H 3827 Session 111 (1995-1996)
H 3827 General Bill, By Cato
Similar(S 628, H 4039)
A Bill to amend Section 38-73-1425, as amended, Code of Laws of South
Carolina, 1976, relating to the final rate or premium charge for private
passenger automobile insurance risk ceded to the South Carolina Reinsurance
Facility, so as to delete certain provisions, and provide, among other things,
that beginning January 1, 1996, and annually thereafter, the final rate or
premium charge for a private passenger automobile insurance risk ceded to the
Facility must be calculated so that the projected combined ratio for risks
subject to the final rate or premium charges is no more than one hundred
percent.-short title
03/21/95 House Introduced and read first time HJ-6
03/21/95 House Referred to Committee on Labor, Commerce and
Industry HJ-9
03/29/95 House Committee report: Favorable Labor, Commerce and
Industry HJ-2
04/04/95 House Debate adjourned until Tuesday, April 25, 1995 HJ-13
04/25/95 House Objection by Rep. White, Askins, Inabinett,
Lloyd, Neal, S. Whipper, McMahand, Cato, A.
Young, Law, Howard, R. Smith, Limehouse &
Robinson HJ-17
05/11/95 House Debate adjourned until Thursday, May 18, 1995 HJ-54
05/24/95 House Debate adjourned until Wednesday, May 31, 1995 HJ-92
01/11/96 House Retaining place on calendar recommitted to
Committee on Labor, Commerce and Industry HJ-29
05/02/96 House Recalled from Committee on Labor, Commerce and
Industry HJ-33
05/07/96 House Recommitted to Committee on Labor, Commerce and
Industry HJ-35
Indicates Matter Stricken
Indicates New Matter
RECALLED
May 2, 1996
H. 3827
Introduced by REP. Cato
S. Printed 5/2/96--H.
Read the first time March 21, 1995.
A BILL
TO AMEND SECTION 38-73-1425, AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
FINAL RATE OR PREMIUM CHARGE FOR PRIVATE
PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO
THE SOUTH CAROLINA REINSURANCE FACILITY, SO AS
TO DELETE CERTAIN PROVISIONS, AND PROVIDE, AMONG
OTHER THINGS, THAT BEGINNING JANUARY 1, 1996, AND
ANNUALLY THEREAFTER, THE FINAL RATE OR PREMIUM
CHARGE FOR A PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE FACILITY MUST BE
CALCULATED SO THAT THE PROJECTED COMBINED
RATIO FOR RISKS SUBJECT TO THE FINAL RATE OR
PREMIUM CHARGES IS NO MORE THAN ONE HUNDRED
PERCENT; TO PROVIDE, AMONG OTHER THINGS, THAT
THE PROVISIONS OF SECTION 38-73-1425 AS AMENDED BY
THIS ACT, ARE EFFECTIVE ON JANUARY 1, 1996; TO
AMEND SECTION 38-73-1420, RELATING TO THE
REQUIREMENT THAT THE BOARD OF GOVERNORS OF
REINSURANCE FACILITY FILE AN EXPENSE COMPONENT,
SO AS TO DELETE CERTAIN LANGUAGE, AND PROVIDE,
AMONG OTHER THINGS, THAT THE COST REDUCTIONS
REALIZED IN OPERATING RESULTS OF THE
REINSURANCE FACILITY MUST BE APPLIED
EXCLUSIVELY TO REDUCE THE RECOUPMENT CHARGES
ON ALL POLICIES OF PRIVATE PASSENGER AUTOMOBILE
INSURANCE WRITTEN IN SOUTH CAROLINA; TO AMEND
SECTION 38-73-455, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE RATES, SO AS TO PROVIDE,
