H 3781 General Bill, By J.G. Felder
 A Bill to amend Section 38-73-455, as amended, Code of Laws of South Carolina,
 1976, relating to automobile insurance rates, so as to delete certain language
 and provisions, and provide, among other things, that an automobile insurer
 shall file and offer for automobile insurance a base rate as defined in
 Section 38-73-457 which is subject to all surcharges or discounts, if any,
 applicable under any approved merit rating plan, credit or discount plan
 promulgated by the Department of Insurance or approved by the Director of the
 Department of Insurance or his designee and subject to allocation and
 recoupment surcharges provided for in Chapter 77, Title 38.-short title

   03/09/95  House  Introduced and read first time HJ-5
   03/09/95  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-11

A BILL

TO AMEND SECTION 38-73-455, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO AUTOMOBILE INSURANCE RATES, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT AN AUTOMOBILE INSURER SHALL FILE AND OFFER FOR AUTOMOBILE INSURANCE A BASE RATE AS DEFINED IN SECTION 38-73-457 WHICH IS SUBJECT TO ALL SURCHARGES OR DISCOUNTS, IF ANY, APPLICABLE UNDER ANY APPROVED MERIT RATING PLAN, CREDIT OR DISCOUNT PLAN PROMULGATED BY THE DEPARTMENT OF INSURANCE OR APPROVED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE AND SUBJECT TO ALLOCATION AND RECOUPMENT SURCHARGES PROVIDED FOR IN CHAPTER 77, TITLE 38; TO AMEND SECTION 38-73-457, AS AMENDED, RELATING TO FILING INFORMATION ON BASE RATES FOR AUTOMOBILE INSURANCE AND THE EFFECTIVE DATE OF THE RATES, SO AS TO DELETE CERTAIN PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT, EFFECTIVE OCTOBER 1, 1995, THE DIRECTOR OR HIS DESIGNEE SHALL DISALLOW THE FURTHER USE OF THE OBJECTIVE STANDARDS RATE PREVIOUSLY FILED IN ACCORDANCE WITH THIS SECTION; TO AMEND SECTION 38-73-735, AS AMENDED, RELATING TO THE PLAN FOR CREDITS AND DISCOUNTS FOR AUTOMOBILE INSUREDS, SO AS TO DELETE CERTAIN LANGUAGE, AND PROVIDE THAT IF AN INSURANCE CREDIT OR DISCOUNT PLAN, OTHER THAN THAT PROMULGATED BY THE DIRECTOR OR HIS DESIGNEE, IS GIVEN TO AN INSURED PURSUANT TO THIS SECTION, THE POLICY MAY BE CEDED TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-760, AS AMENDED, RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND UNIFORM STATISTICAL PLANS, SO AS TO PROVIDE THAT THE SAFE DRIVER DISCOUNT SHALL NOT BE INCLUDED IN THE RATE OR PREMIUM CALCULATION FOR CERTAIN DRIVERS AND APPLICANTS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-780 SO AS TO REQUIRE THE STATE RATING AND STATISTICAL DIVISION TO DEVELOP AND FILE A LOSS COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGES BASED ON THE TOTAL EXPERIENCE OF ALL INSURERS IN THIS STATE INCLUDING RISKS CEDED TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-1420, AS AMENDED, RELATING TO THE REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE REINSURANCE FACILITY FILE AN EXPENSE COMPONENT AND THE USE OF THE COMPONENT AFTER APPROVAL, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT THE BOARD SHALL FILE AN EXPENSE COMPONENT AS DEFINED UNDER SECTION 38-73-1400(2) FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES WHICH MUST ACCURATELY REFLECT THE ACTUAL EXPENSES OF THE REINSURANCE FACILITY WITHOUT PROFIT AND FOR USE WITH THE PURE LOSS COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGES DEVELOPED UNDER SECTION 38-73-780; 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 THE BASE RATE FOR ANY PRIVATE PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO THE FACILITY BY AN INSURER SHALL NOT BE LESS THAN THE BASE RATE WHICH WAS IN EFFECT AND IN USE ON NOVEMBER 1, 1994 BY THOSE AUTOMOBILE INSURERS CONTRACTED PURSUANT TO SECTION 38-77-590(a) FOR RISK WRITTEN BY THEM THROUGH PRODUCERS DESIGNATED PURSUANT TO THAT SAME SECTION; TO AMEND SECTION 38-77-10, AS AMENDED, RELATING TO THE DECLARATION OF PURPOSE FOR THE STATE'S AUTOMOBILE INSURANCE LAW, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE REFERENCE TO THE RISK AND TERRITORIAL CLASSIFICATION PLAN PROMULGATED BY THE DEPARTMENT OF INSURANCE OR THE REINSURANCE FACILITY RATE PLANS; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS UNDER THE AUTOMOBILE INSURANCE LAW, SO AS TO ADD DEFINITIONS FOR "CEDE" OR "CESSION", "CLEAN RISK SUBSIDY", "STATE UNIFORM RATE", AND "FACILITY UNIFORM RATE"; TO AMEND SECTION 38-77-110, AS AMENDED, RELATING TO THE REQUIREMENT UPON AUTOMOBILE INSURERS TO INSURE AND EXCEPTIONS, SO AS TO DELETE CERTAIN CONDITIONAL LANGUAGE REGARDING INSURABLE RISK, AND PROVIDE THAT EVERY AUTOMOBILE INSURANCE RISK CONSTITUTES AN INSURABLE RISK; TO AMEND SECTION 38-77-140, RELATING TO AUTOMOBILE INSURANCE AND BODILY INJURY AND PROPERTY DAMAGE LIMITS, SO AS TO PROVIDE FOR FIFTEEN THOUSAND DOLLARS, RATHER THAN FIVE THOUSAND DOLLARS, BECAUSE OF INJURY TO OR DESTRUCTION OF PROPERTY OF OTHERS IN ANY ONE ACCIDENT; TO AMEND SECTION 38-77-280, AS AMENDED, RELATING TO COLLISION COVERAGE AND COMPREHENSIVE COVERAGE FOR AUTOMOBILE INSURANCE PURPOSES, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT 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; TO AMEND THE TITLE OF ARTICLE 5 OF CHAPTER 77, TITLE 38 FROM "REINSURANCE FACILITY AND DESIGNATED PRODUCERS" TO "REINSURANCE FACILITY, SERVICING CARRIERS, AND PRODUCERS"; TO AMEND SECTION 38-77-530, AS AMENDED, RELATING TO THE PLAN OF OPERATION OF THE REINSURANCE FACILITY, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THE PLAN SHALL PROVIDE THAT EVERY MEMBER, UPON ANY ASSESSMENT RELATED TO PRIVATE PASSENGER AUTOMOBILE RISKS, SHALL COLLECT THAT ASSESSMENT FOR PAYMENT TO THE REINSURANCE FACILITY BY WAY OF A SURCHARGE ON AUTOMOBILE INSURANCE POLICIES ISSUED BY THE MEMBER AND THAT SUCH SURCHARGES