H*4490 Session 111 (1995-1996)
H*4490(Rat #0387, Act #0326 of 1996) General Bill, By
House Labor, Commerce and Industry
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Section
38-73-775 so as to require the South Carolina Reinsurance Facility annually to
develop and file physical damage loss components for automobile insurance
coverages; to amend Sections 37-2-202 and 37-3-202, both as amended, relating
to additional charges a creditor and consumer lender, respectively, may
charge, so as to require that when single interest collision coverage is
written in connection with the purchase of a motor vehicle, notice must be
given that the coverage is for the benefit of the creditor and of other
options available to the buyer; to amend Section 38-77-10, as amended,
relating to the purposes of the Automobile Insurance Chapter, so as to clarify
that the purposes apply to the bodily injury liability and property damage
liability automobile insurance; to amend Section 38-77-30, as amended,
relating to definitions under automobile insurance, so as to add the
definition of "facility physical damage rate"; to amend Section 38-77-110, as
amended, relating to the requirement to write automobile insurance, so as to
clarify that this requirement applies to bodily injury liability and property
damage liability coverages; to amend Section 38-77-280, as amended, relating
to collision and comprehensive coverages, so as to delete certain coverage
requirements, to allow rather than require insurers to make available
collision coverage and comprehensive or fire, theft, and combined additional
coverage, to authorize ceding physical damage insurance coverage to the
Facility, to prohibit discrimination on certain grounds in determining rates
or whether to write or renew coverage, and to provide penalties; and to amend
Section 38-77-920, as amended, relating to duties and rights of insurers and
agents, so as to clarify that automobile insurance refers to bodily injury
liability and property damage liability.
01/24/96 House Introduced, read first time, placed on calendar
without reference HJ-12
01/30/96 House Objection by Rep. S. Whipper, Cobb-Hunter,
Anderson, McMahand, Scott, Neal, Cato, Law,
Young-Brickell, Mason, Walker, R. Smith &
Williams HJ-18
02/07/96 House Read second time HJ-27
02/07/96 House Roll call Yeas-105 Nays-0 HJ-29
02/08/96 House Read third time and sent to Senate HJ-15
02/08/96 Senate Introduced and read first time SJ-8
02/08/96 Senate Referred to Committee on Banking and Insurance SJ-8
04/16/96 Senate Committee report: Favorable Banking and Insurance SJ-17
04/23/96 Senate Read second time SJ-37
04/23/96 Senate Ordered to third reading with notice of
amendments SJ-37
05/02/96 Senate Read third time and enrolled SJ-17
05/14/96 Ratified R 387
05/20/96 Signed By Governor
05/20/96 Effective date 10/01/96 unless otherwise specified
05/31/96 Copies available
05/31/96 Act No. 326
(A326, R387, H4490)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING SECTION 38-73-775 SO AS TO
REQUIRE THE SOUTH CAROLINA REINSURANCE FACILITY
ANNUALLY TO DEVELOP AND FILE PHYSICAL DAMAGE LOSS
COMPONENTS FOR AUTOMOBILE INSURANCE COVERAGES; TO
AMEND SECTIONS 37-2-202 AND 37-3-202, BOTH AS AMENDED,
RELATING TO ADDITIONAL CHARGES A CREDITOR AND
CONSUMER LENDER, RESPECTIVELY, MAY CHARGE, SO AS TO
REQUIRE THAT WHEN SINGLE INTEREST COLLISION
COVERAGE IS WRITTEN IN CONNECTION WITH THE
PURCHASE OF A MOTOR VEHICLE, NOTICE MUST BE GIVEN
THAT THE COVERAGE IS FOR THE BENEFIT OF THE CREDITOR
AND OF OTHER OPTIONS AVAILABLE TO THE BUYER; TO
AMEND SECTION 38-77-10, AS AMENDED, RELATING TO THE
PURPOSES OF THE AUTOMOBILE INSURANCE CHAPTER, SO AS
TO CLARIFY THAT THE PURPOSES APPLY TO THE BODILY
INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY
AUTOMOBILE INSURANCE; TO AMEND SECTION 38-77-30, AS
AMENDED, RELATING TO DEFINITIONS UNDER AUTOMOBILE
INSURANCE, SO AS TO ADD THE DEFINITION OF
"FACILITY PHYSICAL DAMAGE RATE"; TO AMEND
SECTION 38-77-110, AS AMENDED, RELATING TO THE
REQUIREMENT TO WRITE AUTOMOBILE INSURANCE, SO AS
TO CLARIFY THAT THIS REQUIREMENT APPLIES TO BODILY
INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY
COVERAGES; TO AMEND SECTION 38-77-280, AS AMENDED,
RELATING TO COLLISION AND COMPREHENSIVE COVERAGES,
SO AS TO DELETE CERTAIN COVERAGE REQUIREMENTS, TO
ALLOW RATHER THAN REQUIRE INSURERS TO MAKE
AVAILABLE COLLISION COVERAGE AND COMPREHENSIVE OR
FIRE, THEFT, AND COMBINED ADDITIONAL COVERAGE, TO
AUTHORIZE CEDING PHYSICAL DAMAGE INSURANCE
COVERAGE TO THE FACILITY, TO PROHIBIT DISCRIMINATION
ON CERTAIN GROUNDS IN DETERMINING RATES OR WHETHER
TO WRITE OR RENEW COVERAGE, AND TO PROVIDE
PENALTIES; AND TO AMEND SECTION 38-77-920, AS AMENDED,
RELATING TO DUTIES AND RIGHTS OF INSURERS AND
AGENTS, SO AS TO CLARIFY THAT AUTOMOBILE INSURANCE
REFERS TO BODILY INJURY LIABILITY AND PROPERTY
DAMAGE LIABILITY.
Be it enacted by the General Assembly of the State of South
Carolina:
Reinsurance Facility annually to file physical damage loss
component
SECTION 1. The 1976 Code is amended by adding:
"Section 38-73-775. (A) The governing board of the South
Carolina Reinsurance Facility annually shall develop and file physical
damage loss components for automobile insurance coverages based on the
total experience of all risks ceded to the facility which are
actuarially-sound and supported by statistical evidence. The governing
board shall contract with independent actuarial services to develop the
loss component. Due consideration must be given to actual loss
experience within the facility for the most recent three-year period for
which such information is available.
(B) The loss component developed under this section is applicable to
the risk and territorial classification plan promulgated and approved by
the director or the director's designee. Nothing in this section precludes
the governing board of the South Carolina Reinsurance Facility from
filing for approval, or the Director of the Department of Insurance from
requiring the governing board to file for approval, variations in loss
components and rates which are based upon differences in risk
characteristics including, but not limited to, differences in driving
records.
(C) The governing board of the South Carolina Reinsurance Facility
annually shall review the automobile physical damage loss components to
determine if they are actuarially sound and supported by statistical
evidence. If rate changes are required, the governing board shall submit
appropriate filings for approval with the director. These rate filings are
subject to public hearings pursuant to applicable provisions of the
Administrative Procedures Act."
Creditor notice required on single interest collision coverage
SECTION 2. Section 37-2-202(2)(c) of the 1976 Code is amended to
read:
"(c) with respect to vendor's single interest insurance, but only
(i) to the extent that the insurer has no right of subrogation against the
consumer, and (ii) to the extent that the insurance does not duplicate the
coverage of other insurance under which loss is payable to the creditor as
his interest may appear, against loss of or damage to property for which
a separate charge is made to the consumer pursuant to paragraph (a), and
(iii) if a clear, conspicuous, and specific statement in writing is furnished
by the creditor to the consumer setting forth the cost of the insurance if
obtained from or through the creditor and stating that the consumer may
choose the person through whom the insurance is to be obtained, and (iv)
upon application of the consumer for the insurance or for a transaction in
which this coverage may be offered in connection with the purchase of a
motor vehicle or with the placement of a motor vehicle as collateral, the
following notice printed in no smaller than bold-face 13-point type:
`NOTICE: THE INSURANCE COVERAGE YOU ARE
PURCHASING IS FOR THE BENEFIT OF THE CREDITOR. IT
WILL NOT REIMBURSE YOU FOR DAMAGES TO YOUR
VEHICLE, BUT IT MAY PAY THE CREDITOR FOR THE
DAMAGES IF YOU CANNOT PAY. YOU HAVE THE RIGHT TO
PURCHASE INSURANCE THAT WILL REIMBURSE YOU FOR
DAMAGES TO YOUR VEHICLE EITHER THROUGH THE
CREDITOR IF OFFERED BY THE CREDITOR OR THROUGH YOUR
OWN AGENT.'
