S 453 Session 112 (1997-1998)
S 0453 General Bill, By McConnell
A BILL TO AMEND SECTIONS 38-3-150, 38-3-170, 38-3-190, 38-3-210, 38-5-140,
38-13-20, 38-19-825, 38-21-90, 38-21-125, 38-25-160, 38-26-40, 38-27-60,
38-27-80, 38-27-520, 38-29-90, 38-29-100, 38-31-70, 38-31-80, 38-31-170,
38-33-80, 38-33-200, 38-33-210, 38-33-230, 38-39-30, 38-39-40, 38-39-60,
38-41-110, 38-43-100, 38-43-130, 38-44-70, 38-45-140, 38-46-110, 38-47-70,
38-51-20, 38-53-160, 38-57-200, 38-57-210, 38-57-230, 38-59-30, 38-61-20,
38-70-40, 38-71-310, 38-71-510, 38-71-720, 38-71-940, ALL AS AMENDED, SECTIONS
38-71-1330, 38-71-1360, 38-71-1380, 38-71-1390, 38-71-1410, 38-71-1420,
38-71-1430, SECTIONS 38-73-120, 38-73-130, 38-73-457, 38-73-465, 38-73-750,
ALL AS AMENDED, SECTION 38-73-775, SECTIONS 38-73-910, 38-73-915, 38-73-990,
38-73-1000, 38-73-1010, 38-73-1020, 38-73-1030, 38-73-1080, 38-73-1090, ALL AS
AMENDED, SECTION 38-73-1095, SECTIONS 38-73-1100, 38-73-1240, 38-73-1260,
38-73-1270, 38-73-1320, 38-73-1340, 38-73-1350, 38-73-1370, 38-73-1380,
38-73-1420, 38-73-1430, 38-73-1530, 38-73-1720, 38-74-20, 38-75-370,
38-75-410, 38-75-980, 38-77-115, 38-77-580, 38-77-610, 38-79-140, 38-79-230,
38-81-250, 38-81-340, 38-83-40, 38-83-130 AND 38-89-40, ALL AS AMENDED, CODE
OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURANCE, SO AS TO, AMONG OTHER
THINGS, CLARIFY THE JURISDICTIONS OF THE DIRECTOR OF THE DEPARTMENT OF
INSURANCE AND THE ADMINISTRATIVE LAW JUDGE DIVISION IN THE CONDUCT OF
ADMINISTRATIVE HEARINGS AND CORRECT REFERENCES TO THE FORMER OFFICE OF CHIEF
INSURANCE COMMISSIONER.
03/04/97 Senate Introduced and read first time SJ-7
03/04/97 Senate Referred to Committee on Banking and Insurance SJ-7
03/20/97 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-14
03/25/97 Senate Recommitted to Committee on Banking and Insurance SJ-17
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
March 20, 1997
S. 453
Introduced by Senator McConnell
S. Printed 3/20/97--S.
Read the first time March 4, 1997.
THE COMMITTEE ON BANKING AND
INSURANCE
To whom was referred a Bill (S. 453), to amend Sections 38-3-150,
38-3-170, 38-3-190, 38-3-210, 38-5-140, 38-13-20, 38-19-825,
38-21-90, 38-21-125, 38-25-160, 38-26-40, etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking Section 40, page 18,
in its entirety and renumbering the remaining sections to conform.
Amend title to conform.
EDWARD E. SALEEBY, for Committee.
A BILL
TO AMEND SECTIONS 38-3-150, 38-3-170, 38-3-190, 38-3-210,
38-5-140, 38-13-20, 38-19-825, 38-21-90, 38-21-125, 38-25-160,
38-26-40, 38-27-60, 38-27-80, 38-27-520, 38-29-90, 38-29-100,
38-31-70, 38-31-80, 38-31-170, 38-33-80, 38-33-200, 38-33-210,
38-33-230, 38-39-30, 38-39-40, 38-39-60, 38-41-110, 38-43-100,
38-43-130, 38-44-70, 38-45-140, 38-46-110, 38-47-70, 38-51-20,
38-53-160, 38-57-200, 38-57-210, 38-57-230, 38-59-30, 38-61-20,
38-70-40, 38-71-310, 38-71-510, 38-71-720, 38-71-940, ALL AS
AMENDED, SECTIONS 38-71-1330, 38-71-1360, 38-71-1380,
38-71-1390, 38-71-1410, 38-71-1420, 38-71-1430, SECTIONS
38-73-120, 38-73-130, 38-73-457, 38-73-465, 38-73-750, ALL AS
AMENDED, SECTION 38-73-775, SECTIONS 38-73-910,
38-73-915, 38-73-990, 38-73-1000, 38-73-1010, 38-73-1020,
38-73-1030, 38-73-1080, 38-73-1090, ALL AS AMENDED,
SECTION 38-73-1095, SECTIONS 38-73-1100, 38-73-1240,
38-73-1260, 38-73-1270, 38-73-1320, 38-73-1340, 38-73-1350,
38-73-1370, 38-73-1380, 38-73-1420, 38-73-1430, 38-73-1530,
38-73-1720, 38-74-20, 38-75-370, 38-75-410, 38-75-980, 38-77-115,
38-77-580, 38-77-610, 38-79-140, 38-79-230, 38-81-250, 38-81-340,
38-83-40, 38-83-130 and 38-89-40, ALL AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO
INSURANCE, SO AS TO, AMONG OTHER THINGS, CLARIFY
THE JURISDICTIONS OF THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE AND THE ADMINISTRATIVE
LAW JUDGE DIVISION IN THE CONDUCT OF
ADMINISTRATIVE HEARINGS AND CORRECT REFERENCES
TO THE FORMER OFFICE OF CHIEF INSURANCE
COMMISSIONER.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 38-3-150 of the 1976 Code, as last amended
by Section 532 of Act 181 of 1993, is further amended to read:
"Section 38-3-150. All examinations or investigations provided
by this title, unless otherwise provided by any other insurance laws
of this State, may be conducted by the director or by one or more of
his duly authorized assistants or agents. All hearings must be held
by the director or by one of his duly authorized assistants or agents
when authorized to do so in writing by the director. However, in any
hearing concerning the adjustment of insurance rates the director or
his designee may conduct the hearing."
SECTION 2. Section 38-3-170 of the 1976 Code, as last amended
by Section 532 of Act 181 of 1993, is further amended to read:
"Section 38-3-170. All de novo, contested case hearings
provided by this title, unless otherwise specifically provided,
must be held by the Administrative Law Judge Division at
the time and place designated in a written notice given by the
director or his designee Administrative Law Judge
Division in accordance with the rules of that agency to the
person cited to appear at least thirty days before the designated date.
