H 4039 Session 111 (1995-1996)
H 4039 General Bill, By Richardson
Similar(H 3827)
A Bill to amend Section 38-73-1425, as amended, Code of Laws of South
Carolina, 1976, relating to the final rate or premium charge for private
passenger automobile insurance risk ceded to the South Carolina Reinsurance
Facility, so as to delete certain provisions, and provide, among other things,
that beginning January 1, 1995, and annually thereafter, the final rate or
premium charge for a private passenger automobile insurance risk ceded to the
Facility must be calculated so that the projected combined ratio for risks
subject to the final rate or premium charges is no more than one hundred
percent; to provide, among other things, that the provisions of Section
38-73-1425, as amended by this Act, are effective on January 1, 1996, and that
this rate adjustment to a projected combined ratio of one hundred perce
04/12/95 House Introduced and read first time HJ-27
04/12/95 House Referred to Committee on Labor, Commerce and
Industry HJ-27
A BILL
TO AMEND SECTION 38-73-1425, AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
FINAL RATE OR PREMIUM CHARGE FOR PRIVATE
PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO
THE SOUTH CAROLINA REINSURANCE FACILITY, SO AS
TO DELETE CERTAIN PROVISIONS, AND PROVIDE, AMONG
OTHER THINGS, THAT BEGINNING JANUARY 1, 1995, AND
ANNUALLY THEREAFTER, THE FINAL RATE OR PREMIUM
CHARGE FOR A PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE FACILITY MUST BE
CALCULATED SO THAT THE PROJECTED COMBINED
RATIO FOR RISKS SUBJECT TO THE FINAL RATE OR
PREMIUM CHARGES IS NO MORE THAN ONE HUNDRED
PERCENT; TO PROVIDE, AMONG OTHER THINGS, THAT
THE PROVISIONS OF SECTION 38-73-1425, AS AMENDED
BY THIS ACT, ARE EFFECTIVE ON JANUARY 1, 1996, AND
THAT THIS RATE ADJUSTMENT TO A PROJECTED
COMBINED RATIO OF ONE HUNDRED PERCENT OR LESS
MUST OCCUR EVENLY OVER A TWO-YEAR PERIOD
BEGINNING ON JANUARY 1, 1996; AND TO AMEND THE
1976 CODE BY ADDING SECTION 38-73-458 SO AS TO
PROVIDE, AMONG OTHER THINGS, THAT INSURERS OF
PRIVATE PASSENGER AUTOMOBILE INSURANCE AND
INDIVIDUAL MEMBERS OF RATING ORGANIZATIONS MAY
ELECT TO FILE PRIVATE PASSENGER AUTOMOBILE
INSURANCE RATES OR PREMIUM CHARGES UNDER THE
"INDEX FILE AND USE" RATING
METHODOLOGY DESCRIBED IN THIS SECTION.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. (A) Section 38-73-1425 of the 1976 Code, as
added by Act 113 of 1991 and as last amended by Section 783 of
Act 181 of 1993, is further amended to read:
"Section 38-73-1425. Beginning January 1, 1996, and
annually thereafter, the final rate or premium charge for a
private passenger automobile insurance risk ceded to the facility
which does not qualify for the safe driver discount in Section
38-73-760(e) is the final rate or premium charge required by
Section 38-73-1420 or the final rate or premium charge approved
for use by the insurer, whichever is greater must be
calculated so that the projected combined ratio for risks subject to
the final rate or premium charges is not more than one hundred
percent. The final rate or premium charge must be filed by the
Reinsurance Facility with the director for approval. Furthermore, in
calculating the final rate or premium charge, it must be based upon
the combined ratio of all insurers ceding private passenger
automobile insurance risks to the facility."
(B) The provisions of Section 38-73-1425, as amended by
Section 1(A) of this act, are effective on January 1, 1996. This rate
adjustment to a projected combined ratio of one-hundred percent or
less must occur evenly over a two-year period beginning on January
1, 1996. On January 1, 1996, the first year of the two-year period
begins for the rate adjustment and the two equal portions of this
rate adjustment shall be based upon the losses or combined ratios
reported by the facility on or about October 1, 1995. On January 1,
1997, the beginning of the last year of the two-period, the final rate
or premium charge for a private passenger automobile insurance
risk ceded to the facility shall include the remaining portion of the
rate adjustment along with, but not limited to, those adjustments, if
any, for losses or combined ratios reported by the facility after
October 1, 1995.
SECTION 2. The 1976 Code is amended by adding:
"Section 38-73-458. (A) Notwithstanding any other
provision of law, insurers of private passenger automobile insurance
and individual members of rating organizations may elect to file
private passenger automobile insurance rates or premium charges
under the `Index File and Use' rating methodology described in this
section.
(B) At least sixty days before their effective dates insurers of
private passenger automobile insurance shall file with the Director
of the Department of Insurance, or his designee, and the Consumer
Advocate proposed rates or premium charges and certify under oath
that the average of the overall change in the proposed rates or
premium charges for all classes, all territories, and all coverages is
equal to or less than the average annual change, for the previous
twelve-months, of the Consumer Price Index Medical Care
published by the United States Department of Labor, Monthly
Labor Review Gross Weekly Earnings published by the United
States Department of Labor, and Producer Price Index Motor
Vehicles and Equipment published by the United States Department
of Labor. Included in each filing also must be exhibits showing
what each change would be using the same twelve-months
Consumer Price Index published by the United States Department
of Labor. In addition, for each filing under this section, the insurer
shall file the rate report, with investment income and expense
exhibits, set forth in Section 38-73-465 of the 1976 Code.
(C) Filings meeting the requirements of this section are
considered approved after being on file at the Department of
Insurance for sixty days. However, insurers of private passenger
automobile insurance may elect only to file under the `Index File
and Use' rating methodology one time during a consecutive
six-month period, and the medical, labor, and motor vehicles and
equipment index in subsection (B) must be annualized
appropriately.
(D) If the Director of the Department of Insurance, or his
designee, finds that the filed proposed rates do not meet the
requirements of this section he may hold an expedited hearing on
the matter that need not meet the requirements of Chapter 23, Title
1, the Administrative Procedures Act. As a result of this hearing,
the commissioner may order the return of the filings to insurers for
failing to meet the requirements of this section.
(E) If the Director of the Department of Insurance, or his
designee, finds that the rates considered approved produce excess
profits described in Section 38-73-1100, he shall hold a hearing on
the matter in accordance with Section 38-73-1020. As a result of
this hearing, the Director of the Department of Insurance, or his
designee, may order a reduction in the rates previously considered
approved and order rebates as prescribed in Section 38-73-465 of
the 1976 Code. However, the amount of rates subject to rebate
must be no more than the difference between the filed rates as
approved and what they would have been using only the Consumer
Price Index referenced in this section."
SECTION 3. Except as otherwise specifically provided in this
act, this act takes effect upon approval by the Governor.
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