S 271 Session 110 (1993-1994)
S 0271 General Bill, By Reese
Similar(H 3656)
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Section
38-3-65 so as to allow the Chief Insurance Commissioner to suspend the
driver's license of a driver, for a period not to exceed thirty days, under
certain conditions and circumstances; to amend the 1976 Code by adding Section
38-73-458 so as to prohibit an automobile insurer from raising an insured's
premium based upon the insured's driving record or accident record, or
combination of both of these, or from removing an insured's safe driver
discount under certain conditions and circumstances, if the insured completes
and passes a safe driver course approved by the Commissioner; to amend the
1976 Code by adding Section 56-1-467 so as to provide that in addition to all
other penalties provided by law a person may have his license to drive
suspended for six months if he is convicted of, or pleads guilty or nolo
contendere to, five traffic offenses in a one-year period or is convicted of,
or pleads guilty or nolo contendere to, driving under the influence of alcohol
or drugs two or more times in a one-year period, and provide that this
suspension can be waived only upon a showing to the Commissioner of extreme
hardship and substantial rehabilitation; to amend Section 38-73-450, relating
to fairness of automobile insurance rates or premium charges, burden on
insurer to prove fairness, and factors to be considered by the Commissioner,
so as to require the Commissioner to take into account investment income from
all sources, all profits from every source, including investment income, both
active and passive, and earned interest, prohibit an insurer from claiming
reduced profit by doing, or failing to do, certain things, require that any
profit of an insurer exceeding ten percent per annum be refunded to its
insureds unless the insurer can demonstrate extreme and compelling hardship
justifying the refund of a lesser sum, and provide that a request for any rate
increase or premium increase may be denied or disapproved by taking into
account as a factor the inefficiency of the insurer or sufficient insurer
profit; to amend Section 38-73-455, as amended, relating to automobile
insurance rates, so as to delete the provisions relating to the Reinsurance
Facility; to amend Section 38-73-735, as amended, relating to plans or credits
or discounts to automobile insureds, so as to delete the provisions
authorizing the plans to be ceded to the Reinsurance Facility; to amend
Section 38-73-750, as amended, relating to the requirement that automobile
insurers file plans for allocating expenses and profit, so as to delete the
references to the Reinsurance Facility; to amend Section 38-73-760, as
amended, relating to uniform statistical plans for the automobile insurance
business, so as to delete the reference to the Reinsurance Facility; to amend
Section 38-77-30, as amended, relating to definitions pertaining to automobile
insurance, so as to delete the definition of the Reinsurance Facility; to
amend Section 38-77-285, as amended, relating to the requirement that all
automobile insurance coverages for an insured's automobile must be in one
policy, so as to provide for the requirement to apply to individual passenger
automobiles instead of vehicles ceded to the Reinsurance Facility; to provide
that nothing in this Act shall be construed to eliminate the mandate on
automobile insurers doing business in this State to write insurance for all or
for self-insured plans approved by the Commissioner to comply with the
financial responsibility statutes of this State, and to provide that nothing
in this Act shall be construed to eliminate compulsory insurance for all
drivers and compliance with the financial responsibility statutes; to require
the Commissioner to approve a ten percent reduction in rate or premium charges
used by automobile insurers; and to repeal Sections 38-73-1420 and 38-73-1425,
relating to the Reinsurance Facility and other matters, 38-77-920, relating to
the provision that insurers and agents may not refuse acceptance of automobile
insurance and related matters, 38-77-940, relating to automobile insurance and
avoiding certain classes or types of risks and canceling an agent's
representation, 38-77-950, relating to unreasonable or excessive use of the
Reinsurance Facility by an insurer, and 38-77-960, relating to automobile
insurance agent's business, and Article 5, Chapter 77, Title 38 relating to
the Reinsurance Facility.