The notice shall must state the subject of the inquiry
and specific charges, if any. It is sufficient to give notice either by
delivering it to the person or by depositing it in the United States
mail, postage prepaid, addressed to the last known address of the
person and registered with return receipt requested. The
administrative law judge conducting a de novo, contested case
hearing has the authority and discretion otherwise given to the
director to impose any penalty in this title. The actual cost to the
Administrative Law Judge Division and the Department of Insurance
in connection with any hearing may be charged by the Administrative
Law Judge Division to the parties requesting the hearing in any
proportion he considers proper and must be immediately paid by the
respective parties. If not paid within thirty days, the costs may be
entered and enforced as a judgment in any county circuit court having
jurisdiction over the parties requesting the hearing. The costs
obtained by the Department of Insurance must be retained by it and
are considered 'other funds'."
SECTION 3. Section 38-3-190 of the 1976 Code, as last amended
by Section 532 of Act 181 of 1993, is further amended to read:
"Section 38-3-190. Any person summoned by the Insurance
Department to testify as a witness at any hearing must be paid for
his actual mileage at the same rate as provided by law for state
departments or divisions."
SECTION 4. Section 38-3-210 of the 1976 Code, as last amended
by Section 532 of Act 181 of 1993, is further amended to read:
"Section 38-3-210. Any order or decision made, issued, or
executed by the director or his designee as a result of a
hearing is subject to judicial appellate review
by the circuit court of Richland County in accordance
with the appellate procedures of the South Carolina Administrative
Law Judge Division, as provided by law. An appeal from an
order or decision under this section must be heard in the
Administrative Law Judge Division, as provided by law. The
administrative law circuit court judge or
judges may not, under any terms, order a stay of enforcement of
any order of the director or his designee to make good an impairment
of capital or surplus or a deficiency in the amount of admitted assets.
The actual cost to the Department of Insurance in connection
with the appeal may be charged by the circuit court judge to the
parties making the appeal in any proportion he considers proper and
must be immediately paid by the respective parties. The costs
obtained by the Department of Insurance must be retained by it and
are considered 'other funds'."
SECTION 5. Section 38-5-140 of the 1976 Code, as last amended
by Section 533 of Act 181 of 1993, is further amended to read:
"Section 38-5-140. Unless the grounds for revocation relate only
to the financial condition or soundness of the insurer or to a
deficiency in its assets, the director or his designee shall
must notify the insurer not less than thirty days before
revoking its authority to do business in this State and he must specify
in the notice the particulars of the alleged violation of the law or its
charter or grounds for revocation and a proper opportunity must be
offered the insurer to be heard by the director or his
designee. An insurer may appeal the decision or order of the
director or his designee in accordance with Section 38-3-210."
SECTION 6. Section 38-13-20(D) of the 1976 Code, as last
amended by Act 497 of 1994, is further amended to read:
"(D) When making an examination under Section 38-13-10, the
director or his designee may retain attorneys, appraisers, independent
actuaries, independent certified public accountants, or other
professionals and specialists as examiners. The cost of the
retainment must be borne by the insurer which is the subject of the
examination together with the expenses of the director or his designee
and the expenses and compensation of the director's assistants. If a
domestic insurer has less than one million dollars total capital and
surplus as of December 31, 1993, and thereafter, then it must not be
assessed the actual examination costs but shall must
instead pay in accordance with the examination fee schedule in effect
as of July 1, 1993. If an insurer determines that its examination fees
have not been assessed as provided in this section or that the fees
assessed are unreasonable in relation to the examination performed,
the insurer may appeal have the assessments to
the administrative law judge division reviewed pursuant to
Section 38-3-170. Examination fees must be retained by the
department and are considered 'other funds'."
SECTION 7. Section 38-19-825(A) of the 1976 Code, as last
amended by Section 560 of Act 181 of 1993, is further amended to
read:
"(A) A mutual insurer may engage in any of the transactions
specified in Section 38-19-815 under such reasonable plan and
procedure as approved by the director or his designee after he has
held a public hearing on the matter. The director or his
designee must give notice of the hearing must be
given to those persons who were members, directors or trustees,
officers, and employees of the mutual insurer on the date the plan
was filed with the department. Notice may be given to any other
person at the discretion of the director or his designee. All of these
persons have the right to appear and be heard at the hearing."
SECTION 8. Section 38-21-90(A) of the 1976 Code, as last
amended by Section 567 of Act 181 of 1993, is further amended to
read:
"(A) The director or his designee shall must
approve a merger or other acquisition of control in Section 38-21-60
unless, after holding a public hearing, he finds that:
(1) After the change of control the domestic insurer referred to
in Section 38-21-60 is not able to satisfy the requirements for the
issuance of a license to write the line or lines of insurance for which
it is presently licensed.
(2) The effect of the merger or other acquisition of control
would substantially lessen competition in insurance in this State or
tend to create a monopoly. In applying the competitive standard in
this item:
(a) The information requirements and standards of Section
38-21-125(C) and (D) apply.
(b) The merger or other acquisition must not be approved if
the director or his designee finds that at least one of the situations in
Section 38-21-125(D) exists.
(c) The director or his designee may condition the approval
of the merger or other acquisition on the removal of the basis of
disapproval within a specified period of time.
(3) The financial condition of the acquiring party might
jeopardize the financial stability of the insurer or prejudice the
interest of its policyholders.
(4) The plans or proposals which the acquiring party has to
liquidate the insurer, sell its assets, or consolidate or merge it with a
person or to make another material change in its business or
corporate structure or management are unfair and unreasonable to
policyholders of the insurer and not in the public interest.
(5) The competence, experience, and integrity of those persons
who would control the operation of the insurer are such that it is not
in the interest of policyholders of the insurer and of the public to
permit the merger or other acquisition of control.
(6) The acquisition is likely to be hazardous or prejudicial to the
insurance-buying public."
SECTION 9. Section 38-21-125 (E) (1) (b) (i) of the 1976 Code,
as amended by Section 571 of Act 181 of 1993, is further amended
to read:
"(i) There is The director or his designee has
conducted a hearing."
SECTION 10. Section 38-25-160 of the 1976 Code, as last amended
by Section 601 of Act 181 of 1993, is further amended to read:
"Section 38-25-160. The director or his designee may, by
regulation of the department or by his order, exempt from all or any
provisions of this chapter an insurer or other organization not formed
or operating for profit which affords life insurance or annuities to
nonprofit educational and scientific institutions and their staff
members in this State. However, in affording this exemption the
director or his designee shall must require the insurer
or other organization to appoint the director as agent for service of
process. The director or his designee may require the insurer or
other organization to file with the department, as information, policy
forms, annual statements, and financial and other similar material.
The director or his designee may, after giving due notice and
conducting a hearing, discontinue the exemption for any
reason which would have, if then existing or known, justified his
refusal to afford the exemption when it was granted."
SECTION 11. Section 38-26-40(D) of the 1976 Code, as last
amended by Section 608 of Act 181 of 1993, is further amended to
read:
"(D) If it is determined the director or his designee
determines after notice and hearing that the conditions giving
rise to the supervision still exist at the end of the supervision period,
the director or his designee may extend the period or may initiate
proceedings under Chapter 27 of this title."
