H 4972 Session 110 (1993-1994)
H 4972 General Bill, By J.G. Felder, Allison, Bailey, D.W. Beatty, G. Brown,
Cato, Cobb-Hunter, Davenport, L.L. Elliott, Gamble, Govan, Harvin, W.S. Houck,
Klauber, Littlejohn, J.T. McElveen, McKay, M. McLeod, Quinn, Richardson,
Robinson, R. Smith, Townsend, J.W. Tucker, D.C. Waldrop, Walker and C.C. Wells
Similar(H 3637, H 3690)
A Bill to change the title of Article 5, Chapter 77, Title 38 of the Code of
Laws of South Carolina, 1976, from "Reinsurance Facility and Designated
Producers" to "Reinsurance Facility, Servicing Carriers and Producers"; to
change the title of Section 38-77-590 from "Designated Producers" to
"Servicing Carriers and Producers"; to amend Section 38-77-590, as amended,
relating to automobile insurance, the Reinsurance Facility, and designated
producers, so as to delete certain language and provisions and provide, among
other things, that the Chief Insurance Commissioner, after consultation with
the governing board of the Reinsurance Facility, shall direct the governing
board to contract with one or more insurers meeting eligibility requirements
promulgated by the governing board to act as servicing carriers for the
writing of automobile insurance through producers assigned to the servicing
carrier by the governing board, that the contract shall include provisions for
one hundred percent quota share reinsurance through the facility of any
automobile insurance policy ceded to the Facility, and that the governing
board may establish reasonable nondiscriminatory standards which all servicing
carriers must meet for contract renewal; to amend Section 38-73-455, as
amended, relating to automobile insurance rates, so as to delete certain
language and provisions, including references to designated producers,
provide, among other things, that member companies of an affiliated group of
automobile insurers may utilize different filed rates for certain automobile
insurance coverages, and add references to insurers contracted pursuant to
Section 38-77-590 and references to "assigned producers"; to amend Section
38-73-1420, 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 and the use of the component
after approval, so as to delete certain language and provisions and provide,
among other things, that the board of governors of the Facility shall file an
expense component for private passenger and commercial automobile insurance
rate or premium c
03/24/94 House Introduced and read first time HJ-4
03/24/94 House Referred to Committee on Labor, Commerce and
Industry HJ-6
05/04/94 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-6
05/24/94 House Debate adjourned until Wednesday, June 1, 1994 HJ-21
06/01/94 House Tabled HJ-94
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
May 4, 1994
H. 4972
Introduced by REPS. Felder, Wells, Beatty, Allison, Littlejohn,
Townsend, Walker, Cobb-Hunter, R. Smith, Cato, G. Brown, McLeod,
Waldrop, G. Bailey, Klauber, Quinn, Harvin, Houck, Richardson,
Govan, McKay, Elliott, Robinson, McElveen, Davenport, Gamble and
Tucker
S. Printed 5/4/94--H.
Read the first time March 24, 1994.
THE COMMITTEE ON
LABOR, COMMERCE AND INDUSTRY
To whom was referred a Bill (H. 4972), to change the title of Article
5, Chapter 77, Title 38 of the Code of Laws of South Carolina, 1976,
from "Reinsurance Facility and Designated Producers", etc.,
respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass with amendment:
Amend the bill, as and if amended, page 4, by striking Section
38-77-590(b), as contained in SECTION 3, and inserting:
/(b) After the effective date of this section, those producers
previously designated by the Commissioner may continue to serve in
that capacity under the jurisdiction and control of the governing board
of the Facility, except that After June 1, 1994, producers
previously designated by the commissioner or the governing board may
continue to serve in the capacity of a servicing agent for the Reinsurance
