H 3496 Session 110 (1993-1994)
H 3496 General Bill, By Klauber, B.O. Baker, Davenport, M.F. Jaskwhich, Meacham,
Moody-Lawrence, Simrill, Stille, C.H. Stone and Young-Brickell
A Bill to amend Chapter 77, Title 38, Code of Laws of South Carolina, 1976,
relating to automobile insurance, by adding Article 13 so as to establish and
provide for a Joint Underwriting Association, including provisions for the
abolition of the South Carolina Reinsurance Facility effective October 1,
1993, and for the transfer of the administration of the phase-out of the
Facility to the Association; to amend Section 38-73-455, as amended, relating
to automobile insurance rates, so as to, among other things, delete certain
language, require an automobile insurer to offer four, rather than two,
different rates for automobile insurance, and provide that, no later than
ninety days after the passage of this Act, insurers of automobile insurance
must file with the Chief Insurance Commissioner rates for personal protection
policies as defined by law and revised rates for all other private passenger
automobile insurance policies written by them; and to repeal Article 5,
Chapter 77, Title 38, relating to the Reinsurance Facility and designated
producers.
02/16/93 House Introduced and read first time HJ-12
02/16/93 House Referred to Committee on Labor, Commerce and
Industry HJ-13
A BILL
TO AMEND CHAPTER 77, TITLE 38, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO AUTOMOBILE INSURANCE,
BY ADDING ARTICLE 13 SO AS TO ESTABLISH AND PROVIDE
FOR A JOINT UNDERWRITING ASSOCIATION, INCLUDING
PROVISIONS FOR THE ABOLITION OF THE SOUTH CAROLINA
REINSURANCE FACILITY EFFECTIVE OCTOBER 1, 1993, AND
FOR THE TRANSFER OF THE ADMINISTRATION OF THE
PHASE-OUT OF THE FACILITY TO THE ASSOCIATION; TO
AMEND SECTION 38-73-455, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE RATES, SO AS TO, AMONG OTHER
THINGS, DELETE CERTAIN LANGUAGE, REQUIRE AN
AUTOMOBILE INSURER TO OFFER FOUR, RATHER THAN TWO,
DIFFERENT RATES FOR AUTOMOBILE INSURANCE, AND
PROVIDE THAT, NO LATER THAN NINETY DAYS AFTER THE
PASSAGE OF THIS ACT, INSURERS OF AUTOMOBILE
INSURANCE MUST FILE WITH THE CHIEF INSURANCE
COMMISSIONER RATES FOR PERSONAL PROTECTION
POLICIES AS DEFINED BY LAW AND REVISED RATES FOR ALL
OTHER PRIVATE PASSENGER AUTOMOBILE INSURANCE
POLICIES WRITTEN BY THEM; AND TO REPEAL ARTICLE 5,
CHAPTER 77, TITLE 38, RELATING TO THE REINSURANCE
FACILITY AND DESIGNATED PRODUCERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 77 of Title 38 of the 1976 Code is amended by
adding:
"Article 13
Joint Underwriting Association
Section 38-77-1310. (A) The Reinsurance Facility is abolished
effective October 1, 1993. There is created the South Carolina Joint
Underwriting Association. The administration of the phase out of the
Facility is transferred to the Joint Underwriting Association.
(B) As of July 1, 1997, the Facility recoupment charge must not be
included in the rate or premium charged by the insurers of private
passenger automobile insurance to drivers who qualify for the safe driver
discount. If any losses are incurred as a result of the operation of the
Facility, the losses attributable to the Facility must be distributed among
insured drivers as provided in subsection (C) until the commissioner
determines all of the losses have been accounted for, unless provided
otherwise.
(C) Consistent with subsection (B), the rate or premium charged by
insurers of private passenger automobile insurance must include a
recoupment charge, which must be added to the appropriate rate
prescribed in Section 38-73-455 to compensate for any remaining losses
incurred by the Facility as a result of its operation up to the effective
date of this article. The operating losses of the Facility for a twelve-month period must be recouped in the subsequent twelve-month period.
