S*254 Session 112 (1997-1998)
S*0254(Rat #0260, Act #0154 of 1997) General Bill, By
Senate Banking and Insurance
Similar(S 125, H 3357)
A BILL TO AMEND SECTION 56-9-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO THE MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT AND
DEFINITIONS, SO AS TO PROVIDE A DEFINITION FOR "UNINSURED MOTORIST FUND"; TO
AMEND CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE REGISTRATION AND
FINANCIAL SECURITY, BY ADDING ARTICLE 5 SO AS TO PROVIDE FOR THE ESTABLISHMENT
OF AN UNINSURED MOTORIST FUND.-AMENDED SHORT TITLE
01/23/97 Senate Introduced, read first time, placed on calendar
without reference SJ-18
01/29/97 Senate Debate adjourned SJ-22
02/04/97 Senate Debate interrupted SJ-26
02/05/97 Senate Read second time SJ-14
02/05/97 Senate Ordered to third reading with notice of
amendments SJ-14
02/12/97 Senate Amended SJ-15
02/12/97 Senate Read third time and sent to House SJ-15
02/18/97 House Introduced and read first time HJ-15
02/18/97 House Referred to Committee on Labor, Commerce and
Industry HJ-24
05/06/97 House Committee report: Majority favorable with amend.,
minority unfavorable Labor, Commerce and Industry HJ-2
05/14/97 House Debate adjourned until Thursday, May 15, 1997 HJ-80
05/20/97 House Amended HJ-75
05/20/97 House Debate interrupted HJ-168
05/21/97 House Amended HJ-49
05/21/97 House Read second time HJ-72
05/21/97 House Roll call Yeas-96 Nays-17 HJ-72
05/22/97 House Amended HJ-50
05/22/97 House Read third time and returned to Senate with
amendments HJ-50
05/22/97 Senate Non-concurrence in House amendment SJ-22
05/22/97 House House insists upon amendment and conference
committee appointed Reps. Cato, Kirsh & Seithel HJ-76
05/22/97 Senate Conference committee appointed McConnell,
Courtney, Passailaigue SJ-5
06/05/97 Senate Free conference powers granted SJ-67
06/05/97 Senate Free conference committee appointed McConnell,
Passailaigue, Courtney SJ-67
06/05/97 House Free conference powers granted HJ-136
06/05/97 House Free conference committee appointed Reps. Cato,
Kirsh & Seithel HJ-146
06/05/97 Senate Free conference report received and adopted SJ-76
06/17/97 House Free conference report received and adopted HJ-15
06/17/97 House Roll call Yeas-85 Nays-28 HJ-82
06/17/97 Senate Ordered enrolled for ratification SJ-18
06/18/97 Ratified R 260
07/02/97 Signed By Governor
07/09/97 Effective date Secs. 1,2 on 02/01/99; Secs. 4-17
& 19,23,25,26,27,29 & 31 on 03/01/99; Secs
3,18,20,21,22,24,28 & 30 upon approval by Gov.,
except as may be otherwise specifically
provided; Nonrenewal notices may be sent before
03/01/99 for policies on or after 03/01/99
07/28/97 Copies available
07/28/97 Act No. 154
(A154, R260, S254)
AN ACT TO AMEND SECTION 56-9-20, AS AMENDED, CODE
OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT AND
DEFINITIONS, SO AS TO PROVIDE A DEFINITION FOR
"UNINSURED MOTORIST FUND"; TO AMEND
CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE
REGISTRATION AND FINANCIAL SECURITY, BY ADDING
ARTICLE 5 SO AS TO PROVIDE FOR THE ESTABLISHMENT OF
AN UNINSURED MOTORIST FUND; TO AMEND SECTION
38-73-470, AS AMENDED, RELATING TO DISPOSITION OF THE
UNINSURED MOTORIST PREMIUM, SO AS TO PROVIDE THAT
ONE DOLLAR OF THIS YEARLY PREMIUM MUST BE PLACED
ON DEPOSIT WITH THE STATE TREASURER IN THE
"UNINSURED ENFORCEMENT FUND", PROVIDE FOR
THE INTEREST EARNED THEREON, AND PROVIDE THAT THERE
IS NO REQUIREMENT FOR AN INSURER OR AN AGENT TO
OFFER UNDERINSURED MOTORIST COVERAGE AT LIMITS
LESS THAN THE STATUTORILY REQUIRED BODILY INJURY OR
PROPERTY DAMAGE LIMITS; TO AMEND SECTION 38-73-910, AS
AMENDED, RELATING TO PROPERTY, CASUALTY, AND
INLAND MARINE INSURANCE, RATES, RATE MAKING, AND
RATE FILING, AND NOTICE OF A HEARING BEFORE GRANTING
A RATE INCREASE, SO AS TO DELETE AUTOMOBILE
INSURANCE FROM THE LIST OF THE TYPES OF INSURANCE TO
WHICH THIS SECTION APPLIES, AND ADD PROVISIONS WHICH
PROVIDE, AMONG OTHER THINGS, THAT, WITH CERTAIN
STATED EXCEPTIONS, OVERALL AVERAGE RATE LEVEL
INCREASES OR DECREASES, FOR ALL COVERAGES COMBINED,
OF SEVEN PERCENT ABOVE OR BELOW THE INSURER'S RATES
IN EFFECT MAY TAKE EFFECT WITHOUT PRIOR APPROVAL ON
A FILE AND USE BASIS, WITH RESPECT TO RATES FOR
AUTOMOBILE INSURANCE POLICIES; TO AMEND THE 1976
CODE BY ADDING SECTION 38-73-736 SO AS TO PROVIDE THAT
ANY SCHEDULE OF RATES, RATE CLASSIFICATIONS, OR RATE
PLANS FOR AUTOMOBILE INSURANCE AS DEFINED IN
SECTION 38-77-30 FILED WITH THE DEPARTMENT OF
INSURANCE MUST PROVIDE FOR AN APPROPRIATE
REDUCTION IN PREMIUMS FOR PERSONS WHO ARE FIFTY-FIVE
YEARS OF AGE AND OLDER AND WHO QUALIFY UNDER
SECTION 38-73-737; TO AMEND SECTION 38-77-10, AS
AMENDED, RELATING TO THE AUTOMOBILE INSURANCE
LAWS AND DECLARATION OF PURPOSE, SO AS TO DELETE
CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE,
AMONG OTHER THINGS, THAT THE PURPOSE OF CHAPTER 77
OF TITLE 38 IS TO PROVIDE FOR A RESIDUAL MARKET
MECHANISM KNOWN AS THE ASSOCIATED AUTOMOBILE
INSURERS PLAN FOR EVERY PERSON WHO IS LEGALLY
ENTITLED TO AUTOMOBILE INSURANCE BUT HAS NOT BEEN
ABLE TO OBTAIN A LIABILITY POLICY TO BE ABLE TO APPLY
TO THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO
HAVE SUCH PERSON'S RISK ASSIGNED TO AN INSURANCE
CARRIER LICENSED TO WRITE AND WRITING MOTOR VEHICLE
LIABILITY INSURANCE IN SOUTH CAROLINA WHO SHALL
ISSUE A LIABILITY POLICY MEETING AT LEAST THE MINIMUM
REQUIREMENTS FOR ESTABLISHING FINANCIAL
RESPONSIBILITY; TO AMEND SECTION 38-77-30, AS AMENDED,
RELATING TO AUTOMOBILE INSURANCE AND DEFINITIONS,
SO AS TO, AMONG OTHER THINGS, PROVIDE A DEFINITION
FOR CANCELLATION OR "TO CANCEL",
"FACILITY PHYSICAL DAMAGE RATE",
"INSTITUTIONAL SOURCE", AND
"INSURANCE-SUPPORT ORGANIZATION", CHANGE
CERTAIN EXISTING DEFINITIONS, AND DELETE CERTAIN
DEFINITIONS; TO AMEND THE 1976 CODE BY ADDING SECTION
38-77-596 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT
THE GOVERNING BOARD OF THE SOUTH CAROLINA
REINSURANCE FACILITY ANNUALLY SHALL DEVELOP AND
FILE PRIVATE PASSENGER AUTOMOBILE LOSS COMPONENTS
AND EXPENSE COMPONENTS WHICH INCLUDE PROVISIONS
FOR PROFITS AND CONTINGENCIES WHICH WOULD COMBINE
FOR THE FINAL RATE FOR AUTOMOBILE INSURANCE
COVERAGES BASED ON THE TOTAL EXPERIENCE OF ALL
RISKS CEDED TO THE FACILITY WHICH ARE ACTUARIALLY
SOUND AND SUPPORTED BY STATISTICAL EVIDENCE, THAT
THE FACILITIES' BOARD SHALL CONTRACT WITH
INDEPENDENT ACTUARIAL SERVICES TO DEVELOP THE LOSS
COMPONENT, THAT DUE CONSIDERATION MUST BE GIVEN TO
ACTUAL LOSS EXPERIENCE WITHIN THE FACILITY FOR THE
MOST RECENT THREE-YEAR PERIOD FOR WHICH SUCH
INFORMATION IS AVAILABLE, AND THAT FACILITY RATE
INCREASES ON OR AFTER MARCH 1, 1999, MUST BE CAPPED AT
AN OVERALL TEN PERCENT INCREASE EACH YEAR, BUT THAT
THIS CAP DOES NOT APPLY ON AN INDIVIDUAL INSURED
BASIS; TO AMEND SECTION 38-77-112, AS AMENDED,
RELATING TO AUTOMOBILE INSURANCE AND THE
REQUIREMENT THAT AN APPLICANT OR POLICYHOLDER
MUST HAVE A DRIVER'S LICENSE AND EXCEPTIONS, SO AS TO
DELETE CERTAIN LANGUAGE, PROVIDE, AMONG OTHER
THINGS, THAT NO AUTOMOBILE INSURER IS REQUIRED TO
WRITE COVERAGE FOR AUTOMOBILE INSURANCE FOR ANY
APPLICANT OR EXISTING POLICYHOLDER, AND REQUIRE AN
INSURER OR AGENT TO RETAIN FOR THREE YEARS THE
DRIVER'S LICENSE NUMBERS FOR ALL PERSONS WHO HAVE
SUBMITTED AN APPLICATION FOR INSURANCE BUT WHO
WERE REFUSED COVERAGE AND TO FURNISH THIS
INFORMATION UPON THE REQUEST OF THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE OR HIS DESIGNEE; TO AMEND
SECTION 38-77-120, AS AMENDED, RELATING TO
REQUIREMENTS FOR NOTICE OF CANCELLATION OF, OR
REFUSAL TO RENEW, A POLICY OF AUTOMOBILE INSURANCE,
SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THIS
NOTICE MUST PROVIDE FOR THE NOTIFICATION REQUIRED
BY SECTION 38-77-390(b) AND MUST INFORM THE INSURED
THAT HE CAN REQUEST IN WRITING WITHIN FIFTEEN DAYS
OF THE RECEIPT OF NOTICE THAT THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE REVIEW THE ACTION OF THE
INSURER; TO AMEND THE 1976 CODE BY ADDING SECTIONS
38-77-121, 38-77-122, 38-77-123, 38-77-124, 38-77-126, 38-77-141,
38-77-142, 38-77-143, 38-77-151, 38-77-154, AND 38-77-155 SO AS,
WITH RESPECT TO AUTOMOBILE INSURANCE, TO PROVIDE,
AMONG OTHER THINGS, THAT THE INSURER MAY CANCEL AT
ANY TIME IN THE FIRST NINETY DAYS DURING WHICH THE
POLICY IS IN EFFECT SUBJECT TO SECTION 38-77-122, THAT NO
INSURER OR AGENT SHALL REFUSE TO ISSUE A POLICY
BECAUSE OF AGE, SEX, LOCATION OF RESIDENCE IN SOUTH
CAROLINA, RACE, COLOR, CREED, NATIONAL ORIGIN,
ANCESTRY, MARITAL STATUS, OR INCOME LEVEL, THAT,
NOTWITHSTANDING SECTIONS 38-77-122 AND 38-77-123, AN
INSURER MAY REFUSE TO ISSUE OR RENEW A POLICY ON THE
BASIS OF LOCATION OF RESIDENCE WHERE THE INSURER HAS
FILED WITH THE DIRECTOR A TERRITORIAL PLAN SETTING
FORTH THE PRECISE GEOGRAPHIC AREAS OF THE STATE IN
WHICH IT WILL ISSUE OR RENEW POLICIES, THAT INSURERS
MUST DISCLOSE TO THE INSURED WHETHER THE RATE LEVEL
IS HIGHER THAN THE LOWEST RATE LEVEL TIER FOR THAT
INSURER OR THE GROUP TO WHICH THE INSURER IS A
MEMBER, AND THAT ALL FUNDS COLLECTED BY THE
DIRECTOR OF THE DEPARTMENT OF PUBLIC SAFETY UNDER
CHAPTER 10 OF TITLE 56 MUST BE PLACED ON DEPOSIT WITH
THE STATE TREASURER AND HELD IN A SPECIAL FUND TO BE
KNOWN AS THE "UNINSURED MOTORISTS FUND" TO
BE DISBURSED AS PROVIDED BY LAW; TO AMEND SECTION
38-77-140, RELATING TO BODILY INJURY AND PROPERTY
DAMAGE LIMITS OF COVERAGE FOR AUTOMOBILE
INSURANCE, SO AS TO RAISE THE MINIMUM AMOUNT OF
COVERAGE FOR INJURY TO OR DESTRUCTION OF PROPERTY
OF OTHERS IN ANY ONE ACCIDENT FROM FIVE THOUSAND TO
TEN THOUSAND DOLLARS; TO AMEND SECTION 38-77-150, AS
AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE
UNINSURED MOTORIST PROVISION, AND DEFENSE OF AN
ACTION BY THE INSURER, SO AS TO RAISE THE MINIMUM
COVERAGE AMOUNT FOR PROPERTY DAMAGE FROM FIVE
THOUSAND TO TEN THOUSAND DOLLARS, AND PROVIDE
THAT BENEFITS PAID PURSUANT TO THIS SECTION ARE
SUBJECT TO SUBROGATION AND ASSIGNMENT IF AN
UNINSURED MOTORIST HAS SELECTED THE OPTION TO BE
UNINSURED BY PAYING THE FEE PURSUANT TO SECTION
56-10-510; TO AMEND SECTION 38-77-280, AS AMENDED,
RELATING TO AUTOMOBILE INSURANCE AND COLLISION AND
COMPREHENSIVE COVERAGES, SO AS TO, AMONG OTHER
THINGS, DELETE CERTAIN LANGUAGE AND PROVISIONS,
INCLUDING THE PROVISION THAT NO POLICY OF INSURANCE
WHICH PROVIDES AUTOMOBILE PHYSICAL DAMAGE
COVERAGE ONLY MAY BE CEDED TO THE REINSURANCE
FACILITY; TO AMEND SECTION 38-77-350, AS AMENDED,
RELATING TO THE FORM TO BE USED WHEN OPTIONAL
AUTOMOBILE INSURANCE COVERAGES ARE OFFERED, SO AS
TO DELETE CERTAIN PROVISIONS, INCLUDING THE
PROVISION THAT A POLICY OF INSURANCE OFFERED OR
ISSUED BY A NEW SERVICING CARRIER FOR THE
REINSURANCE FACILITY TO REPLACE A POLICY PREVIOUSLY
ISSUED BY A FORMER SERVICING CARRIER AND CONTAINING
THE SAME COVERAGE LIMITS AS THE FORMER POLICY
CONSTITUTES A VALID REPLACEMENT POLICY THAT DOES
NOT REQUIRE THE NEW SERVICING CARRIER OR AGENT TO
MAKE A NEW OFFER OF COVERAGE OR TO OBTAIN A NEW
APPLICATION FROM THE INSURED; TO AMEND THE 1976 CODE
BY ADDING SECTION 38-77-370 SO AS, WITH RESPECT TO
AUTOMOBILE INSURANCE, TO PROVIDE, AMONG OTHER
THINGS, THAT IF AN INDIVIDUAL, AFTER PROPER
IDENTIFICATION, SUBMITS A WRITTEN REQUEST TO AN
INSURANCE-SUPPORT ORGANIZATION FOR ACCESS TO
RECORDED PERSONAL INFORMATION ABOUT THE
INDIVIDUAL THAT IS REASONABLY DESCRIBED BY THE
INDIVIDUAL AND REASONABLY ABLE TO BE LOCATED AND
RETRIEVED BY THE INSURANCE-SUPPORT ORGANIZATION,
THEN THE INSURANCE-SUPPORT ORGANIZATION, WITHIN
THIRTY BUSINESS DAYS FROM THE DATE THE REQUEST IS
RECEIVED, UNDERTAKE CERTAIN ACTIONS; TO AMEND THE
1976 CODE BY ADDING SECTION 38-77-390 SO AS TO PROVIDE,
AMONG OTHER THINGS, THAT IN THE EVENT OF
CANCELLATION OR NONRENEWAL, INCLUDING THOSE THAT