Facility and shall not be required to requalify or reapply for assignment
under the provisions of subsection (c). Producers assigned to a servicing
carrier in accordance with this section and producers previously
designated to a servicing carrier by the commissioner or the governing
board of the Reinsurance Facility must remain assigned to that servicing
carrier until and unless, after October 1, 1995, the producer's written
request to change the assignment is received by the governing board of
the Reinsurance Facility or until the assignment is transferred to another
carrier by the governing board upon nonrenewal or termination of that
servicing carrier's contract. Any change in the rate of commissions
allowed designated the producers is subject to the
commissioner's approval. Policies ceded to the facility by an agent
representing a voluntary market can only be `new business' to such
agent. New business is defined as business not currently written or
renewed through any voluntary carrier of the agent./
Amend further, pages 4 and 5, by striking Section 38-77-590(c), as
contained in SECTION 3, and inserting:
/(c) A producer may apply to the governing board for assignment
to a servicing carrier and is eligible for assignment be
designated by the governing board of the Facility upon application for
designation and is eligible for designation upon a finding by the
governing board that the applicant meets the following qualifications:
(1) The applicant has been, for ten five
continuous years, a licensed resident property and casualty insurance
agent and is at the time of application an agency owner or
principal associated with an agency in South Carolina which has
been actively in business for five years with authority from one or
more licensed insurers to write liability and physical damage insurance
on private passenger automobiles;
(2) At the time of application the applicant is servicing and owns
the renewals on South Carolina private passenger and
commercial automobile insurance business, the net premiums on which
exceeded seventy-five one hundred thousand dollars of
potential cedeable automobile insurance during any one of the previous
five calendar years preceding the application;
(3) Neither the applicant, nor any employee of the applicant
or the applicant's corporate agency, nor any partner or shareholder in any
related insurance agency, related premium service company, or related
other business, has any direct or indirect connection with any voluntary
market outlet for the purpose of writing any type of automobile
insurance in this State except for motorcycle insurance and types not
cedeable to the facility;
(4) The applicant has not contributed to his termination as
agent by any insurer because of any illegal breach of agency agreement
or other related, improper, or unethical conduct; and
(5)(4) The books, records, and accounts of the
insurance business of the applicant have been audited at the expense of
the applicant and found by the governing board to be indicative of a
financially sound operation./
Amend further, page 9, by striking SECTION 6 and inserting:
/SECTION 6. Section 38-73-1425 of the 1976 Code, as added by Act
113 of 1991, is amended to read:
"Section 38-73-1425. 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.
The establishing of a facility rate for risks ceded to the facility
before June 1, 1994, by insurers having company-filed rates less than the
facility final rate or premium charge developed under Section
38-73-1420 must be accomplished by increasing the company-filed rate
not more than ten percent at each successive policy renewal effective on
or after October 1, 1994."/
Amend title to conform.
THOMAS C. ALEXANDER, for Committee.
A BILL
TO CHANGE THE TITLE OF ARTICLE 5, CHAPTER 77, TITLE 38
OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, FROM
"REINSURANCE FACILITY AND DESIGNATED
PRODUCERS" TO "REINSURANCE FACILITY,
SERVICING CARRIERS AND PRODUCERS"; TO CHANGE