01/26/93 Senate Introduced and read first time SJ-18
01/26/93 Senate Referred to Committee on Banking and Insurance SJ-19
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976,
BY ADDING SECTION 38-3-65 SO AS TO ALLOW THE CHIEF
INSURANCE COMMISSIONER TO SUSPEND THE DRIVER'S
LICENSE OF A DRIVER, FOR A PERIOD NOT TO EXCEED
THIRTY DAYS, UNDER CERTAIN CONDITIONS AND
CIRCUMSTANCES; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-73-458 SO AS TO PROHIBIT AN AUTOMOBILE
INSURER FROM RAISING AN INSURED'S PREMIUM BASED
UPON THE INSURED'S DRIVING RECORD OR ACCIDENT
RECORD, OR COMBINATION OF BOTH OF THESE, OR FROM
REMOVING AN INSURED'S SAFE DRIVER DISCOUNT UNDER
CERTAIN CONDITIONS AND CIRCUMSTANCES, IF THE
INSURED COMPLETES AND PASSES A SAFE DRIVER COURSE
APPROVED BY THE COMMISSIONER; TO AMEND THE 1976
CODE BY ADDING SECTION 56-1-467 SO AS TO PROVIDE
THAT IN ADDITION TO ALL OTHER PENALTIES PROVIDED
BY LAW A PERSON MAY HAVE HIS LICENSE TO DRIVE
SUSPENDED FOR SIX MONTHS IF HE IS CONVICTED OF, OR
PLEADS GUILTY OR NOLO CONTENDERE TO, FIVE TRAFFIC
OFFENSES IN A ONE-YEAR PERIOD OR IS CONVICTED OF,
OR PLEADS GUILTY OR NOLO CONTENDERE TO, DRIVING
UNDER THE INFLUENCE OF ALCOHOL OR DRUGS TWO OR
MORE TIMES IN A ONE-YEAR PERIOD, AND PROVIDE THAT
THIS SUSPENSION CAN BE WAIVED ONLY UPON A
SHOWING TO THE COMMISSIONER OF EXTREME HARDSHIP
AND SUBSTANTIAL REHABILITATION; TO AMEND SECTION
38-73-450, RELATING TO FAIRNESS OF AUTOMOBILE
INSURANCE RATES OR PREMIUM CHARGES, BURDEN ON
INSURER TO PROVE FAIRNESS, AND FACTORS TO BE
CONSIDERED BY THE COMMISSIONER, SO AS TO REQUIRE
THE COMMISSIONER TO TAKE INTO ACCOUNT INVESTMENT
INCOME FROM ALL SOURCES, ALL PROFITS FROM EVERY
SOURCE, INCLUDING INVESTMENT INCOME, BOTH ACTIVE
AND PASSIVE, AND EARNED INTEREST, PROHIBIT AN
INSURER FROM CLAIMING REDUCED PROFIT BY DOING, OR
FAILING TO DO, CERTAIN THINGS, REQUIRE THAT ANY
PROFIT OF AN INSURER EXCEEDING TEN PERCENT PER
ANNUM BE REFUNDED TO ITS INSUREDS UNLESS THE
INSURER CAN DEMONSTRATE EXTREME AND COMPELLING
HARDSHIP JUSTIFYING THE REFUND OF A LESSER SUM,
AND PROVIDE THAT A REQUEST FOR ANY RATE INCREASE
OR PREMIUM INCREASE MAY BE DENIED OR DISAPPROVED
BY TAKING INTO ACCOUNT AS A FACTOR THE
INEFFICIENCY OF THE INSURER OR SUFFICIENT INSURER
PROFIT; TO AMEND SECTION 38-73-455, AS AMENDED,
RELATING TO AUTOMOBILE INSURANCE RATES, SO AS TO
DELETE THE PROVISIONS RELATING TO THE REINSURANCE
FACILITY; TO AMEND SECTION 38-73-735, AS AMENDED,
RELATING TO PLANS FOR CREDITS OR DISCOUNTS TO
AUTOMOBILE INSUREDS, SO AS TO DELETE THE
PROVISIONS AUTHORIZING THE PLANS TO BE CEDED TO
THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-750, AS AMENDED, RELATING TO THE REQUIREMENT THAT
AUTOMOBILE INSURERS FILE PLANS FOR ALLOCATING
EXPENSES AND PROFIT, SO AS TO DELETE THE