INVOLVE POLICIES REFERRED TO IN SECTION 38-77-120, THE
INSURER OR AGENT RESPONSIBLE FOR THE CANCELLATION
OR NONRENEWAL SHALL GIVE CERTAIN WRITTEN NOTICE IN
A FORM APPROVED BY THE DIRECTOR OF THE DEPARTMENT
OF INSURANCE; 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 OF OPERATION MUST COMMENCE
RECOUPMENT OF FACILITY ASSESSMENTS BY WAY OF A
SURCHARGE ON LIABILITY INSURANCE COVERAGE ON
PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE
BUSINESS ISSUED BY A MEMBER OR THROUGH THE FACILITY,
THAT THE SURCHARGE MUST BE A PERCENTAGE OF THE
PREMIUM ADOPTED BY THE FACILITY BOARD BUT THAT FOR
THE PERIOD BEGINNING MARCH 1, 1999, AND ENDING
FEBRUARY 28, 2002, THE AMOUNT OF THE PERCENTAGE OF
PREMIUM SURCHARGE FOR THE RECOUPMENT OF FACILITY
ASSESSMENTS ADOPTED BY THE BOARD CANNOT EXCEED
TEN PERCENT OF THE LIABILITY INSURANCE COVERAGE
PREMIUM PER INSURED MOTOR VEHICLE OR RISK ANNUALLY
FOR ALL INSUREDS OR POLICYHOLDERS, THAT SERVICING
CARRIER CONTRACTS FOR BUSINESS WRITTEN BY
DESIGNATED PRODUCERS MAY, AT THE CARRIER'S OPTION,
BE EXTENDED TO MARCH 1, 2002, UPON THE SAME TERMS
AND CONDITIONS AS THEIR CURRENT CONTRACTS, AND
THAT THE FACILITY SHALL CONVERT TO THE
PERCENTAGE-OF-PREMIUM BASIS OF RECOUPMENT BY
MARCH 1, 1999; TO AMEND SECTION 38-77-590, AS AMENDED,
RELATING TO THE REINSURANCE FACILITY AND DESIGNATED
PRODUCERS, SO AS TO DELETE CERTAIN PROVISIONS, AND
PROVIDE THAT A PRODUCER DESIGNATED UNDER THIS
SECTION MAY NOT WRITE NEW PRIVATE PASSENGER AND
COMMERCIAL AUTOMOBILE INSURANCE BUSINESS TO BE
PLACED IN THE FACILITY AFTER MARCH 1, 1999, AND THAT A
POLICY WITH AN EFFECTIVE DATE AFTER MARCH 1, 2002,
SHALL NOT BE ACCEPTED BY THE FACILITY; TO AMEND
SECTION 38-77-595, RELATING TO THE REINSURANCE
FACILITY AND THE CONDITIONS FOR DESIGNATION AS A
FACILITY PRODUCER FOR AN OTHERWISE INELIGIBLE
APPLICANT, SO AS TO PROVIDE THAT A PRODUCER
DESIGNATED UNDER THIS SECTION MAY NOT WRITE NEW
PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE
INSURANCE BUSINESS TO BE PLACED IN THE FACILITY AFTER
MARCH 1, 1999, AND THAT A POLICY WITH AN EFFECTIVE
DATE AFTER MARCH 1, 2002, SHALL NOT BE ACCEPTED BY
THE FACILITY; TO AMEND TITLE 38, RELATING TO
INSURANCE, BY ADDING CHAPTER 91 SO AS TO PROVIDE FOR
A JOINT UNDERWRITING ASSOCIATION FOR PRIVATE
PASSENGER AND COMMERCIAL AUTOMOBILE INSURANCE; TO
PROVIDE THAT THE RESIDUAL AUTOMOBILE INSURANCE
MARKET MECHANISM FOR THE STATE OF SOUTH CAROLINA
SHALL CONVERT FROM A JOINT UNDERWRITING
ASSOCIATION TO AN ASSIGNED RISK PLAN, PROVIDE FOR THE
TRANSITION, AND PROVIDE THAT THE JOINT UNDERWRITING
ASSOCIATION SHALL NOT ACCEPT ANY INSURANCE BUSINESS
AFTER FEBRUARY 28, 2003, AND THAT THE ASSIGNED RISK
PLAN MUST ACCEPT BUSINESS BEGINNING ON MARCH 1, 2003,
AND CONTINUING THEREAFTER; TO AMEND CHAPTER 77,
TITLE 38, RELATING TO AUTOMOBILE INSURANCE, BY
ADDING ARTICLE 8 SO AS TO PROVIDE THAT, BEGINNING ON
MARCH 1, 2003, AND CONTINUING THEREAFTER, THE
DIRECTOR OF THE DEPARTMENT OF INSURANCE MAY
PROMULGATE REASONABLE STANDARDS FOR THE
ASSIGNMENT OF RISKS TO INSURANCE CARRIERS AND
SERVICING CARRIERS, PROVIDE THAT AN ASSIGNED RISK
PLAN, KNOWN AS THE ASSOCIATED AUTOMOBILE INSURERS
PLAN, MUST BE ESTABLISHED BY MARCH 1, 2003, PROVIDE
THAT MORE THAN ONE ASSIGNED RISK PLAN MAY BE
ESTABLISHED, AND PROVIDE FOR RELATED MATTERS,
INCLUDING AN ASSIGNED RISK POOL; TO AMEND CHAPTER
10, TITLE 56, RELATING TO MOTOR VEHICLE REGISTRATION
AND FINANCIAL SECURITY, BY ADDING SECTION 56-10-225 SO
AS TO PROVIDE THAT A PERSON WHOSE APPLICATION FOR
REGISTRATION AND LICENSING OF A MOTOR VEHICLE HAS
BEEN APPROVED MUST MAINTAIN IN THE MOTOR VEHICLE
AT ALL TIMES PROOF THAT THE MOTOR VEHICLE IS AN
INSURED VEHICLE IN CONFORMITY WITH THE LAWS OF THIS
STATE, PROVIDE THAT THE VEHICLE OWNER MUST MAINTAIN
PROOF OF FINANCIAL RESPONSIBILITY IN THE VEHICLE AT
ALL TIMES AND THAT IT MUST BE DISPLAYED UPON DEMAND
OF A POLICE OFFICER OR ANY OTHER PERSON DULY
AUTHORIZED BY LAW, PROVIDE FOR A MISDEMEANOR
OFFENSE AND A PENALTY, AND PROVIDE FOR RELATED AND
INCIDENTAL MATTERS; TO AMEND THE 1976 CODE BY
ADDING SECTION 38-77-395 SO AS TO PROVIDE THAT THERE IS
NO LIABILITY ON THE PART OF, AND NO CAUSE OF ACTION
MAY ARISE AGAINST, THE DIRECTOR OF THE DEPARTMENT
OF INSURANCE OR HIS DESIGNEES, ANY INSURER, OR THE
AUTHORIZED REPRESENTATIVES, AGENTS, AND EMPLOYEES
OF EITHER OR ANY FIRM, PERSON, OR CORPORATION
FURNISHING TO THE INSURER INFORMATION AS TO REASONS
FOR CANCELLATION OR REFUSAL TO WRITE OR RENEW ANY
POLICY OF AUTOMOBILE INSURANCE, FOR ANY STATEMENT
MADE BY ANY OF THEM IN COMPLYING WITH APPLICABLE
LAWS, OR FOR THE PROVIDING OF ANY OF THIS OR RELATED,
INFORMATION, UNLESS THE PERSON ASSERTING THE CAUSE
OF ACTION ESTABLISHES THAT THE PERSON AGAINST WHOM
THE CAUSE OF ACTION IS ASSERTED WAS MOTIVATED BY
EXPRESS MALICE OR GROSS NEGLIGENCE; TO AMEND THE
1976 CODE BY ADDING SECTION 38-5-200 SO AS TO PROVIDE
THAT AN INSURER, ITS AGENT, OR AN INSURANCE BROKER
DOING BUSINESS IN THIS STATE MAY NOT REQUIRE A PERSON
TO USE A PARTICULAR INSURANCE PREMIUM FINANCE
COMPANY OR OTHER INSTALLMENT PLAN FOR WHICH A
FINANCE CHARGE OR OTHER FEE HAS BEEN OR WILL BE
IMPOSED AND MAY NOT REFUSE TO ISSUE A POLICY OF
INSURANCE SOLELY BECAUSE THE PREMIUMS FOR THE
POLICY HAVE BEEN ADVANCED BY A PREMIUM FINANCE
COMPANY LICENSED IN SOUTH CAROLINA, AND PROVIDE
THAT AN INSURER OR ITS AGENT DOING BUSINESS IN THIS
STATE SHALL NOT REDUCE A COMMISSION OR INTIMIDATE
OR RETALIATE AGAINST A PRODUCER, AGENT, BROKER, OR
INSURED WHO USES PREMIUM FINANCING BY DENYING THE
PRODUCER, AGENT, BROKER, OR INSURED THE SAME RIGHTS
ACCORDED PRODUCERS, AGENTS, BROKERS, OR INSUREDS
WHO PAY PREMIUMS IN A DIFFERENT MANNER; TO AMEND
SECTION 38-43-200, AS AMENDED, RELATING TO INSURANCE
AGENTS AND AGENCIES AND SPLITTING COMMISSIONS WITH
UNLICENSED PERSONS, SO AS TO PROVIDE THAT NOTHING IN
THIS SECTION MAY BE CONSTRUED TO PROHIBIT ANY
LICENSED INSURANCE AGENT FROM REBATING ANY PORTION
OF HIS COMMISSION COLLECTED ON AUTOMOBILE
INSURANCE PREMIUMS TO THE INSURED UPON THAT
AUTOMOBILE INSURANCE POLICY; TO AMEND SECTION
38-55-50, AS AMENDED, RELATING TO CONDUCT OF
INSURANCE BUSINESS AND THE PROHIBITION AGAINST
DISCRIMINATION, SO AS TO PROVIDE THAT THIS SECTION
DOES NOT PROHIBIT THE REBATING OF ANY COMMISSION TO
THE INSURED ON AN AUTOMOBILE INSURANCE POLICY
COLLECTED BY OR ON BEHALF OF A LICENSED INSURANCE
AGENT; TO PROVIDE THAT, BEGINNING ON MARCH 1, 2000,
THE DIRECTOR OF THE DEPARTMENT OF INSURANCE SHALL
REVIEW ANNUALLY THE IMPACT OF THE REPEAL OF THE
ANTI-REBATE STATUTES CONCERNING THE SALE OF
AUTOMOBILE INSURANCE IN SOUTH CAROLINA AND MAKE
ANNUAL REPORTS TO THE GENERAL ASSEMBLY, PROVIDE
FOR A FINAL REPORT WITH EXCEPTIONS THERETO, PROVIDE
FOR THE PROMULGATION OF REGULATIONS, AND PROVIDE
FOR RELATED AND INCIDENTAL MATTERS; TO PROVIDE THAT
IF A PROVISION OF THIS ACT OR ITS APPLICATION TO A
PERSON OR CIRCUMSTANCE IS HELD UNCONSTITUTIONAL OR
OTHERWISE INVALID, THE REMAINDER OF THIS ACT AND THE
APPLICATION OF THAT PROVISION TO OTHER PERSONS OR
CIRCUMSTANCES ARE NOT AFFECTED, AND PROVIDE THAT IT
MUST BE CONCLUSIVELY PRESUMED THAT THE GENERAL
ASSEMBLY WOULD HAVE ENACTED THE REMAINDER OF THIS
ACT WITHOUT THE INVALID OR UNCONSTITUTIONAL
PROVISION; TO PROVIDE THAT, BEGINNING MARCH 1, 1999,
INSURERS MAY NONRENEW A POLICY OF AUTOMOBILE
INSURANCE THAT THEY HAVE CURRENTLY CEDED TO THE
REINSURANCE FACILITY, PROVIDE THAT THIS DOES NOT
APPLY TO BUSINESS WRITTEN THROUGH THE DESIGNATED
PRODUCERS, PROVIDE THAT INSURERS MAY NO LONGER
CEDE TO THE FACILITY AFTER OCTOBER 1, 1999, PROVIDE
THAT INSURERS ARE NOT REQUIRED TO CEDE TO THE
FACILITY AFTER MARCH 1, 1999, AND THAT BUSINESS CEDED
AFTER MARCH 1, 1999, MUST BE RENEWAL BUSINESS TO THE
FACILITY, PROVIDE THAT ALL RENEWAL BUSINESS CEDED
AFTER MARCH 1, 1999, MUST BE CEDED AT THE RATE LEVEL
APPROVED FOR THE REINSURANCE FACILITY AFTER
COMBINING ITS EXPENSE COMPONENT WITH THE LOSS
COMPONENT REFERRED TO IN SECTION 38-77-596; TO REPEAL
ARTICLE 5, CHAPTER 77, TITLE 38, RELATING TO THE
REINSURANCE FACILITY AND DESIGNATED PRODUCERS,
EFFECTIVE JANUARY 1, 2006; TO REPEAL, EFFECTIVE MARCH
1, 1999, SECTIONS 38-73-450, RELATING TO THE REQUIREMENT
OF FAIRNESS IN AUTOMOBILE INSURANCE RATES ON
PREMIUM CHARGES, BURDEN ON INSURER TO PROVE
FAIRNESS, AND FACTORS TO BE CONSIDERED BY THE
DIRECTOR OF THE DEPARTMENT OF INSURANCE, 38-73-455,
RELATING TO AUTOMOBILE INSURANCE RATES, 38-73-457,
RELATING TO AUTOMOBILE INSURANCE, THE FILING OF
INFORMATION ON BASE RATES, AND EFFECTIVE DATE OF
SUCH RATES, 38-73-460, RELATING TO AUTOMOBILE
INSURANCE AND THE EFFECT OF GAINS AND LOSSES
INCURRED BY MEMBERS ON RATES, 38-73-465, RELATING TO
AUTOMOBILE INSURANCE, UNFAIRLY DISCRIMINATORY,
EXCESSIVE, OR UNREASONABLE PROFITS AND RATES,
REVIEW OF RATES, AND RATE EXPERIENCE, 38-73-720,
RELATING TO AUTOMOBILE INSURANCE AND THE
ESTABLISHMENT OF RISK AND TERRITORIAL
CLASSIFICATIONS, 38-73-730, RELATING TO AUTOMOBILE
INSURANCE RISK CLASSIFICATION PLANS, DISTINCTIONS IN
VIOLATION OF PLANS, AND ESTABLISHMENT OF PLANS,
38-73-731, RELATING TO THE REQUIREMENT THAT WHEN A
PERSON IN YOUTHFUL DRIVER CLASSIFICATION REACHES
AGE TWENTY-FIVE DURING AN AUTOMOBILE INSURANCE
POLICY PERIOD HE MUST BE REMOVED FROM THAT
CLASSIFICATION, BE RECLASSIFIED, AND BE REFUNDED ANY
EXCESS PREMIUM HE PAID, 38-73-735, RELATING TO
AUTOMOBILE INSURANCE AND PLAN FOR CREDITS AND
DISCOUNTS, 38-73-750, RELATING TO AUTOMOBILE
INSURANCE, PLANS WHICH MUST BE FILED BY INSURERS, THE
PROVISION THAT CERTAIN PLANS MAY NOT BE FILED OR
APPROVED, AND DISAPPROVAL OF PLANS BY THE DIRECTOR
OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE,
38-73-760, RELATING TO AUTOMOBILE INSURANCE AND
UNIFORM STATISTICAL PLANS, 38-73-770, RELATING TO THE
REQUIREMENT THAT EVERY CLASSIFICATION PLAN FOR
AUTOMOBILE INSURANCE RATES PROMULGATED BY THE
DEPARTMENT OF INSURANCE MUST BE STRUCTURAL SO AS
TO PRODUCE RATES OR PREMIUM CHARGES WHICH ARE
ADEQUATE, NOT EXCESSIVE, AND NOT UNFAIRLY
DISCRIMINATORY, 38-73-775, RELATING TO THE ANNUAL
FILING OF THE PHYSICAL DAMAGE LOSS COMPONENT BY THE
REINSURANCE FACILITY, 38-77-110, RELATING TO
AUTOMOBILE INSURANCE, THE "MANDATE TO
WRITE", THE REQUIREMENT UPON INSURERS TO INSURE,
AND EXCEPTIONS, 38-77-111, RELATING TO AUTOMOBILE
INSURANCE POLICIES WHICH MAY BE CEDED TO THE
REINSURANCE FACILITY, 38-77-115, RELATING TO THE SIGNS
REQUIRED TO BE POSTED IN AN AUTOMOBILE INSURANCE
AGENT'S PLACE OF BUSINESS, 38-77-145, RELATING TO
AUTOMOBILE INSURANCE AND THE PROVISION THAT
PERSONAL INJURY PROTECTION COVERAGE IS NOT
MANDATED AND THE DELETION OF REFERENCES TO
PERSONAL INJURY PROTECTION COVERAGE, 38-77-285,
RELATING TO THE REQUIREMENT THAT ALL AUTOMOBILE
COVERAGES MUST BE IN ONE POLICY, 38-77-360, RELATING TO
THE PROHIBITION AGAINST INCREASES IN AUTOMOBILE
INSURANCE PREMIUMS FOLLOWING CERTAIN FIRST OFFENSE
VIOLATIONS, 38-77-600, RELATING TO THE REINSURANCE
FACILITY RECOUPMENT CHARGE, 38-77-605, RELATING TO
THE REQUIREMENT THAT EVERY PREMIUM NOTICE OR BILL
FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE MUST
DISPLAY PROMINENTLY THE REINSURANCE FACILITY
RECOUPMENT CHARGE BY COVERAGE AND THE TOTAL
FACILITY RECOUPMENT CHARGE FOR THAT POLICY OR
BINDER, 38-77-610, RELATING TO THE FILING OF RECOUPMENT
CHARGES, 38-77-620, RELATING TO THE PROVISION THAT THE
REINSURANCE 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, AND 38-77-625, RELATING TO THE PROVISION 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, AND ARTICLE
9, CHAPTER 77, TITLE 38, RELATING TO AUTOMOBILE
INSURANCE AND UNLAWFUL ACTS; AND TO PROVIDE THAT
NONRENEWAL NOTICES MAY BE SENT PRIOR TO MARCH 1,
1999, FOR AUTOMOBILE INSURANCE POLICIES RENEWING ON
OR AFTER MARCH 1, 1999.