THE TITLE OF SECTION 38-77-590 FROM "DESIGNATED
PRODUCERS" TO "SERVICING CARRIERS AND
PRODUCERS"; TO AMEND SECTION 38-77-590, AS
AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE
REINSURANCE FACILITY, AND DESIGNATED PRODUCERS, SO
AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS AND
PROVIDE, AMONG OTHER THINGS, THAT THE CHIEF
INSURANCE COMMISSIONER, AFTER CONSULTATION WITH
THE GOVERNING BOARD OF THE REINSURANCE FACILITY,
SHALL DIRECT THE GOVERNING BOARD TO CONTRACT WITH
ONE OR MORE INSURERS MEETING ELIGIBILITY
REQUIREMENTS PROMULGATED BY THE GOVERNING BOARD
TO ACT AS SERVICING CARRIERS FOR THE WRITING OF
AUTOMOBILE INSURANCE THROUGH PRODUCERS ASSIGNED
TO THE SERVICING CARRIER BY THE GOVERNING BOARD,
THAT THE CONTRACT SHALL INCLUDE PROVISIONS FOR ONE
HUNDRED PERCENT QUOTA SHARE REINSURANCE THROUGH
THE FACILITY OF ANY AUTOMOBILE INSURANCE POLICY
CEDED TO THE FACILITY, AND THAT THE GOVERNING
BOARD MAY ESTABLISH REASONABLE
NONDISCRIMINATORY STANDARDS WHICH ALL SERVICING
CARRIERS MUST MEET FOR CONTRACT RENEWAL; TO
AMEND SECTION 38-73-455, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE RATES, SO AS TO DELETE
CERTAIN LANGUAGE AND PROVISIONS, INCLUDING
REFERENCES TO DESIGNATED PRODUCERS, PROVIDE,
AMONG OTHER THINGS, THAT MEMBER COMPANIES OF AN
AFFILIATED GROUP OF AUTOMOBILE INSURERS MAY
UTILIZE DIFFERENT FILED RATES FOR CERTAIN
AUTOMOBILE INSURANCE COVERAGES, AND ADD
REFERENCES TO INSURERS CONTRACTED PURSUANT TO
SECTION 38-77-590 AND REFERENCES TO "ASSIGNED
PRODUCERS"; TO AMEND SECTION 38-73-1420,
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 AND
THE USE OF THE COMPONENT AFTER APPROVAL, SO AS TO
DELETE CERTAIN LANGUAGE AND PROVISIONS AND
PROVIDE, AMONG OTHER THINGS, THAT THE BOARD OF
GOVERNORS OF THE FACILITY SHALL FILE AN EXPENSE
COMPONENT FOR PRIVATE PASSENGER AND COMMERCIAL
AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES FOR
USE WITH THE PURE LOSS COMPONENTS FOR PRIVATE
PASSENGER AUTOMOBILE INSURANCE AND SMALL
COMMERCIAL RISKS FILED WITH THE CHIEF INSURANCE
COMMISSIONER BY THE RATING ORGANIZATION WITH THE
LARGEST NUMBER OF MEMBERS OR SUBSCRIBERS; TO
AMEND SECTION 38-73-1425, RELATING TO THE FINAL RATE
OR PREMIUM CHARGE FOR PRIVATE PASSENGER
AUTOMOBILE INSURANCE RISK CEDED TO THE
REINSURANCE FACILITY, SO AS TO DELETE CERTAIN
LANGUAGE AND PROVIDE, AMONG OTHER THINGS, THAT
PREMIUMS ATTRIBUTABLE TO RISKS CEDED AT A COMPANY
FILED RATE WHICH IS GREATER THAN THE REINSURANCE
FACILITY RATE SHALL NOT BE INCLUDED WHEN
DETERMINING TOTAL DIRECT CEDEABLE WRITTEN
PREMIUMS UNDER SECTION 38-77-950; TO AMEND SECTION
38-77-280, AS AMENDED, RELATING TO COLLISION
COVERAGE AND COMPREHENSIVE COVERAGE UNDER THE
AUTOMOBILE INSURANCE LAWS, SO AS TO PROVIDE,
AMONG OTHER THINGS, THAT AN INSURER IS NOT
REQUIRED TO WRITE PRIVATE PASSENGER PHYSICAL
DAMAGE COVERAGE FOR CLASSIC CARS, ANTIQUE CARS,
ANY AUTOMOBILE WITH ANY MODIFICATION TO THE
CHASSIS OR WHEEL BASE, ANY AUTOMOBILE WITH A
WHEEL BASE OF NINETY-NINE AND ONE-HALF INCHES OR
LESS, INCLUDING UTILITY VEHICLES, OR ANY AUTOMOBILE
WITHIN THE "SPORTS GROUP" OR "SPORTS
PREMIUM GROUP"; AND TO AMEND SECTION 38-77-350,
RELATING TO AUTOMOBILE INSURANCE AND THE FORM TO
BE USED WHEN OPTIONAL COVERAGES ARE OFFERED, SO AS
TO PROVIDE THAT A POLICY OF AUTOMOBILE INSURANCE
OFFERED OR ISSUED BY A NEW SERVICING CARRIER FOR
THE REINSURANCE FACILITY TO REPLACE A POLICY
PREVIOUSLY ISSUED BY A FORMER SERVICING CARRIER
AND CONTAINING THE SAME COVERAGE LIMITS AS THE
FORMER POLICY CONSTITUTES A VALID REPLACEMENT
POLICY THAT DOES NOT REQUIRE THE NEW SERVICING
CARRIER OR AGENT TO MAKE A NEW OFFER OF COVERAGE
OR TO OBTAIN A NEW APPLICATION FROM THE INSURED.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The title of Article 5, Chapter 77, Title 38 of the 1976
Code is amended to read:
"Reinsurance Facility; Servicing Carriers
and Designated Producers"
SECTION 2. The title of Section 38-77-590 of the 1976 Code is
amended to read:
"Designated Servicing Carriers and
Producers".