SECTION 12. The first paragraph of Section 38-27-60 of the 1976
Code, as last amended by Section 609 of Act 181 of 1993, is
designated as subsection (a) and is further amended to read:
"(a) Except as provided in this subsection, no
delinquency proceeding may be commenced under this chapter by
anyone other than the director or his designee and no court has
jurisdiction to entertain, hear, or determine any proceeding
commenced by any other person. However, the court may consider
the application for receivership of a person other than the director or
his designee if the applicant for receivership has proceeded as
follows:
(1) The applicant for receivership, before presenting his
complaint or petition to the court for action thereon, presents a copy
thereof to the department at least thirty days in advance for
action thereon, as hereinafter set forth, and gives reasonable notice to
the insurance company to be affected that a copy has been lodged
with the department.
(2) The insurance company affected thereby has ten days after
the service of the notice within which to lodge with the department
a copy of the answer which it proposes to file, and thereupon the
director or his designee shall proceed to investigate and within a
reasonable time determine the merits of the application for
receivership and shall fix a time for the hearing of the investigation
of the matters involved in the petition or complaint.
(3) The director or his designee, after completing the
investigation, shall recommend to the court that the receiver be or not
be appointed. The court shall then consider the application for a
receiver."
SECTION 13. Section 38-27-80(d)(2) of the 1976 Code, as last
amended by Section 609 of Act 181 of 1993, is further amended to
read:
"(2) after a hearing, be subject to the imposition by the director or
his designee of a civil penalty not to exceed ten thousand
dollars pursuant to Section 38-2-10 and be subject
further to the revocation or suspension of any insurance licenses
issued by the director or his designee."
SECTION 14. Section 38-27-520(c) of the 1976 Code, as last
amended by Section 621 of Act 181 of 1993, is further amended to
read:
"(c) Before the director or his designee takes any action as set forth
in subsection (b), he shall must give written notice
to the person, company, association, or exchange accused of violating
the law, stating specifically the nature of the alleged violation and
advising of an opportunity of hearing to be held by the director
or his designee at least ten days thereafter. After the hearing,
upon failure of the accused to appear at the hearing, or upon failure
to request the hearing, the director or his designee, if he finds a
violation, shall must impose the penalties under
subsection (b) he considers advisable."
SECTION 15. Section 38-29-90(1) of the 1976 Code, as last
amended by Section 631 of Act 181 of 1993, is further amended to
read:
"(1) The association shall must submit to the
department a plan of operation and any amendments necessary or
suitable to assure the fair, reasonable, and equitable administration of
the association. The plan of operation and any amendments become
effective upon the written approval of the director or his designee.
If the association fails to submit suitable amendments to the plan, the
director or his designee shall must, after
giving notice and conducting a hearing, adopt and
promulgate reasonable amendments necessary or advisable to
effectuate the provisions of this chapter. These amendments must
continue in force until modified by the director or his designee or
superseded by amendments submitted by the association and
approved by the director or his designee."
SECTION 16. Section 38-29-100(2) of the 1976 Code, as last
amended by Section 631 of Act 181 of 1993, is further amended to
read:
"(2) The director or his designee may suspend or revoke, after
notice and hearing, The certificate of authority to transact
insurance in this State of any member insurer which fails to pay an
assessment when due or fails to comply with the plan of operation
may be suspended or revoked, after notice and hearing before the
Administrative Law Judge Division. As an alternative, the
director or his designee may impose the penalties provided in Section
38-2-10."
SECTION 17. Section 38-31-70(1) of the 1976 Code, as last
amended by Section 632 of Act 181 of 1993, is further amended to
read:
"(1) The association shall must submit to the
department a plan of operation and any amendments necessary or
suitable to assure the fair, reasonable, and equitable administration of
the association. The plan of operation and any amendments become
effective upon the written approval of the director or his designee.
If the association fails to submit suitable amendments to the plan, the
director or his designee shall must, after
giving notice and conducting a hearing, adopt and
promulgate reasonable amendments necessary or advisable to
effectuate the provisions of this chapter. These amendments continue
in force until modified by the director or his designee or superseded
by amendments submitted by the association and approved by the
director or his designee."
SECTION 18. Section 38-31-80(B)(2) of the 1976 Code, as last
amended by Section 632 of Act 181 of 1993, is further amended to
read:
"(2) suspend or revoke, after notice and hearing before the
Administrative Law Judge Division, the certificate of authority
to transact insurance in this State of a member insurer who fails to
pay an assessment when due or fails to comply with the plan of
operation. As an alternative, the director or his designee may impose
the penalties provided in Section 38-2-10;"
SECTION 19. Section 38-31-170(1) of the 1976 Code, as last
amended by Section 632 of Act 181 of 1993, is further amended to
read:
"(1) The director or his designee shall must by
order terminate the operation of the association as to any kind of
insurance covered by this chapter with respect to which he has found,
after hearing, that there is in effect a statutory or voluntary plan
which:
(a) is a permanent plan which is adequately funded or for which
adequate funding is provided; and
(b) extends, or will extend, to the South Carolina policyholders
and residents protection and benefits with respect to insolvent
insurers not substantially less favorable and effective to such
policyholders and residents than the protection and benefits provided
with respect to such kinds of insurance under this chapter."
SECTION 20. Section 38-33-80(C) of the 1976 Code, as last
amended by Act 58 of 1995, is further amended to read:
"(C) The director or his designee shall, within a
reasonable period, must approve any form if the
requirements of subsection (A) are met and any schedule of charges
if the requirements of subsection (B) are met. It is unlawful to issue
a form or to use a schedule of charges until approved. If the director
or his designee disapproves the filing, he shall must
notify the filer. The notice must contain the reasons for disapproval,
and the filer, upon request in writing is entitled to a public hearing
thereon before the Administrative Law Judge Division. If
no action is taken to approve or disapprove any form or schedule of
charges within ninety days of the filing of the forms or charges, the
filing is deemed approved."
SECTION 21. Section 38-33-200 of the 1976 Code, as last amended
by Section 633 of Act 181 of 1993, is further amended to read:
"Section 38-33-200. The department may, after notice and hearing
before the Administrative Law Judge Division, promulgate
regulations to carry out the provisions of this chapter."
SECTION 22. Section 38-33-210 of the 1976 Code, as last amended
by Section 633 of Act 181 of 1993, is further amended to read:
"Section 38-33-210. (A) When the director or his designee has
cause to believe that grounds for the denial of an application for a
certificate of authority exist, or that grounds for the suspension or
revocation of a certificate of authority exist, he shall
must notify the health maintenance organization in writing
specifically stating the grounds for denial, suspension, or revocation
and fixing a time of at least thirty days thereafter for a hearing on
the matter providing an opportunity for a hearing on the
matter before the Administrative Law Judge Division pursuant to
Section 38-3-170. However, if the ground for suspension or
revocation relates solely to financial condition, the director or his
designee may immediately and without hearing suspend the
certificate of authority of the health maintenance organization.