Be it enacted by the General Assembly of the State of South Carolina:
Uninsured motorist fund defined
SECTION 1. Section 56-9-20 of the 1976 Code, as last amended by
Act 459 of 1996, is further amended by adding the following
appropriately-numbered item:
"( ) 'Uninsured Motorist Fund' means a fund established for
fees collected by the director of the Department of Public Safety from
registration of uninsured vehicles."
Uninsured motorist fund established
SECTION 2. Chapter 10 of Title 56 of the 1976 Code is amended by
adding:
"Article 5
Establishment of Uninsured Motorist Fund
Section 56-10-510. In addition to any other fees prescribed by law,
every person registering an uninsured motor vehicle, as defined in Section
56-9-20, at the time of registering or reregistering the uninsured vehicle,
shall pay a fee of five hundred and fifty dollars. Notwithstanding any
other provision of law, fifty dollars of the uninsured motor vehicle fee is
nonrefundable and is directed to be paid to the South Carolina
Reinsurance Facility for the recoupment of assessments or losses of the
South Carolina Reinsurance Facility pursuant to Section 56-10-554 until
otherwise ordered by the director of the Department of Insurance.
However, if the uninsured motor vehicle is being registered for a period
of less than a full year, the uninsured motor vehicle fee exclusive of any
nonrefundable portion must be prorated to conform to the registration
period. This uninsured motor vehicle fee shall be increased annually
based upon and in relation to the average rate level increases for private
passenger automobile insurance coverages by insurers in this State. The
director of the Department of Insurance, by annual order, will set this
exact fee. The application for registering an uninsured vehicle must have
the following statements printed on or attached to the first page of the
form, boldface, twelve point type: 'THIS $550 FEE IS NOT AN
INSURANCE PREMIUM AND YOU ARE NOT PURCHASING ANY
INSURANCE BY PAYING THIS FEE. THIS $550 UNINSURED
MOTORIST FEE IS FOR THE PRIVILEGE TO DRIVE AND
OPERATE AN UNINSURED MOTOR VEHICLE ON THE SOUTH
CAROLINA ROADS.' This uninsured motorist notice required by this
section must also be given to the person registering an uninsured motor
vehicle. The director shall prescribe the exact format of this notice by
regulation and shall adjust the amount of this fee annually as part of the
order by the director of the Department of Insurance adjusting the
uninsured motorist fee in relation to the average rate level increases for
private passenger automobile insurance coverages by insurers in this
State. Every person applying for registration of a motor vehicle and
declaring it to be an insured motor vehicle, under the penalties set forth
in Section 56-10-520, shall execute and furnish to the director his
certificate that the motor vehicle is an insured motor vehicle as defined by
the laws of this State, or that the director has issued to its owner, in
accordance with Section 56-9-60, a certificate of self-insurance applicable
to the vehicle sought to be registered. The director, or his designee, may
require any registered owner of a motor vehicle declared to be insured or
any applicant for registration of a motor vehicle to be an insured to submit
a certificate of insurance on a form prescribed by the director. The
director must forward the certificate of insurance or bond to the insurance
company or surety company, whichever is applicable, for verification as
to whether the policy or bond named in the certificate is currently in force.
At that time, and not later than thirty days following receipt of the
certificate of insurance, the insurance company or surety company must
cause to be filed with the director a written notice if the policy or bond
was not applicable as to the named insured. The director must prescribe
the manner in which the written notice must be made. The refusal or
neglect of any owner within thirty days to submit the certificate of
insurance when required by the director or his designee or the notification
by the insurance company or surety company that the policy or bond
named in the certificate of insurance is not in effect, must require the
director to suspend any driver's license and all registration certificates and
license plates issued to the owner of the motor vehicle until the person:
(1) has paid to the director of the Department of Public Safety a fee
of three hundred dollars to be disposed of as provided for in Sections
56-10-550 and 56-10-552 with respect to the motor vehicle determined to
be uninsured; and
(2) furnishes proof of financial responsibility for the future in the
manner prescribed in Section 56-10-10, et seq. of this chapter. An order
of suspension required by this section is not effective until the director has
offered the person an opportunity for an administrative hearing to show
cause why the order should not be enforced. Notice of the opportunity for
an administrative hearing may be included in the order of suspension.
When three years have elapsed from the effective date of the suspension
required in this section, the director may relieve the person of the
requirement of furnishing proof of future financial responsibility. If the
director determines that the fee applicable to the registration of an
uninsured motor vehicle has been paid on the vehicle in question on or
before the date that the insurance certificate was requested, no suspension
action must be taken. The director shall suspend the driver's license and
all registration certificates and license plates of any person on receiving
a record of his conviction of a violation of any provisions of Section
56-10-520, but the director shall dispense with the suspension when the
person is convicted for a violation of Section 56-10-520 and the
department's records show conclusively that the motor vehicle was
insured or that the fee applicable to the registration of an uninsured motor
vehicle has been paid by the owner before the date and time of the alleged
offense.
Section 56-10-520. A person who owns an uninsured motor vehicle:
(1) licensed in the State; or
(2) subject to registration in the State;
who operates or permits the operation of that motor vehicle without first
having paid to the director the uninsured motor vehicle fee required by
Section 56-10-510, to be disposed of as provided by Section 56-10-550,
shall be guilty of a misdemeanor.
A person who is the operator of such an uninsured motor vehicle and
not the titled owner, who knows that the required fee has not been paid to
the director, shall be guilty of a misdemeanor.
The director or his designee, having reason to believe that a motor
vehicle is being operated or has been operated on any specified date, may
require the owner of such motor vehicle to submit the certificate of
insurance provided for by Section 56-10-510. The refusal or neglect of
the owner who has not, before the date of operation, paid the uninsured
motor vehicle fee required by Section 56-10-510 as to such motor vehicle,
to furnish such certificate must be prima facie evidence that the motor
vehicle was an uninsured motor vehicle at the time of such operation. A
person who presents or causes to be presented to the director a false
certificate that a motor vehicle is an insured motor vehicle or false
evidence that a motor vehicle sought to be registered is an insured motor
vehicle, is guilty of a misdemeanor.
However, the foregoing portions of this section must not be applicable
if it is established that the owner had good cause to believe and did
believe that such motor vehicle was an insured motor vehicle, in which
event the provisions of Section 56-10-245 must be applicable.
Abstracts of records of conviction, as defined in this title, of any
violation of any of the provisions of this section must be forwarded to the
director as prescribed by Section 56-9-330. The director shall suspend the
driver's license and all registration certificates and license plates of any
titled owner of an uninsured motor vehicle upon receiving a record of his
conviction of a violation of any provisions of this section, and he shall not
thereafter reissue the driver's license and the registration certificates and
license plates issued in the name of such person until such person pays the
fee applicable to the registration of an uninsured motor vehicle as
prescribed in Section 56-10-510 and furnishes proof of future financial
responsibility as prescribed by this section. Notice of such suspension
shall be made in the form provided for in Section 56-1-465. However,
when three years have elapsed from the date of the suspension herein
required, the director may relieve such person of the requirement of
furnishing proof of future financial responsibility. When such suspension
results from a conviction for presenting or causing to be presented to the
director a false certificate as to whether a motor vehicle is an insured
motor vehicle or false evidence that any motor vehicle sought to be
registered is insured, then the director shall not thereafter reissue the
driver's license and the registration certificates and license plates issued
in the name of such person so convicted for a period of one hundred
eighty days from the date of such order of suspension, and only then when
all other provisions of law have been complied with by such person. The
director shall suspend the driver's license of any person who is the
operator but not the titled owner of a motor vehicle upon receiving a
record of his conviction of a violation of any provisions of this section,
and he shall not thereafter reissue the driver's license until thirty days
from the date of such order of suspension.
Section 56-10-530. When it appears to the director from the records
of his office that an uninsured motor vehicle as defined in Section
56-9-20, subject to registration in the State, is involved in a reportable
accident in the State resulting in death, injury, or property damage with
respect to which motor vehicle the owner thereof has not paid the
uninsured motor vehicle fee as prescribed in Section 56-10-510, the
director shall, in addition to enforcing the applicable provisions of Section
56-10-10, et seq. of this chapter, suspend such owner's driver's license and
all of his license plates and registration certificates until such person has
complied with those provisions of law and has paid to the director of the
Department of Public Safety a reinstatement fee as provided by Section
56-10-510, to be disposed of as provided by Section 56-10-550, with
respect to the motor vehicle involved in the accident and furnishes proof
of future financial responsibility in the manner prescribed in Section
56-9-350, et seq. However, no order of suspension required by this
section must become effective until the director has offered the person an
opportunity for an administrative hearing to show cause why the order
should not be enforced. Notice of the opportunity for an administrative
hearing may be included in the order of suspension. Notice of such
suspension shall be made in the form provided for in Section 56-1-465.
However, when three years have elapsed from the effective date of the
suspension herein required, the director may relieve such person of the
requirement of furnishing proof of future financial responsibility. The
presentation by a person subject to the provisions of this section of a
certificate of insurance, executed by an agent or representative of an
insurance company qualified to do business in this State, showing that on
the date and at the time of the accident the vehicle was an insured motor
vehicle as herein defined or, presentation by such person of evidence that
the additional fee applicable to the registration of an uninsured motor
vehicle had been paid to the department before the date and time of the
accident, is sufficient bar to the suspension provided for in this section.
Section 56-10-535. The director, upon receiving notice at the time of
application or at any time during participation in the fund that a titled
owner of a motor vehicle has been convicted of one of the following
violations: disobedience of any official traffic device; failure to stop for
law enforcement officer when signaled; disobedience to any officer
directing traffic; failure to stop for a school bus; leaving the scene of an
accident where injury to a person or damage to property results; theft or
unlawful taking of a vehicle; racing on public highways; driving under the
influence of intoxicating liquor or narcotic drugs or where injury to a
person of over six hundred dollars per person or damage to property of the
insured or other person of over one thousand dollars results; reckless
driving where injury to a person of over six hundred dollars per person or
damage to property of the insured or other person of over one thousand
dollars results, homicide or assault arising out of the operation of a motor
vehicle; any felony involving the use of a motor vehicle; the transporting
of illegal whiskey or unlawful drugs or other controlled or narcotic
substances; reckless homicide; wilful making of false statements in the
application for license or registration; impersonating an applicant for
license or registration or procuring a license or registration through
impersonation whether for himself or another; any three or more moving
traffic convictions; any two or more accidents for which the owner is
responsible and where injury to a person of over six hundred dollars per
person or damage to property of the insured or other persons of over one
thousand dollars results, or if any household driver has been licensed for
less than three years; then the director shall require the owner to furnish
proof of financial responsibility in the manner prescribed by the director.
However, when three years have elapsed from the effective date of any
conviction for the above offenses, the director may relieve such person of
the requirement of furnishing proof of future financial responsibility.
Section 56-10-540. Whenever any proof of financial responsibility
filed by any person as required by this chapter no longer fulfills the
purpose for which required, the director shall require other proof of
financial responsibility as required by this chapter and shall suspend such
person's driver's license, registration, certificates, and license plates and
decals pending the furnishing of proof in a manner prescribed by the
director. Notice of such suspension shall be made in the form provided
for in Section 56-1-465.
A person whose driver's license or registration certificates, or license
plates and decals have been suspended as provided in this chapter and
have not been reinstated shall immediately return every such license,
registration certificate, and set of license plates and decals held by him to
the director. A person failing to comply with this requirement shall be
guilty of a traffic infraction and, upon conviction, shall be punished as
provided in Section 56-9-310, et seq.
Section 56-10-550. Except as provided in Sections 56-10-552 and
56-10-554, funds collected by the director of the Department of Public
Safety under the provisions of this chapter must be placed on deposit with
the State Treasurer and held in a special fund to be known as the
'Uninsured Motorists Fund' to be disbursed as provided by law. The
director of the Department of Insurance as provided in Sections 38-77-151
and 38-77-154 may expend monies from such funds for the administration
of Title 38.
Section 56-10-551. When any insurance policy certified under this
chapter is canceled or terminated, the insurer shall report the fact to the
director within fifteen days after the cancellation on a form prescribed by
the director.
Section 56-10-552. (A) All funds collected as provided in Section
38-73-470 must be directed to the director of the Department of Public
Safety for the establishment and maintenance of a special fund, to be
known as the 'Uninsured Enforcement Fund', to be used by the
Department of Public Safety for the purpose of enforcement and
administration of Article 3, Chapter 10, Title 56.
(B) Fifty percent of the reinstatement fee as provided by Section
56-10-510(1) must be transferred by the Department of Public Safety and
recorded to the Uninsured Enforcement Fund to be used by the
Department of Public Safety as provided by subsection (A) of this section.
The remaining fifty percent of the reinstatement fee as provided by
Section 56-10-510 must be retained in the Uninsured Motorist Fund to be
used as provided in Sections 56-10-550, 38-77-151, and 38-77-154.
Section 56-10-553. (A) The Department of Public Safety must
collect data and maintain statistics on the total number of vehicles
registered in the State as of June thirtieth of each year, the number of
motorists who voluntarily paid the five hundred and fifty dollar fee at the
time of registration during the fiscal year, the number of motorists who
paid the penalty fee after being detected by the Department of Public
Safety as being uninsured during the fiscal year, the number of certificates
of insurance filed during the fiscal year, the net revenue collections for
these fees by the fiscal year, the net funds available in the Uninsured
Motorist Fund, and the net funds received from the Department of
Insurance from the uninsured motorist fee during the fiscal year.
(B) The Department of Public Safety must implement programs
designed to ensure full compliance with the financial responsibility laws.
These programs must include random sampling of licensed drivers with
moving violations requesting proof of insurance. Other programs may be
added.
(C) The Department of Public Safety must on a daily basis select a
computerized random sample of five hundred of the registered vehicles
in the State and mail to each owner a written request form to be completed
by him and his insurance company or the agent issuing the policy to
verify liability insurance coverage. The form must be in a manner
prescribed by regulation of the department. The completed and verified
form must be returned by the owner to the department within fifteen days
from the date he receives it. Failure to return the form verified in the
proper manner is prima facie evidence that the vehicle is uninsured, and
vehicles determined to be uninsured under this section are subject to the
provisions of state law dealing with uninsured vehicles.
(D) The Department of Public Safety must provide an annual report to
the General Assembly containing the information required in subsections
(A) and (B) of this section.
Section 56-10-554. As provided in Section 56-10-510, fifty dollars
of the uninsured motor vehicle fee paid per vehicle is nonrefundable and
must be used to recoup assessments or losses of the South Carolina
Reinsurance Facility. Upon collection by the director of the Department
of Public Safety from any person registering an uninsured vehicle, this
money must be placed by the director of the Department of Public Safety
on deposit with the State Treasurer to be held in a special account called
the 'Recoupment Fund', payable on a quarterly basis, to provide for the
recoupment of facility assessments or losses. Upon final recoupment of
facility losses as the South Carolina Reinsurance Facility ceases to exist,
the director of the Department of Insurance shall by order (1) set the
uninsured motor vehicle fee which does not include the fifty dollars
dedicated for the recoupment of facility assessments or losses; (2) inform
the director of the Department of Public Safety that the facility
assessments or losses have been recouped and when the Department of
Public Safety must cease collection from every person registering an
uninsured motor vehicle, as well as transmittal to the State Treasurer, of
this fifty dollar portion; and (3) direct the State Treasurer to transfer any
used portion of the 'Recoupment Fund' to the 'Unininsured Motorist Fund'.
The director of the Department of Public Safety must cease collection of
this fifty dollars as part of the uninsured motor vehicle fee which has been
dedicated for the recoupment of facility assessments or losses as provided
in the order issued by the director of the Department of Insurance."
Premium for uninsured motorist coverage; interest; etc.