AMONG OTHER THINGS, THAT MEMBER COMPANIES OF
AN AFFILIATED GROUP OF AUTOMOBILE INSURERS MAY
UTILIZE DIFFERENT FILED RATES FOR AUTOMOBILE
INSURANCE COVERAGES WHICH THEY ARE MANDATED
BY LAW TO WRITE IN ACCORDANCE WITH RATING
PLANS FILED WITH AND APPROVED BY THE DIRECTOR
OF THE DEPARTMENT OF INSURANCE; TO AMEND
SECTION 38-77-280, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE AND COLLISION AND
COMPREHENSIVE COVERAGES, SO AS TO DELETE
CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE,
AMONG OTHER THINGS, THAT THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE SHALL COMPILE A
COMPARATIVE STATISTICAL ANALYSIS OF THE
COMPLAINTS RECEIVED BY, OR FILED WITH, THE
DEPARTMENT FROM PERSONS ALLEGING
DISCRIMINATION WHEN THE PERSON IS DENIED
PHYSICAL DAMAGE COVERAGES BY AN INSURER; TO
AMEND THE 1976 CODE BY ADDING SECTION 38-77-596 SO
AS TO PROVIDE THAT, NOTWITHSTANDING SECTION
38-77-590, UPON NOTIFICATION TO THE GOVERNING
BOARD OF THE REINSURANCE FACILITY, DESIGNATED
PRODUCERS MAY CONTRACT WITH A VOLUNTARY
MARKET OUTLET FOR ANY TYPE OF AUTOMOBILE
INSURANCE CEDEABLE TO THE FACILITY; TO AMEND
SECTION 38-77-950, AS AMENDED, RELATING TO
UNREASONABLE OR EXCESSIVE USE OF THE
REINSURANCE FACILITY BY AN INSURER, SO AS TO
DELETE CERTAIN PROVISIONS, PROVIDE THAT AN
AUTOMOBILE INSURER OR A GROUP OF INSURERS
UNDER THE SAME MANAGEMENT MAY CEDE UP TO, AND
INCLUDING, ONE HUNDRED PERCENT OF TOTAL DIRECT
CEDEABLE WRITTEN PREMIUMS ON SOUTH CAROLINA
AUTOMOBILE INSURANCE AS REPORTED IN THE MOST
RECENTLY FILED ANNUAL STATEMENT OF THE INSURER
OR GROUP, PROVIDE THAT A PRIMA FACIE CASE OF
EXCESSIVE OR UNREASONABLE UTILIZATION IS
ESTABLISHED UPON A SHOWING THAT AN AUTOMOBILE
INSURER OR A GROUP OF INSURERS UNDER THE SAME
MANAGEMENT HAS CEDED OR IS ABOUT TO CEDE MORE
THAN FIFTY PERCENT, RATHER THAN THIRTY-FIVE
PERCENT, OF TOTAL DIRECT CEDEABLE WRITTEN
PREMIUMS ON SOUTH CAROLINA AUTOMOBILE
INSURANCE AS REPORTED IN THE MOST RECENTLY
FILED ANNUAL STATEMENT OF THE INSURER OR GROUP,
PROVIDE THAT A PRIMA FACIE CASE OF EXCESSIVE OR
UNREASONABLE UTILIZATION OF THE FACILITY IS
ESTABLISHED UPON A SHOWING THAT AN AUTOMOBILE
INSURANCE INSURER OR A GROUP OF INSURERS UNDER
THE SAME MANAGEMENT HAS CEDED OR IS ABOUT TO
CEDE MORE THAN SIXTY-FIVE PERCENT, RATHER THAN
THIRTY-FIVE PERCENT, OF TOTAL DIRECT CEDEABLE
WRITTEN PREMIUMS ON SOUTH CAROLINA AUTOMOBILE
INSURANCE AS REPORTED IN THE MOST RECENTLY
FILED ANNUAL STATEMENT OF THE INSURER OR GROUP,
PROVIDE THAT A PRIMA FACIE CASE OF EXCESSIVE OR
UNREASONABLE UTILIZATION IS ESTABLISHED UPON A
SHOWING THAT AN AUTOMOBILE INSURANCE INSURER
OR A GROUP OF INSURERS UNDER THE SAME
MANAGEMENT HAS CEDED OR IS ABOUT TO CEDE MORE
THAN EIGHTY PERCENT, RATHER THAN THIRTY-FIVE
PERCENT, OF TOTAL DIRECT CEDEABLE WRITTEN
PREMIUMS ON SOUTH CAROLINA AUTOMOBILE
INSURANCE AS REPORTED IN THE MOST RECENTLY
FILED ANNUAL STATEMENT OF THE INSURER OR GROUP,
AND PROVIDE FOR VARYING EFFECTIVE DATES FOR THE
ABOVE CHANGES TO THE PROVISIONS OF SECTION
