each insurer within the applicable division of automobile insurance
and the writings or car-year exposures of all insurers within that
division.
In connection with his approval of the plan, the Commissioner may
require that the plan make provision for such comparisons for a one-year
period or for a longer period not to exceed five years and may provide
for weighting the experience so as to attach a greater weight to the more
recent experience.
In connection with the approval of the plan's provisions respecting
equitable apportionment of the operating expenses or gains or losses of
the Facility, the Commissioner may require that the plan make provision
for a comparison between each insurer's percentage of the aggregate
written premiums or car-year exposures respecting automobile insurance
or any such division thereof and the insurer's percentage of total cessions
to the Facility of such insurance or division thereof so as to provide that
the insurer's portion of the operating expenses or gains or losses must be
the average of the two percentages; or the Commissioner may approve
or require any other similar or comparable provision for the
apportionment of the expenses or gains or losses of the Facility which
relates insurers' shares to their respective utilization of the Facility.
The plan of operation of the Underwriting Association is subject
to the commissioner's approval which may be granted only if the plan
provides for equitable apportionment of the operating expenses and
profits or losses among the members. The plan may, if the
commissioner considers it feasible and equitable, make provision for
separate apportionments between private passenger automobile
insurance business and commercial automobile insurance business. Any
such plan of apportionment of operating expenses, gains, or losses shall
give consideration between the writings and car-year exposures of each
insurer of automobile insurance in South Carolina and the total writings
and car-year exposures of all automobile insurance in South Carolina
such that the net losses or gains can be charged or credited to each
member insurer in the form of a level allocation fee or credit per insured
vehicle which is to be included in the total premium charge developed
per vehicle for all individual private passenger automobile risks and
small commercial risks underwritten by the insurer in South Carolina.
The calculation of the final, level allocation fee will be made by an
upward adjustment to reflect the charges for premium taxes, agent's
commissions paid by the insurer, and the time value of money. Any
outstanding, unreimbursed losses on policies transferred to the
Underwriting Association may be applied as a deduction to the
allocation fees collected by each insurer with the remaining net amount
to be paid to the Underwriting Association for distribution to other
member companies with unreimbursed balances due.
In connection with his approval of the plan, the commissioner may
require that the plan make provision for such comparisons for a one-year
period or for a longer period not to exceed five years and may provide
for weighting the experience so as to attach a greater weight to the more
recent experience. The commissioner may approve or require a
provision for the apportionment of the expenses or gains or losses of the
Underwriting Association which relates to insurers respective utilization
of the Underwriting Association so as to increase the apportionment to
insurers who over utilize the Underwriting Association."
SECTION 19. Section 38-77-540 of the 1976 Code is amended to
read:
"Section 38-77-540. The ceding insurer shall transfer or
credit to the Facility on any policy of automobile insurance reinsured by
the Facility the pure loss component of its rate or premium charge
together with the profit and contingency component of the rate or
premium charge as determined under its rating plan or system as filed
with the Department. The ceding insurer shall retain as and for its
ceding commission the allocated loss adjustment expense component as
well as the underwriting and administrative expense components of the
rate or premium charge under ceding insurer's rating plan or system as
filed with the Department. However, no ceding insurer may include in
the agents' commissions component of its underwriting expenses any
amount greater than it has actually paid its agent as commission on the
reinsured risk.
The Underwriting Association shall accept the transfer of risk on
any policy of automobile insurance at the option of an insurer but only
at the rate or premium charge as determined under the rating plans
established by the governing board and approved by the commissioner,
subject, however, to Section 38-77-950 regarding reasonable utilization
of the Underwriting Association by member companies. The rate plans
for the Underwriting Association are subject to the commissioner's
approval which may be granted only if the plan is consistent with and
provides for the following:
(a) The rate or premium charge for drivers of private passenger
automobiles subject to the merit rating plan who have no merit rating
plan points shall be the weighted bureau rate as defined in this chapter,
with the exception that the safe driver discount must be removed from
the rate or premium calculation for any driver who has held a valid
driver's license less than three years or for any applicant for automobile
insurance who cannot show valid proof of twelve months prior,
continuous automobile liability insurance coverage on vehicles owned
by the applicant at the date of application.
(b) The rate or premium charge for drivers of private passenger
automobiles subject to the merit rating plan who have one merit rating
plan point shall be the weighted bureau rate prior to the application of
the safe driver discount.
(c) The rate or premium charge for drivers of private passenger
automobiles subject to the merit rating plan who have two or more merit
rating plan points shall be determined by the actual experience of the
Underwriting Association with such drivers. The underwriting results
of this group must be accounted separate and distinct from other groups
within the pool of shared market risks managed by the Underwriting
Association and must be utilized to formulate and maintain the
self-sustaining rate plan for this group.
(d) The rate or premium charge for commercial risks shall be the
applicable Insurance Service Office (ISO) rates approved by the
department. Where ISO has filed only the pure loss costs component,
the governing board shall file an expense component for use in
developing a final rate.