SECTION 3. Section 38-77-590 of the 1976 Code, as last amended by
Act 524 of 1990, is further amended to read:
"Section 38-77-590. (a) Not more than six months after
July 9, 1974, or at an earlier time as the Commissioner considers
necessary by reason of complaints regarding want of access to
automobile insurance in particular areas or want of outlets for producers,
the Commissioner shall survey the various areas of the State to ascertain
if sufficient marketing outlets exist in all areas or are available to all
producers. Upon a finding by the Commissioner that insufficient
marketing outlets exist in particular areas or that certain producers have
been deprived of a market for risks previously serviced by them, the
Commissioner may, after consultation with the Facility, designate one
or more insurers to service the areas through agents appointed by them
or may designate the producers as the agents of any insurer. The
arrangements shall include provision for one hundred percent quota
share reinsurance through the Facility of any automobile insurance
policy marketed through the arrangements, at the option of the insurer,
and the reinsurance is not subject to the statutory provisions or
regulations regarding excessive utilization of the Facility. The
commissioner, after consultation with the governing board of the
Reinsurance Facility, shall direct the governing board to contract with
one or more insurers meeting eligibility requirements promulgated by
the governing board to act as servicing carriers for the writing of
automobile insurance through producers assigned to the servicing carrier
by the governing board. The contract shall include provisions for one
hundred percent quota share reinsurance through the facility of any
automobile insurance policy ceded to the facility. The governing board
may establish reasonable nondiscriminatory standards which all
servicing carriers must meet for contract renewal. The servicing carriers
shall not be subject to the statutory provisions or regulations regarding
excessive utilization of the Reinsurance Facility for policies produced
by its assigned servicing agents. The servicing carrier shall cede the risk
on every policy of automobile insurance produced by its assigned
servicing agents for the reinsurance facility.
(b) After the effective date of this section, those producers
previously designated by the Commissioner may continue to serve in
that capacity under the jurisdiction and control of the governing board
of the Facility, except that After June 1, 1994, producers
previously designated by the commissioner or the governing board may
continue to serve in the capacity of a servicing agent for the Reinsurance
Facility and shall not be required to requalify or reapply for assignment
under the provisions of subsection (c). Producers assigned to a servicing
carrier in accordance with this section and producers previously
designated to a servicing carrier by the commissioner or the governing
board of the Reinsurance Facility must remain assigned to that servicing
carrier until and unless, after October 1, 1995, the producer's written
request to change the assignment is received by the governing board of
the Reinsurance Facility or until the assignment is transferred to another
carrier by the governing board upon nonrenewal or termination of that
servicing carrier's contract. Any change in the rate of commissions
allowed designated the producers is subject to the
commissioner's approval.
(c) A producer may apply to the governing board for assignment
to a servicing carrier and is eligible for assignment be
designated by the governing board of the Facility upon application for
designation and is eligible for designation upon a finding by the
governing board that the applicant meets the following qualifications:
(1) The applicant has been, for ten five
continuous years, a licensed resident property and casualty insurance
agent and is at the time of application an agency owner or
principal associated with an agency in South Carolina which has
been actively in business for five years with authority from one or
more licensed insurers to write liability and physical damage insurance
on private passenger automobiles; and
(2) At the time of application the applicant is servicing and owns
the renewals on South Carolina private passenger and
commercial automobile insurance business, the net premiums on which
exceeded seventy-five one hundred thousand dollars of
potential cedeable automobile insurance during any one of the previous
five calendar years preceding the application; and
(3) Neither the applicant, nor any employee of the applicant
or the applicant's corporate agency, nor any partner or shareholder in any
related insurance agency, related premium service company, or related
other business, has any direct or indirect connection with any voluntary
market outlet for the purpose of writing any type of automobile
insurance in this State except for motorcycle insurance and types not
cedeable to the facility;
(4) The applicant has not contributed to his termination as agent
by any insurer because of any illegal breach of agency agreement or
other related, improper, or unethical conduct; and
(5) The books, records, and accounts of the insurance
business of the applicant have been audited at the expense of the
applicant and found by the governing board to be indicative of a
financially sound operation.