38-77-950; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-73-458 SO AS TO PROVIDE, AMONG OTHER
THINGS THAT INSURERS OF PRIVATE PASSENGER
AUTOMOBILE INSURANCE AND INDIVIDUAL MEMBERS
OF RATING ORGANIZATIONS MAY ELECT TO FILE
PRIVATE PASSENGER AUTOMOBILE INSURANCE RATES
OR PREMIUM CHARGES UNDER THE "INDEX FILE
AND USE" RATING METHODOLOGY; TO REQUIRE
ALL INSURERS SUBJECT TO SECTION 38-77-280 TO
SUBMIT RATE FILINGS TO THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE WITHIN TWELVE MONTHS
FOLLOWING THE EFFECTIVE DATE OF THIS ACT, AND
PROVIDE THAT THESE FILINGS MUST REFLECT THE RATE
DECREASES, IF ANY, ATTRIBUTABLE TO THE PASSAGE
OF THIS ACT; AND TO PROVIDE THAT IF ANY PROVISION
OF THIS ACT OR THE APPLICATION THEREOF TO ANY
PERSON OR CIRCUMSTANCE IS HELD TO BE
UNCONSTITUTIONAL OR OTHERWISE INVALID, THE
REMAINDER OF THIS ACT AND THE APPLICATION OF
SUCH PROVISION TO OTHER PERSONS OR
CIRCUMSTANCES ARE NOT AFFECTED, AND THAT IT IS
TO BE CONCLUSIVELY PRESUMED THAT THE GENERAL
ASSEMBLY WOULD HAVE ENACTED THE REMAINDER OF
THIS ACT WITHOUT THE INVALID OR
UNCONSTITUTIONAL PROVISION.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. (A) Section 38-73-1425 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1425. Beginning January 1, 1996, and
annually thereafter, The the final rate or
premium charge for a private passenger automobile insurance risk
ceded to the facility which does not qualify for the safe driver
discount in Section 38-73-760(e) is the final rate or
premium charge required by Section 38-73-1420 or the final rate or
premium charge approved for use by the insurer, whichever is
greater must be calculated so that the projected combined
ratio for risks subject to the final rate or premium charges is no
more than one hundred percent. The final rate or premium charge
must be filed by the Reinsurance Facility with the director for
approval. Furthermore, in calculating the final rate or premium
charge, it must be based upon the combined ratio of all insurers
ceding private passenger automobile insurance risks to the
facility."
(B) The provisions of Section 38-73-1425, as amended by
Section 1(A) of this act, are effective on January 1, 1996. This rate
adjustment to a projected combined ratio of one-hundred percent or
less must occur evenly over a two-year period beginning on January
1, 1996. On January 1, 1996, the first year of the two-year period
begins for the rate adjustment and the two equal portions of this
rate adjustment shall be based upon the losses or combined ratios
reported by the facility on or about October 1, 1995. On January 1,
1997, the beginning of the last year of the two-period, the final rate
or premium charge for a private passenger automobile insurance
risk ceded to the facility shall include the remaining portion of the
rate adjustment along with, but not limited to, those adjustments, if
any, for losses or combined ratios reported by the facility after
October 1, 1995.