This notice must be signed by the applicant evidencing his
acknowledgment of having read the notice, and be separate and apart
from any other form used in the application."
Consumer lender notice required on single interest collision
coverage
SECTION 3. Section 37-3-202(2)(c) of the 1976 Code is amended to
read:
"(c) vendor's single interest insurance, but only:
(i) to the extent that the insurer has no right of subrogation against
the debtor;
(ii) to the extent that the insurance does not duplicate the coverage
of other insurance under which loss is payable to the creditor as his
interest may appear, against loss of or damage to property for which a
separate charge is made to the debtor pursuant to paragraph (a); and
(iii) if a clear, conspicuous, and specific statement in writing is
furnished by the creditor to the debtor setting forth the cost of the
insurance if obtained from or through the creditor and stating that the
debtor may choose the person through whom the insurance is to be
obtained; and
(iv) upon application of the consumer for the insurance or for a
transaction in which this coverage may be offered in connection with the
purchase of a motor vehicle or with the placement of a motor vehicle as
collateral, the following notice printed in no smaller than bold-face
13-point type:
`NOTICE: THE INSURANCE COVERAGE YOU ARE
PURCHASING IS FOR THE BENEFIT OF THE CREDITOR. IT
WILL NOT REIMBURSE YOU FOR DAMAGES TO YOUR
VEHICLE, BUT IT MAY PAY THE CREDITOR FOR THE
DAMAGES IF YOU CANNOT PAY. YOU HAVE THE RIGHT TO
PURCHASE INSURANCE THAT WILL REIMBURSE YOU FOR
DAMAGES TO YOUR VEHICLE EITHER THROUGH THE
CREDITOR IF OFFERED BY THE CREDITOR OR THROUGH YOUR
OWN AGENT.'
This notice must be signed by the applicant evidencing his
acknowledgment of having read the notice, and be separate and apart
from any other form used in the application;"
Bodily injury and property damage liability included in purposes of
this chapter
SECTION 4. Section 38-77-10(1) and (2) of the 1976 Code, as last
amended by Act 181 of 1993, is further amended to read:
"(1) To provide that every automobile insurance risk which is
insurable on the basis of the criteria established in this chapter is entitled
to bodily injury liability and property damage liability 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 department so long as all
these applicants or insureds have satisfied the same objective standards as
established in Sections 38-77-280 and 38-73-455;
(2) To provide a Reinsurance Facility for bodily injury liability and
property damage liability automobile insurers in which all automobile
insurers which provide bodily injury liability insurance, property damage
liability insurance, or both, must participate to the end that the operating
expenses and net profit or loss of the facility may be shared equitably by
all the insurers transacting bodily injury liability and property damage
liability automobile insurance business in this State giving appropriate
consideration to degrees of utilization of the facility by the several
insurers of bodily injury liability and property damage liability
automobile insurance and to provide prohibitions or penalties in respect
to excessive utilization of the facility."
Definition added
SECTION 5. Section 38-77-30 of the 1976 Code, as last amended by
Act 181 of 1993, is further amended by adding an appropriately
numbered item to read:
"( ) `Facility physical damage rate' means the final rate or
premium charge for physical damage coverage which must be established
by adding the physical damage loss component developed under Section
38-73-780 to the expense component developed under Section
38-73-1420."
The requirement to write automobile insurance includes bodily injury
and property damage liability coverage
SECTION 6. Section 38-77-110(A) of the 1976 Code, as last amended
by Act 181 of 1993, is further amended to read:
"(A) Automobile insurers other than insurers designated and
approved as specialized insurers by the director or his designee may not
refuse to write or renew automobile insurance policies for bodily injury
liability and property damage liability coverage 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. 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."