SHALL BE A PERCENTAGE OF PREMIUM ADOPTED BY THE GOVERNING BOARD OF THE FACILITY AND APPROVED BY THE DIRECTOR OR HIS DESIGNEE; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-535 SO AS TO PROVIDE THAT FOR CERTAIN PERIODS, CERTAIN PERCENTAGES OF THE CLEAN RISK ALLOCATION MUST BE ASSESSED AND COLLECTED BY MEMBER INSURERS OF THE REINSURANCE FACILITY; TO AMEND THE TITLE OF SECTION 38-77-540 FROM "DUTIES OF CEDING INSURER" TO "FACILITY RATE PLANS"; TO AMEND SECTION 38-77-540, RELATING TO THE DUTIES OF A CEDING INSURER UNDER THE AUTOMOBILE INSURANCE LAW, SO AS TO DELETE THE CURRENT PROVISIONS OF THE SECTION, AND PROVIDE, AMONG OTHER THINGS, THAT THE REINSURANCE FACILITY SHALL ACCEPT CESSIONS ON A POLICY OF PRIVATE PASSENGER AUTOMOBILE INSURANCE AT THE OPTION OF AN INSURER BUT ONLY AT THE RATE OR PREMIUM CHARGE AS DETERMINED UNDER THE RATING PLANS ESTABLISHED BY THE GOVERNING BOARD AND APPROVED BY THE DIRECTOR OR HIS DESIGNEE, SUBJECT, HOWEVER, TO SECTION 38-77-950 REGARDING REASONABLE UTILIZATION OF THE FACILITY BY MEMBER COMPANIES; TO AMEND SECTION 38-77-580, AS AMENDED, RELATING TO THE GOVERNING BOARD OF THE REINSURANCE FACILITY, SO AS TO CHANGE THE METHOD OF APPOINTING CERTAIN MEMBERS TO THE BOARD; TO AMEND SECTION 38-77-585, RELATING TO ADDITIONAL BOARD MEMBERS OF THE REINSURANCE FACILITY, SO AS TO DELETE REFERENCES TO DESIGNATED INSURERS AND, INSTEAD, REFER TO CONTRACTED INSURERS; TO AMEND 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 DESIGNATED PRODUCERS UNDER REINSURANCE FACILITY PROVISIONS, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE, AFTER CONSULTATION WITH THE GOVERNING BOARD OF THE REINSURANCE FACILITY, SHALL DIRECT THE BOARD TO CONTRACT WITH ONE OR MORE INSURERS MEETING ELIGIBILITY REQUIREMENTS PROMULGATED BY THE BOARD TO ACT AS SERVICING CARRIERS FOR THE WRITING OF AUTOMOBILE INSURANCE THROUGH PRODUCERS ASSIGNED TO THE SERVICING CARRIER BY THE BOARD; TO AMEND SECTION 38-77-600, AS AMENDED, RELATING TO THE REINSURANCE FACILITY RECOUPMENT CHARGE, SO AS TO DELETE REFERENCES TO AN OBJECTIVE STANDARDS RATE, DELETE OTHER LANGUAGE, AND PROVIDE, AMONG OTHER THINGS, THAT EFFECTIVE FOR THE RECOUPMENT PERIOD BEGINNING JULY 1, 1996, THROUGH JUNE 30, 1997, .55 MULTIPLIED BY THE RECOUPMENT IS TO BE BORNE BY RISKS HAVING ZERO SURCHARGE POINTS UNDER THE UNIFORM MERIT PLAN PROMULGATED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE; TO AMEND SECTION 38-77-620, AS AMENDED, RELATING TO THE AUTOMOBILE INSURANCE LAW AND THE INCLUSION OF RECOUPMENT CHARGES IN RATES, SO AS TO DELETE REFERENCES TO AN OBJECTIVE STANDARDS RATE; TO AMEND SECTION 38-77-910, AS AMENDED, RELATING TO THE AUTOMOBILE INSURANCE LAW AND UNLAWFUL DISTINCTIONS BETWEEN POLICYHOLDERS OR APPLICANTS, SO AS TO PROVIDE THAT IT IS AN ACT OF UNLAWFUL DISCRIMINATION FOR AN AUTOMOBILE INSURER TO MAKE ANY DISTINCTION BETWEEN AUTOMOBILE INSURANCE POLICYHOLDERS OR APPLICANTS FOR AUTOMOBILE INSURANCE WITH RESPECT TO COVERAGE, RATES, CLAIMS, OR OTHER SERVICES EXCEPT AS THE DISTINCTIONS ARE PROVIDED FOR IN THE RATING PLANS FOR THE CLASSIFICATION OF RISKS AND TERRITORIES PROMULGATED BY THE DEPARTMENT OF INSURANCE AND THE REINSURANCE FACILITY RATE PLANS; TO AMEND SECTION 38-77-940, RELATING TO THE AUTOMOBILE INSURANCE LAW, AVOIDING CERTAIN CLASSES OR TYPES OF RISKS, EXCEPTIONS, AND CANCELING AN AGENT'S REPRESENTATION, SO AS TO DELETE THE LANGUAGE PROHIBITING AN AUTOMOBILE INSURER FROM PROVIDING TO INSURANCE AGENTS, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, ANY LISTING OF CLASSES OR TYPES OF AUTOMOBILE INSURANCE RISKS WHICH THE INSURER CONSIDERS NECESSARY TO REINSURE IN THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-950, AS AMENDED, RELATING TO UNREASONABLE OR EXCESSIVE USE OF THE REINSURANCE FACILITY BY AN INSURER AND NOTICE TO A POLICYHOLDER THAT HIS AUTOMOBILE INSURANCE POLICY IS IN THE FACILITY, SO AS TO DELETE CERTAIN LANGUAGE, AND PROVIDE TOTAL DIRECT CEDEABLE WRITTEN PREMIUMS AS USED IN THIS SECTION DO NOT INCLUDE PREMIUMS ATTRIBUTABLE TO RISKS CEDED TO THE REINSURANCE FACILITY HAVING ONE OR MORE MERIT RATING PLAN POINTS; TO AMEND THE 1976 CODE BY ADDING SECTION 56-10-275 SO AS TO PROVIDE THAT ANY PERSON WHO OPERATES OR ALLOWS AN UNINSURED MOTOR VEHICLE TO BE OPERATED SHALL SUFFER THE IMMEDIATE IMPOUNDMENT OF THE VEHICLE UNTIL HE POSTS LIABILITY INSURANCE IN THE AMOUNT REQUIRED BY CHAPTER 77 OF TITLE 38 AND PAYS ANY STORAGE AND IMPOUNDMENT FEE, TOGETHER WITH ANY OTHER FINES OR FEES IMPOSED FOR THE OPERATION OF AN UNINSURED MOTOR VEHICLE; TO REPEAL SECTIONS 38-73-1410, RELATING TO AUTOMOBILE INSURANCE AND THE PROVISION THAT THE REFILING OF FINAL RATES OR PREMIUM CHARGES PREVIOUSLY APPROVED IS NOT REQUIRED, AND 38-77-595, RELATING TO THE REINSURANCE FACILITY AND THE CONDITIONS FOR THE DESIGNATION OF AN OTHERWISE INELIGIBLE APPLICANT; AND TO REPEAL, EFFECTIVE JULY 1, 2000, SECTIONS 38-77-600, RELATING TO THE REINSURANCE FACILITY RECOUPMENT CHARGE, 38-77-605, RELATING TO THE REQUIREMENT THAT THE REINSURANCE FACILITY RECOUPMENT CHARGE BE DISPLAYED ON EVERY PREMIUM NOTICE OR BILL FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE, 38-77-610, RELATING TO THE AUTOMOBILE INSURANCE LAW AND THE FILING OF RECOUPMENT CHARGES, 38-77-620, RELATING TO THE AUTOMOBILE INSURANCE LAW AND THE INCLUSION OF RECOUPMENT CHARGES IN CERTAIN RATES, AND 38-77-625, RELATING TO THE PROVISION THAT IF AN INSURED IS INVOLVED IN A MOTOR VEHICLE ACCIDENT WHERE HE IS NOT THE AT-FAULT DRIVER, HIS REINSURANCE FACILITY RECOUPMENT CHARGE MAY NOT BE INCREASED BY HIS INSURER BECAUSE OF THIS OCCURRENCE.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Section 38-73-455 of the 1976 Code, as last amended by Sections 783, 784, and 785 of Act 181 of 1993, is further amended to read:

"Section 38-73-455. (A) An automobile insurer shall file and offer two different rates for automobile insurance, a base rate as defined in Section 38-73-457 and an objective standards rate which is twenty-five percent above the base rate. Both of these rates are which is subject to all surcharges or discounts, if any, applicable under any approved merit rating plan, credit or discount plan promulgated by the department or approved by the director or his designee and subject to allocation and recoupment surcharges provided for in Chapter 77. Additionally, an automobile insurer shall offer the applicable rates approved for policies ceded to the Reinsurance Facility.

Applicants, or a current policyholder, seeking automobile insurance with an insurer must be written at the base rate, unless one of the conditions or factors in subitems (1) through (8) of item (A) is present.

(A) The named insured or any operator who is not excluded in accordance with Section 38-77-340 and who resides in the same household or customarily operates an automobile insured under the same policy, individually:

(1) has obtained a policy of automobile insurance or continuation thereof through material misrepresentation within the preceding thirty-six months; or

(2) has had convictions for driving violations on three or more separate occasions within the thirty-six months immediately preceding the effective date of coverage as reflected by the motor vehicle record of each insured driver as maintained by the Motor Vehicle Division of the Department of Revenue and Taxation; or

(3) has had two or more "chargeable" accidents within the thirty-six months immediately preceding the effective date of coverage. A "chargeable" accident is defined as one resulting in bodily injury to any person in excess of three hundred dollars per person, death, or damage to the property of the insured or other person in excess of seven hundred fifty dollars. Accidents occurring under the circumstances enumerated below are not considered chargeable.

(a) The automobile was lawfully parked. An automobile rolling from a parked position is not considered as lawfully parked but is considered as operated by the last operator.

(b) The applicant or other operator or owner was reimbursed by or on behalf of a person responsible for the accident or has a judgment against this person.

(c) The automobile of an applicant or other operator was struck in the rear by another vehicle and the applicant or other operator has not been convicted of a moving traffic violation in connection with the accident.

(d) The operator of the other automobile involved in the accident was convicted of a moving traffic violation and the applicant or other operator was not convicted of a moving traffic violation in connection therewith.

(e) An automobile operated by the applicant or other operator is damaged as a result of contact with a "hit and run" driver, if the applicant or other operator so reports the accident to the proper authority within twenty-four hours or, if the person is injured, as soon as the person is physically able to do so.

(f) Accidents involving damage by contact with animals or fowl.

(g) Accidents involving physical damage, limited to and caused by flying gravel, missiles, or falling objects.

(h) Accidents occurring as a result of the operation of any automobile in response to an emergency if the operator at the time of the accident was responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or any law enforcement agency. This exception does not include an accident occurring after the emergency situation ceases or after the private passenger motor vehicle ceases to be used in response to the emergency; or

(4) has had one "chargeable" accident and two convictions for driving violations, all occurring on separate occasions, within the thirty-six months immediately preceding the effective date of coverage as reflected by the motor vehicle record of each insured driver as maintained by the Motor Vehicle Division of the South Carolina Department of Revenue and Taxation; or

(5) has been convicted of or forfeited bail during the thirty-six months immediately preceding the effective date of coverage for operating a motor vehicle while in an intoxicated condition or while under the influence of drugs; or

(6) has been convicted or forfeited bail during the thirty-six months immediately preceding the effective date for:

(a) any felony involving the use of a motor vehicle;

(b) criminal negligence resulting in death, homicide, or assault arising out of the operation of a motor vehicle;

(c) leaving the scene of an accident without stopping to report;

(d) theft or unlawful taking of a motor vehicle;

(e) operating during a period of revocation or suspension of registration or license;

(f) knowingly permitting an unlicensed person to drive;

(g) reckless driving;

(h) the making of material false statements in the application for licenses or registration;

(i) impersonating an applicant for license or registration or procuring a license or registration through impersonation, whether for himself or another;

(j) filing of a false or fraudulent claim or knowingly aiding or abetting another in the presentation of such a claim;

(k) failure to stop a motor vehicle when signaled by means of a siren or flashing light by a law enforcement vehicle; or

(7) has for thirty or more consecutive days during the twelve months immediately preceding the effective date of coverage, owned or operated the automobile to be insured (or if newly acquired, the automobile it replaces) without liability coverage in violation of the laws of this State; or

(8) has used the insured automobile as follows or if the insured automobile is:

(a) used in carrying passengers for hire or compensation, except that the use of an automobile for a car pool must not be considered use of an automobile for hire or compensation;

(b) used in the business of transportation of flammables or explosives;

(c) used in illegal operation; or

(d) no longer principally used and garaged within the state, but not to include students who are operating a motor vehicle registered in this State while attending an institution located in another state.

(B) In the event that one or more of the conditions or factors prescribed in items (1) through (8) of subsection (A) exist, the motor vehicle customarily operated by that individual must be written at the objective standards rate.

(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, shall utilize the rates or premium charges by coverage filed and authorized for use by the rating organization licensed by the director or his designee pursuant to Article 11, Chapter 73 of this title, which has the largest number of members or subscribers for automobile insurance rates applicable for policies ceded to the facility. 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 policies not ceded to the facility.

(D) An automobile insurance policy may be endorsed at any time during the policy period to reflect the correct rate or premium applicable by reason of the factors or conditions described in subsection (A) which existed prior to the commencement of the policy period in which the endorsement is made, regardless of whether the factors or conditions were known or disclosed to the insurer at the commencement of the policy period. However, No policy may be endorsed during a policy period to reflect factors or conditions occurring during that policy period. A policy may be endorsed during a policy period to recognize the addition or deletion of an operator or vehicle.

(E) For purposes of determining the applicable rates to be charged an insured, an automobile insurer shall obtain and review an applicant's a motor vehicle record for an applicant or an existing policyholder, on renewal, and each operator of an insured vehicle."