The Underwriting Association shall make applicable rate filings
annually with the exception of the self-sustaining rate plan for multiple
point drivers which rate revisions may be filed every six months at the
option of the governing board. An insurer may elect to utilize the rate
plans of the Underwriting Association for an applicant or for an existing
policyholder, on renewal, in lieu of the insurer's own individually filed
and approved rates and not transfer the risk under that policy of
automobile insurance to the Underwriting Association.
An insurer shall transfer or credit to the Underwriting Association on
any policy of automobile insurance transferred to the Underwriting
Association for shared risk pooling the pure loss component of the rate
or premium charge as determined under the Underwriting Association's
rating plan as filed with the department. The insurer, unless contracted
pursuant to Section 38-77-590, shall retain as and for its commission the
lesser of either the allocated loss adjustment expense and expense
component of the rate or premium charge under the Underwriting
Association's rating plan as filed with the department or an amount equal
to the insurer's own filed allocated loss adjustment expense component
and expense component with any remainder transferred or credited to the
Underwriting Association. Insurers contracted pursuant to Section
38-77-590 shall retain as and for its commission the allocated loss
adjustment expense component and expense component of the rate or
premium charge under the Underwriting Association's rating plan as
filed with the department."
SECTION 20. Section 38-77-550 of the 1976 Code is amended to
read:
"Section 38-77-550. Reinsurance of a policy of automobile
insurance with the Facility does not create a privity of contract or any
other direct relationship between the policyholder of the reinsured policy
and the Facility. The contractual or other legal rights of the insured and
insurer are not affected by the reinsurance. The transfer of risk
under a policy of automobile insurance to the Underwriting Association
for shared risk pooling does not create a privity of contract or any other
direct relationship between the policyholder and the Underwriting
Association. The contractual or other legal rights of the insured and
insurer are not affected by the transfer."
SECTION 21. Section 38-77-560 of the 1976 Code is amended to
read:
"Section 38-77-560. An insurer ceding reinsurance to the
Facility on automobile insurance policies shall receive credit by way of
deduction from its unearned premium liability as calculated in
accordance with Section 38-9-170. However, reinsurance with the
Facility may not be deducted for purposes of the limitations-of-risk
provisions of Section 38-55-30. An insurer transferring risks on
automobile insurance policies to the Underwriting Association shall
receive credit by way of deduction from its unearned premium liability
as calculated in accordance with Section 38-9-170."
SECTION 22. Section 38-77-570 of the 1976 Code is amended to
read:
"Section 38-77-570. The funds and reserves of the Facility
must be invested in lawful investments permitted to property and
casualty insurers under the laws and regulations governing investments
of property and casualty insurers. In determining the net profit or loss
resulting from the operations of the Facility, all investment income and
profits must be taken into consideration. No distribution of the funds,
assets, property, or profits of the Facility may be made except pursuant
to the Commissioner's written order. The funds and reserves of
the Underwriting Association must be invested in lawful investments
permitted to property and casualty insurers under the laws and
regulations governing investments of property and casualty insurers. In
determining the net profit or loss resulting from the operations of the
Underwriting Association all investment income and profits must be
taken into consideration. No distribution of the funds, assets, property,
or profits of the Underwriting Association may be made except pursuant
to the commissioner's written order unless otherwise permitted under
this chapter."
SECTION 23. Section 38-77-580 of the 1976 Code, as last
amended by Act 248 of 1991, is further amended to read:
"Section 38-77-580. The operations and affairs of the
facility Underwriting Association are under the
direction and control of a governing board of nineteen persons of whom
four must be residents of South Carolina appointed by the Governor of
South Carolina to represent consumers. The commissioner shall appoint
eight persons to represent the insurance industry; in appointing these
persons, the commissioner shall select two from a list of not less than
five nominated by the American Insurance Association from the officers
or employees of insurers licensed in South Carolina and which are
members or subscribers of that organization; he shall select two from a
list of not less than five persons nominated by the American Mutual
Insurance Alliance from the officers or employees of insurers licensed
in South Carolina and which are members or subscribers of that
organization; he shall select two from a list of not less than five persons
nominated by the National Association of Independent Insurers from the
officers or employees of insurers licensed in South Carolina and which
are members or subscribers of that organization; he shall select two
persons, one of whom must be an officer or employee of a stock insurer
licensed in South Carolina and not a member or subscriber of any of
these organizations, and one of whom must be an officer or employee of
a nonstock insurer licensed in South Carolina and not a member or
subscriber of any of these organizations; however, of the eight persons
appointed to represent the insurance industry, not less than five must be
residents of South Carolina and those who are not residents of South
Carolina must have job responsibilities that include the supervision over
South Carolina operations; not less than two must be officers or
employees of insurers licensed to transact automobile insurance in South
Carolina and domiciled therein. The commissioner shall appoint four
persons to represent producers, all of whom must be residents of South
Carolina; he shall select two such persons from a list of not less than five
nominated by the stock agents' association and two from a list of not less
than five persons nominated by the mutual agents' association. The
commissioner shall appoint two persons to represent the
designated servicing agents, one of whom must be an
officer of a premium service finance company and the other of whom
must be a designated servicing agent and both of whom
must be residents of South Carolina. In addition the Consumer
Advocate is an ex-officio member of the governing board of the
Reinsurance Facility Underwriting Association. No
person who is associated with any business within the meaning of
Section 8-13-20, which is either subject to regulation by the Department
of Insurance or which provides goods or services to the facility
Association for compensation, is eligible for appointment to the
board to represent consumers, except that any person serving on the
board representing consumers on the effective date of this provision who
would otherwise be disqualified from serving based on this provision
may continue to serve for the remainder of his current term.