SECTION 3. Section 38-73-470 of the 1976 Code, as last amended by
Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-470. One dollar of the yearly premium for
uninsured motorist coverage is directed to be paid to the South Carolina
Department of Public Safety to be placed on deposit with the State
Treasurer in the 'Uninsured Enforcement Fund', payable on a quarterly
basis, to provide for the costs of enforcing and administering the
provisions of Article 3, Chapter 10, Title 56. Interest earned by the
'Uninsured Fund' must be retained by that fund. There is no requirement
for an insurer or an agent to offer underinsured motorist coverage at limits
less than the statutorily required bodily injury or property damage
limits."
No requirement of hearing and approval for automobile insurance rate
increase; etc.
SECTION 4. Section 38-73-910 of the 1976 Code, as last amended by
Acts 300, 360, and 378 of 1996, is further amended to read:
"Section 38-73-910. (A) No increase in the premium rates may
be granted for workers' compensation, fire, allied lines, and homeowners'
insurance, nor for any other line or type of insurance with respect to
which the director or his designee has, by order, made a finding that (a)
legal or other compulsion upon the part of the insured to purchase the
insurance interferes with competition, or (b) under prevailing
circumstances there does not exist substantial competition, unless notice
is given in all newspapers of general, statewide circulation at least thirty
days in advance of the insurer's proposed effective date of the increase in
premium rates. The notice shall state the amount of increase, the type and
line of coverage, and the proposed effective date and shall allow any
insured or affected party to request within fifteen days a public hearing
upon the propriety of the rate increase request before the Administrative
Law Judge Division. A copy of the notice must be sent to the Consumer
Advocate.
However, the requirements of public notices and public hearings in this
section do not apply to applications for rate increases when the applicant
insurer had earned premiums in this State in the previous calendar year of
less than two million dollars for the line or type of insurance for which the
rate increase is sought or, if the rate increase is sought by a rating
organization, the earned premiums in this State for all members and
subscribers of the organization for whom an increase is sought were less
than two million dollars for the previous calendar year for the line or type
of insurance for which the rate increase is sought. The two million dollars
must be increased by a factor equal to the increase in the consumer price
index, all items, every three years.
However, a private insurer licensed to underwrite essential property
insurance as defined by Section 38-75-310(1), notwithstanding any
limitations included within this title, may file and use, pursuant to the
provisions of Section 38-73-1095, any rates which result in insurance
premium rates of ninety percent, or less, of the insurance premium rates
then approved for the South Carolina Wind and Hail Underwriting
Association for use within the coastal area of South Carolina as defined
by Section 38-75-310(5).
(B) Except as provided in subsection (C) of this section, overall
average rate level increases or decreases, for all coverages combined, of
seven percent above or below the insurer's rates in effect may take effect
without prior approval on a file and use basis with respect to rates for
automobile insurance policies. The seven percent cap does not apply on
an individual insured basis.
(C) Notwithstanding any other provisions of this chapter, for any
policies governed by this section, filings that produce rate level changes
within the limitation specified in subsection (B) of this section becomes
effective without prior approval; provided, however, that (1) no more than
one rate increase within the limitation specified in subsection (B) of this
section may be implemented during any twelve-month period and (2) no
rate increase within the limitation specified in subsection (B) of this
section may be implemented until the onset of the new policy period and
unless the insurer, at least thirty days in advance of the end of the policy
period, mails or delivers to the named insured, at the address shown in the
policy, a written notice of its intention to change the rate. The overall
statewide rate change implemented under this section must be stated in the
notice.
A rate increase or decrease falling within the limitation specified in
subsection (B) of this section may become effective not less than thirty
days after the date of the filing with the director. Any such filing is
deemed to meet the requirements of this chapter. The director may find
that such a filing is not in compliance with this chapter. In the event of
such a finding, the director shall issue a written order specifying in detail
the provisions with which the insurer has not complied and state a
reasonable period thereafter in which the filing shall be deemed no longer
effective. Any order by the director pursuant to this section that is issued
more than thirty days from the date on which the director received the rate
filing shall be on a prospective basis only and shall not affect any contract
issued or made prior to the effective date of the order.
Rate filings falling outside the limitation specified in subsection (B) of
this section will be subject to the prior approval of the director. The
director shall approve or disapprove such filings in accordance with the
provisions of Section 38-73-960 and 38-73-990.
(D) Individual automobile insurance companies and member
companies of an affiliated group of automobile insurers may utilize
different filed rates for automobile insurance coverages in accordance
with rating plans filed with and approved by the director. These rating
plans may provide for different rates, rating tiers, and rating plans among
affiliated companies. For the purpose of this section, an affiliated group
of automobile insurers includes a group of automobile insurers under
common ownership, management, or control.
(E) The director of the Department of Insurance or his designee shall
promulgate regulations implementing the provisions of this section.
(F) On or before March 31, 2004, the director of the Department of
Insurance or his designee shall report to the General Assembly on the
effectiveness of flexible rating for automobile insurance policies. The
report which may not include data regarding a specific insurer or insurer
group, except data that is public record, must analyze the impact of
flexible rating on:
(1) the extent and nature of competition;
(2) size and significance of coverage;
(3) level and range or rates and rate changes among insurers;
(4) extent of consumer complaints to the Department of Insurance;
(5) volume of cancellations and nonrenewals;
(6) changes in the number of policies by territory and by class,
including age and sex, in each territory; and
(7) the number of new insured, nonrenewed insured and business
written by each insurer."
Premium reductions for persons fifty-five years of age and older
SECTION 5. The 1976 Code is amended by adding:
"Section 38-73-736. Any schedule of rates, rate classifications,
or rating plans for automobile insurance as defined in Section 38-77-30
filed with the Department of Insurance must provide for an appropriate
reduction in premium charges for those insured persons who are fifty-five
years of age and older and who qualify as provided in Section
38-73-737."
Associated automobile insurers plan; etc.
SECTION 6. Section 38-77-10 of the 1976 Code, as last amended by
Act 326 of 1996, 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 to provide:
(1) that every automobile insurance risk which is insurable on the
basis of the criteria established in this chapter is entitled to automobile
insurance;
(2) for a residual market mechanism, known as the Associated Auto
Insurers Plan, for every person who is legally entitled to automobile
insurance but has not been able to obtain a motor vehicle liability policy
to apply to the director of the Department of Insurance to have his risk
assigned to an insurance carrier licensed to write and writing motor
vehicle liability insurance in the State who shall issue a motor vehicle
liability policy which will meet at least the minimum requirements for
establishing financial responsibility in this chapter;
(3) prohibitions and penalties in respect to unfairly discriminatory or
unfairly competitive practices having as their purpose or effect evasion of
the coverages as provided in this chapter; and
(4) 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."
Definitions changed, deleted, added
SECTION 7. Section 38-77-30 of the 1976 Code, as last amended by
Act 326 of 1996, is further amended to read:
"Section 38-77-30. As used in this chapter, unless the context
requires otherwise:
(1) 'Automobile insurance' means automobile bodily injury and
property damage liability insurance, including medical payments and
uninsured motorist coverage, and automobile physical damage insurance
such as automobile comprehensive physical damage, collision, fire, theft,
combined additional coverage, and similar automobile physical damage
insurance and economic loss benefits as provided by this chapter written
or offered by automobile insurers. An automobile insurance policy
includes a motor vehicle liability policy as defined in item (7) of Section
56-9-20 and any nonowner automobile insurance policy which covers an
individual private passenger automobile not owned by the insured, a
family member of the insured, or a resident of the same household as the
insured.
(2) 'Automobile insurer' means an insurer licensed to do business
in South Carolina and authorized to issue automobile insurance policies.
(3) 'Bodily injury' includes death resulting therefrom.
(3.5) 'Cancellation' or 'to cancel' means a termination of a policy
during the policy period.
(4) 'Damages' includes both actual and punitive damages.
(4.5) 'Facility physical damage rate' means the final rate or premium
charge for physical damage coverage which must be established by
adding the physical damage loss component developed under Section
38-77-596 to the expense component developed under Section 38-77-596.
(5.2) 'Facility physical damage rate' means the final rate or premium
charge for physical damage coverage which must be established by
adding the physical damage loss component developed under Section
38-73-780 to the expense component developed under Section
38-73-1420.
(5.5)(a)'Individual private passenger automobile' means the following
types of motor vehicles owned by or leased under a long-term contract by
an individual or individuals:
(i) motor vehicles of the private passenger type or station wagon
type;
(ii) panel trucks, delivery sedans, vehicles with a pickup body,
vans, or similar motor vehicles designed for use on streets and highways
and so licensed;
(iii) motor homes, so long as the motor vehicles described in (ii)
and (iii) are not used in the occupation, profession, or business of the
insured other than farming and ranching; and
(iv) motorcycles.
(b) A motor vehicle is not considered 'owned by or leased under a
long-term contract by an individual or individuals' if the motor vehicle is
owned by a partnership or corporation, unless the motor vehicle is owned
by a farm family copartnership or a farm family corporation and is
garaged principally on a farm or ranch.
(c) A motor vehicle is not considered 'used in the occupation,
profession, or business of the insured', because it is used in the course of
driving to and from work.
(d) Individual private passenger automobile does not include:
(i) motor vehicles that are used for public or livery conveyance
or rented to others without a driver;
(ii) fire department vehicles, police vehicles, ambulances, and
rescue squad vehicles which are publicly owned;
(iii) motor-driven cycles, motor scooters, and mopeds;
(iv) dune buggies, all-terrain vehicles, go carts, and snowmobiles;
(v) golf carts; and
(vi) small commercial risks.
(6) 'Institutional source' means any person or governmental entity that
provides information about an individual to an agent, insurer, or
insurance-support organization other than:
(a) an agent;
(b) the individual who is the subject of the information; or
(c) a natural person acting in a personal capacity rather than in a
business or professional capacity.
(7) 'Insured' means the named insured and, while resident of the same
household, the spouse of any named insured and relatives of either, while
in a motor vehicle or otherwise, and any person who uses with the
consent, expressed or implied, of the named insured the motor vehicle to
which the policy applies and a guest in the motor vehicle to which the
policy applies or the personal representative of any of the above.
(8) 'Insurance-support organization' means any person who regularly
engages, in whole or in part, in the practice of assembling or collecting
information about natural persons for the primary purpose of providing
the information to an insurer or agent for insurance transactions, including
(i) the furnishing of consumer reports or investigative consumer reports
to an insurer or agent for use in connection with an insurance transaction
or (ii) the collection of personal information from insurers, agents, or
other insurance-support organizations for the purpose of detecting or
preventing fraud, material misrepresentation, or material nondisclosure in
connection with insurance underwriting or insurance claim activity.
However, the following persons shall not be considered insurance-support
organizations for purposes of this chapter: agents, governmental
institutions, insurers, rating organizations, medical care institutions, and
medical professionals.
(9) 'Motor vehicle' means every self-propelled vehicle which is
designed for use upon a highway, including trailers and semitrailers
designed for use with these vehicles but excepting traction engines, road
rollers, farm trailers, tractor cranes, power shovels and well-drillers, and
every vehicle which is propelled by electric power obtained from
overhead wires but not operated upon rails. For purposes of this chapter,
the term automobile has the same meaning as motor vehicle.
(10) 'Nonpayment of premium' means failure of the named insured to
pay when due any of his obligations in connection with the payment of
premiums on a policy, or any installment of the premium, whether the
premium is payable directly to the insurer or its agent or indirectly under
any premium finance plan or extension of credit, or failure to maintain
membership in an organization if membership is a condition precedent to
insurance coverage.
(10.5) 'Policy of automobile insurance' or 'policy' means a policy or
contract for bodily injury or property damage liability insurance issued or
delivered in this State covering liability arising from the ownership,
maintenance, or use of any motor vehicle, insuring as the named insured
one individual or husband and wife who are residents of the same
household, and under which the insured vehicle designated in the policy
is either:
(a) a motor vehicle of a private passenger, station wagon, or
motorcycle type that is not used commercially, rented to others, or used
as a public or livery conveyance where the terms 'public or livery
conveyance' do not include car pools, or
(b) any other four-wheel motor vehicle which is not used in the
occupation, profession, or business, other than farming, of the insured, or
as a public or livery conveyance, or rented to others. The term 'policy of
automobile insurance' or 'policy' does not include:
(i) any policy issued through the Associated Auto Insurers Plan,
(ii) any policy covering the operation of a garage, sales agency,
repair shop, service station, or public parking place,
(iii) any policy providing insurance on an excess basis such as an
umbrella policy, or
(iv) any other contract providing insurance to the named insured
even though the contract may incidentally provide insurance on motor
vehicles.
(11) 'Quota share reinsurance' means that form of reinsurance in which
the reinsurer assumes a fixed percentage of the insured risk.
(12) 'Renewal' or 'to renew' means the issuance and delivery by an
insurer of a policy superseding at the end of the policy period a policy
previously issued and delivered by the same insurer, the renewal policy
to provide types and limits of coverage at least equal to those contained
in the policy being superseded, or the issuance and delivery of a
certificate or notice extending the terms of a policy beyond its policy
period or term with types and limits of coverage at least equal to those
contained in the policy being extended. However, any policy with a policy
period or term of less than six months or any period with no fixed
expiration date is considered as if written for successive policy periods or
terms of six months.
(13) 'Small commercial risk' means:
(a) Garage risks including nonmotor vehicle insurance when
written in combination with automobile liability coverage.
(b) Ambulance risks.
(c) Commercial risks which have a manufacturer's gross vehicular
weight less than twenty thousand pounds and are not required to have a
mandatory filing by a governmental authority other than an SR-22.
(d) Church buses used by a church to transport adults or children to
and from services and in activities incidental to church functions, so long
as a mandatory filing by any governmental authority other than an SR-22
is not required.
(e) Privately-owned school buses used to carry school children and
students, their parents or guardians, members of the faculty, school board
members, nurses, doctors, and dentists, as well as guests in connection
with any school activity and operations incidental thereto, including
games, outings, and similar road trips, so long as a mandatory filing by
any governmental authority other than an SR-22 is not required.
'Small commercial risk' does not include pulpwood trucks or dump
trucks.
(14) 'Uninsured motor vehicle' means a motor vehicle as to which:
(a) there is not bodily injury liability insurance and property
damage liability insurance both at least in the amounts specified in
Section 38-77-140, or
(b) there is nominally that insurance, but the insurer writing the
same successfully denies coverage thereunder, or
(c) there was that insurance, but the insurer who wrote the same is
declared insolvent, or is in delinquency proceedings, suspension, or
receivership, or is proven unable fully to respond to a judgment, and
(d) there is no bond or deposit of cash or securities in lieu of the
bodily injury and property damage liability insurance.
(e) the owner of the motor vehicle has not qualified as a self-insurer
in accordance with the applicable provisions of law.
A motor vehicle is considered uninsured if the owner or operator is
unknown. However, recovery under the uninsured motorist provision is
subject to the conditions set forth in this chapter.
Any motor vehicle owned by the State or any of its political
subdivisions is considered an uninsured motor vehicle when the vehicle
is operated by a person without proper authorization.
(15) 'Underinsured motor vehicle' means a motor vehicle as to which
there is bodily injury liability insurance or a bond applicable at the time
of the accident in an amount of at least that specified in Section 38-77-140
and the amount of the insurance or bond is less than the amount of the
insureds' damages."
Reinsurance facility; loss, expense components; facility rate increases
capped, exceptions, etc.
SECTION 8. The 1976 Code is amended by adding:
"Section 38-77-596. (A) The governing board of the South
Carolina Reinsurance Facility annually shall develop and file private
passenger automobile loss components and expense components which
include provisions for profits and contingencies, which would combine
for the final rate for automobile insurance coverages based on the total
experience of all risks ceded to the facility which are actuarially sound
and supported by statistical evidence. The governing board shall contract
with independent actuarial services to develop the loss component. Due
consideration must be given to actual loss experience within the facility
for the most recent three-year period for which such information is
available.
(B) The loss component developed under this section is applicable to
the risk and territorial classification plan adopted by the facility. Nothing
in this section precludes the governing board of the facility from filing for
approval, or the director of the Department of Insurance from requiring
the governing board to file for approval, variations in loss components
and rates which are based upon differences in risk characteristics
including, but not limited to, difference in driving records.
(C) The governing board of the facility annually shall review the
private passenger automobile loss components to determine if they are
actuarially sound and supported by the statistical evidence. If rate
changes are required, the governing board shall submit appropriate filings
for approval with the director. Facility rate increases on or after March 1,
1999, must be capped at an overall ten percent increase each year. This
cap does not apply on an individual insured basis. These rate filings are
subject to public hearing pursuant to applicable provisions of the
Administrative Procedures Act."
Requirement to write insurance deleted; etc.
SECTION 9. Section 38-77-112 of the 1976 Code, as last amended by
Act 148 of 1989, is further amended to read:
"Section 38-77-112. Notwithstanding Section 38-77-280, no
automobile insurer is required to write coverage for automobile insurance
as defined in Section 38-77-30 for any applicant or existing policyholder.