SECTION 2. Section 38-73-1420 of the 1976 Code, as added by
Act 148 of 1989 and amended by Section 783 of Act 181 of 1993,
is further amended to read:
"Section 38-73-1420. After June 30, 1989
1995, and annually thereafter, the Board of
Governors of the South Carolina Reinsurance Facility shall
authorize a licensed rating organization approved by the director
to file with the director an expense component for
private passenger automobile insurance rate or premium charges
and after the rating organization with the largest number
of members or subscribers has filed a pure loss component for
private passenger automobile insurance written by those
automobile insurers designated pursuant to Section 38-77-590(a),
for risks written by them through producers designated pursuant to
that same section with the director or his designee.
Upon the approval of such component the
components by the director or his designee, those
automobile insurers designated pursuant to Section
38-77-590(A)(a), for risks written by them through
producers designated pursuant to that same section, shall utilize
these final rate or premium charges, provided that the final rate
or premium charges must be discounted from the actuarially
indicated rates so that the projected combined ratio for risks subject
to the final rate or premium charges is one hundred fifteen percent.
This rate adjustment must occur evenly over a four-year period.
Pursuant to Section 38-77-610, Reinsurance Facility recoupment
charges must be reduced to the extent of resulting reductions in
facility operating losses. Automobile insurers designated
pursuant to Section 38-77-590(A)(a) are not
required to use those same final rates or premium charges for risks
written through their agents not appointed pursuant to Section
38-77-590.
The cost reductions realized in operating results of the
Reinsurance Facility attributable to Act 186 of 1993 must be
applied exclusively to reduce the recoupment charges on all policies
of private passenger automobile insurance written in the State of
South Carolina."
SECTION 3. Section 38-73-455(C) of the 1976 Code, as last
amended by Act 113 of 1991, is further amended to read:
"(C) Member companies of an affiliated group of
automobile insurers may not utilize different filed rates for
automobile insurance coverages which they are mandated by law to
write in accordance with rating plans filed with and approved
by the director. These rating plans may provide for different rates
and rating plans among affiliated companies. The director shall
approve the rating plans if the rates are not excessive, inadequate,
or unfairly discriminatory. For the purpose of this section, an
affiliated group of automobile insurers includes a group of
automobile insurers under common ownership, management, or
control. Each member of a group of affiliated insurers shall not
be considered a separate insurer for purposes of compliance with
the laws governing the writing, cancellation, or renewal of an
automobile insurance policy. Therefore, if one company which is a
member of a group of affiliated companies refuses to write, cancels,
or refuses to renew a policy but, at the same time, offers to arrange
insurance for the applicant or insured with another member of the
same group, there has not been a refusal to write, a cancellation, or
a refusal to renew by the first company. However, no insurer shall
take such action unless it does so on the basis of underwriting
guidelines filed with the director. The movement of a policy from
one company to another within a group of affiliated companies
resulting in a different rate for the insured may only occur on the
renewal date of the policy. Those automobile insurers
designated pursuant to Section 38-77-590(a), for automobile
insurance risks written by them through producers designated by the
facility governing board pursuant to that section, shall utilize the
rates or premium charges developed under Section 38-73-1420
or the rates and premium charges by coverage filed and
authorized for use by the rating organization licensed by the
commissioner pursuant to Article 11, Chapter 73 of this title, which
has the largest number of members or subscribers for automobile
insurance rates, whichever is greater. However, those
automobile insurers designated pursuant to Section 38-77-590(a) are
not required to use those same rates or premium charges described
in the preceding sentence for risks written by them through their
authorized agents not appointed pursuant to Section
38-77-590."
SECTION 4. Section 38-77-280 of the 1976 Code, as last
amended by Section 810 of Act 181 of 1993, is further amended to
read:
"Section 38-77-280. (A) Except as provided in subsection
(B), all automobile insurers, including those insurance companies
writing private passenger physical damage coverages only,
shall may make collision coverage and either
comprehensive or fire, theft, and combined additional coverage
available to an insured or qualified applicant who requests the
coverage.