The commissioner is chairman of the board, ex officio, but has no
vote except in the case of a tie. The commissioner, or his designated
representative, shall preside over all meetings which must be held not
less than quarterly in South Carolina at the times and places the
commissioner designates. However, upon the filing with the
commissioner of a request for a meeting signed by not fewer than five
members of the board and specifying the subjects to be discussed at the
proposed meeting, the commissioner shall call a special meeting of the
board to be held not less than fifteen nor more than thirty days after
receipt of the request. Notice, in writing, of the special meeting must be
provided members of the board.
Members of the board shall serve one year or until their successors
are appointed and have qualified.
Amendment of the plan of operation may be made only at the annual
meeting of the board or at a special meeting called by the commissioner
for that purpose and so specified in the notice of meeting. Amendments
of the plan require the affirmative vote of two-thirds of all the board
members and are subject to the commissioner's approval. The
commissioner may approve amendments only if they are consistent with
the purposes of this chapter. If the consumer-representative members of
the board unanimously dissent from a proposed amendment and specify
their reasons for dissent in writing, the commissioner may not approve
the amendment until after a public hearing addressed to the reasons for
the dissent.
The commissioner may make provision for voting by proxy at
meetings.
The commissioner may propose to the board any amendment to or
modification of the plan that the commissioner considers to be necessary
to render the plan reasonable or consistent with the purposes of this
chapter, specifying in writing the reasons for any proposed amendment
or modification. In the event that the board fails to adopt his proposed
amendment or modification, the commissioner may, after notice and
public hearing addressed to the reasons for the proposed amendment or
modification, promulgate the amendment or modification considered
necessary to render the plan reasonable or consistent with the purposes
of this chapter."
SECTION 24. Section 38-77-585 of the 1976 Code, as added by
Act 557 of 1990, is amended to read:
"Section 38-77-585. Any insurer designated
contracted pursuant to Section 38-77-590(a) is entitled to
appoint an officer or employee to the governing board of the
Reinsurance Facility Underwriting Association if not
otherwise represented on the governing board pursuant to Section
38-77-580. Any member of the governing board representing an
insurer so designated contracted must abstain from
casting a vote on any matter which would have a material effect on the
operations of that insurer as it relates to the affairs of the insurer acting
as a designated contracted insurer for the
Reinsurance Facility Underwriting Association."
SECTION 25. Section 38-77-590 of the 1976 Code, as last
amended by Act 524 of 1990, is further amended to read:
"Section 38-77-590. (a) Not more than six months after
July 9, 1974, or at an earlier time as the Commissioner considers
necessary by reason of complaints regarding want of access to
automobile insurance in particular areas or want of outlets for producers,
the Commissioner shall survey the various areas of the State to ascertain
if sufficient marketing outlets exist in all areas or are available to all
producers. Upon a finding by the Commissioner that insufficient
marketing outlets exist in particular areas or that certain producers have
been deprived of a market for risks previously serviced by them, the
Commissioner may, after consultation with the Facility, designate one
or more insurers to service the areas through agents appointed by them
or may designate the producers as the agents of any insurer. The
arrangements shall include provision for one hundred percent quota
share reinsurance through the Facility of any automobile insurance
policy marketed through the arrangements, at the option of the insurer,
and the reinsurance is not subject to the statutory provisions or
regulations regarding excessive utilization of the Facility.
The governing board of the Underwriting Association shall
contract with domestic insurers meeting eligibility requirements
promulgated by the governing board to act as servicing carriers for the
writing of automobile insurance through producers assigned to the
servicing carrier by the governing board. The servicing carriers shall not
be subject to the statutory provisions or regulations regarding excessive
utilization of the Underwriting Association for shared risk pooling. The
servicing carrier shall transfer the risk on every policy of automobile
insurance produced by its assigned servicing agents to the Underwriting
Association. Servicing carriers and their assigned servicing agents may
not nonrenew or refuse to write any policy of automobile insurance for
individual private passenger automobile and small commercial risks as
defined in this chapter.
(b) After the effective date of this section, those producers
previously designated by the Commissioner may continue to serve in
that capacity under the jurisdiction and control of the governing board
of the Facility, except that any change in the rate of commissions
allowed designated producers is subject to the Commissioner's
approval. The governing board of the Underwriting Association
shall assume and renew the contracts of servicing carriers previously
contracted with the former South Carolina Reinsurance Facility prior to
the creation of the South Carolina Automobile Underwriters
Association. Producers previously designated to a servicing carrier by
the commissioner or the governing board of the former reinsurance
facility must remain assigned to that servicing carrier until and unless
the producer's written request to change the assignment is approved by
the governing board of the Underwriting Association.