An insurer or an agent shall retain, for a period of three years, the driver's
license numbers for all persons who have submitted an application for
insurance but who were refused coverage and shall furnish such
information upon the request of the director of the Department of
Insurance or his designee. This section does not apply to an individual
who is handicapped and who owns a vehicle in this State but who does
not have a valid driver's license. If an automobile is principally garaged
and operated in this State, the owner of the vehicle can be offered
coverage thereon regardless of whether or not he possesses a valid South
Carolina driver's license if he designates to the insurer who the principal
operator of the vehicle will be and this person has a valid South Carolina
driver's license or otherwise meets the requirements of this section. This
requirement does not apply to personnel of the Armed Forces of the
United States on active duty and officially stationed in this State who
possess a valid motor vehicle driver's license issued by another state or
territory of the United States or the District of Columbia. This
requirement is waived ninety days for individuals who move into South
Carolina with the intent of making South Carolina their place of residence
if they possess a valid driver's license issued by another state or territory
of the United States or the District of Columbia."
Notice of cancellation; etc.
SECTION 10. Section 38-77-120(a) of the 1976 Code, as last amended
by Section 806 of Act 181 of 1993, is further amended to read:
"(a) No cancellation or refusal to renew by an insurer of a
policy of automobile insurance is effective unless the insurer delivers or
mails to the named insured at the address shown in the policy a written
notice of the cancellation or refusal to renew. This notice:
(1) must be approved as to form by the director or his designee
before use;
(2) must state the date not less than fifteen days after the date of the
mailing or delivering on which the cancellation or refusal to renew
becomes effective;
(3) must state the specific reason of the insurer for cancellation or
refusal to renew and provide for the notification required by subsection
(B) of Section 38-77-390. However, those notification requirements must
not apply when the policy is being canceled or not renewed for the reason
set forth in Section 38-77-123(B),
(4) must inform the insured of his right to request in writing within
fifteen days of the receipt of notice that the director review the action of
the insurer. The notice of cancellation or refusal to renew must contain
the following statement to inform the insured of such right:
'IMPORTANT NOTICE
Within fifteen days of receiving this notice, you or your attorney may
request in writing that the director review this action to determine whether
the insurer has complied with South Carolina laws in canceling or
nonrenewing your policy. If this insurer has failed to comply with the
cancellation or nonrenewal laws, the director may require that your policy
be reinstated. However, the director is prohibited from making
underwriting judgments. If this insurer has complied with the cancellation
or nonrenewal laws, the director does not have the authority to overturn
this action.'
(5) must inform the insured of the possible availability of other
insurance which may be obtained through his agent, through another
insurer, or through the Associated Auto Insurers Plan. It must also state
that the Department of Insurance has available an automobile insurance
buyer's guide regarding automobile insurance shopping and availability,
and provide applicable mailing addresses and telephone numbers,
including a toll-free number, if available, for contacting the Department
of Insurance.
Nothing in this subsection prohibits any insurer or agent from including
in the notice of cancellation or refusal to renew, any additional disclosure
statements required by state or federal laws, or any additional information
relating to the availability of other insurance. The insurer must disclose
in writing whether the insured is ceded to the facility."
Code sections added; uninsured motorist fund; etc.
SECTION 11. The 1976 Code is amended by adding:
"Section 38-77-121. (A) Any application for the original
issuance of a policy of insurance covering liability arising out of the
ownership, maintenance, or use of any motor vehicle as defined in Section
38-77-30 must have the following statement printed on or attached to the
first page of the application form, in boldface type: 'THE INSURER CAN
CANCEL THIS POLICY FOR WHICH YOU ARE APPLYING
WITHOUT CAUSE DURING THE FIRST 90 DAYS. THAT IS THE
INSURER'S CHOICE. AFTER THE FIRST 90 DAYS, THE INSURER
CAN ONLY CANCEL THIS POLICY FOR REASONS STATED IN
THE POLICY.'
(B) Any application for the original issuance of a policy of insurance
covering liability arising out of the ownership, maintenance, or use of any
motor vehicle defined in Section 38-77-30 that requires the insured to
disclose information as to any previous cancellation or refusal to renew
must also permit the insured to offer or provide a full explanation of the
reason for the cancellation or refusal to renew.
(C) The notice required by this section must accompany the initial
declarations page in the event the applicant is not provided a written copy
at the time of the application and the coverage has been bound by the
insurer.
(D) The insurer may cancel without cause at any time in the first
ninety days during which the policy is in effect subject to
Section 38-77-122.
This section does not apply to the renewal of any policy of insurance.
Section 38-77-122. (A) No insurer or agent shall refuse to issue an
automobile insurance policy as defined in Section 38-77-30 because of
any one or more of the following factors: age, sex, location of residence
in this State, race, color, creed, national origin, ancestry, marital status, or
income level. No insurer or agent shall refuse to issue an automobile
insurance policy as defined in Section 38-77-30 solely because of any one
of the following factors: the previous refusal of automobile insurance by
another insurer, prior purchase of insurance through the Associated Auto
Insurers Plan, or lawful occupation, including the military service, of the
person seeking the coverage. Nothing in this section prohibits any insurer
from limiting the issuance of motor vehicle insurance policies only to
persons engaging in or who have engaged in a particular profession or
occupation, or who are members of a particular religious sect.
Nothing in this section prohibits any insurer from setting rates in
accordance with relevant actuarial data.
(B) In determining the premium rates to be charged for an automobile
insurance policy as defined in Section 38-77-30, it is unlawful to consider
race, color, creed, religion, national origin, ancestry, location of residence
in this State, economic status, or income level. Nor may an insurer, agent,
or broker refuse to write or renew an automobile insurance policy as
defined in Section 38-77-30 based upon age, sex, race, color, creed,
religion, national origin, ancestry, location of residence in this State,
economic status, or income level. However, nothing in this subsection
may preclude the use of a territorial plan approved by the director. Any
insurer or agent who violates this section shall be subject to the penalties
as provided in Section 38-2-10. If the director of the Department of
Insurance or his designee finds that an insurer or agent is participating in
a pattern of unfair discrimination, the director or his designee may impose
a fine of up to two hundred thousand dollars. Provided, however, if the
unfair discrimination is required by an insurer, only the insurer is subject
to the penalty as long as the agent of the insurer has reported the pattern
of unfair discrimination to the department. The director or his designee
at any time may examine an insurer or agent to enforce this section. The
expense of examination must be paid by the insurer, agent, or broker.
Section 38-77-123. (A)(1) No insurer shall refuse to renew an
automobile insurance policy because of any one or more of the following
factors:
(a) age;
(b) sex;
(c) location of residence in this State;
(d) race;
(e) color;
(f) creed;
(g) national origin;
(h) ancestry;
(i) marital status;
(j) income level.
(2) No insurer shall refuse to renew an automobile insurance policy
solely because of any one of the following factors:
(a) lawful occupation, including the military service;
(b) lack of driving experience, or number of years of driving
experience;
(c) lack of supporting business or lack of the potential for
acquiring such business;
(d) one or more accidents or violations that occurred more than
thirty-six months immediately preceding the upcoming anniversary date;
(e) one or more claims submitted under the uninsured motorists
coverage of the policy where the uninsured motorist is known or there is
physical evidence of contact;
(f) single claim by a single insured submitted under the medical
payments coverage or medical expense coverage due to an accident for
which the insured was neither wholly nor partially at fault;
(g) one or more claims submitted under the comprehensive or
towing coverages. However, nothing in this section prohibits an insurer
from modifying or refusing to renew the comprehensive or towing
coverages at the time of renewal of the policy on the basis of one or more
claims submitted by an insured under those coverages, provided that the
insurer mails or delivers to the insured at the address shown in the policy
written, notice of the change in coverage at least thirty days before the
renewal; or
(h) two or fewer motor vehicle accidents within a three-year
period unless the accident was caused either wholly or partially by the
named insured, a resident of the same household, or other customary
operator.
(3) Nothing contained in subsection (A)(1)(f), (g), and (h) of this
subsection prohibits an insurer from refusing to renew a policy where a
claim is false or fraudulent. Nothing in this section prohibits an insurer
from setting rates in accordance with relevant actuarial data except that no
insurer may set rates based in whole or in part on race, color, creed,
religion, national origin, ancestry, location of residence in this State,
economic status, or income level. However, nothing in this subsection
may preclude the use of a territorial plan approved by the director.
(B) No insurer shall cancel a policy except for one or more of the
following reasons:
(1) The named insured or any other operator who either resides in
the same household or customarily operates a motor vehicle insured under
the policy has had his driver's license suspended or revoked during the
policy period or, if the policy is a renewal, during its policy period or the
ninety days immediately preceding the last anniversary of the effective
date.
(2) The named insured fails to pay the premium for the policy or
any installment of the premium, whether payable to the insurer or its agent
either, directly or indirectly under any premium finance plan or extension
of credit.
(C) There shall be no liability on the part of and no cause of action of
any nature shall arise against the director or his designees; any insurer, its
authorized representatives, its agents, or its employees; or any person
furnishing to the insurer information as to reasons for cancellation or
refusal to renew, for any statement made by any of them in complying
with this section or for providing information pertaining to the
cancellation or refusal to renew. For the purposes of this section, no
insurer shall be required to furnish a notice of cancellation or refusal to
renew to anyone other than the named insured, any person designated by
the named insured, any other person to whom such notice is required to
be given by the terms of the policy and the director.
(D) Within fifteen days of receipt of the notice of cancellation or
refusal to renew, any insured or his attorney shall be entitled to request in
writing to the director that he review the action of the insurer in canceling
or refusing to renew the policy of the insured. Upon receipt of the
request, the director shall promptly begin a review to determine whether
the insurer's cancellation or refusal to renew complies with the
requirements of this section and of Section 38-77-120 if the notice was
sent by mail. The policy must remain in full force and effect during the
pendency of the review by the director except where the cancellation or
refusal to renew is for the reason set forth in subitem (2) of subsection (B)
of this section, in which case the policy terminates as of the effective date
stated in the notice. Where the director finds from the review that the
cancellation or refusal to renew has not complied with the requirements
of this section or of Section 38-77-120, he shall immediately notify the
insurer, the insured, and any other person to whom such notice was
required to be given by the terms of the policy that the cancellation or
refusal to renew is not effective. Nothing in this section authorizes the
director to substitute his judgment as to underwriting for that of the
insurer.
(E) Each insurer shall maintain for at least three years, records of
cancellation and refusal to renew and copies of every notice or statement
referred to in Section 38-77-120 of this section that it sends to any of its
insureds.
(F) The provisions of this section do not apply to any insurer that
limits the issuance of policies of motor vehicle liability insurance to one
class or group of persons engaged in any one particular profession, trade,
occupation, or business. Nothing in this section requires an insurer to
renew a policy of automobile insurance if the insured does not conform
to the occupational or membership requirements of an insurer who limits
its writings to an occupation or membership of an organization. No
insurer is required to renew a policy if the insured becomes a nonresident
of South Carolina.
(G) Any insurer who violates this section shall be subject to the
penalties as provided in Section 38-2-10. If the director of the
Department of Insurance or his designee finds that an insurer, agent, or
broker is participating in a pattern of unfair discrimination, the director or
his designee may impose a fine of up to two hundred thousand dollars.
Provided, however, if the unfair discrimination is required by an insurer,
only the insurer is subject to the penalty as long as the agent of the insurer
has reported the pattern of unfair discrimination to the department. The
director or his designee at any time may examine an insurer, agent, or
broker to enforce this section. The expense of examination must be paid
by the insurer, agent, or broker.
Section 38-77-124. (A) Notwithstanding the provisions of Sections
38-77-122 and 38-77-123, an insurer may refuse to issue or renew an
automobile insurance policy as defined in Section 38-77-30 on the basis
of location of residence where the insurer has filed with the director a
territorial plan setting forth the precise geographic areas of the state in
which it will issue or renew policies. This territorial plan may not limit
issuances or renewals to areas at any level smaller than a county, except
that an insurer may include in its territorial plan an area smaller than a
county which is contiguous to a whole county contained within the
territorial plan provided, that the inclusion in the territorial plan of any
such area at a level smaller than a county does not have the effect of
excluding populations based upon any factors set out in
Section 38-77-122(A) or Section 38-77-123(A)(1). The director must
reject any territorial plan which violates the provisions of this section.
(B) No insurer or agent shall refuse to issue or fail to renew a policy
of motor vehicle liability insurance solely because of the age of the motor
vehicle to be insured, provided the motor vehicle is licensed.
Section 38-77-126. Insurers must disclose to the insured if the rate
level is higher than the lowest rate level tier for that insurer or the group
to which the insurer is a member. The insurer must provide in writing the
reason for the higher tier.
Section 38-77-141. No new policy or original premium notice of
insurance covering liability arising out of the ownership, maintenance, or
use of a motor vehicle may be issued or delivered unless it contains the
following statement printed in boldface type, or unless the statement is
attached to the front of or is enclosed with the policy or premium notice:
'IMPORTANT NOTICE
IN ADDITION TO THE INSURANCE COVERAGE REQUIRED BY
LAW TO PROTECT YOU AGAINST A LOSS CAUSED BY AN
UNINSURED MOTORIST, IF YOU HAVE PURCHASED LIABILITY
INSURANCE COVERAGE THAT IS HIGHER THAN THAT
REQUIRED BY LAW TO PROTECT YOU AGAINST LIABILITY
ARISING OUT OF THE OWNERSHIP, MAINTENANCE, OR USE OF
THE MOTOR VEHICLES COVERED BY THIS POLICY, AND YOU
HAVE NOT ALREADY PURCHASED UNINSURED MOTORIST
INSURANCE COVERAGE EQUAL TO YOUR LIABILITY
INSURANCE COVERAGE:
(1) YOUR UNINSURED AND UNDERINSURED MOTORIST
INSURANCE COVERAGE HAS INCREASED TO THE LIMITS OF
YOUR LIABILITY COVERAGE AND THIS INCREASE WILL COST
YOU AN EXTRA PREMIUM CHARGE; AND
(2) YOUR TOTAL PREMIUM CHARGE FOR YOUR MOTOR
VEHICLE INSURANCE COVERAGE WILL INCREASE IF YOU DO
NOT NOTIFY YOUR AGENT OR INSURER OF YOUR DESIRE TO
REDUCE COVERAGE WITHIN TWENTY DAYS OF THE MAILING
OF THE POLICY OR THE PREMIUM NOTICE, AS THE CASE MAY
BE;
(3) IF THIS IS A NEW POLICY AND YOU HAVE ALREADY
SIGNED A WRITTEN REJECTION OF SUCH HIGHER LIMITS IN
CONNECTION WITH IT, PARAGRAPHS (1) AND (2) OF THIS
NOTICE DO NOT APPLY.'
After twenty days, the insurer is relieved of the obligation imposed by
this subsection to attach or imprint the foregoing statement to any
subsequently delivered renewal policy, extension certificate, other written
statement of coverage continuance, or to any subsequently mailed
premium notice.
Section 38-77-142. (A) No policy or contract of bodily injury or
property damage liability insurance covering liability arising from the
ownership, maintenance, or use of a motor vehicle may be issued or
delivered in this State to the owner of the vehicle or may be issued or
delivered by an insurer licensed in this State upon a motor vehicle that is
principally garaged, docked, or used in this State unless the policy
contains a provision insuring the named insured and any other person
using or responsible for the use of the motor vehicle with the expressed
or implied consent of the named insured against liability for death or
injury sustained or loss or damage incurred within the coverage of the
policy or contract as a result of negligence in the operation or use of the
vehicle by the named insured or by any such person. Each policy or
contract of liability insurance, or endorsement to the policy or contract,
insuring private passenger automobiles principally garaged, docked, or
used in this State, that has as the named insured an individual or husband
and wife who are residents of the same household and that includes, with
respect to any liability insurance provided by the policy, contract, or
endorsement for use of a nonowner automobile a provision requiring
permission or consent of the owner of the automobile for the insurance to
apply.
(B) No policy or contract of bodily injury or property damage liability
insurance relating to the ownership, maintenance, or use of a motor
vehicle may be issued or delivered in this State to the owner of a vehicle
or may be issued or delivered by an insurer licensed in this State upon a
motor vehicle principally garaged or used in this State without an
endorsement or provision insuring the named insured, and any other
person using or responsible for the use of the motor vehicle with the
expressed or implied consent of the named insured, against liability for
death or injury sustained, or loss or damage incurred within the coverage
of the policy or contract as a result of negligence in the operation or use
of the motor vehicle by the named insured or by any other person. If an
insurer has actual notice of a motion for judgment or complaint having
been served on an insured, the mere failure of the insured to turn the
motion or complaint over to the insurer may not be a defense to the
insurer, nor void the endorsement or provision, nor in any way relieve the
insurer of its obligations to the insured, provided the insured otherwise
cooperates and in no way prejudices the insurer.
Where the insurer has elected to provide a defense to its insured under
such circumstances and files responsive pleadings in the name of its
insured, the insured is not subject to sanctions for failure to comply with
discovery pursuant to the South Carolina Rules of Civil Procedure unless
it can be shown that the suit papers actually reached the insured, and that
the insurer has failed after exercising due diligence to locate its insured,
and as long as the insurer provides such information in response to
discovery as it can without the assistance of the insured.
(C) Any endorsement, provision, or rider attached to or included in
any policy of insurance which purports or seeks to limit or reduce the
coverage afforded by the provisions required by this section is void.