SECTION 2. Section 38-73-457 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:

"Section 38-73-457. Notwithstanding Sections 38-73-920 and 38-73-1210, every automobile insurer and rating organization shall, prior to October 1, 1987, file with the department a base rate, which is defined as a rate by coverage calculated solely upon the experience generated by the risk for each class and territory retained by the insurer in its voluntary book of business and which must not include experience generated by risks ceded or assumed from the Reinsurance Facility. established under Section 38-73-1030. An objective standards rate by coverage must also be filed which is twenty-five percent above the base rate previously described for each class and territory. The base rate must be calculated by removing from the rate or premium charge, then in effect for the automobile insurer, that portion of the rate or premium charge attributable to the net gain or loss of the insurer as a result of participation in the operating results of the facility as required by Section 38-77-760. In determining the base rate and objective standards rate, by coverage, the director or his designee, in order that no extra premium revenue is generated by this section, shall require that the insurer's average rate, by coverage, on October 1, 1987, (computed as a weighted average of the base rate and objective standards rate, by coverage, as determined by the Commissioner), not exceed the insurer's average rate, by coverage, prior to October 1, 1987, as determined by the director or his designee. The provisions of the Administrative Procedures Act apply to any appeal of a base rate or objective standards rate brought thereunder before the Administrative Law Judge Division as provided by law. The base rate or objective standards rate approved by the director or his designee may be put into effect under bond in a similar manner that a public utility may put a proposed rate increase into effect under bond as provided by law. No insurer may file a base rate for any class or territory which is higher than the rate or premium charge, exclusive of that portion required by Section 38-73-460, approved by the director or his designee for use on October 1, 1987. As a result of this section, no insured may receive an increase in rates for other than an increase in coverage or due to the provisions of Section 38-77-280, 38-77-610, or 38-73-455, unless the insurer files additional rates in accordance with this title.

The base rate and objective standards rate filed by each insurer of automobile insurance are effective if they meet the requirements of this section, on or after July 1, 1988, for all eligible applicants and upon the renewal date, on or after July 1, 1988, for all eligible existing policyholders. If the base rate and objective standards rate filed by an automobile insurer do not meet the requirements of this section, the director or his designee shall suspend the authority of that insurer to write automobile insurance until the deficiencies are corrected.

After July 1, 1988, No rate or premium charge, exclusive of the facility recoupment charge approved or established pursuant to Section 38-77-610 and allocation surcharges approved or established under Section 38-77-530, may be approved for an insurer of automobile insurance unless that rate or premium charge is calculated in accordance with this section and meets the other applicable requirements of this title pertaining to the approval of rates or premium charges.

The Consumer Advocate, upon request to the director or his designee, must be provided by him with a copy of any base rate filed with the director or his designee along with any supporting materials, documents, or studies utilized to support the filed base rate. In addition, every automobile insurer and rating organization shall promptly respond to requests for information and data requested by the Consumer Advocate relating to the filed base rate. The Consumer Advocate must be afforded an opportunity for a hearing before the director or his designee on any filed base rate before it takes effect that he believes does not meet the requirements of this section. Final decisions of the director or his designee regarding this hearing are subject to the provisions of the State Administrative Procedures Act and may be appealed to the Administrative Law Judge Division as provided by law.

Effective October 1, 1995, the director or his designee shall disallow the further use of the objective standards rate previously filed in accordance with this section; however, concurrently with the above effective date the director or his designee shall modify the uniform merit rating plan to the extent that surcharges are applied as a percent of the base rate, not as a flat dollar amount, incorporating into the surcharges the prior objective standards rate surcharge such that the overall rate levels on applicable policy premiums before and after the effective date are generally the same.

Upon the effective date of this section, nothing in this section should be construed to require a rating organization, its members or subscribers, or an individual insurer to immediately refile final rates or premium charges previously approved by the director and his designee and referred to as the base rate for automobile insurance coverages. Members or subscribers of a rating organization or individual insurers are authorized to continue to use those base rates approved before the effective date of this section."

SECTION 3. Section 38-73-735 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, 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 department 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 director or his designee 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, other than that promulgated by the director or his designee, is given to an insured pursuant to this section, the policy may not be ceded to the Reinsurance Facility in accordance with the facility's plan of operation."

SECTION 4. Section 38-73-760(e) of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:

"(e) The director or his designee 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. The safe driver discount shall not be included in the rate or premium calculation for:

(1) any driver who has held a valid driver's license less than two years; or

(2) any applicant for automobile insurance who cannot show valid proof of twelve months prior, continuous automobile liability insurance coverage on vehicles owned by the applicant at the date of application. However, a lapse of coverage for five days or less shall not cause the loss of the safe driver discount nor thirty days or less without coverage on newly acquired vehicles."

SECTION 5. The 1976 Code is amended by adding:

"Section 38-73-780. (A) The state rating and statistical division shall develop and file a loss component for private passenger automobile insurance coverages based on the total experience of all insurers in this State including risks ceded to the facility. Due consideration must be given to actual loss experience within this State for the most recent three-year period for which such information is available; to prospective loss experience with this State; and to all other relevant factors within this State; provided, however, that countrywide loss experience and other countrywide data may be considered only where credible South Carolina experience or data is not 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 his designee.

(C) The state rate and statistical division shall annually review the loss component to determine if it is proper and supported by statistical evidence and make appropriate filings for approval of rates as required under this chapter."

SECTION 6. Section 38-73-1420 of the 1976 Code, as added by Act 148 of 1989 and as last 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 as defined under Section 38-73-1400(2) for private passenger automobile insurance rate or premium charges which must accurately reflect the actual expenses of the South Carolina Reinsurance Facility without profit and for use with after the rating organization with the largest number of members or subscribers has filed a the pure loss component for private passenger automobile insurance coverages developed under Section 38-73-780 with the director or his designee. Upon the approval of such component by the director or his designee, 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 the final rate or premium charges required under Section 38-77-540. 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 7. 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 38-77-540 or the final rate or premium charge approved for use by the insurer, whichever is greater. However, the base rate for any private passenger automobile insurance risk ceded to the facility by an insurer shall not be less than the base rate which was in effect and in use on November 1, 1994 by those automobile insurers contracted pursuant to Section 38-77-590(a) for risks written by them through producers designated pursuant to that same section.

(A) The establishing of a uniform rate for risks having no merit rating plan points currently ceded to the facility by insurers having company filed rates in effect on October 1, 1995 which are less than the state uniform rate shall be accomplished within a two-year period such that one-half of the current differential of the lower company filed rate and the state uniform rate shall be added on renewals effective on or after October 1, 1995, and on renewals effective on or after October 1, 1996. Such risks shall be ceded at the final rate or premium charge required by Section 38-77-540.

(B) On private passenger automobile insurance coverages ceded to the facility, effective for the period beginning October 1, 1995 through September 30, 1996 the loss component portion of the state uniform rate under Section 38-73-780 shall not be more than ten percent greater than the loss component for private passenger automobile insurance coverage filed with the director or his designee by the Insurance Services Office (ISO). On private passenger automobile insurance coverages ceded to the facility, effective for the period beginning October 1, 1996 through September 30, 1997 the loss component portion of the state uniform rate under Section 38-73-780 shall not be more than fifteen percent greater than the loss component for private passenger automobile insurance coverage filed with the director or his designee by the Insurance Services Office (ISO).