(c) A producer may be designated by the governing board of the
Facility upon application for designation and is eligible for designation
upon a finding by the governing board that the applicant meets the
following qualifications: A producer may apply to the governing
board for assignment to a servicing carrier and is eligible for assignment
upon a finding by the governing board that the applicant meets the
following qualifications:
(1) The applicant has been, for ten five
continuous years, a licensed resident property and casualty insurance
agent and agency owner or principal with authority from one or more
licensed insurers to write liability and physical damage insurance on
private passenger automobiles;
(2) At the time of application the applicant is servicing and
owns the renewals on private passenger and commercial automobile
insurance business, the net premiums on which exceeded seventy-five
thousand dollars of potential cedeable automobile insurance during any
one of the previous five calendar years preceding the application;
At the time of application the applicant is servicing and owns the
renewals on private passenger and commercial automobile insurance
business, the net premiums on which exceeded one hundred thousand
dollars during any one of the previous five calendar years preceding the
application; and
(3) Neither the applicant, nor any employee of the
applicant or the applicant's corporate agency, nor any partner or
shareholder in any related insurance agency, related premium service
company, or related other business, has any direct or indirect connection
with any voluntary market outlet for the purpose of writing any type of
automobile insurance in this State except for motorcycle insurance and
types not cedeable to the facility;
(4) The applicant has not contributed to his termination as
agent by any insurer because of any illegal breach of agency agreement
or other related, improper, or unethical conduct; and
(5) The books, records, and accounts of the insurance
business of the applicant have been audited at the expense of the
applicant and found by the governing board to be indicative of a
financially sound operation.
(d) Prior to designation the assignment as a
producer, the applicant shall furnish at his expense a bond in an amount
of not less than fifty thousand dollars for the faithful performance of the
duties as a producer, executed by the applicant as principal and a
corporate surety licensed to do business in this State as surety, and shall
also have effective errors and omissions insurance by an insurer licensed
to do business in this State, with the bond and errors and omissions
insurance being subject to approval by the governing board.
(e) The governing board shall assign a specific location to each
producer designated. The governing board shall determine from the
commissioner the locations assigned by him to those producers whom
the commissioner has designated. Designated producers may not open
or maintain any other locations without the written authorization of the
governing board; provided, however, that an applicant maintaining
multiple offices on June 4, 1987, is entitled to maintain two locations as
a designated agent which he owned and operated at that time and
through which premiums in at least the amount of seventy-five thousand
dollars were written. The governing board shall terminate the
designation, and the commissioner shall revoke all agents' licenses of
any producer who does not comply with this requirement upon demand
by the governing board. Upon termination, the producer's expirations
on designated business become the property of the facility.
Producers assigned to a servicing carrier may not open or maintain
more than two locations without the written authorization of the
governing board. The governing board shall terminate the assignment
of any servicing agent who does not comply with this requirement upon
demand by the governing board.
(f) The designation of a producer by the Commissioner or the
governing board is transferable to a spouse, child, parent, brother, or
sister of the producer upon the designated producer's retirement,
incapacity, or death. The duties of a designated producer may be
performed by one or more qualified employees of the producer or the
producer's corporate agency. The assignment of a producer to
a servicing carrier by the governing board is transferable to a spouse,
child, parent, brother, or sister of the producer upon the producer's
retirement, incapacity, or death. The duties of the producer may be
performed by one or more qualified employees of the producer or the
producer's corporate agency.
(g) Neither a designated producer, nor any employee of a
designated producer or the producer's corporate agency, nor any partner
or shareholder in any related insurance agency, related premium service
company, or related other business, may have any direct or indirect
connection with any voluntary market outlet for the purpose of writing
any type of automobile insurance in this State except for motorcycle
insurance and types not cedeable to the Facility. The governing board
shall terminate the designation of any producer, and the Commissioner
shall revoke all licenses of the producer and of any other insurance agent
and premium service company knowingly involved in this connection.
Upon termination, the producer's expirations on designated business
become the property of the Facility.
(h) (g) A designated servicing carrier who
fails a claims audit shall have no new designated producer
servicing agent assignments until the time it passes a reaudit
within a reasonable time prescribed by the governing board. If this
carrier fails two claims audits, including a reaudit, within any three-year
period that carrier is disqualified for renewal of its contract with the
facility association upon expiration of its existing
contract."
SECTION 26. Section 38-77-630 of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"Section 38-77-630. (A) A policy, other than a renewal
policy, may be ceded to the South Carolina Reinsurance Facility only
when the application is accompanied by either a renewal notice from
another insurer or a motor vehicle report (MVR), issued at the point of
sale, together with the full premium correctly reflecting the facts shown
on the MVR or consistent with the premium quoted in the renewal
notice. A risk, other than at renewal, may be transferred to the
Underwriting Association only when the application is accompanied by
either a renewal notice from another insurer or a motor vehicle report
(MVR) issued at the point of sale, together with the full premium
correctly reflecting the facts shown on the MVR or consistent with the
premium quoted in the renewal notice.