If collision coverage is offered or provided, it
must have a mandatory deductible of two hundred fifty dollars, but
an insured or qualified applicant, at his option, may select an
additional deductible in appropriate increments up to one thousand
dollars.
If comprehensive coverage or fire, theft, and combined
additional coverages are offered or provided, they must
have a mandatory deductible of two hundred fifty dollars, but an
insured, at his option, may select an additional deductible in
appropriate increments up to one thousand dollars. This deductible
does not apply to auto safety glass. It is an unfair trade practice, as
described in Sections 38-57-30 and 38-57-40, for an insurer or an
agent to sell collision insurance, comprehensive coverage, or fire,
theft, and combined additional coverages unless the insured is
notified at the time of application of the savings which may be
realized if the applicant or the insured selects a higher deductible.
This notice is required only at the time of the initial sale and must
be in a form approved by the director or his designee. An insurer
may offer insureds lower deductibles at the insurer's option.
(B) Notwithstanding subsection (A) and Sections 38-77-110
and 38-77-920, automobile insurers may refuse to write automobile
physical damage insurance coverage, including automobile
comprehensive physical damage, collision, fire, theft, and combined
additional coverage, for an applicant or existing policyholder, on
renewal, for a motor vehicle customarily operated by an individual,
either the named insured or another operator not excluded in
accordance with Section 38-77-340 and who resides in the same
household, where one or more of the conditions or factors
prescribed in Section 38-73-455 exist. In addition, automobile
insurers may refuse to write physical damage insurance coverage to
an applicant or existing policyholder, on renewal, who has collected
benefits provided under automobile insurance physical damage
coverage during the thirty-six months immediately preceding the
effective date of coverage, for two or more total fire losses or two
or more total theft losses. Automobile insurers may refuse to write
for private passenger automobiles physical damage insurance
coverage, including automobile comprehensive physical damage,
collision, fire, theft, and combined additional coverage, for an
applicant or existing policyholder, on renewal, for a motor vehicle
customarily operated by an individual, either the named insured or
another operator not excluded in accordance with Section 38-77-340
and who resides in the same household, which does not qualify for
the safe driver discount in Section 38-73-760(e). All
insurers subject to the provisions of this section writing single
interest collision coverage shall provide an applicant for the
insurance at the time of his application a notice separate and apart
from any other form used in the application. The notice must be
signed by the applicant evidencing his acknowledgment of having
read the notice. This notice must contain the following language
printed in bold-face type:
`NOTICE: THE INSURANCE COVERAGE YOU ARE
HEREBY PURCHASING IS ONLY SINGLE INTEREST
COLLISION COVERAGE. THE AMOUNT OF INSURANCE
DECREASES AS YOU PAY OFF THE AMOUNT OF YOUR
INDEBTEDNESS. YOU MAY NOT RECEIVE ANY
INSURANCE PROCEEDS OVER AND ABOVE THE
AMOUNT OF THE OUTSTANDING BALANCE ON YOUR
LOAN.'
(C) Notwithstanding Section 38-77-110, automobile physical
damage coverage in an automobile insurance policy may be
canceled at any time during the policy period by reason of the
factors or conditions described in Section 38-73-455(A) or
Section 38-77-280(B) which existed before the commencement
of the policy period and which were not disclosed to the insurer at
the commencement of the policy period.
(D) No policy of insurance which provides automobile
physical damage coverage only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for
physical damage insurance coverages different than
from those provided for in Section 38-73-457 if the rates
are filed with the department and approved by the director or his
designee. Any applicant or existing policyholder, to be charged
this different rate, must be denied the coverage pursuant to
subsection (B) at the rate provided in Section 38-73-457.