(d) Prior to Before designation the
assignment as a producer, the applicant shall furnish at his expense
a bond in an amount of not less than fifty thousand dollars for the
faithful performance of the duties as a producer, executed by the
applicant as principal and a corporate surety licensed to do business in
this State as surety, and shall also have effective errors and omissions
insurance by an insurer licensed to do business in this State, with the
bond and errors and omissions insurance being subject to approval by
the governing board.
(e) The governing board shall assign a specific location to each
producer designated. The governing board shall determine from the
commissioner the locations assigned by him to those producers whom
the commissioner has designated. Designated producers may not open
or maintain any other locations without the written authorization of the
governing board; provided, however, that an applicant maintaining
multiple offices on June 4, 1987, is entitled to maintain two locations as
a designated agent which he owned and operated at that time and
through which premiums in at least the amount of seventy-five thousand
dollars were written. The governing board shall terminate the
designation, and the commissioner shall revoke all agents' licenses of
any producer who does not comply with this requirement upon demand
by the governing board. Upon termination, the producer's expirations on
designated business become the property of the facility. A
producer assigned to a servicing carrier may not open or maintain more
than one location at which the solicitation or transaction of any
automobile insurance business is conducted and may not change such
location without the written authorization of the governing board. The
governing board shall terminate the assignment of any servicing agent
who does not comply with this requirement upon demand by the
governing board. Applicants maintaining multiple offices on January 1,
1994, are entitled to maintain two locations as a producer which the
agent owned and operated at that time and through which automobile
insurance premiums in at least the amount of one hundred thousand
dollars were written by the agent at each of the two locations.
(f) The designation of a producer by the Commissioner or the
governing board is transferable to a spouse, child, parent, brother, or
sister of the producer upon the designated producer's retirement,
incapacity, or death. The duties of a designated producer may be
performed by one or more qualified employees of the producer or the
producer's corporate agency. The assignment of a producer to
a servicing carrier by the governing board is transferable to a spouse,
child, parent, brother, or sister of the producer upon the producer's
retirement, incapacity, or death. The assignment at any time may, at the
election of the producer by written notice thereof to the governing board,
be irrevocably transferred to a corporation authorized to transact
business in South Carolina by the Secretary of State and licensed by the
insurance commissioner as an insurance agency. The duties of an
individual or corporate producer may be performed by one or more
qualified employees of the producer.
(g) Neither a designated producer, nor any employee of a
designated producer or the producer's corporate agency, nor any partner
or shareholder in any related insurance agency, related premium service
company, or related other business, may have any direct or indirect
connection with any voluntary market outlet for the purpose of writing
any type of automobile insurance in this State except for motorcycle
insurance and types not cedable to the Facility. The governing board
shall terminate the designation of any producer, and the Commissioner
shall revoke all licenses of the producer and of any other insurance agent
and premium service company knowingly involved in this connection.
Upon termination, the producer's expirations on designated business
become the property of the Facility.
(h) A designated servicing carrier who fails a
claims audit shall have no new designated producer
servicing agent assignments until the time it passes a re-audit
within a reasonable time prescribed by the governing board. If this
carrier fails two claims audits, including a re-audit, within any
three-year period that carrier is disqualified for renewal of its contract
with the facility upon expiration of its existing contract.
(h) The governing board of the Reinsurance Facility shall not
contract with an insurer to act as a servicing carrier solely for the
insurer's own authorized and voluntarily contracted agents. Servicing
carriers shall accept assignments of servicing agents on an equitable,
nondiscriminatory basis promulgated by the governing board.
(i) Upon the change of assignment of a producer to another
servicing carrier, the producer's former servicing carrier shall not be
subject to the requirements of Sections 38-75-740 and 38-77-120 for the
existing policies of that producer which policies shall expire at the
policy renewal dates beginning one hundred twenty days from the
receipt of the notice of the change of assignment by the former carrier
from the governing board of the Reinsurance Facility. The former
servicing carrier shall give written notice to each such policyholder not
less than thirty days before the policy expiration date stating:
(1) that the policy will expire on the policy expiration date and
that coverage will not be continued by the former servicing carrier after
that date; and
(2) that a renewal policy will be offered to the policyholder by the
new servicing carrier effective at the expiration date and time of the
existing policy; and
(3) the name, address, and phone number of the producer. The
former servicing carrier shall provide in a timely manner current
individual policy information sufficient to allow the new servicing
carrier to issue renewal policies replacing the expiring policies of the
producer's transferred business with like coverages and premiums.