(B) To facilitate compliance with this requirement, a carrier shall
require an applicant other than a renewal applicant, to obtain the MVR
or a renewal notice from the insurance carrier who provided the
insurance coverage then in effect and present it to the agent upon
making an application. In those cases, the applicant must be credited for
the amount paid for the MVR.
(C) In the case of an applicant who holds a valid driver's license
from another state but is not yet licensed in this State, a copy of this
out-of-state driver's license may be submitted with the application in lieu
of the MVR or renewal notice above required in this section. The MVR,
renewal notice, or copy of the applicant's driver's license, as applicable,
must be kept with the application by the carrier in the manner the
facility Underwriting Association requires.
SECTION 27. Section 38-77-910 of the 1976 Code is amended by
adding:
"Any violation of this section or the prohibition against
discriminatory underwriting practices as described under Section
38-77-110 may be cause for revocation or suspension of the insurer's or
agent's license by the commissioner."
SECTION 28. 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 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 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, shall 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 29. Section 38-77-940 of the 1976 Code is amended to
read:
"Section 38-77-940. No insurer of automobile insurance shall
directly or indirectly by offer or promise of reward or imposition or
threat of penalty or through any artifice or device whatsoever, confer
any benefit upon any agent or impose any detriment upon any such
agent for the purpose of avoiding any class or type of automobile
insurance risk which the insurer considers it necessary to reinsure in
the Facility transfer to the Underwriting Association; nor
shall any offer or promise of reward or imposition or threat of penalty in
connection with any other line or type of insurance be so tied to
automobile insurance as to have a tendency to induce the agent to avoid
any such class or type of automobile insurance risk; nor shall any
insurer of automobile insurance provide to agents, directly or indirectly,
orally or in writing, any listing of classes or types of automobile
insurance risks which it considers necessary to reinsure in the
Facility; nor shall any insurer of automobile insurance terminate its
insurance business with any one agent over the writing of certain classes
or types of automobile insurance risks without also pulling out of the
entire State or terminating its similar insurance business with all other
agents in the State at the same time for a period of time of at least 365
days, except that if the insurer reinstates the agent within thirty days of
the determination that the termination was unlawful, then this provision
shall not apply; nor shall any insurer of automobile insurance do
anything unfair, or unfairly fail to do anything, which has the effect of,
or which results in, causing any ceded transferable
insurance business to have a detrimental effect on any incentive bonuses
paid by the insurer to agents. Any act in violation of this section
constitutes an act of unlawful discrimination and unfair competition
which, if wilful, shall result in the suspension or revocation of the
insurer's certificate of authority for not less than twelve months. Any
agreement made in violation of this section shall be void.
Nothing in this section may be considered to preclude or impair
agreements between insurers and their agents or some of their agents to
pay contingency commissions or a profit-sharing bonus based upon the
quality of business; nor shall the insurers, in any manner, use that
business placed in the Facility Underwriting
Association when determining the quality bonus; nor may it be
considered to preclude an agreement between any agent and an insurer
of automobile insurance to exclude from any profit-sharing or
contingency arrangement automobile insurance business coming
unsolicited to the agent and written by him solely because of the
mandate of coverage provided in this chapter prohibition
against discriminatory underwriting practices described in Section
38-77-110.
No insurer of automobile insurance shall cancel its representation by
an agent primarily because of the volume of automobile insurance
placed with it by the agent on account of the statutory mandate of
coverage prohibition against discriminatory underwriting
practices nor because of the amount of the agent's automobile
insurance business which the insurer has considered it necessary to
reinsure in the Facility transfer to the Underwriting
Association."
SECTION 30. 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 Underwriting Association 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 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
Underwriting Association.
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.
A prima facie case of excessive or unreasonable utilization
shall be established upon a showing that an automobile insurance insurer
or group of such insurers under the same management has transferred or
is about to transfer to the Underwriting Association for shared risk
pooling policies whose combined premiums are more than twenty
percent of total direct written premiums on South Carolina automobile
insurance as reported in the most recently filed annual statements of
such 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 31. 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 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.
When dealing with the agents of the company, who are licensed
to sell automobile insurance, the company may not use any business
transferred to the Underwriting Association in determining the
profitability of that agent's business. Further, the company shall not hold
the business transferred to the Underwriting Association against any
agent in any manner which could be construed as being detrimental to
the agent."
SECTION 32. Section 38-73-10(a)(3) of the 1976 Code is
amended to read:
"(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 South Carolina
Automobile Underwriters Association 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."
SECTION 33. Section 38-73-455 of the 1976 Code, as last
amended by Act 113 of 1991, is further amended to read:
"Section 38-73-455. An automobile insurer shall offer two
different rates for automobile insurance, a base rate as defined in Section
38-73-457 and an objective standards rate which is twenty-five percent
above the base rate. Both of these rates are subject to all surcharges or
discounts, if any, applicable under any approved merit rating plan, credit
or discount plan promulgated or approved by the Commissioner.