(F) A carrier may not cede collision coverage, comprehensive
coverage, or fire, theft, and combined additional coverages with a
deductible of less than two hundred fifty dollars. An insured or
qualified applicant may select an additional deductible in
appropriate increments up to one thousand dollars. However, the
mandatory deductible does not apply to safety glass. In
determining the premium rates to be charged on automobile
insurance, it is unlawful to consider race, color, creed, religion,
national origin, ancestry, residence, economic status, or income
level. Nothing herein shall prevent the use of any territorial or
county boundaries approved by the Department of Insurance. If the
Director of the Department of Insurance, or his designee, finds that
the insurer is participating in a pattern of discriminatory practices,
the director, or his designee, may impose a fine on the insurer of up
to two hundred thousand dollars.
(G) The Director of the Department of Insurance shall
compile a comparative statistical analysis of the persons for whom
physical damage coverages are written and of the persons for whom
physical damage coverages are denied indicating the data for the
following categories: race; sex; occupation; range of income levels;
and geographical territory. This report must be furnished on an
annual basis to the General Assembly. The comparative statistical
analysis shall be applicable to new policies written or new requested
policies by these persons and not applicable to renewal policies or
policy changes.
(H) The Director of the Department of Insurance shall
compile a comparative statistical analysis of the complaints received
by, or filed with, the department from persons alleging
discrimination when the person is denied physical damage
coverages by an insurer. This report must be furnished on an
annual basis to the General Assembly and it may include, but is not
limited to, data for the following categories: race; sex; occupation;
range of income levels; and geographical territory.
(I) For the purposes of this section, `single interest collision
coverage' refers to an automobile insurance policy used in
connection with an automobile sold on the installment plan or
financed by a lender. It solely protects the outstanding balance due
to the creditor or lender advancing money to the borrower to
purchase the automobile."
SECTION 5. The 1976 Code is amended by adding:
"Section 38-77-596. Notwithstanding Section 38-77-590,
upon notification to the governing board, designated producers may
contract with a voluntary market outlet for any type of automobile
insurance cedeable to the facility. Upon the effective date of such a
contract, the designated producer may no longer write new business
with a designated carrier. The producer is permitted to retain all
existing policies in the facility until such time as these policies
lapse, cancel, nonrenew, or cease to remain in effect for any reason.
For the purposes of this section, vehicles written as an addition to a
multi-car policy in the facility do not constitute `new
business'."
SECTION 6. (A) Section 38-77-950 of the 1976 Code, as last
amended by Act 104 of 1993 and by Section 828 of Act 181 of
1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the
facility must not be excessively nor unreasonably utilized by
automobile insurers for unfairly competitive purposes or for
purposes of unfairly discriminating against certain classes or types
of automobile insurance risks having the same or similar objective
risk characteristics as other risks in the same class under the rating
plan for the classification of risks promulgated by the department,
nor for the purpose of discriminating against the risks or risks in
certain rating territories. The director or his designee shall prohibit
unreasonable or excessive utilization of the facility. A prima facie
case of excessive or unreasonable utilization is established upon a
showing that an automobile insurance insurer or a group of insurers
under the same management has ceded or is about to cede more
than thirty-five fifty percent of total direct cedeable
written premiums on South Carolina automobile insurance as
reported in the most recently filed annual statement of the insurer or
group. Upon the written request of the policyholder, insurance
companies doing business in this State shall give written notice to
the policyholder informing him whether or not he and a driver
under the policy is in the facility. Insurers shall give written notice
to the policyholder of a risk ceded to the facility which does not
qualify for the safe driver discount in Section 38-73-760(e).
Total direct cedeable written premiums as used in this section do
not include premiums attributable to risks ceded to the facility that
do not qualify for the safe driver discount in Section 38-73-760(e)
for twenty-four months following October 1, 1993."
(B) The provisions of Section 38-77-950, as amended by Section
6(A) of this act, are effective on January 1, 1998.