REFERENCES TO THE REINSURANCE FACILITY; TO AMEND
SECTION 38-73-760, AS AMENDED, RELATING TO UNIFORM
STATISTICAL PLANS FOR THE AUTOMOBILE INSURANCE
BUSINESS, SO AS TO DELETE THE REFERENCE TO THE
REINSURANCE FACILITY; TO AMEND SECTION 38-77-30, AS
AMENDED, RELATING TO DEFINITIONS PERTAINING TO
AUTOMOBILE INSURANCE, SO AS TO DELETE THE
DEFINITION OF THE REINSURANCE FACILITY; TO AMEND
SECTION 38-77-285, AS AMENDED, RELATING TO THE
REQUIREMENT THAT ALL AUTOMOBILE INSURANCE
COVERAGES FOR AN INSURED'S AUTOMOBILE MUST BE IN
ONE POLICY, SO AS TO PROVIDE FOR THE REQUIREMENT
TO APPLY TO INDIVIDUAL PASSENGER AUTOMOBILES
INSTEAD OF VEHICLES CEDED TO THE REINSURANCE
FACILITY; TO PROVIDE THAT NOTHING IN THIS ACT SHALL
BE CONSTRUED TO ELIMINATE THE MANDATE ON
AUTOMOBILE INSURERS DOING BUSINESS IN THIS STATE
TO WRITE INSURANCE FOR ALL OR FOR SELF-INSURED
PLANS APPROVED BY THE COMMISSIONER TO COMPLY
WITH THE FINANCIAL RESPONSIBILITY STATUTES OF THIS
STATE, AND TO PROVIDE THAT NOTHING IN THIS ACT
SHALL BE CONSTRUED TO ELIMINATE COMPULSORY
INSURANCE FOR ALL DRIVERS AND COMPLIANCE WITH
THE FINANCIAL RESPONSIBILITY STATUTES; TO REQUIRE
THE COMMISSIONER TO APPROVE A TEN PERCENT
REDUCTION IN RATE OR PREMIUM CHARGES USED BY
AUTOMOBILE INSURERS; AND TO REPEAL SECTIONS 38-73-1420 AND 38-73-1425, RELATING TO THE REINSURANCE
FACILITY AND OTHER MATTERS, 38-77-920, RELATING TO
THE PROVISION THAT INSURERS AND AGENTS MAY NOT
REFUSE ACCEPTANCE OF AUTOMOBILE INSURANCE AND
RELATED MATTERS, 38-77-940, RELATING TO AUTOMOBILE
INSURANCE AND AVOIDING CERTAIN CLASSES OR TYPES
OF RISKS AND CANCELING AN AGENT'S REPRESENTATION,
38-77-950, RELATING TO UNREASONABLE OR EXCESSIVE
USE OF THE REINSURANCE FACILITY BY AN INSURER, AND
38-77-960, RELATING TO AUTOMOBILE INSURANCE AGENT'S
BUSINESS, AND ARTICLE 5, CHAPTER 77, TITLE 38
RELATING TO THE REINSURANCE FACILITY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-3-65. Notwithstanding any other provision of
law, the Chief Insurance Commissioner may suspend the driver's
license, for a period not to exceed thirty days, of any driver who has
caused two accidents in a single calendar year and has in each such
accident received a ticket and pled guilty or nolo contendere, been
convicted, or forfeited bond or, if no ticket was issued, signs a
statement on a form approved by the commissioner admitting fault and
indicating that, if a ticket had been issued, the driver would have pled
guilty or nolo contendere. The driver has twenty days to appeal such
suspension, in writing to the commissioner, and the commissioner may
waive the suspension or reduce the period of suspension below thirty
days only upon a showing by the driver of extreme hardship or
compelling special circumstances.