Applicants, or a current policyholder, seeking automobile insurance
with an insurer must be written at the base rate, unless one of the
conditions or factors in subitems (1) through (8) of item (A) is present.
(A) The named insured or any operator who is not excluded in
accordance with Section 37-77-340 and who resides in the same
household or customarily operates an automobile insured under the same
policy, individually:
(1) has obtained a policy of automobile insurance or
continuation thereof through material misrepresentation within the
preceding thirty-six months; or
(2) has had convictions for driving violations on three or more
separate occasions within the thirty-six months immediately preceding
the effective date of coverage as reflected by the motor vehicle record
of each insured driver as maintained by the Department of Highways
and Public Transportation; or
(3) has had two or more "chargeable" accidents
within the thirty-six months immediately preceding the effective date of
coverage. A "chargeable" accident is defined as one
resulting in bodily injury to any person in excess of three hundred
dollars per person, death, or damage to the property of the insured or
other person in excess of seven hundred fifty dollars. Accidents
occurring under the circumstances enumerated below are not considered
chargeable.
(a) The automobile was lawfully parked. An automobile
rolling from a parked position is not considered as lawfully parked but
is considered as operated by the last operator.
(b) The applicant or other operator or owner was
reimbursed by or on behalf of a person responsible for the accident or
has a judgment against this person.
(c) The automobile of an applicant or other operator was
struck in the rear by another vehicle and the applicant or other operator
has not been convicted of a moving traffic violation in connection with
the accident.
(d) The operator of the other automobile involved in the
accident was convicted of a moving traffic violation and the applicant
or other operator was not convicted of a moving traffic violation in
connection therewith.
(e) An automobile operated by the applicant or other operator
is damaged as a result of contact with a "hit and run" driver,
if the applicant or other operator so reports the accident to the proper
authority within twenty-four hours or, if the person is injured, as soon
as the person is physically able to do so.
(f) Accidents involving damage by contact with animals or
fowl.
(g) Accidents involving physical damage, limited to and
caused by flying gravel, missiles, or falling objects.
(h) Accidents occurring as a result of the operation of any
automobile in response to an emergency if the operator at the time of the
accident was responding to a call of duty as a paid or volunteer member
of any police or fire department, first aid squad, or any law enforcement
agency. This exception does not include an accident occurring after the
emergency situation ceases or after the private passenger motor vehicle
ceases to be used in response to the emergency; or
(4) has had one "chargeable" accident and two
convictions for driving violations, all occurring on separate occasions,
within the thirty-six months immediately preceding the effective date of
coverage as reflected by the motor vehicle record of each insured driver
as maintained by the Department of Highways and Public
Transportation; or
(5) has been convicted of or forfeited bail during the thirty-six
months immediately preceding the effective date of coverage for
operating a motor vehicle while in an intoxicated condition or while
under the influence of drugs; or
(6) has been convicted or forfeited bail during the thirty-six
months immediately preceding the effective date for:
(a) any felony involving the use of a motor vehicle,
(b) criminal negligence resulting in death, homicide, or
assault arising out of the operation of a motor vehicle,
(c) leaving the scene of an accident without stopping to report,
(d) theft or unlawful taking of a motor vehicle,
(e) operating during a period of revocation or suspension of
registration or license,
(f) knowingly permitting an unlicensed person to drive,
(g) reckless driving,
(h) the making of material false statements in the
application for licenses or registration, (i) impersonating an
applicant for license or registration or procuring a license or registration
through impersonation, whether for himself or another,
(j) filing of a false or fraudulent claim or knowingly aiding or
abetting another in the presentation of such a claim,
(k) failure to stop a motor vehicle when signaled by means
of a siren or flashing light by a law enforcement vehicle; or
(7) has for thirty or more consecutive days during the twelve
months immediately preceding the effective date of coverage, owned or
operated the automobile to be insured (or if newly acquired, the
automobile it replaces) without liability coverage in violation of the laws
of this State; or
(8) has used the insured automobile as follows or if the insured
automobile is:
(a) used in carrying passengers for hire or compensation,
except that the use of an automobile for a car pool must not be
considered use of an automobile for hire or compensation,
(b) used in the business of transportation of flammables or
explosives,
(c) used in illegal operation, or
(d) no longer principally used and garaged within the State,
but not to include students who are operating a motor vehicle registered
in this State while attending an institution located in another state.
(B) In the event that one or more of the conditions or factors
prescribed in items (1) through (8) of subsection (A) exist, the motor
vehicle customarily operated by that individual must be written at the
objective standards rate.
(C) Member companies of an affiliated group of automobile
insurers may not utilize different filed rates for automobile insurance
coverages which they are mandated by law to write. For the purpose of
this section, an affiliated group of automobile insurers includes a group
of automobile insurers under common ownership, management, or
control. Those automobile insurers designated pursuant to Section
38-77-590(a), for automobile insurance risks written by them through
producers designated by the facility governing board pursuant to that
section, shall utilize the rates or premium charges by coverage filed and
authorized for use by the rating organization licensed by the
commissioner pursuant to Article 11, Chapter 73 of this title, which has
the largest number of members or subscribers for automobile insurance
rates. However, those automobile insurers designated pursuant to
Section 38-77-590(a) are not required to use those same rates or
premium charges described in the preceding sentence for risks written
by them through their authorized agents not appointed pursuant to
Section 38-77-590.