(B) The provisions of Article 3, Chapter 23, Title 1, apply to
administrative proceedings under this section. Whenever the
director or his designee issues an order of suspension without an
administrative hearing before the director or his designee
based upon a health maintenance organization's financial condition,
as authorized under subsection (A), the health maintenance
organization has a right to judicial review before have the
order reviewed by the Administrative Law Judge Division in
accordance with law."
SECTION 23. Section 38-33-230 (A) of the 1976 Code, as last
amended by Section 633 of Act 181 of 1993, is further amended to
read:
"(A) The director or his designee may, in lieu of revocation or
suspension of a certificate of authority under Section
Sections 38-33-180 and 38-33-210, levy an
administrative penalty of not more than fifteen thousand dollars for
each violation or ground as prescribed therein. A series of acts by
an organization which merely implement a basic violation and are not
separate and distinct violations of an independent nature are
considered to be part of the basic violation and only one penalty may
be imposed. A monetary penalty may be imposed under this
paragraph only after notice and an opportunity to be heard have been
afforded in accordance with Section 38-33-210."
SECTION 24. Section 38-39-30(a) of the 1976 Code, as last
amended by Section 653 of Act 181 of 1993, is further amended to
read:
"(a) Upon the filing of an application and the payment of the
license fee the director or his designee shall must
make an investigation of the applicant and shall issue a
license if the applicant is qualified. If the director or his designee
does not find the applicant qualified, he the applicant
shall has, within thirty days after he has
received denial of the application, at the request of
the applicant, give the applicant to request a full
hearing before the Administrative Law Judge Division."
SECTION 25. Section 38-39-40(a)(4) of the 1976 Code, is amended
to read:
"(4) The company has violated this chapter title;
or"
SECTION 26. Section 38-39-40(b) of the 1976 Code, as last
amended by Section 653 of Act 181 of 1993, is further amended to
read:
"(b) Before the director or his designee revokes, suspends, or
refuses to renew the license of a premium service company, he
shall must give the person an opportunity to be fully
heard before the Administrative Law Judge Division and to
introduce evidence in his behalf. In lieu of revoking or suspending
the license for any of the causes enumerated in this section, after a
hearing, the director or his designee may subject the company to a
monetary penalty as provided for in Section 38-2-10 for each offense
when in his judgment he finds that the public interest would not be
harmed by the continued operation of the company. The penalty
must be paid to the department and must be deposited by the
department in the state treasury. Any action by the director or his
designee pursuant to this section may be appealed by the premium
service company before the Administrative Law Judge Division."
SECTION 27. Section 38-39-60 of the 1976 Code, as last amended
by Section 653 of Act 181 of 1993, is further amended to read:
"Section 38-39-60. The department, after a public hearing
before the Administrative Law Judge Division, has authority
to make and enforce any regulations necessary to carry out this
chapter, but these regulations may not be contrary to nor inconsistent
with this chapter."
SECTION 28. Section 38-41-110 of the 1976 Code, as last amended
by Section 654 of Act 181 of 1993, is further amended to read:
"Section 38-41-110. If the director or his designee is of the
opinion that a multiple employer self-insured health plan is in an
unsound condition, that it has failed to comply with the law or any
applicable regulations or orders issued by the director or his designee,
or that it is in a condition which renders its proceedings hazardous to
the public or to persons covered under the plan, the director or his
designee may, after conducting a hearing, revoke or suspend
the license of the plan or, in lieu thereof, impose a monetary penalty
not to exceed five thousand dollars for each violation or ground.
If the director or his designee is of the opinion that any of the
grounds set forth in the first paragraph of this section exists, he may
commence delinquency proceedings against the plan and supervise,
rehabilitate, or liquidate the plan in accordance with the procedures
set forth in Chapter 27 of this title."
SECTION 29. Section 38-43-100(d) of the 1976 Code, as last
amended by Section 659 of Act 181 of 1993, is further amended by
deleting (d), which reads:
"(d) If more than twenty-five percent of the temporary licensees of
an insurer fail to receive a permanent license, not counting those who
fail the written examination twice, in any twelve-month period it is
prima facie evidence that the insurer is abusing the privilege of
obtaining temporary licenses. Upon a determination by the director
or his designee of abuse being made, following a public hearing, no
temporary license may be issued for twenty-four months following
the month of the determination of abuse on behalf of the insurer."
SECTION 30. Section 38-43-130 of the 1976 Code, as last amended
by Section 663 of Act 181 of 1993, is further amended to read:
"Section 38-43-130. The administrative law judge or the
director or his designee may revoke or suspend an agent's license
after ten days' notice or refuse to issue or to reissue
a license when it appears that an agent has been convicted of a crime
involving moral turpitude, has violated this title or any regulation
promulgated by the department, or has wilfully deceived or dealt
unjustly with the citizens of this State. The director or his
designee may revoke or suspend an agent's license after ten days'
notice of an opportunity for a hearing on the merits before the
Administrative Law Judge Division when the agent fails to request
in writing such a hearing within the ten-day period.
For purposes of this section, 'convicted' includes a plea of guilty or
a plea of nolo contendere, and the record of conviction, or a copy of
it, certified by the clerk of court or by the judge in whose court the
conviction occurred is conclusive evidence of the conviction.
The words 'deceived or dealt unjustly with the citizens of this State'
include, but are not limited to, action or inaction by the agent as
follows:
(1) misstating the facts in an application for insurance or aiding in
the misstatement of the facts;
(2) failing to inform promptly the customer or insured of the
correct premium or informing him of an incorrect premium based on
the information furnished the agent by the customer or insured;
(3) failing to transmit promptly or pay all or a portion of the
amount of an insurance premium when the agent or one of his
employees has received payment from a customer or insured or
someone on his behalf or when it has been financed by the agent;
(4) issuing his check covering all or a portion of an insurance
premium which is not accepted by the bank on which it is written
when it is initially submitted to the bank;
(5) failing to deliver promptly a policy, endorsement, or rider to
any insured;
(6) failing to notify promptly the customer or insured if the agent
has been unable to obtain the requested insurance for him;
(7) failing to maintain adequate records regarding insurance
sought or obtained from or through the agent which can be examined
by the director or his designee or one of his representatives for and
on behalf of a citizen of this State.
When upon investigation the director or his designee finds that an
agent has obtained a license by fraud or misrepresentation, he may
suspend immediately the license. The director or his designee, in an
order suspending a license, shall must specify the
period during which the suspension is to be in effect. The period may
not exceed two years. No licensee whose license has been revoked
or an applicant who has been refused a license by the director or his
designee has the right to apply for another license within two years
from the effective date of the revocation or refusal or, if judicial
review a hearing on the merits before the Administrative
Law Judge Division of the revocation or refusal is sought,
within two years from the date of a final court order or decree
affirming the revocation or suspension.
If, after notice of a hearing before the Administrative
Law Judge Division administrative law judge conducting the
hearing or notice of an opportunity for hearing before the
Administrative Law Judge Division, the director or his designee
finds that one or more grounds exist for the revocation or suspension
of, or the refusal to issue or reissue a license, the director or his
designee he may, in his discretion, in lieu of revocation,
suspension, or refusal, may impose upon the agent or
applicant an administrative penalty as provided in Section 38-2-10
for each offense or ground.
