H 3959 Session 112 (1997-1998)
H 3959 General Bill, By Cato
A BILL TO AMEND SECTION 38-73-1420, AS AMENDED, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO THE REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE
REINSURANCE FACILITY FILE AN EXPENSE COMPONENT FOR PRIVATE PASSENGER
AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES, SO AS TO DELETE THE CURRENT
PROVISIONS OF THE SECTION.-SHORT TITLE
04/10/97 House Introduced and read first time HJ-83
04/10/97 House Referred to Committee on Labor, Commerce and
Industry HJ-84
A BILL
TO AMEND SECTION 38-73-1420, AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE
REINSURANCE FACILITY FILE AN EXPENSE COMPONENT
FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE
RATE OR PREMIUM CHARGES, SO AS TO DELETE THE
CURRENT PROVISIONS OF THE SECTION AND PROVIDE,
AMONG OTHER THINGS, THAT BEGINNING APRIL 30, 1998
THE BOARD OF GOVERNORS OF THE FACILITY, UTILIZING
DATA PROVIDED TO IT BY THE INSURANCE
DEPARTMENT'S STATE RATING AND STATISTICAL
DIVISION AND BY ANY CONTRACT STATISTICAL AGENT
FOR THE FACILITY, ANNUALLY MUST FILE A PURE LOSS
COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE
LIABILITY INSURANCE, THAT THE PURE LOSS
COMPONENT MUST BE DEVELOPED AS AN AVERAGE FOR
ALL INSURED VEHICLES REGISTERED IN SOUTH
CAROLINA, AND THAT UPON THE APPROVAL OF THAT
PURE LOSS COMPONENT BY THE ADMINISTRATIVE LAW
JUDGE DIVISION PURSUANT TO THE PROVISIONS OF
SECTION 38-73-1370, BUT IN NO EVENT LATER THAN JUNE
THIRTIETH, THE BOARD OF GOVERNORS ANNUALLY
MUST FILE AN EXPENSE COMPONENT FOR PRIVATE
PASSENGER AUTOMOBILE LIABILITY INSURANCE; TO
AMEND SECTION 38-77-590, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE, THE REINSURANCE FACILITY,
AND DESIGNATED PRODUCERS, SO AS TO ADD
PROVISIONS WHICH PROVIDE, AMONG OTHER THINGS,
FOR THE REDESIGNATION OF CERTAIN TERMINATED
PRODUCERS WITHOUT HAVING TO MEET CERTAIN
SPECIFIED REQUIREMENTS OF THIS SECTION; AND TO
AMEND SECTION 38-77-950, AS AMENDED, RELATING TO
UNREASONABLE OR EXCESSIVE USE OF THE
REINSURANCE FACILITY BY AN AUTOMOBILE INSURER,
SO AS TO PROVIDE THAT PRIVATE PASSENGER
AUTOMOBILE LIABILITY INSURANCE PREMIUMS WRITTEN
THROUGH A PRODUCER CONTRACTING BY CERTAIN
PROVISIONS OF SECTION 38-77-590 MUST NOT COUNT
TOWARD THAT THIRTY-FIVE PERCENT CESSION
LIMITATION DURING THE FIRST TWENTY-FOUR MONTHS
THAT THAT PRODUCER IS UNDER CONTRACT.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 38-73-1420 of the 1976 Code, as amended
by Section 783 of Act 181 of 1993, is further 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 director or his
designee. Upon the approval of such component by the director or
his designee, 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. Beginning April
30, 1998, the Board of Governors of the South Carolina Reinsurance
Facility, utilizing data provided to it by the department's State Rating
and Statistical Division and by any contract statistical agent for the
Reinsurance Facility, annually must file a pure loss component for
private passenger automobile liability insurance. The pure loss
component must be developed as an average for all insured vehicles
registered within this State. Upon approval of that pure loss
component by the Administrative Law Judge Division pursuant to the
provisions of Section 38-73-1370, but in no event later than June
thirtieth, the Board of Governors annually must file an expense
component for private passenger automobile liability insurance.
Upon approval of that expense component by the Administrative Law
Judge Division pursuant to the provisions of Section 38-73-1380,
insurers designated pursuant to Section 38-77-950(a) must utilize the
pure loss component and expense component for all risks written
through them by producers designated before June 7, 1985 pursuant
to Section 38-77-590(a) or after June 7, 1985, pursuant to Section
38-77-590(c). However, any increase in designated producer rates
over the rates resulting from the calculation formula in effect before
April 30, 1998, must be phased-in over a three-year period. "
SECTION 2. Section 38-77-590 of the 1976 Code, as last amended
by Sections 821 through 825 of Act 181 of 1993, is further amended
by adding:
"(i) Notwithstanding any other provision of this section or other
provision of law, any producer designated by a chief insurance
commissioner before June 7, 1985 and any producer designated by
the Governing Board of the Reinsurance Facility after June 7, 1985
who enters into an agreement after the effective date of this
subsection (i) to write private passenger automobile liability
insurance on behalf of an insurer not designated pursuant to the
provisions of Section 38-77-590(a) may, if terminated by that insurer
within the first thirty-six months of that agreement, be redesignated
by the Governing Board of the Reinsurance Facility without meeting
the requirements of subsection (c) of this section."
SECTION 3. Section 38-77-950 of the 1976 Code, as last amended
by Section 828 of Act 181 of 1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the facility
must not be excessively nor unreasonably utilized by automobile
insurers for unfairly competitive purposes or for purposes of unfairly
discriminating against certain classes or types of automobile
insurance risks having the same or similar objective risk
characteristics as other risks in the same class under the 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 director or his designee shall prohibit
unreasonable or excessive utilization of the facility. A prima facie
case of excessive or unreasonable utilization is established upon a
showing that an automobile insurance insurer or a group of insurers
under the same management has ceded or is about to cede more than
thirty-five percent of total direct cedeable written premiums on South
Carolina automobile insurance as reported in the most recently filed
annual statement of the insurer or group. However, private
passenger automobile liability insurance premiums written through
a producer contracting by the provisions of Section 38-77-590(i)
must not count toward that thirty-five percent cession limitation
during the first twenty-four months that that producer is under
contract. 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 are 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).
Total direct cedeable written premiums as used in this section do
not include premiums attributable to risks ceded to the facility that do
not qualify for the safe driver discount in Section 38-73-760(e) for
twenty-four months following October 1, 1993."
SECTION 4. Except as may otherwise specifically be provided in
this act, this act takes effect upon approval by the Governor.
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