However, the original application for insurance and endorsements on
expiring policies of the producer's transferred business shall be
applicable to the renewal policy issued by the new servicing carrier and
may take precedence over the information otherwise provided to the new
servicing carrier. The producer's existing policyholders shall not be
required to execute a new application for insurance. As a condition of
acceptance of a producer's change of assignment the new servicing
carrier must agree to compensate the former servicing carrier in a
manner and amount determined by the governing board to reimburse the
former servicing carrier costs to be incurred by its transfer of
information and documents to the new servicing carrier based upon the
producer's volume of business. Nothing in this section shall be
construed to in any way change, assign, or terminate the property rights
held by the producer which pertain to the producer's ownership of policy
expirations."
SECTION 4. Section 38-73-455(C) of the 1976 Code, as last amended
by Act 113 of 1991, is further amended to read:
"(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
contracted pursuant to Section 38-77-590(a), for automobile
insurance risks written by them through producers designated
assigned by the facility governing board pursuant to that section
and, subject to the provisions of Section 38-73-1425, all insurers on
all risks ceded to the facility, shall utilize the rates or premium
charges developed under Section 38-73-1420 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
contracted 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 on risks not ceded to the
facility."
SECTION 5. Section 38-73-1420 of the 1976 Code, as added by Act
148 of 1989, is 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 and commercial
automobile insurance rate or premium charges for use with
after the rating organization with the largest number of members or
subscribers has filed a the pure loss component
components for private passenger automobile insurance and
small commercial risks filed with the commissioner by the
rating organization with the largest number of members or
subscribers. Upon the approval of such component
components, those automobile insurers designated
contracted pursuant to Section 38-77-590(a), for risks written
by them through producers designated assigned
pursuant to that same section, and, subject to the provisions of
Section 38-73-1425, all insurers on all risks ceded to the facility,
shall utilize these final rate or premium charges. Automobile insurers
designated contracted 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
assigned pursuant to Section 38-77-590 on risks not ceded
to the facility."
SECTION 6. Section 38-73-1425 of the 1976 Code, as added by Act
113 of 1991, is amended to read:
"Section 38-73-1425. 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. Premiums attributable to risks ceded
at a company filed rate which is greater than the facility rate shall not be
included when determining total direct cedeable written premiums under
Section 38-77-950.
The establishing of a facility rate for all business ceded to the facility
must be phased in over a three-year period such that one-third of the
current differential of the company-filed rate and the current facility rate
shall be added on renewals effective on or after October 1, 1994, an
additional one-third shall be added on renewals effective on or after
October 1, 1995, and the remaining one-third balance of the differential
between the company filed rate and the facility rate shall be added on
renewals effective on or after October 1, 1996."
SECTION 7. Section 38-77-280 of the 1976 Code, as last amended by
Act 113 of 1991, is further amended to read:
"Section 38-77-280. (A) Except as provided in subsection
(B), all automobile insurers, including those insurance companies
writing private passenger physical damage coverages only, shall make
collision coverage and either comprehensive or fire, theft, and combined
additional coverage available to an insured or qualified applicant who
requests the coverage.
Collision coverage must have a mandatory deductible of two hundred
fifty dollars, but an insured or qualified applicant, at his option, may
select an additional deductible in appropriate increments up to one
thousand dollars.
Comprehensive coverage or fire, theft, and combined additional
coverages must have a mandatory deductible of two hundred fifty
dollars, but an insured, at his option, may select an additional deductible
in appropriate increments up to one thousand dollars. This deductible
does not apply to auto safety glass. It is an unfair trade practice, as
described in Sections 38-57-30 and 38-57-40, for an insurer or an agent
to sell collision insurance, comprehensive coverage, or fire, theft, and
combined additional coverages unless the insured is notified at the time
of application of the savings which may be realized if the applicant or
the insured selects a higher deductible. This notice is required only at the
time of the initial sale and must be in a form approved by the Chief
Insurance Commissioner. An insurer may offer insureds lower
deductibles at the insurer's option.