(1) Prior to December first of each year, the governing board of
the Facility shall calculate the recoupment amount, by coverage, by
dividing the net Facility operating loss, adjusted to reflect prudently
incurred expenses, consistent with the provisions of Section 38-73-465,
and the time value of money, by mandated coverage for the preceding
Facility accounting year, by the total number of earned car years in
South Carolina, by coverage, for the same period of time. .368
multiplied by the recoupment is to be borne by risks having zero
surcharge points under the Uniform Merit Plan promulgated by the
commissioner. The remainder of the recoupment (.614 multiplied by the
recoupment) represents R in the formula P1X +2P2X +3P3X + 4P4X +
5P5X + 6P6X + 7P7X + 8P8X + 9P9X + 10P10X = R. In this formula
to be utilized in determining the Facility recoupment charge:
(a) P1 is the percentage of risks which have one surcharge
point under the Uniform Merit Rating Plan;
(b) P2 is the percentage of risks which have two surcharge
points under the Uniform Merit Rating Plan;
(c) P3 is the percentage of risks which are subject to a
surcharge of three points under the Uniform Merit Rating Plan;
(d) P4 is the percentage of risks which are subject to a
surcharge of four points under the Uniform Merit Rating Plan;
(e) P5 is the percentage of risks subject to a surcharge of five
points under the Uniform Merit Rating Plan;
(f) P6 is the percentage of risks subject to a surcharge of six
points under the Uniform Merit Rating Plan;
(g) P7 is the percentage of risks subject to a surcharge of seven
points under the Uniform Merit Rating Plan;
(h) P8 is the percentage of risks subject to a surcharge of eight
points under the Uniform Merit Rating Plan;
(i) P9 is the percentage of risks subject to a surcharge of nine
points under the Uniform Merit Rating Plan;
(j) P10 or more is the percentage of risks subject to a surcharge
of ten or more points under the Uniform Merit Rating Plan;
(k) X is the dollar amount by coverage, to be charged all risks
having one surcharge point under the Uniform Merit Rating Plan
promulgated by the commissioner. This dollar amount, by coverage, is
the Facility recoupment charge to be added to the base rate or objective
standards rate prescribed in Sections 38-73-455 and 38-73-457 for all
risks which have one surcharge point.
(2) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which have one
surcharge point under the Uniform Merit Rating Plan is calculated by
multiplying X by a factor of one.
(3) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which have two
surcharge points under the Uniform Merit Rating Plan is calculated by
multiplying X by a factor of two.
(4) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of three points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of three.
(5) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of four points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of four.
(6) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of five points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of five.
(7) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of six points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of six.
(8) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of seven points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of seven.
(9) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of eight points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of eight.
(10) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of nine points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of nine.
(11) The Facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which are subject to
a surcharge of ten or more points under the Uniform Merit Rating Plan
is calculated by multiplying X by a factor of ten.
(12) In determining the number of surcharge points a risk has for
the purposes of this section, no surcharge points assigned under the
Uniform Merit Rating Plan because the principal operator of the
automobile has not been licensed in any state for at least one year
immediately preceding the writing of the risk or as a result of a failure
of any motor vehicle equipment requirement may be considered.
(13) This section applies to all private passenger automobile
insurance policies issued or renewed after June 30, 1993. However,
insurers unable to comply with the provisions of this section and renewal
provisions required by law may comply with the provisions of this
section at any time after June 30, 1993, but in no event later than
October 1, 1993.
Section 38-77-1330. As used in this article:
(1) `Association' means the South Carolina Joint Underwriting
Association established pursuant to this article.
(2) `Net direct premiums' means gross direct premiums written on
automobile liability insurance as computed by the Chief Insurance
Commissioner less return premiums or the unused or unabsorbed
portions of premium deposits.
Section 38-77-1340. (A) A joint underwriting association is
created consisting of all automobile insurers licensed to write within this
State automobile insurance policies. Every such insurer is and must
remain a member of the association as a condition of its authority to
continue to transact this kind of insurance in this State.
(B) The purpose of the association is to provide automobile
insurance on a self-supporting basis to the fullest extent possible.
Section 38-77-1350. The association has the power on behalf of its
members to make agreements among themselves with respect to the
equitable apportionment among them of insurance which may be
afforded applicants who are in good faith entitled to or have lost their
safe driver discount, but are unable to procure such insurance through
ordinary methods, and such insurers may agree among themselves on the
use of reasonable rate modifications for such insurance. Such
agreements and rate modifications shall be subject to the approval of the
department.
Section 38-77-1360. (A) The department shall, after consultation
with the insurers licensed to write automobile liability insurance in this
State, adopt a reasonable plan or plans for the equitable apportionment
among such insurers of applicants for such insurance who are in good
faith entitled to or have lost their safe driver discount, but are unable to,
procure such insurance through ordinary methods, and, when such plan
has been adopted, all such insurers shall subscribe thereto and shall
participate therein. Such plan or plans shall include rules for
classification of risks and rates therefor by driver classification and
territory. Any insured placed with the plan shall be notified of the fact
that insurance coverage is being afforded through the plan and not
through the private market, and such notification shall be given in
writing within ten days of such placement. To assure that plan rates are
made adequate to pay claims and expenses, insurers shall develop a
means of obtaining loss and expense experience at least annually, and
the plan shall file such experience, when available, with the department
in sufficient detail to make a determination of rate adequacy.