If, after giving notice of an opportunity to be heard before the
Administrative Law Judge Division, the director or his designee
determines that one or more grounds exist for the revocation or
suspension of, or the refusal to issue or reissue a license, he may, in
his discretion, in lieu of transferring the case to the Administrative
Law Judge Division for a hearing on the merits, and with the agent's
consent, impose upon the agent or applicant an administrative penalty
as provided in Section 38-2-10 for each offense or ground.
The director or his designee may allow the agent or applicant a
reasonable period, not to exceed thirty days, within which to pay to
the director or his designee the amount of the penalty imposed. If the
agent or applicant fails to pay the penalty in its entirety to the director
or his designee at his office in Columbia within the period allowed,
the license or application stands revoked, suspended, or renewal
refused, as the case may be, upon expiration of the period and
without any further proceedings."
SECTION 31. Section 38-44-70(A) of the 1976 Code, as last
amended by Section 670 of Act 181 of 1993, is further amended to
read:
"(A) If the director or his designee administrative law
judge finds after a hearing conducted in accordance with
Insurance Department Regulation 69-31 the procedures
of the Administrative Law Judge Division that a person has
violated this chapter, the director or his designee
administrative law judge may order:
(1) for each separate violation, a penalty as provided in Section
38-2-10;
(2) revocation or suspension of the agent's license of the MGA;
(3) the MGA to reimburse the insurer, the rehabilitator, or
liquidator of the insurer for losses incurred by the insurer caused by
a violation of this chapter committed by the MGA."
SECTION 32. Section 38-45-140 of the 1976 Code, as last amended
by Section 672 of Act 181 of 1993, is further amended to read:
"Section 38-45-140. When the director or his designee
administrative law judge determines after
investigation a hearing that a broker has violated this
title, he may, upon ten days' notice, impose the penalties
provided in Section 38-2-10. The revocation of a South Carolina
agent's license automatically revokes any broker's license held by
that agent."
SECTION 33. Section 38-46-110(A) of the 1976 Code, as last
amended by Section 679 of Act 181 of 1993, is further amended to
read:
"(A) A reinsurance intermediary, insurer, or reinsurer found by
the director or his designee after a hearing conducted in
accordance with Insurance Department Regulation 69-31 to be
in violation of this chapter:
(1) for each separate violation, shall must pay
a penalty of not more than fifteen thousand dollars and thirty
thousand dollars if the violation is wilful;
(2) is subject to revocation or suspension of its license;
(3) for a violation committed by the reinsurance intermediary,
make restitution to the insurer, reinsurer, rehabilitator, or liquidator
of the insurer or reinsurer for the net losses incurred by the insurer or
reinsurer attributable to the violation."
SECTION 34. Section 38-47-70 of the 1976 Code, as last amended
by Section 681 of Act 181 of 1993, is further amended to read:
"Section 38-47-70. When the director or his designee
administrative law judge determines after
investigation a hearing that there has been a violation
of this title by an adjuster, upon ten days' notice, he may
impose the penalties provided in Section 38-2-10."
SECTION 35. Section 38-51-20 of the 1976 Code, as last amended
by Section 683 of Act 181 of 1993, is further amended to read:
"Section 38-51-20. No person may act as an administrator in this
State without first being licensed by the director or his designee.
Any person who acts as an administrator without a license is guilty
of a misdemeanor and, upon conviction, must be
fined not more than ten thousand dollars or imprisoned for not more
than two years, or both, and is subject to revocation of any insurance
licenses issued by the director or his designee.
Application for a license must be upon forms prescribed by the
director or his designee and must be accompanied by an initial
license fee of one hundred dollars. Thereafter, the administrator
shall must pay to the department a license renewal
fee of one hundred dollars by March first of each year.
Before granting any license, the director or his designee must be
satisfied that the administrator is competent, trustworthy, financially
responsible, has a good personal and business reputation, has not had
an insurance license revoked, suspended, or denied in any jurisdiction
within the preceding five years, and has not been convicted of a
crime involving fraud, dishonesty, or moral turpitude in any
jurisdiction. For purposes of this section, 'convicted' includes a plea
of guilty or a plea of nolo contendere.
The director or his designee may revoke or suspend any
license issued to an administrator may be revoked or suspended
after notice and a hearing before the Administrative Law Judge
Division when he the administrative law judge
finds that any condition exists which would have prohibited issuance
of the original license, that the administrator has violated any
provision of this chapter, or that the administrator has deceived or
dealt unjustly with the citizens of this State. In lieu of revocation or
suspension of license, the director or his designee may impose an
administrative monetary penalty not to exceed one thousand dollars
for each offense."
SECTION 36. Section 38-53-160 of the 1976 Code, as last amended
by Section 695 of Act 181 of 1993, is further amended to read:
"Section 38-53-160. Notice and hearing required; right to
appeal.
No license may be refused, suspended, or revoked, or renewal
refused, except on reasonable ten days' notice
and of an opportunity to be heard afforded the
person licensed or seeking renewal of the license for a
hearing on the merits before the Administrative Law Judge
Division. Any applicant for a license as a bail bondsman or
runner whose application has been denied or whose license has been
suspended or revoked, or renewal of the license denied, has the right
of appeal from the final order of the director or his designee to the
Administrative Law Judge Division as provided by law."
SECTION 37. Section 38-57-200 of the 1976 Code, as last amended
by Section 711 of Act 181 of 1993, is further amended to read:
"Section 38-57-200. If, after a hearing, the director or his designee
determines that a method of competition or an act or practice is unfair
or deceptive as defined in this title and that the person complained of
has engaged in the method of competition, act, or practice in
violation of this title, he the director shall
must reduce his finding to writing and shall issue and
cause to be served upon the person charged with the violation:
(1) an order requiring the person to cease and desist from engaging
in the method of competition, act, or practice; and
(2) an order imposing penalties provided in Section 38-2-10."
SECTION 38. Section 38-57-210 of the 1976 Code, as last amended
by Section 712 of Act 181 of 1993, is further amended to read:
"Section 38-57-210. Upon good cause shown, the director or his
designee shall must permit any person to intervene,
appear, and be heard at the hearing by counsel or in person. If the
report of the director or his designee does not charge a violation of
this chapter, then any intervenor in the proceedings may, within thirty
days after the service of the report, cause a petition to be filed in the
circuit court of Richland County for a review of the report. Upon
review the court has authority to issue appropriate orders and decrees
in connection therewith, including, if the court finds that it is to the
interest of the public, orders enjoining and restraining the
continuance of any method of competition, act, or practice which it
finds, notwithstanding the report of the director or his designee,
constitutes a violation of this chapter."