Section 38-77-143. A policy or contract of insurance relating to the
maintenance, selling, repairing, servicing, storing, or parking of motor
vehicles shall be primary.
Section 38-77-151. All funds collected by the director of the
Department of Public Safety under the provisions of Chapter 10 of Title
56 must be placed on deposit with the State Treasurer and held in a
special fund to be known as the 'Uninsured Motorists Fund' to be
disbursed as provided by law. Interest earned by the 'Uninsured Motorists
Fund' must be retained by that fund. The director of the Department of
Insurance, as provided in Sections 38-77-154 and 38-77-155, may expend
such funds for the administration of this chapter; provided, however, that
the Department of Insurance shall retain ten percent of the Uninsured
Motorists Fund to be used by the Department of Insurance to enforce the
provisions of Title 38 including Sections 38-77-112, 38-77-122, and
38-77-123, to publish for consumers an automobile insurance buyer's
guide, a brochure comparing automobile insurance premiums, and to
provide for a public awareness campaign.
Section 38-77-154. The Uninsured Motorists Fund shall be under the
supervision and control of the Department of Insurance. Payments from
the Uninsured Motorists Fund shall be made on warrants of the
Comptroller General issued on vouchers signed by a person designated by
the director. The purpose of the Uninsured Motorists Fund is to reduce
the cost of the insurance required by Section 38-77-150 and to protect and
educate consumers as provided by Section 38-77-151.
Section 38-77-155. The director shall distribute monies annually
from the Uninsured Motorists Fund among the several insurers writing
motor vehicle bodily injury and property damage liability insurance on
motor vehicles registered in this State. Monies must be distributed in the
proportion that each insurer's premium income for the basic uninsured
motorists limits coverage bears to the total premium income for basic
uninsured motorists limits coverage written in this State during the
preceding year. Premium income must be gross premiums less
cancellation and return premiums for coverage required by Section
38-77-150. Only insurers that maintain records satisfactory to the director
shall receive any payment from the Uninsured Motorists Fund. Records
must be considered satisfactory if they adequately disclose the loss
experience for the coverage."
Minimum property damage coverage limit raised
SECTION 12. 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 ten 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."
Minimum property damage coverage limit raised; etc.
SECTION 13. Section 38-77-150 of the 1976 Code, as last amended by
Section 807 of Act 181 of 1993, is further amended to read:
"Section 38-77-150. (A) No automobile insurance policy or
contract may be issued or delivered unless it contains a provision by
endorsement or otherwise, herein referred to as the uninsured motorist
provision, undertaking to pay the insured all sums which he is legally
entitled to recover as damages from the owner or operator of an uninsured
motor vehicle, within limits which may be no less than the requirements
of Section 38-77-140. The uninsured motorist provision must also
provide for no less than ten thousand dollars' coverage for injury to or
destruction of the property of the insured in any one accident but may
provide an exclusion of the first two hundred dollars of the loss or
damage. The director or his designee may prescribe the form to be used
in providing uninsured motorist coverage and when prescribed and
promulgated no other form may be used.
(B) No action may be brought under the uninsured motorist provision
unless copies of the pleadings in the action establishing liability are
served in the manner provided by law upon the insurer writing the
uninsured motorist provision. The insurer has the right to appear and
defend in the name of the uninsured motorist in any action which may
affect its liability and has thirty days after service of process on it in
which to appear. The evidence of service upon the insurer may not be
made a part of the record.
(C) Benefits paid pursuant to this section are subject to subrogation
and assignment if an uninsured motorist has selected the option to be
uninsured by paying the fee pursuant to Section 56-10-510."
Provisions deleted; etc.
SECTION 14. Section 38-77-280 of the 1976 Code, as last amended by
Act 326 of 1996, is further amended to read:
"Section 38-77-280. (A) Any automobile insurer may, at its own
election, make collision coverage and either comprehensive or fire, theft,
and combined additional coverage available to an insured or qualified
applicant who requests the coverage at such rates and under such rules as
have been approved by the director. Automobile insurers contracted
pursuant to Section 38-77-590 for risks written by them through
producers assigned by the facility governing board pursuant to that
section may make available collision coverage and either comprehensive
or fire, theft, and combined additional coverage available to an insured or
qualified applicant who requests the coverage. Notwithstanding Section
38-77-590(g), a designated producer may have one or more voluntary
outlets for automobile physical damage.
(B) Any automobile physical damage insurance coverage deductible
or policy deductible does not apply to automobile safety glass.
(C) Notwithstanding Section 38-77-111, automobile physical damage
insurance coverage may be ceded to the facility. However, automobile
physical damage coverages ceded to the facility by an insurer or servicing
carrier must be at the facility physical damage rate as defined in Section
38-77-30.
(D) In determining the premium rates to be charged on physical
damage coverage or single interest collision coverage, it is unlawful to
consider race, color, creed, religion, national origin, ancestry, location of
residence in this State, economic status, or income level. Nor may an
insurer, agent, or broker refuse to write or renew physical damage
insurance coverage or single interest collision coverage based upon race,
color, creed, religion, national origin, ancestry, location of residence in
this State, economic status, or income level. However, nothing in this
subsection may preclude the use of a territorial plan approved by the
director. If the director of the Department of Insurance or the director's
designee finds that an insurer, agent, or broker is participating in a pattern
of unfair discrimination, the director or the director's designee may
impose a fine of up to two hundred thousand dollars. The director or the
director's designee at any time may examine an insurer, agent, or broker
to enforce this section. The expense of examination must be paid by the
insurer, agent, or broker."
Provisions deleted
SECTION 15. Section 38-77-350(C) of the 1976 Code, as last
amended by Act 496 of 1994, is further amended to read:
"(C) An automobile insurer is not required to make a new offer
of coverage on any automobile insurance policy which renews, extends,
changes, supersedes, or replaces an existing policy."
Obligations of insurance-support organizations; cancellation and
nonrenewal, certain insurer or agent duties
SECTION 16. The 1976 Code is amended by adding:
"Section 38-77-370. (A) If an individual, after proper
identification, submits a written request to an insurance-support
organization for access to recorded personal information about the
individual that is reasonably described by the individual and reasonably
able to be located and retrieved by the insurance-support organization, the
insurance-support organization, within thirty business days from the date
the request is received shall:
(1) inform the individual of the nature and substance of the
recorded personal information in writing, by telephone, or by other oral
communication, whichever the insurance-support organization prefers;
(2) permit the individual to see and obtain a copy of the recorded
personal information pertaining to him or to obtain a copy of the recorded
personal information by mail, whichever the individual prefers, unless the
recorded personal information is in coded form, in which case an accurate
translation in plain language must be provided in writing;
(3) disclose to the individual the identity, if recorded, of those
persons to whom the insurance-support organization has disclosed the
personal information within two years before the request, and if the
identity is not recorded, the names of those insurance-support
organizations or other persons to whom the information is disclosed
normally; and
(4) provide the individual with a summary of the procedures by
which he may request correction, amendment, or deletion of recorded
personal information.
(B) Any personal information provided pursuant to subsection (A) of
this section must identify the source of the information if it is an
institutional source.
(C) Medical record information supplied by a medical care institution
or medical professional and requested under subsection (A) of this
section, together with the identity of the medical professional or medical
care institution that provided the information, must be supplied either
directly to the individual or to a medical professional designated by the
individual and licensed to provide medical care with respect to the
condition to which the information relates, whichever the insurer, agent,
or insurance-support organization prefers. If it elects to disclose the
information to a medical professional designated by the individual, the
insurer, agent, or insurance-support organization shall notify the
individual, at the time of the disclosure, that it has provided the
information to the medical professional.
(D) Except for personal information provided under this section, an
insurer, agent, or insurance-support organization may charge a reasonable
fee to cover the costs incurred in providing a copy of recorded personal
information to individuals.
(E) The obligations imposed by this section upon an insurer or agent
may be satisfied by another insurer or agent authorized to act on its
behalf. With respect to the copying and disclosure of recorded personal
information pursuant to a request under subsection (A) of this section, an
insurer, agent, or insurance-support organization may make arrangements
with an insurance-support organization or a consumer reporting agency
to copy and disclose recorded personal information on its behalf.
(F) The rights granted to individuals in this section must extend to all
natural persons to the extent information about them is collected and
maintained by an insurer, agent, or insurance-support organization in
connection with an insurance transaction. The rights granted to all natural
persons by this subsection must not extend to information about them that
relates to and is collected in connection with or in reasonable anticipation
of a claim or civil or criminal proceeding involving them.
(G) For purposes of this section, 'insurance-support organization' does
not include 'consumer reporting agency'.
Section 38-77-390. (A) In the event of a cancellation or nonrenewal,
including those that involve policies referred to in Section 38-77-120, the
insurer or agent responsible for the cancellation or nonrenewal shall give
a written notice in a form approved by the director that:
(1) either provides the applicant, policyholder, or individual
proposed for coverage with the specific reason or reasons for the
cancellation or nonrenewal in writing or advises the person that upon
written request he may receive the specific reason or reasons in writing;
and
(2) provides the applicant, policyholder, or individual proposed for
coverage with a summary of the rights established under subsection (B)
of this section and Section 38-77-380.
(B) Upon receipt of a written request within ninety business days from
the date of the mailing of notice or other communication of a cancellation
or nonrenewal to an applicant, policyholder, or individual proposed for
coverage, the insurer or agent shall furnish to the person within
twenty-one business days from the date of receipt of the written request:
(1) the specific reason or reasons for the cancellation or nonrenewal
in writing, if that information was not furnished initially in writing
pursuant to subsection (A)(1);
(2) the specific items of personal and privileged information that
support those reasons; however:
(a) the insurer or agent shall not be required to furnish specific
items of privileged information if it has a reasonable suspicion, based
upon specific information available for review by the director, that the
applicant, policyholder, or individual proposed for coverage has engaged
in criminal activity, fraud, material misrepresentation, or material
nondisclosure; and
(b) specific items of medical-record information supplied by a
medical-care institution or medical professional must be disclosed either
directly to the individual about whom the information relates or to a
medical professional designated by the individual and licensed to provide
medical care with respect to the condition to which the information
relates, whichever the insurer or agent prefers; and
(3) the names and addresses of the institutional sources that
supplied the specific items of information given pursuant to subsection
(B)(2) of this section. However, the identity of any medical professional
or medical-care institution must be disclosed either directly to the
individual or to the designated medical professional, whichever the
insurer or agent prefers.
(C) The obligations imposed by this section upon an insurer or agent
may be satisfied by another insurer or agent authorized to act on its
behalf. However, the insurer or agent making the cancellation or
nonrenewal shall remain responsible for compliance with the obligations
imposed by this section.
(D) When a cancellation or nonrenewal results solely from an insured's
oral request or inquiry, the explanation of reasons and summary of rights
required by subsection (A) of this section may be given orally."
Reinsurance facility; changes
SECTION 17. 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. 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 must 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.
The plan of operation, provided that insurers writing liability and
physical damage coverages, including nonowners coverage, in the State
of South Carolina, must commence recoupment of facility assessments by
way of a surcharge on liability insurance coverage on private passenger
and commercial automobile business issued by a member or through the
facility. Such surcharge must be a percentage of the premium adopted by
the governing board of the facility; however, for the period beginning on
March 1, 1999 and ending on February 28, 2002 the amount of the
percentage of premium surcharge for the recoupment of facility
assessments adopted by such board cannot exceed ten percent of the
liability insurance coverage premium per insured motor vehicle or risk
annually for all insureds or policyholders. Beginning on March 1, 2002
and continuing thereafter, every insured or policyholder who does not
have any insurance merit rating points pursuant to the Uniform Merit
Rating Plan in effect upon the effective date of this act must not be
surcharged for the recoupment of any facility assessments or losses;
therefore, a clean or nonpointed risk shall no longer pay any form of
recoupment seeking to recoup facility losses. Any surcharge as provided
above during the period of March 1, 1999 through February 28, 2002
must be displayed as a part of the applicable premium charge for liability
insurance coverage. However, beginning on March 1, 2002 every insured
or policyholder who does have insurance merit rating points pursuant to
the Uniform Merit Rating Plan in effect upon the effective date of this act
shall be surcharged for the recoupment of any facility assessments or
losses; therefore, these pointed risks shall be the only persons in the State
of South Carolina who shall pay any recoupment fee for facility losses or
assessments remaining in the facility on March 1, 2002 or any losses
accruing in the facility after March 1, 2002. Furthermore, the director of
the Department of Insurance shall promulgate a plan by regulation to
recoup any losses remaining in the facility on March 1, 2002 or any losses
accruing after March 1, 2002 only from those insureds or policyholders
having insurance merit rating points as provided above. This plan shall
include, but is not limited to, a schedule of recoupment and method of
surcharge method whether a fixed fee, a percentage basis, or otherwise
consider appropriate by the director.
No insurer may include directly or indirectly in premiums any charges
or surcharges for the recoupment of facility assessments or losses other
than as authorized herein. If the director of the Department of Insurance,
or his designee, determines that an insurer has violated this prohibition,
the director or his designee may impose the penalties against the insurer
as provided by law. Upon the final recoupment of facility losses when the
South Carolina Reinsurance Facility ceases to exist, no insurance carrier
offering automobile insurance coverage in the State shall include any
surcharge for the recoupment of facility assessments or losses as any
portion of the premium charged for automobile insurance coverage and
these insurance carriers must remove this surcharge at the next policy
renewal, thereby reducing automobile insurance premiums in the amount
of the surcharge percentage of premium.
(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) The Reinsurance Facility shall convert to the
percentage-of-premium basis of recoupment by March 1, 1999.
(5) Servicing carrier contracts for business written by designated
producers may, at the carrier's option, be extended to March 1, 2002 upon
the same terms and conditions as their current contracts."
New insurance business cannot be written by designated producer
after March 1, 1999; etc.
SECTION 18. 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 must 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.
(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 any change in the rate of commissions allowed
designated producers is subject to the approval of the director or his
designee.
(c) A producer may be designated by the governing board of the
facility upon application for designation and is eligible for designation
upon a finding by the governing board that the applicant meets the
following qualifications:
(1) The applicant has been, for ten continuous years, a licensed
resident property and casualty insurance agent and agency owner or
principal with authority from one or more licensed insurers to write
liability and physical damage insurance on private passenger automobiles;
(2) At the time of application the applicant is servicing and owns
the renewals on private passenger and commercial automobile insurance
business, the net premiums on which exceeded seventy-five thousand
dollars of potential cedeable automobile insurance during any one of the
previous five calendar years preceding the application;
(3) Neither the applicant, nor any employee of the applicant or the
applicant's corporate agency, nor any partner or shareholder in any related
insurance agency, related premium service company, or related other
business, has any direct or indirect connection with any voluntary market
outlet for the purpose of writing any type of automobile insurance in this
State except for motorcycle insurance and types not cedeable to the
facility;
(4) The applicant has not contributed to his termination as agent by
any insurer because of any illegal breach of agency agreement or other
related, improper, or unethical conduct; and
(5) 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) Before designation 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.
(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.
(g) A designated carrier who fails a claims audit shall have no new
designated producer 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.
A producer designated under this section may not write new private
passenger and commercial automobile insurance business to be placed in
the facility after March 1, 1999. A policy with an effective date after
March 1, 2002 shall not be accepted by the facility."
Ineligible applicants for designated producer; no new business after
certain time; etc.
SECTION 19. Section 38-77-595 of the 1976 Code, as added by Act
524 of 1990, is amended by adding:
"A producer designated under this section may not write new
private passenger and commercial automobile insurance business to be
placed in the facility after March 1, 1999. A policy with an effective date
after March 1, 2002 shall not be accepted by the facility."
Joint underwriting association; assigned risk plan; transition; etc.
SECTION 20(A). Title 38 of the 1976 Code is amended by adding:
"CHAPTER 91
Joint Underwriting Association for
Private Passenger and Commerce Automobile
Insurance
Section 38-91-10. (A) The purposes of this chapter are to:
(1) promote the public welfare by establishing a mechanism to
provide automobile insurance to those required to have such insurance,
(2) provide controls over such mechanism in order to lower
expenses and prevent abuses,
(3) provide for competitive bidding of servicing carriers,
(4) provide controls over the application process to prevent fraud
and inaccuracies as well as other improper practices.
(B) The provisions of this chapter must cease to be of any force or
effect after February 28, 2003. In other words, the joint underwriting
association cannot accept any business after February 28, 2003.
However, any policy currently issued by or written through the joint
underwriting association, pursuant to this chapter, on February 28, 2003
shall continue to be a valid contract of insurance until the end of the
policy period unless canceled by the insurer or insured. Furthermore, the
director of the Department of Insurance may promulgate regulations
which he deems necessary to implement this transition including, but not
limited to, the termination of the joint underwriting association and its
wind-up period.
Section 38-91-30. As used in this chapter:
(a) 'association' means the joint underwriting association established
pursuant to the provisions of this act.
(b) 'automobile insurance' means direct insurance against injury or
damage arising out of the ownership, operation, maintenance, or use of
motor vehicles, or insurance against loss for damage to motor vehicles.
Private passenger automobile insurance and commercial automobile
insurance are two distinct kinds of automobile insurance.