(B) The plan of operation shall provide for economic, fair, and
nondiscriminatory administration and for the prompt and efficient
provision of insurance and may contain other provisions, including, but
not limited to, preliminary assessment of all members for initial
expenses necessary to commence operations, establishment of necessary
facilities, management of the association, assessment of the members to
defray losses and expenses, commission arrangements, reasonable and
objective underwriting standards, appointment of servicing carriers, and
procedures for determining amounts of insurance to be provided by the
association.
(C) Trend factors shall not be found to be inappropriate if not in
excess of trend factors normally used in the development of residual
market rates by the appropriate licensed rating organization. Each
application for coverage in the plan shall include, in boldfaced 12-point
type immediately preceding the applicant's signature, the following
statement:
`THIS INSURANCE IS BEING AFFORDED THROUGH THE
SOUTH CAROLINA JOINT UNDERWRITING ASSOCIATION AND
NOT THROUGH THE PRIVATE MARKET. PLEASE BE ADVISED
THAT COVERAGE WITH A PRIVATE INSURER MAY BE
AVAILABLE FROM ANOTHER AGENT AT A LOWER COST.
AGENT AND COMPANY LISTINGS ARE AVAILABLE IN THE
LOCAL YELLOW PAGES.'
(D) The plan of operation shall provide that any profit achieved by
the association must be added to the reserves of the association or
returned to the policyholders as a dividend but under no circumstances
whatsoever shall any profit be paid over to or received by an insurer
either in currency or any other benefit of any kind.
(E) Amendments to the plan of operation may be made by the
directors of the association with the approval of the commissioner or
must be made at the direction of the commissioner after proper notice
and public hearing.
(F) The association may not 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,
(5) two hundred fifty thousand dollars of added personal
protection benefits or personal protection liability limits up to the limits
of the personal protection benefits.
(G) If a driver covered by the association maintains a driving record
without a chargeable accident or driving conviction for three
consecutive years while they are covered by the association, the
association must attempt to place the driver with an insurer in the
voluntary market. This provision does not preclude the driver from
seeking automobile insurance coverage on the voluntary market at any
other time. If a driver has not been able to purchase insurance on the
voluntary market after seven consecutive years of maintaining a driving
record with no chargeable accidents or driving convictions the driver
must be placed by the association with an automobile insurance
company doing business in the voluntary market in this State. The
company must be chosen based on its percentage of automobile
insurance business written in this State on the voluntary market. The
company may charge the driver any one of the company's four rates
according to driver classification and territory. A driver assigned under
this provision may not be refused insurance until the driver fails to
qualify for the safe driver discount.
Section 38-77-1370. The rates, rating plans, rating rules, rating
classifications, territories, and policy forms applicable to insurance
written by the association and the statistical and experience data relating
thereto are subject to this chapter and to those provisions of Chapter 73
of Title 38 which are not inconsistent with this chapter.
Section 38-77-1380. The commissioner shall obtain complete
statistical data in respect to automobile insurance losses and reparation
costs as well as all other costs or expenses which underlie or are related
to automobile insurance. The commissioner shall promulgate any
statistical plan he considers necessary for the purpose of gathering data
referable to loss and loss adjustment expense experience and other
expense experience. When the statistical plan is promulgated, the
association shall adopt and use it.
Section 38-77-1390. In structuring rates and determining the profit
or loss of the association in respect to such insurance, consideration
must be given by the commissioner to all investment income so that
investment income is a part of the ratemaking and ratesetting process.
Section 38-77-1395. No later than sixty days after the passage of
this act, the board must file with the commissioner rates for personal
protection policies as may be defined by law and rates for private
passenger automobile insurance liability coverages, uninsured motorist
coverages, and underinsured motorist coverages. All of these rates are
subject to surcharges or discounts, if any, applicable under any approved
Merit Rating Plan, credit, or discount plan promulgated or approved by
the commissioner. The board must file:
(1) a standard rate by driver classification and territory fifteen
percent less than the rate defined in (2). This rate applies to all private
passenger automobile insurance risks which qualify for the safe driver
discount and are insured directly by or ceded to the association; and
(2) a rate by driver classification and territory less than the rate
defined in (3) which applies to all private passenger automobile
insurance risks which have between one and three merit surcharge points
and are insured directly by or ceded to the association; and
(3) a rate by driver classification and territory less than the rate
defined in (4) which applies to all private passenger automobile
insurance risks which have between four and ten merit surcharge points
and are insured directly by or ceded to the association; and
(4) a rate by driver classification and territory which applies to all
private passenger automobile insurance risks which have more than ten
merit surcharge points and are insured directly by or ceded to the
association.