On private passenger automobile insurance coverages ceded to the facility, effective for the period beginning October 1, 1997 through September 30, 1998 the loss component portion of the state uniform rate under Section 38-73-780 shall not be more than twenty percent greater than the loss component for private passenger automobile insurance coverage filed with the director or his designee by the Insurance Services Office (ISO). On private passenger automobile insurance coverages ceded to the facility, effective for the period beginning October 1, 1998 through September 30, 1999 the loss component portion of the state uniform rate under Section 38-73-780 shall not be more than twenty-five percent greater than the loss component for private passenger automobile insurance coverage filed with the director or his designee by the Insurance Services Office (ISO). On private passenger automobile insurance coverages ceded to the facility, effective for the period beginning October 1, 1999 through September 30, 2000 the loss component portion of the state uniform rate under Section 38-73-780 shall not be more than thirty percent greater than the loss component for private passenger automobile insurance coverage filed with the director or his designee by the Insurance Services Office (ISO).

(C) The establishment of the facility uniform rate as defined in Chapter 77 and required under Section 38-77-540(b) shall be accomplished by an annual increase, if any, of not more than five percent at each successive policy renewal on applicable risks effective on or after October 1, 1995."

SECTION 8. Section 38-77-10 of the 1976 Code, as last amended by Section 801 of Act 181 of 1993, is further amended to read:

"Section 38-77-10. In order to effect a complete reform of automobile insurance and insurance practices in South Carolina, the purposes of this chapter are:

(1) To provide that every automobile insurance risk which is insurable on the basis of the criteria established in this chapter is entitled to 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 same classification of risk and territory under the applicable risk and territorial classification plan promulgated by the department or the facility rate plans. 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 automobile insurers in which all automobile insurers 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 automobile insurance business in this State giving appropriate consideration to degrees of utilization of the facility by the several insurers of automobile insurance and to provide prohibitions or penalties in respect to excessive utilization of the facility.

(3) To provide prohibitions and penalties in respect to unfairly discriminatory or unfairly competitive practices having as their purpose or effect evasion of the statutory mandate of coverage provided in this chapter or imposing an undue or unfair burden upon other automobile insurers through excessive utilization of the facility.

(4) To provide medical, surgical, funeral, and disability insurance benefits without regard to fault to be offered under automobile insurance policies that provide bodily injury and property damage liability insurance, or other security, for motor vehicles registered in this State."

SECTION 9. Section 38-77-30 of the 1976 Code, as last amended by Section 802 of Act 181 of 1993, is further amended by adding:

"(15) `Cede' or `cession' means the act of transferring the risk of loss from the individual insurer to all member insurers of the South Carolina Reinsurance Facility through the operation of the facility.

(16) `Clean risk subsidy' means the total annual amount assessed to member insurers, collected by the insurer as an allocation surcharge per insured vehicle, and paid to the facility in each fiscal period to off-set the anticipated losses attributable to the facility's experience with drivers of private passenger automobile risks having no merit rating plan points.

(17) `State uniform rate' means the final rate or premium charge established by adding the loss component developed under Section 38-73-780 to the expense component filed by the governing board of the facility under Section 38-73-1420.

(18) `Facility uniform rate' means the state uniform rate after application of an experience modification factor of no less than one such that no operating loss or gain is attributable to the facility's experience with drivers of private passenger automobile risks having one or more merit rating plan points [Ex: state uniform rate X 1.00; state uniform rate X 1.14; etc.]."

SECTION 10. Section 38-77-110(A) of the 1976 Code, as last amended by Section 803 of 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 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."

SECTION 11. Section 38-77-140 of the 1976 Code is amended to read:

"Section 38-77-140. No automobile insurance policy may be issued or delivered in this State to the owner of a motor vehicle or may be issued or delivered by an insurer licensed in this State upon any motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the persons defined as insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles within the United States or Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle, as follows: fifteen thousand dollars because of bodily injury to one person in any one accident, and, subject to the limit for one person, thirty thousand dollars because of bodily injury to two or more persons in any one accident, and five fifteen thousand dollars because of injury to or destruction of property of others in any one accident. Nothing in this article prevents an insurer from issuing, selling, or delivering a policy providing liability coverage in excess of these requirements."

SECTION 12. Section 38-77-280(B) of the 1976 Code, as last amended by Section 810 of Act 181 of 1993, is further amended to read:

"(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, to which does not qualify for the safe driver discount in Section 38-73-760(e) one or more merit rating plan points apply."

SECTION 13. The title of Article 5 of Chapter 77, Title 38 of the 1976 Code is amended to read:

SECTION 14. Section 38-77-530 of the 1976 Code, as last amended by Section 818 of Act 181 of 1993, is further amended to read:

"Section 38-77-530. (A) The plan of operation of the facility is subject to the approval of the director or his designee which may be granted only if the plan provides for equitable apportionment of the operating expenses and profits or losses among the members. The plan may, if the director or his designee considers it feasible and equitable, make provision for separate apportionments between private passenger automobile insurance business and commercial automobile insurance business, or, alternatively or in addition to that division, the plan may make provision for separate apportionments between automobile liability insurance business, including medical payments and uninsured motorist insurance, and automobile physical damage insurance business. Any such apportionments shall give consideration to a comparison between the writings or car-year exposures of each insurer of automobile insurance and the total writings or car-year exposures of all automobile insurers or, in the case of any separate apportionments approved by the director or his designee, a comparison between the writings or car-year exposures of each insurer within the applicable category of automobile insurance and the writings or car-year exposures of all insurers within that category.

In connection with his approval of the plan, the director or his designee may require that the plan make provision for such comparisons for a one-year period or for a longer period not to exceed five years and may provide for weighing the experience so as to attach a greater weight to the more recent experience.

In connection with the approval of the plan's provisions respecting equitable apportionment of the operating expenses or gains or losses of the facility, the director or his designee may require that the plan make provision for a comparison between each insurer's percentage of the aggregate written premiums or car-year exposures respecting automobile insurance or any such category thereof and the insurer's percentage of total cessions to the facility of such insurance or category thereof so as to provide that the insurer's portion of the operating expenses or gains or losses must be the average of the two percentages; or the director or his designee may approve or require any other similar or comparable provision for the apportionment of the expenses or gains or losses of the facility which relates insurers' shares to their respective utilization of the facility.

(B) The plan shall provide that every member, upon any assessment related to private passenger automobile risks, shall collect that assessment for payment to the facility by way of a surcharge on automobile insurance policies issued by the member. Such surcharges shall be a percentage of premium adopted by the governing board of the facility and approved by the director or his designee;and the charges determined on the basis of the surcharge shall be combined with and displayed as a part of the applicable premium charges. If the amount collected during the period of surcharge exceeds assessments paid by the member to the facility, the member shall pay over the excess to the facility on a date specified by the governing board. If the amount collected during the period of surcharge is less than the assessments paid by the member to the facility, the facility shall pay the difference to the member.