Coverage requirements revised; ceding physical damage insurance
coverage authorized; discrimination prohibited, penalties
SECTION 7. Section 38-77-280 of the 1976 Code, as last amended by
Act 181 of 1993, is further amended to read:
"Section 38-77-280. (A) All automobile insurers, including
those insurance companies writing private passenger physical damage
coverages only, may, at their own election, make collision coverage and
either comprehensive or fire, theft, and combined additional coverage
available to an insured or qualified applicant who requests the coverage
at such rates and under such rules as have been approved by the director.
Automobile insurers contracted pursuant to Section 38-77-590 for risks
written by them through producers assigned by the facility governing
board pursuant to that section may make available collision coverage and
either comprehensive or fire, theft, and combined additional coverage
available to an insured or qualified applicant who requests the coverage.
Notwithstanding Section 38-77-590(g), a designated producer may have
one or more voluntary outlets for automobile physical damage.
(B) Any automobile physical damage insurance coverage deductible or
policy deductible does not apply to automobile safety glass.
(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 the uniform merit rating plan which existed before the commencement
of the policy period and which were not disclosed to the insurer at the
commencement of the policy period.
(D) No policy of insurance which provides automobile physical
damage coverage only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for physical
damage insurance coverages different than those provided for in Section
38-73-457 if the rates are filed with the department and approved by the
director or his designee. Notwithstanding Section 38-77-111, automobile
physical damage insurance coverage may be ceded to the facility.
However, automobile physical damage coverages ceded to the facility by
an insurer or servicing carrier must be at the facility physical damage rate
as defined in Section 38-77-30.
(F) In determining the premium rates to be charged on physical
damage coverage or single interest collision coverage, it is unlawful to
consider race, color, creed, religion, national origin, ancestry, location of
residence in this State, economic status, or income level. Nor may an
insurer, agent, or broker refuse to write or renew physical damage
insurance coverage or single interest collision coverage based upon race,
color, creed, religion, national origin, ancestry, location of residence in
this State, economic status, or income level. However, nothing in this
subsection may preclude the use of a territorial plan approved by the
director. If the Director of the Department of Insurance or the director's
designee finds that an insurer, agent, or broker is participating in a
pattern of unfair discrimination, the director or the director's designee
may impose a fine of up to two hundred thousand dollars. The director
or the director's designee at any time may examine an insurer, agent, or
broker to enforce this section. The expense of examination must be paid
by the insurer, agent, or broker."
Duties and rights of insurers include bodily injury and property
damage liability duties and rights
SECTION 8. Section 38-77-920 of the 1976 Code, as last amended by
Section 828 of Act 181 of 1993, 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 bodily injury liability and
property damage liability 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 bodily injury
liability and property damage liability automobile insurance may refuse to
accept in behalf of an insurer represented by him bodily injury liability
and property damage liability automobile insurance for an insurable risk
where the applicant for insurance designates by name or description the
insurer of his choice. If the applicant relies upon the skill and judgment
of the agent to place the risk in any insurer represented by the agent, the
agent may place the risk in the insurer which he considers appropriate.
No insurer may agree, collude, or conspire with an agent or give, offer,
or promise an agent anything of value to place any risk or any class or
type of risk under such circumstances in another insurer. Every such
agreement is utterly void and every act of collusion or conspiracy
constitutes an act of unfair competition by both the insurer and agent
which, if proved, must result in the suspension or revocation of the
license of each for not less than one year, in addition to any other
penalties or liabilities applicable.
No automobile insurer authorized to transact bodily injury liability and
property damage liability automobile insurance in this State which offers
bodily injury liability and property damage liability automobile insurance
through the mails or uses the mails in transacting bodily injury liability
and property damage liability 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 director or his
designee is directed to examine an insurer's records at any time the
director or his designee considers it necessary to determine that the
insurer is not so restricting or limiting its offerings."
Initial reporting
SECTION 9. The development of the initial physical damage loss
components for automobile insurance coverages required by Section
38-73-775 of the 1976 Code, as added by Section 1 of this act, must be
filed and approved by October 1, 1996, and this filing is not required to
comply with the otherwise applicable provisions of the Administrative
Procedures Act.
Time effective
SECTION 10. This act takes effect October 1, 1996, unless otherwise
specified.
Approved the 20th day of May, 1996. |