(B) Notwithstanding subsection (A) and Sections 38-77-110 and
38-77-920, automobile insurers may refuse to write automobile physical
damage insurance coverage, including automobile comprehensive
physical damage, collision, fire, theft, and combined additional
coverage, for an applicant or existing policyholder, on renewal, for a
motor vehicle customarily operated by an individual, either the named
insured or another operator not excluded in accordance with Section
38-77-340 and who resides in the same household, where one or more
of the conditions or factors prescribed in Section 38-73-455 exist. In
addition, automobile insurers may refuse to write physical damage
insurance coverage to an applicant or existing policyholder, on renewal,
who has collected benefits provided under automobile insurance
physical damage coverage during the thirty-six months immediately
preceding the effective date of coverage, for two or more total fire losses
or two or more total theft losses. Automobile insurers may refuse to
write for private passenger automobiles physical damage insurance
coverage, including automobile comprehensive physical damage,
collision, fire, theft, and combined additional coverage, for an applicant
or existing policyholder, on renewal, for a motor vehicle customarily
operated by an individual, either the named insured or another operator
not excluded in accordance with Section 38-77-340 and who resides in
the same household, which does not qualify for the safe driver discount
in Section 38-73-760(e).
Notwithstanding the provisions of this section, and any other
provision of law, an insurer is not required to write private passenger
physical damage coverage for the following types of vehicles:
(1) classic cars, meaning an automobile whose monetary value
exceeds the original purchase price which has appreciated in value by
maintaining the original parts;
(2) antique cars, meaning an automobile over twenty-five years
of age;
(3) any automobile with any modification to the chassis or wheel
base;
(4) any automobile with a wheel base of ninety-nine and one-half
inches or less, including utility vehicles;
(5) any automobile within the `Sports Group' or `Sports Premium
Group'. For the purposes of this provision `Sports Group' means a
two-passenger body type automobile with a net weight to horsepower
ratio between 20:1 and 30:1. `Sports Premium Group' means a
two-passenger body type automobile with a net weight to horsepower
ratio between 20:1 or less.
(C) All insurers subject to the provisions of this section writing
single interest collision coverage shall provide an applicant for the
insurance at the time of his application a notice separate and apart from
any other form used in the application. The notice must be signed by the
applicant evidencing his acknowledgment of having read the notice.
The notice must contain the following language printed in bold face
type: `NOTICE: The insurance coverage you are hereby purchasing
is only single interest collision coverage. The amount of insurance
decreases as you pay off the amount of your indebtedness. You may
not receive any insurance proceeds over and above the amount of
the outstanding balance on your loan.'
(C) (D) 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 Section 38-73-455(A) or Section
38-77-280(B) 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) (E) No policy of insurance which provides
automobile physical damage coverage only may be ceded to the facility.
(E) (F) Insurers of automobile insurance may
charge a rate for physical damage insurance coverages different
than from those provided for in Section 38-73-457 if the
rates are filed and approved by the Chief Insurance Commissioner. Any
applicant or existing policyholder, to be charged this different rate, must
be denied the coverage pursuant to subsection (B) at the rate provided
in Section 38-73-457.
(F) (G) A carrier may not cede collision coverage,
comprehensive coverage, or fire, theft, and combined additional
coverages with a deductible of less than two hundred fifty dollars. An
insured or qualified applicant may select an additional deductible in
appropriate increments up to one thousand dollars. However, the
mandatory deductible does not apply to safety glass."
SECTION 8. Section 38-77-350(C) of the 1976 Code, as added by Act
148 of 1989, is amended to read:
"(C) An automobile insurer is not required to make a new
offer of coverage on any automobile insurance policy which renews,
extends, changes, supersedes, or replaces an existing policy. However,
the first renewal notices for existing policies after December 1, 1989,
must include the form provided in subsection (A). A policy of
automobile insurance offered or issued by a new servicing carrier for the
South Carolina Reinsurance Facility to replace a policy previously
issued by a former servicing carrier and containing the same coverage
limits as the former policy constitutes a valid replacement policy that
does not require the new servicing carrier or agent to make a new offer
of coverage or to obtain a new application from the insured."
SECTION 9. This act takes effect June 1, 1994.
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