(c) 'director' means the director of the Department of Insurance.
(d) 'plan of operation' means the plan of operation approved pursuant
to the provisions of this act or ordered by the director.
(e) 'qualified applicant' means (1) a resident of this State who owns a
motor vehicle registered in this State or has a valid driver's license or is
required to file proof of financial responsibility in order to register his
motor vehicle or obtain a driver's license, or (2) a nonresident of this State
who owns a vehicle registered or principally garaged in this State;
provided, however, that no one shall be a qualified applicant if he has any
unpaid premium due for prior automobile insurance or if any person who
usually drives the motor vehicle to be insured does not hold or is not
eligible to obtain a driver's license under suspension.
(f) 'residual market mechanism' means a means of providing a market
for insureds in South Carolina were the voluntary market is inadequate.
Section 38-91-110. (a) A joint underwriting association, hereinafter
referred to as the 'Associated Auto Insurers Plan', is hereby created
consisting of all insurers authorized to write and engaged in writing
automobile insurance within this State. Each insurer shall be a member
of the association and shall remain a member as a condition of its
authority to continue to transact such insurance in this State.
(b) The purpose of the association shall be to guarantee that
automobile insurance will be available to any qualified applicant who is
unable to procure such insurance through ordinary methods while
preserving to the public the benefits of competition among financially
sound automobile insurers by encouraging maximum use of the normal
private insurance system.
(c) Pursuant to the provisions of this act and its plan of operation, the
association is empowered on behalf of its members:
(1) to issue automobile insurance policies to qualified applicants or
to arrange for the issuance of such policies through members of the
association;
(2) to establish procedures for the sharing among the members of
profit or loss on association business and other costs, charges, expenses,
liabilities, income, property and other assets of the association. The
assessment of members for their appropriate shares may be based on the
member's premium volume or exposure units for business other than
association business or on a combination of such bases or on any other
equitable basis with allowances for incentive programs for insurers to
write in the voluntary market business written in the association.
Allowances may be provided for existing debits and credits under any
automobile insurance plans replaced or terminated as a result of this
legislation;
(3) to reinsure association business;
(4) to establish the compensation to be paid to any licensed resident
insurance agent or broker;
(5) to join, advise, assist, associate, cooperate and contract with its
members and with such organizations, associations, insurers,
governmental agencies, and others as may be necessary or proper to
accomplish the purpose of the association;
(6) to sue and be sued in the name of the association. No judgment
against the association shall create any direct liability in the individual
participating members thereof;
(7) to do anything not specifically enumerated above or related
thereto which is otherwise necessary or proper to accomplish the purpose
of the association.
Section 38-91-130. (a) Within ninety days after the effective date
of this act, the director or his designee shall call the first, or organizational
meeting, of the association and seat an Advisory Board (hereinafter
referred to as the board).
The initial board shall consist of three individuals who are licensed
agents or brokers and four consumer representatives to be appointed by
the director or his designee, five association members, the Consumer
Advocate or his designee, the director of Public Safety or his designee,
and one member from the Department of Insurance. The representative
from the Department of Insurance will be a nonvoting board member.
Association members will be chosen as follows:
One insurer which is a member of and selected by the American
Insurance Association;
One insurer which is a member of and selected by the Alliance of
American Insurers;
One insurer which is a member of and selected by the National
Association of Independent Insurers;
One insurer which is not affiliated with the forgoing organizations
and which is elected by such nonaffiliated insurers voting in person or by
proxy;
One insurer which is a domestic appointed by the director regardless
of affiliation.
The terms of office for the initial and subsequent members of the board
shall be as provided in the plan of operation. Such plan shall provide for
the appointment by the director of three individuals who are licensed as
agents or brokers in this State. The board shall elect a chairperson who is
not an insurer representative.
No more than one representative of a domestic insurer may serve on the
board at any one time. No insurer may serve on the board if such insurer
is a servicing carrier for the association or is a member of a group of
insurers which has one insurer as a servicing carrier unless the carrier or
group of carriers participates in the voluntary automobile market with a
level at least twice the premium level for the Associated Auto Insurers
Plan. If a servicing contract is awarded mid-term, then the affected
representative must resign at the next board meeting.
(b) Within sixty days after the organizational meeting, the board shall
file with the director or his designee for his approval, a proposed plan of
operation, consistent with the provisions of this act, which shall provide
for the prompt and efficient provision of automobile insurance to qualified
applicants unable to procure such insurance through ordinary methods.
Distinct and separate plans may be filed for private passenger automobile
insurance and commercial automobile insurance. The plan(s) of operation
shall provide for, among other matters, preliminary assessments of
members for initial expenses to commence operations, establishment of
necessary facilities, the operation of the association, assessments of
members to defray losses and expenses, compensation to licensed agents
or brokers, eligibility requirements, the coverages and amounts of
insurance to be provided and premium payment plans. The plan(s) of
operation must be approved by the department as evidenced by a returned
copy stamped approved by the department. The plan(s) of operation must
include a provision that all meetings of the board will be held in Columbia
unless approval is given by the director. Approval must consist of request
stamped approved by the department.
(c) If the director or his designee shall disapprove all or any part of
the proposed plan of operation, he shall do so in writing, specifying in
what respect the plan of operation fails to meet the requirements of this
act. Unless the board takes other appropriate legal action to contest the
disapproval, it shall within thirty days thereafter file for his review an
appropriately revised plan of operation.
(d) If, after a hearing, the director or his designee finds that any
activity or practice of insurers participating in the association or any other
residual market mechanism is unfair, unreasonable, or otherwise
inconsistent with the provisions of this title, the director or his designee
must issue a written order specifying in what respects such activity or
practice is unfair, unreasonable, or otherwise inconsistent with the
provisions of this title and require the discontinuance of such activity or
practice. The director or his designee may establish a residual market
mechanism by written order if the director or his designee finds that the
existing residual market mechanism is unfair, unreasonable, or
inconsistent with the provisions of this chapter.
(e) Any revision of the proposed plan of operation or any subsequent
amendments to an approved plan of operation shall be subject to the
provisions in subsection (c) relating to the initial plan of operation.
(f) If no plan of operation is submitted to the director or his designee
within sixty days after the organizational meeting, the director or his
designee shall, after consulting with the representatives of the industry,
prepare and promulgate a plan of operation in accordance with the
requirements of this act which shall continue in force until superseded by
a plan of operation effective in accordance with subsections (b) and (c).
Section 38-91-210. (a) Any qualified applicant shall, on or after the
effective date of the plan of operation, be entitled to apply for coverage
through the association. The application may be made on his behalf by
any licensed resident agent or broker authorized by him. Every licensed
resident agent or broker shall offer to place insurance through the
association for any qualified applicant for whom he is unable to procure
such insurance though the markets available to him. Coverage limits may
be provided up to $250,000 per person and $500,000 per accident for
bodily injury, $100,000 property damage or a combined single limit of
$500,000 and fire, theft, comprehensive and collision coverage. In order
to place the insurance of the applicant through the association, the agent
or broker on the application must show (i) that the applicant has been
refused automobile insurance coverage by at least one insurer, agent, or
broker, and (ii) the reasons for refusal. The applicant must by his
signature acknowledge this showing.
(b) The director of the Department of Insurance or his designee may
review each application and provide such application to other qualified
insurers. The director or his designee may assign the applicant to any
qualified insurer other than the association willing to accept such
coverage in the voluntary market. The agent who placed such applicant
in the association for automobile insurance coverage shall not receive any
commission from this insurance policy or applicant upon placement by
the director or his designee of this applicant voluntary market; provided,
however, any commission received or paid on the sale of this policy for
such applicant must be refunded.
(c) If the director or his designee determines that any agent or broker
has placed ten percent or more of his applications with the association and
if the director or his designee further determines that the agent improperly
assigned applicants insurable through regular underwriting in the
voluntary market to the association, then the director or his designee shall
assess any one of, a combination thereof, or all, of the following penalties
against the agent or broker: (i) a fine up to five thousand dollars per
violation; (ii) suspension of that agent's or broker's right to place
coverages with the association, or his binding authority, for a specified
period of time; or (iii) suspension or revocation of the agent's or broker's
license to offer automobile insurance in the State. In his review of the
agent's or broker's residual market business, the director or his designee
may consider whether the insurer, agent, or broker is participating in a
pattern of unfair discrimination as provided in Section 38-77-122 and
Section 38-77-123.
(d) If the association determines that the applicant is a qualified
applicant eligible under the plan of operation, then the association, upon
receipt of the premium, or such portion thereof as is prescribed in the plan
of operation, shall issue or cause to be issued a policy of automobile
insurance and policy periods as are available under the plan of operation
as may be requested.
If the director or his designee finds, after a hearing, with respect to any
specified geographical area in the State, that a large number of persons are
failing to gain the benefits of the association because they do not have the
services of an agent or broker, the association shall provide service to
assist the public in applying to the association for insurance.
(e) The association shall monitor applications submitted to the
association in order to ascertain if applications are correct, complete, and
reflect that actual risk of the insured. The association shall select a
subcommittee of three board members who will review applications. The
subcommittee may develop and enforce requirements on applications and
if requirements are not met by agents submitting applications, shall
suspend the ability of that agent to bind applications for thirty days as
well as prescribe audit fees to be applied to applications from particular
agents. In the event of three suspensions for a particular agent in any
five-year period, the ability of that agent to bind applications shall be
suspended for three years. In the event of four suspensions for agents in
a particular agency in any five-year period, the ability of that agency to
bind applications shall be suspended for three years. Appeals of the
subcommittee shall be made to the full board and then the director or his
designee.
The association shall monitor agents to ensure that insureds are not
forced to purchase other insurance coverages in order for the agent to
submit the application to the association. The association or the director
of the Department of Insurance may require agents to disclose all policies
written in conjunction with a policy through the association.
Section 38-91-220. (a) The classifications, rules, rating plans, and
policy forms proposed for use for automobile insurance issued by or
through the association may be made by the association or by any licensed
rating organization and shall be filed with the director or his designee.
Such filings may incorporate by reference any other material on file with
the director.
(b) The classifications, rules, rates, rating plans, and policy forms
proposed for use for automobile insurance issued by or through the
association shall be subject to appropriate statutes concerning approval of
filings including Section 38-73-910. The association and every member
shall be required to use the classifications, rules, rates, rating plans, and
policy forms so approved for automobile insurance issued by or through
the association for business written through the association.
(c) The rates used for the Associated Auto Insurers Plan must be
actuarially sound, self-supporting, and provide adequate premiums to pay
losses and expenses associated with the Associated Auto Insurers Plan.
Any deficits incurred by the plan should be recovered prospectively by
rate changes for the Associated Auto Insurers Plan.
Section 38-91-230. (A) Effective March 1, 1999 the association
shall file private passenger automobile loss components for automobile
insurance coverages based on the total experience of all risks ceded to the
South Carolina Reinsurance Facility which are actuarially sound and
supported by statistical evidence. The association shall contract with
independent actuarial services to develop such loss component. Due
consideration must be given to actual loss experience within the
reinsurance facility for the most recent three-year period for which such
information is available. The loss component developed under this
section is applicable to the risk and territorial classification plan adopted
by the association.
(B) In the initial year of operation, the expense component used to
develop the final rate or premium charge when combined with the loss
component filed in subsection (A) shall be that expense component filed
in accordance with Section 38-73-1420 by the governing board of the
Reinsurance Facility.
(C) After the initial year of operation, rates, rating plans, and rating
rules must be based upon the Underwriting Association's loss and expense
experience and investment income. The resultant final rate or premium
charges must be on an actuarially sound basis and must be calculated to
be self-supporting.
Section 38-91-310. The board shall have all power to direct the
operation of the association, except as may be specifically delegated to
others or reserved to the members in the plan of operation and may
delegate ministerial duties, hire a manager, and contract for goods and
services from others.
Section 38-91-320. The association shall file in the office of the
department annually, by March first, a statement which contains
information with respect to its transactions, condition, operations, and
affairs during the preceding year. The statement shall contain such
matters and information as are prescribed by the director or his designee
and must be in the form he directs. The director or his designee may, at
any reasonable time, require the association to furnish additional
information with respect to its transactions, condition, or any matter
connected therewith considered to be material and of assistance in
evaluating the scope, operation, and experience of the association.
Section 38-91-330. The director or his designee shall make an
examination into the financial condition and affairs of the association at
least annually and shall file a report thereon with the department, the
Governor, and the General Assembly. The expenses of the examination
must be paid by the association.
Section 38-91-340. The servicing carriers for the association may be
competitively bid as provided for in this subsection. Separate bidding
processes may be done for private passenger and commercial automobile
insurance. If the carriers are competitively bid, then the director or his
designee must appoint a committee or committees of individuals as he
considers qualified to establish standards and procedures for the
consideration and evaluation of bids. The committee must include
incentive and disincentive programs that encourage proper claims
processing of policies and claims handling. Insurers, or other vendors in
conjunction with a licensed insurer, may submit bids. The committee or
committees must evaluate and award contracts pursuant to the final
approval of the director or his designee. The director may require a bid
fee to cover the expenses of implementing this section. A serving carrier
may be an entity other than a licensed insurance carrier if that entity can
prove to the satisfaction of the director that it has the experience and
capability to perform the duties of a servicing carrier and if that entity has
a licensed automobile insurance carrier to which a policyholder can be
issued an automobile insurance policy.
Section 38-91-410. (a) Any applicant for an association policy, any
person insured under such a policy, and any member of the association
may request a hearing and ruling the board of the association on any
alleged violation of the plan of operation or any alleged improper act or
ruling of the association directly affecting it as to coverage or premium or
in the case of a member directly affecting its assessment. Any member of
the association may request a hearing and ruling on the application to him
of the plan of operation. Any such member may request the board to act
upon or to rule upon any proposed change in or addition to the plan of
operation. The final action of the board in respect of any such proposed
changes or additions shall be deemed a formal ruling for purposes of
applying sections (b) and (c) below. The request for hearing must be
made within thirty days after the date of the alleged violation or improper
act or ruling. The hearing shall be held within thirty days after the receipt
of the request. The hearing may be held by a panel appointed by the
chairman of the advisory board consisting of not less than three members
thereof, of which one must be a consumer representative, and the ruling
of a majority of the panel shall be deemed to be the formal ruling of the
board, unless the full board on its own motion shall modify or rescind the
action of the panel.
(b) Any formal ruling by the board may be appealed to the director or
his designee by filing notice of appeal with the association and director
within thirty days after issuance of the ruling.
(c) The director, after a hearing if requested in the notice of appeal,
shall issue an order approving the action or decision, disapproving the
action or decision, or directing the board to reconsider the ruling.
(d) In any hearing held pursuant to this section by the board or the
director or his designee, the board or the commissioner as the case may
be, shall issue a ruling or order within thirty days after the close of the
hearing.
(e) All rulings or orders of the director or his designee under this
section shall be subject to appeal to circuit court.
Section 38-91-420. The director of the Department of Insurance shall
promulgate regulations to implement the provisions of this chapter."
(B) Subsection (A) of this section takes effect beginning on March 1,
1999 and must cease to be of any force or effect after February 28, 2003.
Beginning on March 1, 2003 and continuing thereafter, the provisions of
Article 8, Chapter 77, Title 38 of the 1976 Code as added by Section 21
of this act take effect; thus, the residual market mechanism for the State
of South Carolina shall convert from a joint underwriting association to
an assigned risk plan as outlined herein. The director of the Department
of Insurance is responsible for supervising, administering, and enforcing
the transition of the residual market mechanism from the joint
underwriting association, as provided in Chapter 91, Title 38 of the 1976
Code as added in Section 20 of this act, to the assigned risk plan, as
provided in Article 8, Chapter 77, Title 38 of the 1976 Code as added by
Section 21 of this act. The director of the Department of Insurance may
by order, regulation, or both, direct the transition of the residual market
mechanism so that the joint underwriting association cannot accept any
business after February 28, 2003 and the assigned risk plan must accept
business beginning on March 1, 2003 and continuing thereafter. Any
policy currently issued by or written through the joint underwriting
association, pursuant to Chapter 91, Title 38 of the 1976 Code as added
in Section 20 of this act, on February 28, 2003 shall continue to be a valid
contract of insurance until the end of the policy period unless canceled by
the insurer or insured. Furthermore, the director of the Department of
Insurance may promulgate regulations which he deems necessary to
implement this transition including, but not limited to, the termination of
the joint underwriting association and its wind-up period, and the
establishment of the assigned risk plan and its start-up period.
Assignment of risks; associated automobile insurers plan; assigned
risk pool; etc.
SECTION 21(A). Title 38, Chapter 77 of the 1976 Code is amended by
adding:
"Article 8
Assignment of Risks
Section 38-77-810. Beginning on March 1, 2003 and continuing
thereafter, the director may promulgate reasonable standards for the
assignment of risks to insurance carriers and servicing carriers, and an
assigned risk plan, hereinafter referred to as the Associated Auto Insurers
Plan, must be established by March 1, 2003. More than one assigned risk
plan may be established. The director may make reasonable regulations
for the assignment of risks to insurance carriers. He shall establish rate
classifications, rating schedules, rates, and regulations to be used by
insurance carriers issuing assigned risk, policies of motor vehicle liability,
physical damage, and underinsured and uninsured motorist insurance in
accordance with this chapter as appear to it to be proper in the
establishment of rate classifications, rating schedules, rates, and
regulations, it shall be guided by the principles and practices which have
been established under its statutory authority to regulate motor vehicle
liability, physical damage, and medical payments insurance rates, and it
may act in conformity with its statutory discretionary authority in such
matters.