SECTION 39. Section 38-57-230 of the 1976 Code, as last amended
by Section 714 of Act 181 of 1993, is further amended to read:
"Section 38-57-230. Any person who contemptuously violates a
cease and desist order of any practice issued by the director or his
designee shall must, upon due notice, receive a
hearing before the director or his designee circuit court of
Richland County. Upon the determination of the director or
his designee that the contemptuous violation has been committed,
the director or his designee circuit court judge
shall must issue his order to the effect that the person
is in contempt of his the director's order to cease and
desist. Any person who contemptuously violates a cease and desist
order of the director or his designee shall must pay
a fine set by the director or his designee circuit court
judge but not to exceed fifty dollars for each day of violation.
However, if the violation is wilful, the fine may be assessed in an
amount not to exceed one hundred dollars per day of violation."
SECTION 40. Section 38-59-30 of the 1976 Code, as last amended
by Section 723 of Act 181 of 1993, is further amended to read:
"Section 38-59-30. If, after giving due notice and
conducting a hearing, the director or his designee determines
that the insurer has engaged in any of the improper claim practices
defined in Section 38-59-20, he shall must order the
insurer to cease and desist from the practice and may impose a
penalty as provided in Section 38-2-10. If the penalty is imposed, the
penalty may not be considered a cost of the insurer for purposes of
determining whether or not the rates of the insurer warrant
adjustment. Upon good cause shown, the director or his designee
may permit any person to intervene, appear, and be heard at the
hearing by counsel or in person. If the report of the director or his
designee does not charge a violation of this chapter, then any
intervenor in the proceedings may, within thirty days after the service
of the report, cause a petition to be filed in the circuit court of
Richland County for a review of the report. Upon review the court
has authority to issue appropriate orders and decrees in connection
therewith, including, if the court finds that it is to the interest of the
public, orders enjoining and restraining the continuance of any
method of competition, act, or practice which it finds,
notwithstanding the report of the director or his designee, constitutes
a violation of this chapter."
SECTION 41. Section 38-61-20(B) of the 1976 Code, as last
amended by Section 724 of Act 181 of 1993, is further amended to
read:
"(B) At any time after having given written approval, and after an
opportunity for a hearing before the Administrative Law Judge
Division for which at least thirty days' written notice has been
given, the director or his designee may withdraw approval if he finds
that the forms (1) do not meet the requirements of law, (2) contain
any provisions which are unfair, deceptive, ambiguous, misleading,
or unfairly discriminatory, or (3) are being solicited by means of
advertising, communication, or dissemination of information which
is deceptive or misleading."
SECTION 42. Section 38-70-40 of the 1976 Code, as last amended
by Section 748 of Act 181 of 1993, is further amended to read:
"Section 38-70-40. (A) The director or his designee may conduct
periodic reviews of the operations of private review agents in this
State to ensure that they continue to meet the specifications outlined
in this chapter and any applicable regulations which may be
promulgated by the department. The director or his designee may
perform periodic telephone audits of private review agents authorized
to conduct business in this State, to determine if the agents are
reasonably accessible.
(B) Within ninety days upon receipt of a complaint from a licensed
health care provider, the director or his designee may investigate the
complaint, including holding investigatory hearings and
taking testimony or other appropriate actions, and shall
must present a written response to the complainant and the
private review agent named. This response must include the
following:
(1) a statement of the original complaint;
(2) a determination of findings of the director or his designee;
(3) corrective actions, if any, on the part of the private review
agent which the director or his designee finds appropriate; and
(4) a time frame in which any corrective actions are to be
completed.
(C) The director or his designee is authorized to take
appropriate action against A private review agent who fails to
meet the standards of this chapter or of any applicable regulations
promulgated by the department, or who fails to respond in a timely
fashion to corrective actions ordered by the director or his
designee. The director or his designee may impose
be subject to an administrative fine not to exceed one
thousand dollars for each violation. The certificate of the private
review agent or may also be deny
denied, suspend suspended, or
revoke revoked the certificate of the private
review agent.
(D) The certificate of the private review agent director
or his designee may also be deny
denied, suspend suspended, or
revoke revoked a certificate if, upon
review, the director or his designee finds that the private review
agent does not:
(1) have a utilization review program that meets the
requirements of subsection (C) of Section 38-70-20;
(2) have available the services of sufficient numbers of
registered nurses, medical records technicians, or similarly qualified
persons supported and supervised by appropriate physicians to carry
out its utilization review activities;
(3) meet any applicable regulations the department promulgates
under this chapter relating to the qualifications of private review
agents or the performance of utilization review;
(4) remain accessible to patients and providers.
(E) Before taking the actions authorized by this section to deny,
suspend, or revoke the certificate of a private review agent, the
director or his designee shall must provide the
private review agent with reasonable time to supply additional
information demonstrating compliance with the requirements of this
chapter and the opportunity to request a hearing before the
Administrative Law Judge Division. If a private review agent
requests a hearing, the director or his designee shall
must send a hearing notice to the involved parties by
certified mail, return receipt requested, at least thirty days before the
hearing. The director or his designee shall hold the hearing in
accordance with the provisions of Chapter 3 of this title, and the State
Administrative Procedures Act. Any action or decision of the
director or his designee pursuant to the administrative hearing may
be appealed to the Administrative Law Judge Division as provided by
law by the private review agent."
SECTION 43. Section 38-71-310(A) and (C) of the 1976 Code, as
last amended by Section 753 of Act 181 of 1993, are further amended
to read:
"(A) No policy or certificate of accident, health, or accident and
health insurance may be issued or delivered in this State, nor may any
application, endorsement, or rider which becomes a part of the policy
be used, until a copy of its form has been filed with and approved by
the director or his designee except as exempted by regulation of the
department as permitted by Section 38-61-20. The director or his
designee may disapprove the form if the form (1) does not meet the
requirements of law, (2) contains any provisions which are unfair,
deceptive, ambiguous, misleading, or unfairly discriminatory, or (3)
is going to be solicited by means of advertising, communication, or
dissemination of information which is deceptive or misleading. The
director or his designee shall must notify in writing,
as soon as is practicable, the insurer which has filed the form of his
approval or disapproval. In the event of disapproval, the notice must
contain the reasons for disapproval, and the insurer is entitled to a
public hearing thereon before the Administrative Law Judge
Division. If the director or his designee takes no action
has been taken to approve or disapprove a policy or
certificate, application, endorsement, or rider after the documents
have been filed for ninety days, they are deemed to be approved.
(C) At any time the director or his designee, after a public
hearing of which at least thirty days' written notice has been
given, may withdraw approval of forms or rates previously
approved under subsections (A) and (B) if he determines that the
forms or rates no longer meet the standards for approval specified in
subsections (A) and (B). The insurer is entitled to a public
hearing thereon before the Administrative Law Judge Division."