The provisions of this section are in addition to, and not in lieu of,
any other provision of law providing for driver license suspension and
appeal procedures."
SECTION 2. The 1976 Code is amended by adding:
"Section 38-73-458. Notwithstanding any other provision of
law, subject to appeal rights and limitations as provided by law no
automobile insurer may raise an insured's premium based upon the
insured's driving record or accident record, or a combination of the
insured's driving record and accident record, or remove an insured's
safe driver discount if the insured has had no traffic tickets or
accidents for which he received a ticket and was convicted, pled guilty
or nolo contendere, or forfeited bond in the preceding ten years prior
to the three-year period of having the combination of accidents or
traffic tickets described above, if the insured completes and passes a
safe-driver course approved by the Chief Insurance Commissioner.
The benefit of this provision may be utilized by an insured only one
time.
The intent of this section is to provide relief to drivers with a
lengthy history of accident-free and ticket-free driving."
SECTION 3. The 1976 Code is amended by adding:
"Section 56-1-467. (A) In addition to all other penalties
provided by law of any nature whatever, a person may have his
license to drive suspended for six months if:
(1) he is convicted of, or pleads guilty or nolo contendere to,
five traffic offenses in a one-year period; or
(2) he is convicted of, or pleads guilty or nolo contendere to,
driving under the influence of alcohol or drugs (Section 56-5-2930)
two or more times in a one-year period.
(B) The suspension provided for in subsection (A) can be waived
only upon a showing to the Chief Insurance Commissioner of extreme
hardship and substantial rehabilitation."
SECTION 4. Section 38-73-450(b) of the 1976 Code is amended
to read:
"(b) In the approval of automobile insurance rates and in
determining whether the final rates or premium charges for automobile
insurance are adequate, not excessive, and not unfairly discriminatory,
the commissioner shall take into account investment income from
all sources, including income from unearned premium and loss
reserves as well as all profits from every source,
including investment income, both active and passive, and
earned interest. Every insurer writing automobile insurance in this
State shall file with the commissioner, in a form the commissioner
orders, complete financial records showing the amount of profit,
in accordance with this subsection, on every line of automobile
insurance during the previous year and shall also file records showing
profits or losses from such investment income, and all other
sources, in accordance with this subsection, which records shall
include, but shall not be limited to, investment income or
profit on net realized and unrealized capital gains. However,
unrealized capital gains or losses may not be considered in the rate-making process."
SECTION 5. Section 38-73-450 of the 1976 Code is amended by
adding:
"(c) No insurer may claim reduced profit under subsection
(b) by:
(1) artificially allocating funds to salaries, dividends, or other
payouts so as to reduce profit; or
(2) failing to include all sources of income, including
investment income, both active and passive, and earned interest.
(d) Any profit of an insurer exceeding ten percent per annum must
be refunded to its insureds unless the insurer is able to demonstrate by
clear and convincing evidence, after a hearing before the Chief
Insurance Commissioner allowing all interested persons and
representatives of consumer groups to speak and present evidence, that
extreme and compelling hardship will occur to the extent that the
insurer cannot continue to do business unless a lesser sum is refunded
to its insureds.
(e) A request for any rate increase or premium increase by an
insurer may be denied or disapproved by taking into account as a
factor (1) inefficiency of the insurer for any valid reason or based
upon excessive overhead or based upon premiums and income
collected compared with claims paid out or based upon excessive
salaries, benefits, sales commissions, or other compensation to
executives, employees, officers, directors, or managers at all levels or
based upon excessive amounts paid out to defend or litigate claims or
based upon delay in paying valid claims; or (2) sufficient insurer
profit such that a rate increase or premium increase is not in the best
interest of the public."
SECTION 6. Section 38-73-455 of the 1976 Code, as last amended
by Act 113 of 1991, is further amended by deleting subsection (C)
which reads:
"(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."