These four rates must be construed so that when the experience
generated by them is combined, the association is able to provide private
passenger automobile insurance on a self-supporting basis.
Upon the approval of these rates, they must be utilized for all private
passenger automobile insurance risks either ceded to or insured directly
by the association. The association must submit policy forms, rating
plans, and rating rules applicable to insurance to be written by the
association to the commissioner for his approval.
Section 38-77-1400. The premium rate charged for coverage must
be at rates established on an actuarially sound basis, including
consideration of trends in the frequency and severity of losses and must
be calculated to be self-supporting.
Section 38-77-1410. The association may provide a rate increase or
assessment subject to the commissioner's approval.
Section 38-77-1420. Any deficit sustained by the association in any
year must be recouped, pursuant to the plan of operation and the rating
plan then in effect, by one or both of the following procedures:
(1) an assessment upon the policyholders, which may not exceed
one additional annual premium at the then current rate;
(2) a rate increase applicable prospectively.
Section 38-77-1430. After the initial year of operation, rates, rating
plans, and rating rules and any provision for recoupment through
policyholder assessment or premium rate increase must be based upon
the association's loss and expense experience and investment income,
together with any other information based upon this experience and
income as the commissioner considers appropriate. The resultant
premium rates must be on an actuarially sound basis and must be
calculated to be self-supporting.
If sufficient funds are not available for the sound financial operation
of the association, pending recoupment as provided in Section 38-77-1420, all members, on a temporary basis, shall contribute to the financial
requirements of the association in the manner provided for in Section
38-77-1440. Any such contribution must be reimbursed to the members
following recoupment as provided in Section 38-77-1420.
Section 38-77-1440. All insurers which are members of the
association shall participate in its writings, expenses, and losses in the
proportion that the net direct premiums of each member, excluding that
portion of premiums attributable to the operation of the association,
written during the preceding calendar year bear to the aggregate net
direct premiums written in this State by all members of the association.
Each insurer's participation in the association must be determined
annually on the basis of the net direct premiums written during the
preceding calendar year, as reported in the annual statements and other
reports filed by the insurer with the commissioner. No member may be
obligated in any one year to reimburse the association because of its
proportionate share in the deficit from operations of the association in
that year in excess of one percent of its surplus to policyholders and the
aggregate amount not so reimbursed must be reallocated among the
remaining members in accordance with the method of determining
participation prescribed in this section after excluding from the
computation the total net direct premiums of all members not sharing in
the excess deficit. If the deficit from operations allocated to all members
of the association in any calendar year exceeds one percent of their
respective surplus to policyholders, the amount of the deficit must be
allocated to each member in accordance with the method of determining
participation prescribed in this section.
Section 38-77-1450. Every member of the association is bound by
the approved plan of operation of the association and the rules of the
board of directors of the association.
Section 38-77-1460. (A) If the authority of an insurer to transact
automobile insurance in this State terminates for any reason, its
obligations as a member of the association continue until all its
obligations are fulfilled and the commissioner has so found and certified
to the board of directors.
(B) If a member insurer merges into or consolidates with another
insurer authorized to transact insurance in this State or another insurer
authorized to transact insurance in this State has reinsured the insurer's
entire automobile insurance business in this State, both the insurer and
its successor or assuming reinsurer, as the case may be, are liable for the
insurer's obligations to the association.
(C) Any unsatisfied net liability of any insolvent member of the
association must be assumed by and apportioned among the remaining
members in the same manner in which assessments or gain and loss are
apportioned and the association shall acquire and have all rights and
remedies allowed by law in behalf of the remaining members against the
estate or funds of the insolvent insurer for funds due the association.
Section 38-77-1470. The joint underwriting association is governed
by a board of seven directors, one of whom is appointed by the
Governor to represent the general public and four of whom are
appointed by the Governor and represent automobile insurers who are
members of the association. Two directors, appointed by the Governor,
are agents authorized to represent automobile insurers licensed to do
business in this State.
The approved plan of operation of the association may make
provision for combining insurers under common ownership or
management into groups for voting, assessment, and all other purposes
and may provide that not more than one of the officers or employees of
such a group may serve as a director at any one time. The board of
directors shall elect a chairman by majority vote and he, or his designee,
must preside at all meetings of the board.