SECTION 44. Section 38-71-510 of the 1976 Code, as last amended
by Section 762 of Act 181 of 1993, is further amended to read:
"Section 38-71-510. The purpose of this subarticle is to provide
reasonable standardization and simplification of terms and coverages
of individual accident and health insurance policies or subscriber
contracts of nonprofit hospital, medical, and dental service
associations in order to facilitate public understanding and
comparison, to eliminate provisions contained in individual accident
and health insurance policies or subscriber contracts of nonprofit
hospital, medical, and dental service associations which may be
misleading or unreasonably confusing in connection with the
purchase of the coverage or with the settlement of claims, to provide
for full disclosure in the sale of accident and health coverages, and to
provide for the termination of approval, after due notice and hearing
before the director or his designee, of policy forms which do not
comply with the minimum standards. Any decision or determination
by the director or his designee to terminate approval pursuant to
the administrative hearing may be appealed to is subject to
a public hearing before the Administrative Law Judge Division
as provided in accordance with Section 38-3-210
38-3-170."
SECTION 45. Section 38-71-720 of the 1976 Code, as last amended
by Section 766 of Act 181 of 1993, is further amended to read:
"Section 38-71-720. No policy or contract of group accident,
group health, or group accident and health insurance may be issued
or delivered in this State, nor may any application, endorsement, or
rider which becomes a part of the policy be used, until a copy of the
form thereof has been filed with and approved by the director or his
designee except as exempted by regulation of the department as
permitted by Section 38-61-20. The director or his designee may
disapprove the form if the form (1) does not meet the requirements
of law, (2) contains any provisions which are unfair, deceptive,
ambiguous, misleading, or unfairly discriminatory, or (3) is going to
be solicited by means of advertising, communication, or
dissemination of information which is deceptive or misleading.
However, if no action has been taken to approve or disapprove a
policy, contract, certificate, application, endorsement, or rider after
the documents have been filed for ninety days, they may be issued
and delivered until or unless subsequently disapproved by the
director or his designee. This time period may be extended thirty
days if the director or his designee gives written notice to the filer
that he needs additional time to review the filing. The director or his
designee shall must, as soon as is practicable, notify
in writing the insurer which has filed the form of his approval or
disapproval. In the event of disapproval the notice must contain the
reasons for disapproval and the insurer is entitled to a public hearing
thereon. At any time after having given written approval thereof the
director or his designee may, after a public hearing of which at least
thirty days' written notice has been given, withdraw approval if he
finds that the forms (1) do not meet the requirements of law, (2)
contain any provisions which are unfair, deceptive, ambiguous,
misleading, or unfairly discriminatory, or (3) are being solicited by
means of advertising, communication, or dissemination of
information which is deceptive or misleading. The withdrawal of
approval must be effected by written notice to the insurer and the
insurer is entitled to a public hearing thereon Any action or
decision of the director or his designee to withdraw approval may be
appealed to before the Administrative Law Judge
Division in accordance with Section 38-3-210
38-3-170."
SECTION 46. Section 38-71-940(C) of the 1976 Code, as last
amended by Act 339 of 1994, is further amended to read:
"(C) The commissioner director or his designee
may approve wellness incentives developed by small employer
insurers that allow premium reductions from the rating limitations of
this section. Wellness incentives to be considered may include, but
are not limited to, smoking status, participation in physical fitness
activities, and dietary habits."
SECTION 47. Section 38-71-1330(C), (D), and (N) of the 1976
Code, as added by Act 339 of 1994, are amended to read:
"(C) 'Commissioner Director' means the
Chief Director of Insurance Commissioner
of this State.
(D) 'Committee' means the advisory committee to the
commissioner director referred to in Section
38-71-1420.
(N) 'Risk-assuming insurer' means a small employer insurer whose
application is approved by the commissioner director
pursuant to Section 38-71-1390."
SECTION 48. Section 38-71-1360 of the 1976 Code, as added by
Act 339 of 1994, is amended to read:
"Section 38-71-1360. (A)(1) Every small employer insurer shall,
as a condition of transacting business in this State with small
employers, fairly market to small employers at least two health
insurance plans. One health insurance plan offered by each small
employer insurer must be a basic health insurance plan and one plan
must be a standard health insurance plan.
(2) Coverage under the basic or standard health insurance plan
must be offered to all eligible employees of a small employer and
their dependents. A small employer insurer may not offer coverage
only to certain individuals in a small employer group, or to only part
of the group, except as provided in Section 38-71-1370(B).
(3) Except with respect to applicable preexisting condition
limitation periods or late enrollees as provided in Section
38-71-1370(B), a small employer insurer shall not modify a health
insurance plan with respect to a small employer or any eligible
employee or dependent through rider, endorsements, or otherwise, to
restrict or exclude coverage or benefits for specific diseases, medical
conditions or services otherwise covered under the plan.
(4)(a) A small employer insurer shall issue a basic health
insurance plan or a standard health insurance plan to any eligible
small employer that applies for either such plan and agrees to make
the required premium payments and to satisfy the other reasonable
provisions of the health insurance plan not inconsistent with this
article.
(b) In the case of a small employer insurer that establishes
more than one class of business pursuant to Section 38-71-920(11) of
the 1976 Code of Laws, the small employer insurer shall maintain
and issue to eligible small employers at least one basic health
insurance plan and at least one standard health insurance plan in each
class of business so established. A small employer insurer may apply
reasonable criteria in determining whether to accept a small employer
into a class of business, provided that:
(i) The criteria are not intended to discourage or prevent
acceptance of small employers applying for a basic or standard health
insurance plan;
(ii) The criteria are not related to the health status or claim
experience of the small employer;
(iii) The criteria are applied consistently to all small
employers applying for coverage in the class of business; and
(iv) The small employer insurer provides for the acceptance
of all eligible small employers into one or more classes of business.
The requirement to offer at least two health insurance plans to small
employers shall not apply to a class of business into which the small
employer insurer is no longer enrolling new small businesses.
(5) The provisions of this subsection (A) of this section shall
be become effective one hundred eighty days after the
commissioner's director's approval of the basic
health insurance plan and the standard health insurance plan
developed pursuant to Section 38-71-1420; provided, that if the
Small Employer Insurer Reinsurance Program created pursuant to
Section 38-71-1410 is not yet operative on that date, the provisions
of this paragraph shall be become effective on the
date that the program begins operation.
(B)(1) After the commissioner's director or his
designee has approval approved of the basic
health insurance plan and the standard health insurance plan
developed pursuant to Section 38-71-1420, a small employer insurer
shall must file with the commissioner
director or his designee in the form and manner prescribed
by the commissioner director or his designee, the
basic and standard health insurance plans to be used by the insurer.
The insurer shall must certify to the
commissioner director or his designee that the plans
as filed are in substantial compliance with the provisions as approved
by the commissioner director or his designee. Upon
the commissioner's receipt by the director or his
designee of the certification, the insurer may use the certified
plans unless their use is disapproved by the commissioner
director or his designee.
(2) The commissioner director or his designee
may, at any time, after providing notice and an opportunity for
hearing, disapprove the continued use by a small employer insurer of
a basic or standard health insurance plan on the grounds that the plan
does not meet the requirements of this article.