(D) An automobile insurance policy may be endorsed at any time
during the policy period to reflect the correct rate or premium applicable
by reason of the factors or conditions described in subsection (A) which
existed prior to the commencement of the policy period in which the
endorsement is made, regardless of whether the factors or conditions
were known or disclosed to the insurer at the commencement of the
policy period. However, no policy may be endorsed during a policy
period to reflect factors or conditions occurring during that policy
period. A policy may be endorsed during a policy period to recognize
the addition or deletion of an operator or vehicle.
(E) For purposes of determining the applicable rates to be charged
an insured, an automobile insurer shall obtain and review an applicant's
motor vehicle record.
An automobile insurer shall file and offer for automobile
insurance a rate as defined in Section 38-73-457, which rate is subject
to all surcharges or discounts, if any, applicable under any approved
merit rating plan, credit or discount plan promulgated or approved by the
commissioner. Additionally, an automobile insurer may utilize and offer
at its option on policies not transferred to the South Carolina
Automobile Underwriters Association for shared risk pooling the final
rate or premium charges approved by the commissioner for rating plans
of the Underwriting Association.
An individual insurer or member companies of an affiliated group of
automobile insurers may not utilize different filed rates for automobile
insurance with the exception that an insurer or different member
company of an affiliated group of insurers may utilize the Underwriting
Association rate or premium charges pursuant to this section. For the
purpose of this section, an affiliated group of automobile insurers
includes any group of automobile insurers under common ownership,
management, or control. Those automobile insurers contracted pursuant
to Section 38-77-590(A), for automobile insurance risks written by them
through producers assigned by the governing board of the Underwriting
Association pursuant to that same section, shall utilize the rates or
premium charges by coverage filed and authorized for use by the
Underwriting Association pursuant to Section 38-73-1420. However,
those automobile insurers contracted pursuant to Section 38-77-590(A)
are not required to use those same rates or premium charges described
in the preceding sentence for risks written by them through their duly
authorized agents not assigned pursuant to Section 38-77-590 on
policies not transferred to the Underwriting Association for shared risk
pooling.
No policy may be endorsed during a policy period to reflect factors
or conditions occurring during that policy period. A policy may be
endorsed during a policy period to recognize the addition or deletion of
an operator or vehicle.
For purposes of determining the applicable rates to be charged an
insured, an automobile insurer shall obtain and review an applicant's
motor vehicle record."
SECTION 34. 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.
Notwithstanding Sections 38-73-920 and 38-73-1210, every
automobile insurer and rating organization shall file with the
commissioner a rate for automobile insurance by coverage calculated
solely upon the experience generated by the insurer in its book of
business and which must not include experience generated by risks
transferred to the Underwriting Association for shared risk pooling.
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.
Effective October 1, 1992, the commissioner shall disallow the
further use of the objective standards rate previously filed in accordance
with this section; however, upon the effective date of this section
nothing herein should be construed to require a rating organization, its
members or subscribers, or an individual insurer to immediately refile
final rates or premium charges previously approved by the commissioner
and referred to as the base rate for automobile insurance coverages.
Members or subscribers of a rating organization or individual insurers
are authorized to continue to use those base rates approved before the
effective date of this section."
SECTION 35. 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 Automobile Underwriters Association.
However, it is the intent of the plan of operation of the Underwriters
Association pursuant to Section 38-77-530 that the allocation fee or
credit be utilized to recover or disburse the allocated net losses or gains
of the Underwriters Association distinctly and separately from the rate
filings of individual insurers or rating organizations."
SECTION 36. Section 38-73-520 of the 1976 Code is amended to
read:
"Section 38-73-520. With the exception of an insurer's use
of the rate plans of the South Carolina Automobile Underwriters
Association pursuant to Section 38-73-455, Every
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."
SECTION 37. Section 38-73-735 of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"Section 38-73-735. In addition to risk and territorial
classification plans promulgated or approved under Section 38-73-730,
the commissioner may promulgate plans to afford credits or discounts
to automobile insureds, or he may approve the credit or discount plans
filed with him by insurers of automobile insurance. No automobile
insurance credit or discount plan may be promulgated or approved by
the commissioner unless: (1) the criteria for determining eligibility for
credits or discounts under the plan are objective, clear, and unequivocal;
(2) the criteria are based upon factually or statistically supported data;
and (3) the credits or discounts provided under the plan will be afforded
by the insurer on a nondiscriminatory basis to all insureds who are
eligible therefor. If an insurance credit or discount plan is given to
an insured pursuant to this section, the policy may be ceded to the
Reinsurance Facility in accordance with the facility's plan of
operation."
SECTION 38. 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 39. Section 38-73-760(b) of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"(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."