SECTION 7. 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 8. 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
and classes 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 9. Section 38-73-760 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-73-760. (A) The commissioner, through the
State Rating and Statistical Division, shall fix, establish, and
promulgate any uniform statistical plan that may be necessary
or appropriate for the gathering and compilation of statistical data
from insurers, rating organizations, or advisory organizations
transacting or otherwise engaged in the automobile insurance business
in the State. In promulgating any a uniform statistical
plan consideration may be given to the extent reasonable or practicable
to the rules and forms of the plans used for rating systems in other
states. Upon the promulgation of any a statistical plan
for automobile insurance in this State, the same it
must be adopted and used by every automobile insurer in this
State South Carolina, and every automobile insurer shall
constitute the State Rating and Statistical Division its statistical agent
for automobile insurance in this State.
(B) The statistical plan may be promulgated so as to provide for
any and all the 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: (1) risk and territorial classification plans
for automobile insurance;
(2) determining the pure loss rate level indications for
automobile insurance in South Carolina this State
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,;
(3) 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;
(4) 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;
(5) determining the amount, validity, and propriety of
surcharges and discounts referable to any a 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;
(6) determining the propriety or validity of any
a 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
(7) 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 the provisions of this
subsection or in connection with means and methods for
providing appropriate rates for insurance consumers or fostering and
encouraging competition among insurers.
(C) The functions and responsibilities of the State Rating and
Statistical Division acting as statistical agent for automobile insurers
may must not be delegated, except that the
commissioner may, as the result of competitive bidding,
may make an agreement with some suitable person, firm,
corporation, or other organization for the gathering, compilation,
recordation, or computerization of the statistical data. However, these
functions are always subject to the supervision, direction, and control
of the commissioner and the examination and oversight of insurers in
respect to their obligations to furnish statistical data to him remain the
direct responsibility of the commissioner and may never
must not be delegated other than to the State Rating and
Statistical Division.
(D) Any A merit rating plan or system promulgated
by the commissioner pursuant to the authority contained in
subsection (B) likewise extends to and includes automobile
collision insurance. However, nothing contained in this
subsection (d) requires that the same percentage or dollar
amounts for discounts or surcharges apply to collision coverage nor
does it require that surcharges already assessed in respect to the
liability coverages of the policy again be assessed in respect to the
collision coverage afforded by the same policy.
(E) The commissioner shall require all insurers transacting
automobile insurance business in this State to assess surcharges and
grant safe driver discounts of no less than twenty percent.
(F) All policies of automobile insurance issued in South Carolina
must show on the initial policy or on an attachment to the initial
policy and on all premium invoices or attached to all premium
invoices, in a form to be approved by the commissioner, the
amount of any a surcharge, (including
loss of safe driver discount) that may be, applicable
to the policy as a result of any a merit rating plan or
system promulgated by the commissioner. Also to be included,
presented in a fashion that is readily understandable, is The reason
for the applicable surcharge or the loss of safe driver discount
must be included and presented in a readily understandable
fashion. The amount of the applicable safe driver discount also
must be shown."
SECTION 10. Section 38-77-30 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended by deleting item (5) which
reads:
"(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."
SECTION 11. 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 individual passenger
automobiles."
SECTION 12. (A) Nothing in this act may be construed to
eliminate the mandate imposed on automobile insurers doing business
in this State to write insurance for all (Article 3, Chapter 77, Title 38
of the 1976 Code) or for self-insured plans approved by the Chief
Insurance Commissioner to comply with the financial responsibility
statutes of this State.
(B) Nothing in this act may be construed to eliminate compulsory
insurance for all drivers and compliance with the financial
responsibility statutes of this State.
SECTION 13. Upon the effective date of this act the Chief
Insurance Commissioner shall approve a ten percent reduction in rate
or premium charges used by automobile insurers.
SECTION 14. Sections 38-73-1420, 38-73-1425, 38-77-920, 38-77-940, 38-77-950, and 38-77-960, and Article 5, Chapter 77, Title 38
of the 1976 Code are repealed.
SECTION 15. Except as otherwise specifically provided, this act
takes effect July 1, 1994, except the Reinsurance Facility may operate
until July 1, 1996.
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