(C) The plan shall provide for two general classes of assessments relating to the private passenger automobile reinsurance operations of the facility:

(1) clean risk allocation which is the recovery of anticipated losses attributable to the facility's experience with drivers having no merit rating plan points hereafter referred to as "clean risks", and

(2) effective January 1, 2001, loss allocation which is the recovery of past facility operating losses attributable to the experience with private passenger automobile risks after applying as revenue the clean risk subsidy. The surcharge for each assessment, the clean risk allocation and the loss allocation, shall be combined where applicable and computed as one allocation fee per insured vehicle during the period of surcharge. Except as provided in this section, the amount of the allocation surcharge shall not be considered or treated as a rate or premium and no ceding or claim expense allowances shall be paid on such amount; however, the surcharges provided for in this section shall include an amount necessary to recover the amount of commission paid by each member to agents in addition to the assessment to member insurers. Such surcharges are subject to normal cancellation procedures. The allocation surcharge percentage adopted by the governing board shall not be applied to the facility recoupment charges required under Section 38-77-600. The clean risk allocation surcharge percentage shall be applicable to all private passenger automobile risks written in this State by an insurer, including servicing carriers contracted under Section 38-77-590 for business produced by servicing agents assigned in accordance with that chapter, having one or more merit rating plan points and private passenger automobile risks having no merit rating plan points but which do not qualify for the safe driver discount under Section 38-73-760(e) and on any insurance policy or other financial instrument used to satisfy a financial responsibility filing required to maintain a South Carolina driver's license. The loss allocation surcharge percentage shall apply to all private passenger automobile risks on policies issued by a member insurer. The clean risk and loss allocation surcharge percentages applicable in this section shall be adjusted by an insurer such that the insurer collects the same dollar amount as would have been collected had the surcharge percentage established by the governing board been applied to the premium for the risk utilizing the state uniform rate as defined in this chapter.

(D) On November 30, 1995 and before December first of each year thereafter, the governing board of the facility shall determine the clean risk allocation surcharge for use in the next calendar year period from loss experience and expense data of the prior fiscal year; however, the total annual amount assessed to member insurers to off-set the anticipated losses of `clean risks' must not be more than ten percent of the combined total for incurred losses, loss adjustment expenses, commissions, and all other expenses of the facility related to private passenger automobile risks during the previous fiscal year. On November 30, 2000 and before December first of each year thereafter, the governing board of the facility shall calculate the loss allocation surcharge for use in the next calendar year period from the actual operating loss, if any, attributable to all ceded private passenger automobile risks after applying as revenue the clean risk subsidy in the prior fiscal year.

(E) The plan of operation shall provide that all investment income from the premium on business reinsured by the facility shall be retained by or paid over to the facility. In determining the cost of operation of the facility, all investment income shall be taken into consideration. Any net operating gains resulting from the operation of the facility must be retained by the facility and used to offset future operating losses.

(F) Except as provided for in this section, an insurer will provide the same type of service to ceded business that it provides for its voluntary market. The facility shall require each member to adjust losses for ceded business fairly and efficiently in the same manner as voluntary business losses are adjusted and to effect settlement where settlement is appropriate.

(G) It shall be the responsibility of the agent to write the coverage applied for at what is believed to be the appropriate rate level. If coverage is written at the cedeable rate levels and the company elects not to cede, the policy shall be rated at the voluntary rate level. Coverage written at the voluntary rate level which is not acceptable to the company must either be placed with another company or rated at the cedeable rate level by the agent. When an insurer cedes a policy or renewal thereof to the facility and the facility premium for such policy is higher than the voluntary market premium normally charged for such policy if retained by the insurer and the policyholder cancels the policy within forty-five days of the effective date of such ceded policy then the earned premium shall be based on the voluntary market premium and calculated on the pro rata basis.

(H) The plan of operation shall allow for annual and semiannual policy terms. No insurer shall cede an automobile risk to the facility on a policy having an installment payment plan offered by the insurer if such plan provides for other than annual, semiannual, or quarterly installments. Nothing in this section shall prohibit the arrangement of installment financing by the agent or a licensed premium service company in accordance with the applicable sections of this title."

SECTION 15. The 1976 Code is amended by adding:

"Section 38-77-535. (A) During the period beginning on January 1, 1996, through December 31, 1996, only five percent of the clean risk allocation shall be assessed and collected by member insurers.

(B) During the period beginning on January 1, 1997, through December 31, 1997, only twenty percent of the clean risk allocation shall be assessed and collected by member insurers.

(C) During the period beginning on January 1, 1998, through December 31, 1998, only thirty percent of the clean risk allocation shall be assessed and collected by member insurers.

(D) During the period beginning on January 1, 1999, through December 31, 1999, only fifty percent of the clean risk allocation shall be assessed and collected by member insurers.

(E) Beginning on January 1, 2000, one hundred percent of the clean risk allocation shall be assessed and collected by member insurers."

SECTION 16. The title of Section 38-77-540 of the 1976 Code is amended to read:

SECTION 17. Section 38-77-540 of the 1976 Code is amended to read:

"Section 38-77-540. The ceding insurer shall transfer or credit to the Facility on any policy of automobile insurance reinsured by the Facility the pure loss component of its rate or premium charge together with the profit and contingency component of the rate or premium charge as determined under its rating plan or system as filed with the Department. The ceding insurer shall retain as and for its ceding commission the allocated loss adjustment expense component as well as the underwriting and administrative expense components of the rate or premium charge under ceding insurer's rating plan or system as filed with the Department. However, no ceding insurer may include in the agents' commissions component of its underwriting expenses any amount greater than it has actually paid its agent as commission on the reinsured risk. The facility shall accept cessions on a policy of private passenger automobile insurance at the option of an insurer but only at the rate or premium charge as determined under the rating plans established by the governing board and approved by the director or his designee, subject, however, to Section 38-77-950 regarding reasonable utilization of the facility by member companies. The rate plans for the facility are subject to the director's or his designee's approval which may be granted only if the plan is consistent with and provides for the following:

(A) The rate or premium charge for drivers of private passenger automobiles subject to the merit rating plan who have no merit rating plan points shall be the state uniform rate as defined in this chapter.

(B) The rate or premium charge for drivers of private passenger automobiles subject to the merit rating plan who have one or more merit rating plan points shall be the facility uniform rate as defined in this chapter.

(C) The rate plans of the facility shall use the applicable risk and territorial classification plan promulgated by the director or his designee including merit rating plan surcharges and discounts as provided for in section 38-73-760(e), and all rates or premium charges shall likewise be subject to allocation and recoupment surcharges as provided for in this chapter.

(D) The ceding insurer shall transfer or credit to the facility on a policy of automobile insurance reinsured by the facility the pure loss component of the applicable uniform rate together with the contingent component of such rate. The ceding insurer shall retain as and for its ceding commission the allocated loss adjustment expense component as well as the underwriting and administrative expense components of the applicable uniform rate. However, no ceding insurer may include in the agents' commissions component of its underwriting expenses any amount greater than it has actually paid its agent as commission on the reinsured risk."