SECTION 7. (A) Section 38-77-950 of the 1976 Code, as last
amended by Act 104 of 1993 and by Section 828 of Act 181 of
1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the
facility must not be excessively nor unreasonably utilized by
automobile insurers for unfairly competitive purposes or for
purposes of unfairly discriminating against certain classes or types
of automobile insurance risks having the same or similar objective
risk characteristics as other risks in the same class under the rating
plan for the classification of risks promulgated by the department,
nor for the purpose of discriminating against the risks or risks in
certain rating territories. The director or his designee shall prohibit
unreasonable or excessive utilization of the facility. A prima facie
case of excessive or unreasonable utilization is established upon a
showing that an automobile insurance insurer or a group of insurers
under the same management has ceded or is about to cede more
than thirty-five sixty-five percent of total direct
cedeable written premiums on South Carolina automobile insurance
as reported in the most recently filed annual statement of the insurer
or group. Upon the written request of the policyholder, insurance
companies doing business in this State shall give written notice to
the policyholder informing him whether or not he and a driver
under the policy is in the facility. Insurers shall give written notice
to the policyholder of a risk ceded to the facility which does not
qualify for the safe driver discount in Section 38-73-760(e).
Total direct cedeable written premiums as used in this section do
not include premiums attributable to risks ceded to the facility that
do not qualify for the safe driver discount in Section 38-73-760(e)
for twenty-four months following October 1, 1993."
(B) The provisions of Section 38-77-950, as amended by Section
7(A) of this act, are effective on January 1, 1999.
SECTION 8. (A) Section 38-77-950 of the 1976 Code, as last
amended by Act 104 of 1993 and by Section 828 of Act 181 of
1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the
facility must not be excessively nor unreasonably utilized by
automobile insurers for unfairly competitive purposes or for
purposes of unfairly discriminating against certain classes or types
of automobile insurance risks having the same or similar objective
risk characteristics as other risks in the same class under the rating
plan for the classification of risks promulgated by the department,
nor for the purpose of discriminating against the risks or risks in
certain rating territories. The director or his designee shall prohibit
unreasonable or excessive utilization of the facility. A prima facie
case of excessive or unreasonable utilization is established upon a
showing that an automobile insurance insurer or a group of insurers
under the same management has ceded or is about to cede more
than thirty-five eighty percent of total direct
cedeable written premiums on South Carolina automobile insurance
as reported in the most recently filed annual statement of the insurer
or group. Upon the written request of the policyholder, insurance
companies doing business in this State shall give written notice to
the policyholder informing him whether or not he and a driver
under the policy is in the facility. Insurers shall give written notice
to the policyholder of a risk ceded to the facility which does not
qualify for the safe driver discount in Section 38-73-760(e).
Total direct cedeable written premiums as used in this section do
not include premiums attributable to risks ceded to the facility that
do not qualify for the safe driver discount in Section 38-73-760(e)
for twenty-four months following October 1, 1993."
(B) The provisions of Section 38-77-950, as amended by Section
8(A) of this act, are effective on January 1, 2000.
SECTION 9. (A) Section 38-77-950 of the 1976 Code, as last
amended by Act 104 of 1993 and by Section 828 of Act 181 of
1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that
the facility must not be excessively nor unreasonably utilized by
automobile insurers for unfairly competitive purposes or for
purposes of unfairly discriminating against certain classes or types
of automobile insurance risks having the same or similar objective
risk characteristics as other risks in the same class under the rating
plan for the classification of risks promulgated by the department,
nor for the purpose of discriminating against the risks or risks in
certain rating territories. The director or his designee shall prohibit
unreasonable or excessive utilization of the facility. A prima facie
case of excessive or unreasonable utilization is established upon a
showing that an automobile insurance insurer or a group of insurers
under the same management has ceded or is about to cede more
than thirty-five percent of total direct cedeable written premiums on
South Carolina automobile insurance as reported in the most
recently filed annual statement of the insurer or group. An
automobile insurance insurer or a group of insurers under the same
management may cede up to, and including, one hundred percent of
total direct cedeable written premiums on South Carolina
automobile insurance as reported in the most recently filed annual
statement of the insurer or group. Upon the written request of
the policyholder, insurance companies doing business in this State
shall give written notice to the policyholder informing him whether
or not he and a driver under the policy is in the facility. Insurers
shall give written notice to the policyholder of a risk ceded to the
facility which does not qualify for the safe driver discount in
Section 38-73-760(e).