SECTION 40. Section 38-73-920 of the 1976 Code is amended to
read:
"Section 38-73-920. No insurer may make or issue a contract
or policy except in accordance with the filings which are in effect for the
insurer as provided in this chapter or in accordance with Section
38-73-1060 or Section 38-73-455 as pertaining to utilization of the
Underwriting Association rate plans by insurers. Notwithstanding
Section 38-73-10, item (2) of Section 38-73-330, and item (4) of Section
38-73-430, filings for property and casualty rate increases may not be
approved for any insurer or rating organization for any line, sub-line, or
otherwise identifiable property and casualty insurance coverage for
which a rate increase has previously been granted within the
immediately preceding twelve months. However, if satisfactory
evidence is presented to the commissioner by an insurer or rating
organization that the continued use of the previously approved rates for
the line, sub-line, or otherwise identifiable property and casualty
insurance coverage may result in the insolvency of an insurer, more
frequent rate increases may be approved. This section does not apply
to contracts or policies for inland marine risks as to which filings are not
required This section does not apply to contracts or policies for
inland marine risks and to the apportionment of gains or losses of the
Underwriting Association in the form of allocation fees or credits as to
which filings are not required."
SECTION 41. Section 38-73-1420 of the 1976 Code, as added by
Act 148 of 1989, is amended to read:
"Section 38-73-1420. After June 30, 1989, the Board of
Governors of the South Carolina Reinsurance Facility shall file an
expense component for private passenger automobile insurance rate or
premium charges after the rating organization with the largest number
of members or subscribers has filed a pure loss component for private
passenger automobile insurance with the commissioner. Upon the
approval of such components, those automobile insurers designated
pursuant to Section 38-77-590(A), for risks written by them through
producers designated pursuant to that same section, shall utilize these
final rate or premium charges. Automobile insurers designated pursuant
to Section 38-77-590(A) are not required to use those same final rates or
premium charges for risks written through their agents not appointed
pursuant to Section 38-77-590.
The board of governors of the South Carolina Automobile
Underwriters Association shall file an expense component for rate or
premium charges developed under rate plans approved by the
commissioner for the Underwriting Association. The board of governors
shall file a weighted pure loss component determined by calculating the
mean average of the pure loss components filed by the seven largest
writers of private passenger automobile insurance in this State and
averaging that resultant loss component with the pure loss component
for private passenger automobile insurance filed by the rating
organization in South Carolina with the largest number of members or
subscribers. The resultant weighted pure loss component must be used
to determine rate or premium charges developed under rate plans
pursuant to Section 38-77-540(a) and (b). The board of governors shall
file a pure loss component based on the underwriting experience of
multiple point drivers within the shared risk pool of the Underwriting
Association to use in developing rate or premium charges for that group
pursuant to Section 38-77-540(c).
Automobile insurers contracted to the South Carolina Automobile
Underwriters Association pursuant to Section 38-77-590(a) and all
insurers on policies of automobile insurance transferred to the
Underwriting Association for shared risk pooling shall utilize the final
rate or premium charges under the applicable rate plan approved by the
commissioner for the Underwriting Association comprising these filed
rates. Automobile insurers contracted to the Underwriting Association
pursuant to Section 38-77-590(a) are not required to use the rate or
premium charges under the rate plans approved for the Underwriting
Association by the commissioner for risks not transferred to the
Underwriting Association."
SECTION 42. The Chief Insurance Commissioner shall conduct
a study not to exceed twelve months in duration to determine whether
there are more equitable territories in this State, where private passenger
automobile insurers compete, than now exist which would allow a
greater degree of open-market competition. The commissioner shall
present his findings and conclusions, in writing, to the Governor and the
General Assembly not later than ninety days after the study is concluded
in accordance with this section.
SECTION 43. Notwithstanding any other provision of law, any
person who shall operate or allow an uninsured motor vehicle to be
operated shall suffer the immediate impoundment of such vehicle until
such time as he posts liability insurance in the amount required by
Chapter 77, Title 38 of the 1976 Code of Laws and pays any storage and
impoundment fee, together with any other fines or fees imposed for the
operation of an uninsured motor vehicle.
SECTION 44. Notwithstanding any provision of Title 38 of the
1976 Code of Laws or any other provision of law: (a) no newly licensed
driver who has obtained his driver's license after successfully completing
a duly licensed course in driver training shall be deprived of the benefit
of a safe driver discount for automobile insurance purposes; and (b) no
student who successfully completes a recognized and approved course
in driver education in the school he attends and obtains his driver's
license following such completion of the course shall have his policy of
automobile insurance ceded to the South Carolina Reinsurance Facility
or be deprived of any discount he receives or is entitled to receive as a
result of the successful completion of such course.
SECTION 45. Sections 38-73-1410, 38-73-1425, 38-77-111,
38-77-510, 38-77-595, 38-77-600, 38-77-605, 38-77-610, 38-77-620,
38-77-625, and 38-77-930 of the 1976 Code are repealed.
SECTION 46. This act takes effect October 1, 1992.
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