The servicing carriers for the Associated Auto Insurers Plan may be
competitively bid as provided for in this section. If the Associated Auto
Insurers Plan is competitively bid, then the director or his designee shall
appoint a committee or committees of individuals as he considers
qualified to establish standards and procedures for the consideration and
evaluation of bids. Insurers or other vendors, in conjunction with a
licensed automobile insurer, may submit bids. The committee or
committees shall evaluate and award contracts pursuant to the bidding
process established by the committee or committees, subject to the final
approval of the director or his designee. The director may require a bid
fee to cover the expenses of implementing this section.
The plan for the Associated Auto Insurers Plan must contain a
provision for which licensed agents and/or brokers may be certified such
as to bind insurance policies. The manager of the plan shall establish and
maintain an electronic means to bind policies immediately. The electronic
effective date procedure shall be available only to producers of record
who are certified by the plan.
Section 38-77-820. Every person who has been unable to obtain a
motor vehicle liability policy shall have the right to apply to the director
to have his risk assigned to an insurance carrier licensed to write and
writing motor vehicle liability insurance in the State and the insurance
carrier, whether a stock or mutual company, reciprocal, or interinsurance
exchange, or other type or form of insurance organization, as provided in
this chapter shall issue a motor vehicle liability policy which will meet at
least the minimum requirements for establishing financial responsibility
as provided in this chapter, and in addition shall provide, at the option of
the insured, reasonable motor vehicle physical damage and medical
payments coverages, (both as defined in Chapter 77, Title 38) in the same
policy. Every person who has otherwise obtained a motor vehicle liability
insurance policy, or who has been afforded motor vehicle liability
insurance under the laws of this State, but who was not afforded motor
vehicle medical payments insurance or motor vehicle physical damage
insurance in the same policy, or who was not afforded such coverages
under the provisions of that section, shall have the right to apply to the
director to have his risk assigned to an insurance carrier, as provided
above, licensed to write and writing either or both coverages, and the
insurance carrier shall issue a policy providing the coverage or coverages
applied for.
Section 38-77-830. Insurance carriers may satisfy their Associated
Auto Insurers Plan obligations by joining with other insurers to establish
an Assigned Risk Pool whereby one or more insurers accepts the
assignments of other insurers and in return, the other insurers agree to be
responsible for any assessment necessary to pay losses associated with the
servicing carrier's pool policies. These agreements are subject to approval
by the director.
Section 38-77-840. The director may in its discretion, after reviewing
all information pertaining to the applicant or policyholder available from
its records, the records of the department, or from other sources:
(1) refuse to assign an application;
(2) approve the rejection of an application by an insurance carrier;
(3) approve the cancellation of a policy of motor vehicle liability,
physical damage, and medical payments insurance by an insurance
carrier; or
(4) refuse to approve the renewal or the reassignment of an expiring
policy.
Section 38-77-841. The producer of each Associated Auto Insurers
Plan must provide on a form promulgated by the director of the
Department of Insurance the information as follows:
(1) the name of one other insurance agent and/or insurer representative
who has rejected the applicant for automobile insurance;
(2) if the producer has at least one voluntary market for automobile
insurance, the producer must provide the application to at least one
voluntary market used by that producer and the application must be
rejected;
(3) the reason why the applicant is submitting an application to the
Associated Auto Insurers Plan. Such reason shall include data on traffic
violations, accidents and/or reasons as to why the voluntary market has
not provided coverage.
Section 38-77-845. (A) The director or his designee, or the plan
manager, may review each application. Applications which are not
complete or accurate, or both, shall be considered in violation of Section
38-57-30 and are subject to penalty. The department shall promulgate
regulations to enforce this section. Penalties may include suspension of
binding authority, fines up to five thousand dollars, and revocation of
license.
(B) The director or his designee may review each application and
provide such application to other qualified insurers upon request who may
provide the insurance in the voluntary market at a rate less than the
Associated Auto Insurers Plan rate. In such a case, the producer shall not
receive commission on the sale of such policy.
(C) In his review of the agent's or broker's residual market business,
the director or his designee may consider whether the insurer, agent, or
broker is participating in a pattern of unfair discrimination as provided in
Section 38-77-122 and Section 38-77-123.
Section 38-77-850. Any information filed with the director by an
insurance carrier in connection with an assigned risk must be confidential
and solely for the information of the director and its staff and must not be
disclosed to any person, including an applicant, policyholder, and any
other insurance carrier.
Section 38-77-860. (A) The director is not required to disclose to
any person, including the applicant or policyholder, its reasons for:
(1) refusing to assign an application;
(2) approving the rejection of an application by an insurance carrier;
(3) approving the cancellation of a policy of motor vehicle liability,
physical damage, and medical payments insurance by an insurance
carrier; or
(4) refusing to approve the renewal or the reassignment of an
expiring policy.
(B) The director or anyone acting for him is not held liable for any act
or omission in connection with the administration of the duties imposed
upon it by the provisions of this chapter, except upon proof of actual
malfeasance.
Section 38-77-870. The provisions of this chapter relevant to
assignment of risks must be available to nonresidents who are unable to
obtain a policy of motor vehicle liability, physical damage, and medical
payments insurance with respect only to motor vehicles registered and
used in the State.
Section 38-77-880. Notwithstanding any other provision of law, the
provisions of this chapter relating to assignment of risks must be available
to carriers by motor vehicle who are required by law to carry public
liability and property damage insurance for the protection of the
public."
(B) Subsection (A) of this section takes effect beginning on March 1,
2003 and continuing thereafter; therefore, the residual market mechanism
for the State of South Carolina shall convert from a joint underwriting
association to an assigned risk plan as outlined herein. The director of the
Department of Insurance is responsible for supervising, administering,
and enforcing the transition of the residual market mechanism from the
joint underwriting association, as provided in Chapter 91, Title 38 of the
1976 Code as added in Section 20 of this act, to the assigned risk plan, as
provided in Article 8, Chapter 77, Title 38 of the 1976 Code as added by
Section 21 of this act. The director of the Department of Insurance may
by order, regulation, or both, direct the transition of the residual market
mechanism so that the joint underwriting association cannot accept any
business after February 28, 2003, and the assigned risk plan must accept
business beginning on March 1, 2003, and continuing thereafter. Any
policy currently issued by or written through the joint underwriting
association, pursuant to Chapter 91, Title 38 of the 1976 Code as added
in Section 20 of this act, on February 28, 2003 shall continue to be a valid
contract of insurance until the end of the policy period unless canceled by
the insurer or insured. Furthermore, the director of the Department of
Insurance may promulgate regulations which he deems necessary to
implement this transition including, but not limited to, the termination of
the joint underwriting association and its wind-up period, and the
establishment of the assigned risk plan and its start-up period.
Proof of insurance, financial responsibility in the vehicle;
misdemeanor; penalty; etc.
SECTION 22. Chapter 10, Title 56 of the 1976 Code is amended by
adding:
"Section 56-10-225. (A) A person whose application for
registration and licensing of a motor vehicle has been approved by the
department must maintain in the motor vehicle at all times proof that the
motor vehicle is an insured vehicle in conformity with the laws of this
State and Section 56-10-510.
(B) The owner of a motor vehicle must maintain proof of financial
responsibility in the motor vehicle at all times and it must be displayed
upon demand of a police officer or any other person duly authorized by
law.
(C) A person who fails to maintain the proof in his motor vehicle as
required by subsection (A) is guilty of a misdemeanor and, upon
conviction, is subject to the same punishment as provided by law for
failure of the person driving or in control of a motor vehicle to carry the
vehicle registration card and to display the registration card upon demand.
A person failing to maintain in his vehicle the proof required pursuant to
subsection (A), within thirty days of being cited for such failure, shall
provide proof of insurance or have his driver's license suspended until
satisfactory proof is provided. Further, this proof must be provided every
quarter for one year after being cited for driving without proof of liability
insurance. Failure to provide this proof when required shall cause his
driver's license to be suspended until satisfactory proof is provided.
(D) The penalties provided in subsection (C) are in addition to, and not
in lieu of, any other penalty, of whatever nature, provided by law for
failing to act as required in subsection (A)."
No liability, cause of action in certain situations; exceptions
SECTION 23. The 1976 Code is amended by adding:
"Section 38-77-395. There is no liability on the part of and no
cause of action of any nature may arise against the director or his
designees, any insurer, or the authorized representatives, agents, and
employees of either or any firm, person, or corporation furnishing to the
insurer information as to reasons for cancellation or refusal to write or
renew, for any statement made by any of them in complying with this
article, or for the providing of information pertaining thereto, unless the
person asserting the cause of action establishes that the person against
whom the cause of action is asserted was motivated by express malice or
gross negligence."
Use of a particular insurance premium finance company or other
installment plan cannot be required; etc.
SECTION 24. The 1976 Code is amended by adding:
"Section 38-5-200. (A) An insurer, its agent, or an insurance
broker doing business in this State may not require a person to use a
particular insurance premium finance company or other installment plan
for which a finance charge or other fee in connection with an installment
payment has been or will be imposed.
(B) An insurer, its agent, or an insurance broker doing business in this
State may not refuse to issue a policy of insurance solely because the
premiums for the policy have been advanced by a premium finance
company licensed in this State.
(C) An insurer or its agent doing business in this State shall not reduce
commission or intimidate or retaliate against a producer, agent, broker, or
insured who uses premium financing by denying the producer, agent,
broker, or insured the same rights accorded producers, agents, brokers, or
insureds who pay premiums in a different manner."
Insurance agents may rebate automobile insurance policy
commissions for insureds
SECTION 25. Section 38-43-200 of the 1976 Code, as last amended by
Section 1 of Act 465 of 1990, is amended to read:
"Section 38-43-200. (a) A licensed agent representing an insurer
may not pay, directly or indirectly, any commission, brokerage, or other
valuable consideration on account of any policy of insurance on any risk
in this State to any nonresident or resident not duly licensed to act as
agent or broker for the type of insurance involved.
(b) Notwithstanding the provisions of subsection (a), agents licensed
under this title may write insurance at the request of other licensed agents
or licensed brokers or licensed nonresident brokers and allow the licensed
agents or licensed brokers or licensed nonresident brokers not exceeding
one-half of the commissions which they receive on the business written.
(c) The limitations contained in subsection (b) with respect to the
amount of commission which may be allowed other licensed agents or
licensed brokers or licensed nonresident brokers do not apply where the
insurance written is life insurance or accident and health insurance.
(d) This section does not prohibit the payment of a fee to a trade or
professional association exempt from income tax under Section 501(c) of
the Internal Revenue Code.
(e) Nothing in this section should be construed to prohibit any
licensed insurance agent from rebating any portion of his commission
collected on automobile insurance premiums to the insured upon that
automobile insurance policy."
Rebating of insurance agent's commission to insured on automobile
insurance policy allowed
SECTION 26. Section 38-55-50 of the 1976 Code, as last amended by
Section 2 of Act 465 of 1990, is amended to read:
"Section 38-55-50. An insurer, its agent, or an insurance broker
doing business in this State may not make or permit any discrimination in
favor of individuals between insureds of the same class and risk involving
the same hazards in the amount of the payment of premiums or rates
charged for policies of insurance except as provided in Sections
38-57-140, 38-65-310, and 38-71-1110, in the dividends or other benefits
payable, or in any other of the terms and conditions of the contracts it
makes. An insurer, its agent, or an insurance broker may not make a
contract of insurance or agreement as to a contract other than as plainly
expressed in the policy issued. An insurer or its officer, agent, solicitor,
or representative or an insurance broker may not pay, allow, or give or
offer to pay, allow, or give, directly or indirectly, as inducement to the
taking of insurance any rebate of premium payable on the policy, any
special favor or advantage in the dividends or other benefits to accrue
from the policy, any paid employment or contract for services of any kind,
or any valuable consideration or inducement not specified in the policy
contract of insurance, or give, sell, or purchase or offer to give, sell, or
purchase, as inducement to the taking of insurance or in connection
therewith, any stocks, bonds, or other securities of an insurer or other
corporation, association, or partnership, any dividends or profits to accrue
from them, or anything of value not specified in the policy.
This section does not prohibit the payment of a fee to a trade or
professional association exempt from income tax under Section 501(c) of
the Internal Revenue Code.
Further, this section does not prohibit the rebating of any commission
to the insured on an automobile insurance policy collected by, or on
behalf of, a licensed insurance agent."
Review and reports on impact of repeal of anti-rebate laws regarding
sale of automobile insurance; etc.
SECTION 27. Beginning on March 1, 2000 the director of the
Department of Insurance shall review annually the impact of the repeal of
the anti-rebate statutes concerning the sale of automobile insurance in
South Carolina pursuant to this act and shall report annually to the
General Assembly his findings and recommendations, if any, along with
the data and supporting information which the director utilized. In his
review, the director shall evaluate the following, but is not limited to: the
impact on automobile insurance premiums; any pattern of an insurance
carrier, agent, broker, and others concerning the practice of rebating; any
pattern of discrimination regarding the insured or policyholder, agent,
broker, insurance carrier, or others; the impact on the automobile
insurance industry, such as additional market entrants, number of
insurance carriers, agents, or others who engage in this practice, or any
change in the number of companies writing automobile insurance or of
agents selling automobile insurance; and any complaints received by or
made to the Department of Insurance concerning rebates in the sale of
automobile insurance or regarding the repeal of the anti-rebate statutes
concerning the sale of automobile insurance in South Carolina. The initial
report by the director of the Department of Insurance shall be submitted
to the General Assembly by May 1, 2000 and notwithstanding any other
provision of law, the director shall begin collecting data, material, and any
information needed for this initial report on March 1, 1999. All
subsequent reports shall be submitted to the General Assembly no later
than March first of each year. Notwithstanding any other provision of
law, the director of the Department of Insurance shall make his final
report on this matter to the General Assembly as provided herein on
March 1, 2003 unless otherwise directed by the General Assembly;
however, the director may at his discretion continue to submit a report to
the General Assembly regarding this matter at any time after March 1,
2003 and shall continue to monitor the impact of the repeal of the
anti-rebate statutes concerning the sale of automobile insurance in South
Carolina pursuant to this act. The director may promulgate regulations
in order to carry out the requirements of this section.
Severability clause
SECTION 28. If a provision of this act or its application to a person or
circumstance is held to be unconstitutional or otherwise invalid, the
remainder of this act and the application of that provision to other persons
or circumstances are not affected, and it must be conclusively presumed
that the General Assembly would have enacted the remainder of this act
without the invalid or unconstitutional provision.
Insurers may nonrenew automobile insurance policies currently ceded
to reinsurance facility; inapplicable to designated producers; end of all
ceding by insurers; etc.
SECTION 29. Beginning March 1, 1999 insurers may nonrenew a
policy that they have currently ceded to the South Carolina Reinsurance
Facility. This provision does not apply to business written through the
designated producers. Insurers may no longer cede to the facility after
October 1, 1999. If a provision of this act or its application to a person or
circumstance is held to be unconstitutional or otherwise invalid, the
remainder of this act and the application of that provision to other persons
or circumstances are not affected, and it must be conclusively presumed
that the General Assembly would have enacted the remainder of this act
without the invalid or unconstitutional provision. Insurers are not
required to cede to the facility after March 1, 1999 and business ceded
after March 1, 1999 must be renewal business to the facility. All renewal
business ceded after March 1, 1999 must be ceded at the rate level
approved for the reinsurance facility after combining its expense
component with the loss component referenced in Section 38-77-596.
Repeal
SECTION 30. Article 5 of Chapter 77, Title 38 of the 1976 Code is
repealed effective January 1, 2006.
Repeal
SECTION 31. Sections 38-73-450, 38-73-455, 38-73-457, 38-73-460,
38-73-465, 38-73-720, 38-73-730, 38-73-731, 38-73-735, 38-73-750,
38-73-760, 38-73-770, 38-73-775, 38-77-110, 38-77-111, 38-77-115,
38-77-145, 38-77-285, 38-77-360, 38-77-600, 38-77-605, 38-77-610,
38-77-620, and 38-77-625 and Article 9 of Chapter 77 of Title 38 of the
1976 Code are repealed.
Time effective; sending of certain nonrenewal notices
SECTION 32. The provisions of this act take effect as follows: (a)
Sections 1 and 2 on February 1, 1999; (b) Sections 4 through 17 and
Sections 19, 23, 25, 26, 27, 29, and 31 on March 1, 1999; and (c) Sections
3, 18, 20, 21, 22, 24, 28, and 30 upon approval by the Governor, except
as may be otherwise specifically provided in any of those sections.
Nonrenewal notices may be sent before March 1, 1999, for policies
renewing on or after March 1, 1999.
Approved the 2nd day of July, 1997. |