Total direct cedeable written premiums as used in this section do
not include premiums attributable to risks ceded to the facility that
do not qualify for the safe driver discount in Section 38-73-760(e)
for twenty-four months following October 1, 1993."
(B) The provisions of Section 38-77-950, as amended by Section
9(A) of this act, are effective on January 1, 2001.
SECTION 10. The 1976 Code is amended by adding:
"Section 38-73-458. (A) Notwithstanding any other
provision of law, insurers of private passenger automobile insurance
and individual members of rating organizations may elect to file
private passenger automobile insurance rates or premium charges
under the `Index File and Use' rating methodology described in this
section.
(B) At least sixty days before their effective dates insurers of
private passenger automobile insurance shall file with the Director
of the Department of Insurance, or his designee, and the Consumer
Advocate proposed rates or premium charges and certify under oath
that the average of the overall change in the proposed rates or
premium charges for all classes, all territories, and all coverages is
equal to or less than the average annual change, for the previous
twelve-months, of the Consumer Price Index Medical Care
published by the United States Department of Labor, Monthly
Labor Review Gross Weekly Earnings published by the United
States Department of Labor, and Producer Price Index Motor
Vehicles and Equipment published by the United States Department
of Labor. Included in each filing also must be exhibits showing
what each change would be using the same twelve-months
Consumer Price Index published by the United States Department
of Labor. In addition, for each filing under this section, the insurer
shall file the rate report, with investment income and expense
exhibits, set forth in Section 38-73-465 of the 1976 Code.
(C) Filings meeting the requirements of this section are
considered approved after being on file at the Department of
Insurance for sixty days. However, insurers of private passenger
automobile insurance may elect only to file under the `Index File
and Use' rating methodology one time during a consecutive
six-month period, and the medical, labor, and motor vehicles and
equipment index in subsection (B) must be annualized
appropriately.
(D) If the Director of the Department of Insurance, or his
designee, finds that the filed proposed rates do not meet the
requirements of this section he may hold an expedited hearing on
the matter that need not meet the requirements of Chapter 23, Title
1, the Administrative Procedures Act. As a result of this hearing,
the commissioner may order the return of the filings to insurers for
failing to meet the requirements of this section.
(E) If the Director of the Department of Insurance, or his
designee, finds that the rates considered approved produce excess
profits described in Section 38-73-1100, he shall hold a hearing on
the matter in accordance with Section 38-73-1020. As a result of
this hearing, the Director of the Department of Insurance, or his
designee, may order a reduction in the rates previously considered
approved and order rebates as prescribed in Section 38-73-465 of
the 1976 Code. However, the amount of rates subject to rebate
must be no more than the difference between the filed rates as
approved and what they would have been using only the Consumer
Price Index referenced in this section."
SECTION 11. All insurers subject to the provisions of Section
38-77-280 of the 1976 Code shall submit rate filings to the Director
of the Department of Insurance within twelve months following the
effective date of this act. These filings must reflect the rate
decreases, if any, attributable to the passage of this act.
SECTION 12. If any provision of the act or the application
thereof to any person or circumstance is held to be unconstitutional
or otherwise invalid, the remainder of this act and the application of
such provision to other persons or circumstances are not affected
thereby, and it is to be conclusively presumed that the legislature
would have enacted the remainder of this act without such invalid
or unconstitutional provision.
SECTION 13. Except as otherwise specifically provided herein,
this act takes effect upon approval by the Governor.
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