Section 38-77-1480. Any applicant for insurance through the
association or any insurer adversely affected, or claiming to be adversely
affected, by any ruling, action, or decision by or on behalf of the
association, may appeal to the commissioner within thirty days after the
ruling, action, or decision.
Section 38-77-1490. The association shall file in the office of the
commissioner annually by March first a statement containing
information with respect to its transactions, condition, operations, and
affairs during the preceding year. The statement shall contain
information prescribed by the commissioner and must be in the form he
directs.
The commissioner, at any reasonable time, may require the
association to furnish additional information concerning its transactions,
condition, or any matter connected therewith considered to be material
and of assistance in evaluating the scope, operations, and experience of
the association.
Section 38-77-1500. The commissioner shall make an examination
into the financial condition and affairs of the association at least
annually and shall file a report thereon with the Commission, the
Governor, and the General Assembly. The expenses of the examination
must be paid by the association."
SECTION 2. 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. (A) An automobile insurer
shall offer two four 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 All 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.
(B) No later than ninety days after the passage of this act,
insurers of automobile insurance must file with the commissioner rates
for personal protection policies as defined by Section 38-78-30 and
revised rates for all other private passenger automobile insurance
policies written by them. Each insurer must file:
(1) a `preferred' rate by driver classification and territory, which
is a rate less than the standard rate defined herein. This rate applies to
private passenger automobile insurance risks which qualify for the safe
driver discount; and
(2) a `standard' rate which must be the approved base rate as
defined in Section 38-73-457, by driver classification and territory in
effect on July 1, 1994. This rate applies to private passenger automobile
insurance risks which qualify for the safe driver discount; and
(3) a `nonpreferred' rate by driver classification and territory,
which is a rate more than the standard rate but less than the rate by
driver classification and territory for the substandard rate and is
applicable to all private passenger automobile insurance risks; and
(4) a `substandard' rate by driver classification and territory,
which is a rate more than the nonpreferred rate but less than or equal to
the substandard rate by driver classification and territory for the South
Carolina Joint Underwriting Association, as provided for in Article 13
of Chapter 77 of Title 38, and is applicable to all private passenger
automobile risks.
(C) The commissioner must approve the rates filed pursuant to
subsection (A). If the rates are approved, the rates shall become
effective for all policies of automobile insurance issued or renewed with
effective dates on or after January 1, 1997.
(D) Insurers may place any automobile insurance risk at any of the
four rate levels without restriction unless provided otherwise in this
chapter. An insurer or agent shall provide written notice to the insurer
of the tier at which coverage is being written for the insured and the
reasons the insured was written in that particular tier. However, the
Uniform Merit Rating Plan must continue to apply to all risks written by
them.
(E) An applicant and all operators of the insured automobile who
have qualified for the safe driver discount for the last five years and who
reside in the same household, and the automobile or the automobile it
replaced has been insured for liability or personal protection coverage
for the past twelve months must be written at the preferred or standard
rate and may not be ceded to the Joint Underwriting Association. A
driver who is claimed as a dependent for income tax purposes is not
required to meet the five year requirement as long as the dependent
qualifies for the safe driver discount.
(F) An applicant and all operators of the insured automobile who
have qualified for the safe driver discount for the last ten years and who
reside in the same household and the automobile or the automobile it
replaced has been insured for liability or personal protection coverage
for the past twelve months must be written at the preferred rate and may
not be ceded to the Joint Underwriting Association. A driver who is
claimed as a dependent for income tax purposes is not required to meet
the ten year requirement as long as the dependent qualifies for the safe
driver discount.
(G) All policies of automobile insurance issued or renewed with
effective dates on or after October 1, 1996, that are written by
automobile insurers designated pursuant to Section 38-77-590(A), for
risks written by them through producers designated pursuant to that
same section, and all policies ceded to the Joint Underwriting
Association by automobile insurers must be written at the rates provided
for in Section 38-77-1395. However, the Uniform Merit Rating Plan
must apply to all such risks.
(H) The Board of Directors of the association must file rates by
driver classification and territory for both the personal protection
policies as defined by Section 38-78-30, liability coverages, and
uninsured motorist coverage.
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 an 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 or
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) (I) 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) (J) 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 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."
SECTION 3. Article 5 of Chapter 77 of Title 38 of the 1976 Code is
repealed.
SECTION 4. Except as otherwise specifically provided herein, this act
takes effect upon approval by the Governor.
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