SECTION 18. Section 38-77-580 of the 1976 Code, as last amended by Section 820 of Act 181 of 1993, is further amended to read:

"Section 38-77-580. The operations and affairs of the facility are under the direction and control of a governing board of nineteen persons of whom four three must be residents of South Carolina appointed by the Governor of South Carolina to represent consumers. The director shall appoint eight persons to represent the insurance industry; in appointing these persons, the director shall select two from a list of not less than five nominated by the American Insurance Association from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two from a list of not less than five persons nominated by the American Mutual Insurance Alliance from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two from a list of not less than five persons nominated by the National Association of Independent Insurers from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two persons, one of whom must be an officer or employee of a stock insurer licensed in South Carolina and not a member or subscriber of any of these organizations, and one of whom must be an officer or employee of a nonstock insurer licensed in South Carolina and not a member or subscriber of any of these organizations; however, of the eight persons appointed to represent the insurance industry, not less than five must be residents of South Carolina and those who are not residents of South Carolina must have job responsibilities that include the supervision over South Carolina operations; not less than two must be officers or employees of insurers licensed to transact automobile insurance in South Carolina and domiciled therein. The director shall appoint four six persons to represent producers, all of whom must be residents of South Carolina; he shall select two such persons from a list of not less than five nominated by the stock agents' association Independent Insurance Agents of South Carolina, Inc., and two from a list of not less than five persons nominated by the mutual agents' association Professional Insurance Agents of South Carolina, Inc., and two from a list of not less than five persons nominated by the South Carolina Association of Auto Insurance Agents, Inc. The director shall appoint two persons one additional person to represent the designated agents, one of whom who must be an officer of a premium service finance company and the other of whom must be a designated agent and both of whom must be residents a resident of South Carolina. In addition the Consumer Advocate is an ex officio member of the governing board of the Reinsurance Facility. No person who is associated with any business within the meaning of Section 8-13-20, which is either subject to regulation by the Department of Insurance or which provides goods or services to the facility for compensation, is eligible for appointment to the board to represent consumers, except that any person serving on the board representing consumers on the effective date of this provision who would otherwise be disqualified from serving based on this provision may continue to serve for the remainder of his current term.

The director is chairman of the board, ex officio, but has no vote except in the case of a tie. The director, or his designated representative, shall preside over all meetings which must be held not less than quarterly in South Carolina at the times and places the director designates. However, upon the filing with the director of a request for a meeting signed by not fewer than five members of the board and specifying the subjects to be discussed at the proposed meeting, the director shall call a special meeting of the board to be held not less than fifteen nor more than thirty days after receipt of the request. Notice, in writing, of the special meeting must be provided members of the board.

Members of the board shall serve one year or until their successors are appointed and have qualified.

Amendment of the plan of operation may be made only at the annual meeting of the board or at a special meeting called by the director for that purpose and so specified in the notice of meeting. Amendments of the plan require the affirmative vote of two-thirds of all the board members and are subject to the approval of the director or his designee. The director or his designee may approve amendments only if they are consistent with the purposes of this chapter. If the consumer-representative members of the board unanimously dissent from a proposed amendment and specify their reasons for dissent in writing, the director or his designee may not approve the amendment until after a public hearing addressed to the reasons for the dissent.

The director may make provision for voting by proxy at meetings.

The director or his designee, through the department, may propose to the board any amendment to or modification of the plan that the director or his designee considers to be necessary to render the plan reasonable or consistent with the purposes of this chapter, specifying in writing the reasons for any proposed amendment or modification. In the event that the board fails to adopt his proposed amendment or modification, the director or his designee may, after notice and public hearing addressed to the reasons for the proposed amendment or modification, promulgate the amendment or modification considered necessary to render the plan reasonable or consistent with the purposes of this chapter."

SECTION 19. Section 38-77-585 of the 1976 Code, as added by Act 557 of 1990, is amended to read:

"Section 38-77-585. Any insurer designated contracted pursuant to Section 38-77-590(a) is entitled to appoint an officer or employee to the governing board of the Reinsurance Facility if not otherwise represented on the governing board pursuant to Section 38-77-580. Any member of the governing board representing an insurer so designated contracted must abstain from casting a vote on any matter which would have a material effect on the operations of that insurer as it relates to the affairs of the insurer acting as a designated contracted insurer for the Reinsurance Facility."

SECTION 20. The title of Section 38-77-590 of the 1976 Code is amended to read:

SECTION 21. Section 38-77-590 of the 1976 Code, as last amended by Sections 821-825 of Act 181 of 1993, 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 director or his designee considers necessary by reason of complaints regarding want of access to automobile insurance in particular areas or want of outlets for producers, the director or his designee 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 director or his designee 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 director or his designee 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 director or his designee, 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 director or his designee may continue to serve in that capacity under the jurisdiction and control of the governing board of the facility, except that After October 1, 1995, producers previously designated by the director or his designee 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 director or his designee or the governing board of the Reinsurance Facility must remain assigned to that servicing carrier until and unless, after October 1, 1997, 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 approval of the director or his designee.

(c) A producer may be designated by apply to the governing board of the Facility upon application for designation and is eligible for designation for assignment to a servicing carrier and is eligible for assignment upon a finding by the governing board that the applicant meets the following qualifications:

(1) the applicant has been, for ten 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 during the previous five calendar years 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.

(d) Prior to designation Before 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 director or his designee the locations assigned by him to those producers whom the director or his designee 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 director or his designee 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 June 4, 1987, 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 seventy-five thousand dollars were written by the agent at each of the two locations.

(f) The designation of a producer by the director or his designee 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 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 director or his designee 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 director or his designee 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. An insurer having voluntary contracts with one or more servicing agents to write potentially cedeable automobile insurance shall not be subject to the statutory provisions or regulations regarding excessive utilization of the Reinsurance Facility for policies produced by such servicing agents. An insurer shall not at any time nor in any manner require, coerce or provide incentive for a servicing agent to make a new offer of coverage and application for insurance through the servicing carrier to which the servicing agent is assigned pursuant to this section in order to replace or supersede an existing policy or renewal offering of the insurer.

(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 22. Section 38-77-600 of the 1976 Code, as last amended by Section 826 of Act 181 of 1993, is further amended to read:

"Section 38-77-600. The rate or premium charged by insurers of private passenger automobile insurance must include a facility recoupment charge, which must be added to the appropriate base rate or objective standards rate prescribed in Sections 38-73-455 and 38-73-457. The operating losses of the facility for a twelve-month period must be recouped in the subsequent twelve-month period.

(1) Prior to Before December first of each year, the governing board of the facility shall calculate the recoupment amount, by coverage, by dividing the net facility operating loss, adjusted to reflect prudently incurred expenses, consistent with the provisions of Section 38-73-465, and the time value of money, by mandated coverage for the preceding facility accounting year, by the total number of earned car years in South Carolina, by coverage, for the same period of time. Until July 1, 1996, .386 multiplied by the recoupment is to be borne by risks having zero surcharge points under the Uniform Merit Plan promulgated by the department. The remainder of the recoupment (.614 multiplied by the recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(1)+I0X = R. Effective for the recoupment period beginning July 1, 1996 through June 30, 1997, .55 multiplied by the recoupment is to be borne by risks having zero surcharge points under the uniform merit plan promulgated by the director or his designee. The remainder of the recoupment (.45 multiplied by the recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(10)X = R. Effective for the recoupment period beginning July 1, 1997 through June 30, 1998, .63 multiplied by the recoupment is to be borne by risks having zero surcharge points under the uniform merit plan promulgated by the director or his designee. The remainder of the recoupment (.37 multiplied by the recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(10)X = R. Effective for the recoupment period beginning July 1, 1998 through June 30, 1999, .71 multiplied by the recoupment is to be borne by risks having zero surcharge points under the uniform merit plan promulgated by the director or his designee. The remainder of the recoupment (.29 multiplied by the recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(10)X = R. Effective for the recoupment period beginning July 1, 1999 through June 30, 2000, .80 multiplied by the recoupment is to be borne by risks having zero surcharge points under the uniform merit plan promulgated by the director or his designee. The remainder of the recoupment (.20 multiplied by the recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(10)X = R. In this formula to be utilized in determining the facility recoupment charge:

(a) P(1) is the percentage of risks which have one surcharge point under the Uniform Merit Rating Plan;

(b) P(2) is the percentage of risks which have two surcharge points under the Uniform Merit Rating Plan;

(c) P(3) is the percentage of risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan;

(d) P(4) is the percentage of risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan;

(e) P(5) is the percentage of risks subject to a surcharge of five points under the Uniform Merit Rating Plan;

(f) P(6) is the percentage of risks subject to a surcharge of six points under the Uniform Merit Rating Plan;

(g) P(7) is the percentage of risks subject to a surcharge of seven points under the Uniform Merit Rating Plan;

(h) P(8) is the percentage of risks subject to a surcharge of eight points under the Uniform Merit Rating Plan;

(i) P(9) is the percentage of risks subject to a surcharge of nine points under the Uniform Merit Rating Plan;

(j) P(1)+I0 or more is the percentage of risks subject to a surcharge of ten or more points under the Uniform Merit Rating Plan;

(k) X is the dollar amount by coverage, to be charged all risks having one surcharge point under the Uniform Merit Rating Plan promulgated by the department. This dollar amount, by coverage, is the facility recoupment charge to be added to the base rate or objective standards rate prescribed in Sections 38-73-455 and 38-73-457 for all risks which have one surcharge point.

(2) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which have one surcharge point under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of one.

(3) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which have two surcharge points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of two.

(4) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of three.

(5) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of four.

(6) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of five points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of five.

(7) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of six points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of six.

(8) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of seven points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of seven.

(9) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of eight points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of eight.

(10) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of nine points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of nine.

(11) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of ten or more points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of ten.

(12) In determining the number of surcharge points a risk has for the purposes of this section, no surcharge points assigned under the Uniform Merit Rating Plan because the principal operator of the automobile has not been licensed in any state for at least one year immediately preceding the writing of the risk or as a result of a failure of any motor vehicle equipment requirement may be considered.

(13) This section applies to all private passenger automobile insurance policies issued or renewed after June 30, 1989. However, insurers unable to comply with the provisions of this section and renewal provisions required by law may comply with this section at any time after June 30, 1989, but in no event later than October 1, 1989."

SECTION 23. Section 38-77-620 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-77-620. The facility recoupment charges approved or established pursuant to Section 38-77-610 must be added to the approved base rate and objective standards rate in effect for each automobile insurer. The combined rate or premium charge is effective on July first of each year and the recoupment charges must remain constant until July first of the following year. The base rate and objective standards rate may change in accordance with Section 38-73-457 and the other applicable requirements of this title pertaining to the approval of rates or premium charges. Facility recoupment charges must be considered in accordance with:

(1) Any recoupment charge paid by policyholders must be considered premium for the purpose of calculating premium taxes and commissions and is subject to normal policy cancellation procedures.

(2) Any net operating gains resulting from the operation of the facility must be retained by the facility, and the gains and any investment income derived from the gains must be used to offset future operating losses.

(3) The total funds recouped by all insurers less commission and premium tax expenses and time value of money considerations must be paid to the Reinsurance Facility in accordance with the plan of operation. The governing board shall redistribute the funds to the insurers based upon each insurer's share of the Reinsurance Facility losses. Recoupment must be used solely for the purpose of recovering past facility operating deficits. The plan of operation must provide that the amount ultimately received by an individual company is not more than the company's share of the Reinsurance Facility losses, plus the time value of money.

(4) In the making and approval of rates for small commercial automobile risks, as defined in Section 38-77-30, consideration must be given to the net gains or losses incurred by insurers as a result of participation in the operating results and actual, prudently incurred expenses, respectively, of the facility."

SECTION 24. Section 38-77-910 of the 1976 Code, as last amended by Section 828 of Act 181 of 1993, is further amended to read:

"Section 38-77-910. It is an act of unlawful discrimination for an automobile insurer to make any distinction between automobile insurance policyholders or applicants for automobile insurance with respect to coverage, rates, claims, or other services except as the distinctions are provided for in the rating plans for the classification of risks and territories promulgated by the department and the facility rate plans."

SECTION 25. Section 38-77-940 of the 1976 Code is amended to read:

"Section 38-77-940. No insurer of automobile insurance shall directly or indirectly by offer or promise of reward or imposition or threat of penalty or through any artifice or device whatsoever, confer any benefit upon any agent or impose any detriment upon any such agent for the purpose of avoiding any class or type of automobile insurance risk which the insurer considers it necessary to reinsure in the facility; nor shall any offer or promise of reward or imposition or threat of penalty in connection with any other line or type of insurance be so tied to automobile insurance as to have a tendency to induce the agent to avoid any such class or type of automobile insurance risk; nor shall any insurer of automobile insurance provide to agents, directly or indirectly, orally or in writing, any listing of classes or types of automobile insurance risks which it considers necessary to reinsure in the Facility; nor shall any insurer of automobile insurance terminate its insurance business with any one agent over the writing of certain classes or types of automobile insurance risks without also pulling out of the entire State or terminating its similar insurance business with all other agents in the State at the same time for a period of time of at least 365 days, except that if the insurer reinstates the agent within thirty days of the determination that the termination was unlawful, then this provision shall not apply; nor shall any insurer of automobile insurance do anything unfair, or unfairly fail to do anything, which has the effect of, or which results in, causing any ceded insurance business to have a detrimental effect on any incentive bonuses paid by the insurer to agents. Any act in violation of this section constitutes an act of unlawful discrimination and unfair competition which, if wilful, shall result in the suspension or revocation of the insurer's certificate of authority for not less than twelve months. Any agreement made in violation of this section shall be void.

Nothing in this section may be considered to preclude or impair agreements between insurers and their agents or some of their agents to pay contingency commissions or a profit sharing bonus based upon the quality of business; nor shall the insurers, in any manner, use that business placed in the facility when determining the quality bonus; nor may it be considered to preclude an agreement between any agent and an insurer of automobile insurance to exclude from any profit sharing or contingency arrangement automobile insurance business coming unsolicited to the agent and written by him solely because of the mandate of coverage provided in this chapter.

No insurer of automobile insurance shall cancel its representation by an agent primarily because of the volume of automobile insurance placed with it by the agent on account of the statutory mandate of coverage nor because of the amount of the agent's automobile insurance business which the insurer has considered it necessary to reinsure in the facility."

SECTION 26. Section 38-77-950 of the 1976 Code, as last amended by Act 104 of 1993, and 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. 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 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 having one or more merit rating plan points."

SECTION 27. The 1976 Code is amended by adding:

"Section 56-10-275. Notwithstanding any other provision of law, any person who operates or allows an uninsured motor vehicle to be operated shall suffer the immediate impoundment of such vehicle until such time as he posts liability insurance in the amount required by Chapter 77 of Title 38 and pays any storage and impoundment fee, together with any other fines or fees imposed for the operation of an uninsured motor vehicle."

SECTION 28. Sections 38-73-1410 and 38-77-595 of the 1976 Code are repealed.

SECTION 29. Sections 38-77-600, 38-77-605, 38-77-610, 38-77-620, and 38-77-625 of the 1976 Code are repealed July 1, 2000.

SECTION 30. This act takes effect October 1, 1995.