(C)(1) A health maintenance organization shall not be required to
offer coverage or accept applications pursuant to subsection (A) in
the case of the following:
(a) to a small employer, where the small employer is not
physically located in the health maintenance organization's
established geographic service area;
(b) to an employee, when the employee does not work or
reside within the health maintenance organization's established
geographic service area; or
(c) within an area where the health maintenance organization
reasonably anticipates, and demonstrates to the satisfaction of the
commissioner director or his designee, that it will not
have the capacity within its established geographic service area to
deliver service adequately to the members of such groups because of
its obligations to existing group policyholders and enrollees.
(2) A health maintenance organization that cannot offer
coverage pursuant to paragraph (1)(c) may not offer coverage in the
applicable area to new cases of employer groups with more than fifty
eligible employees or to any small employer groups until the later of
one hundred eighty days following each such refusal or the date on
which the health maintenance organization notifies the
commissioner director or his designee that it has
regained capacity to deliver services to small employer groups.
(D) A small employer insurer may not be required to provide
coverage to small employers pursuant to subsection (A) for any
period of time for which the commissioner director or his
designee determines that requiring the acceptance of small
employers in accordance with the provisions of subsection (A) would
place the small employer insurer in a financially impaired condition."
SECTION 49. Section 38-71-1380(A) of the 1976 Code, as added
by Act 339 of 1994, is amended to read:
"(A)(1) Within sixty days after the plan of operation is approved
by the commissioner director or his designee under
Section 38-71-1410, each small employer insurer shall
must notify the commissioner director or his
designee of the insurer's intention to operate as a risk-assuming
insurer or a reinsuring insurer. A small employer insurer seeking to
operate as a risk-assuming insurer shall must make
an application pursuant to Section 38-71-1390.
(2) The decision shall be is binding for a
five-year period except that the initial decision shall be
is binding for two years. The commissioner
director or his designee may permit an insurer to modify its
decision at any time for good cause shown.
(3) The commissioner director or his designee
shall must establish an application process for small
employer insurers seeking to change their status under this
subsection. In the case of a small employer insurer that has been
acquired by another such insurer, the commissioner
director or his designee may waive or modify the time
periods established in paragraph (2)."
SECTION 50. Section 38-71-1390 (A) of the 1976 Code, as added
by Act 339 of 1994, is amended to read:
"(A) Any small employer insurer may elect to become a
risk-assuming insurer upon application to and approval by the
commissioner director or his designee. A small
employer insurer shall must not be approved as a
risk-assuming insurer if the commissioner director or his
designee finds that the insurer is not capable of assuming that
status pursuant to the criteria set forth in subsection (B) of this
section. The insurer shall must provide public notice
of its application to become a risk-assuming insurer. A small
employer insurer's application to be a risk-assuming insurer
shall must be approved unless disapproved by the
commissioner director or his designee within sixty
days after the insurer's application. A small employer insurer that
has had its application to be a risk-assuming insurer disapproved may
request and shall must be granted a public hearing
before the Administrative Law Judge Division within sixty
days after the disapproval."
SECTION 51. Section 38-71-1410 of the 1976 Code, as added by
Act 339 of 1994, is amended to read:
"Section 38-71-1410. (A) There is hereby created a nonprofit
entity to be known as the South Carolina Small Employer Insurer
Reinsurance Program, which shall is to become
operational on July 1, 1995.
(B)(1) The program shall must operate subject to
the supervision and control of the board. Subject to the provisions of
paragraph (2), the board shall must consist of eight
members appointed by the commissioner director
plus the commissioner director or his designated
representative, who shall must serve as an ex officio
member of the board.
(2) In selecting the members of the board, the
commissioner director shall must
include representatives of small employers and small employer
insurers and such other individuals determined to be qualified by the
commissioner director. At least five members of the
board shall must be representatives of insurers, one
of whom shall must be a licensed independent
insurance agent who represents multiple health and accident
insurance carriers, and shall must be selected from
individuals nominated in this State pursuant to procedures and
guidelines developed by the commissioner director or his
designee.
(3) The initial board members shall must be
appointed as follows: two of the members to serve a term of two
years; three of the members to serve a term of four years; and three
of the members to serve a term of six years. Subsequent board
members shall must serve for a term of three years.
A board member's term shall continue
continues until his successor is appointed.
(4) A vacancy in the board shall must be filled
by the commissioner director. A board member
may be removed by the commissioner director for
cause.
(C) Not later than September 1, 1994, each small employer insurer
shall must make a filing with the
commissioner director or his designee containing the
insurer's net health insurance premium derived from health insurance
plans delivered or issued for delivery to small employers in this State
in the previous calendar year.
(D) Within one hundred eighty days after the appointment of the
initial board, the board shall must submit to the
commissioner director a plan of operation and
thereafter any amendments thereto necessary or suitable to assure the
fair, reasonable, and equitable administration of the program. The
commissioner director may, after notice and
hearing, approve the plan of operation if the
commissioner director determines it to be suitable to
assure the fair, reasonable, and equitable administration of the
program, and to provide for the sharing of program gains or losses on
an equitable and proportionate basis in accordance with the
provisions of this section. The plan of operation shall
become becomes effective upon written approval by
the commissioner director.
(E) If the board fails to submit a suitable plan of operation within
one hundred eighty days after its appointment, the
commissioner director shall must,
after notice and hearing, adopt and promulgate a temporary plan of
operation. The commissioner director shall
must amend or rescind any plan adopted under this
subsection at the time a plan of operation is submitted by the board
and approved by the commissioner director.
(F) The plan of operation shall must:
(1) establish procedures for handling and accounting of program
assets and monies and for an annual fiscal reporting to the
commissioner director;
(2) establish procedures for selecting an administering insurer
and setting forth the powers and duties of the administering insurer;
(3) establish procedures for reinsuring risks in accordance with
the provisions of this section;
(4) establish procedures for collecting assessments from
reinsuring insurers to fund claims and administrative expenses
incurred or estimated to be incurred by the program;
(5) establish a methodology for applying the dollar thresholds
contained in this section in the case of insurers that pay or reimburse
health care providers though capitation or salary; and
(6) provide for any additional matters necessary for the
implementation and administration of the program.
(G) The program shall have is given the general
powers and authority granted under the laws of this State to insurance
companies and health maintenance organizations licensed to transact
business, except the power to issue health insurance plans directly to
either groups or individuals. In addition, the program shall
have is given the specific authority to:
(1) enter into contracts as are necessary or proper to carry out
the provisions and purposes of this article, including the authority,
with the approval of the commissioner director, to
enter into contracts with similar programs of other states for the joint
performance of common functions or with persons or other
organizations for the performance of administrative functions;
(2) sue or be sued, including taking any legal actions necessary
or proper to recover any assessments and penalties for, on behalf of,
or against the program or any reinsuring insurers;
(3) take any legal action necessary to avoid the payment of
improper claims against the program;
(4) define the health insurance plans for which reinsurance will
be provided, and to issue reinsurance policies, in accordance with the
requirements of this article;
(5) establish rules, conditions, and procedures for reinsuring
risks under the program;
(6) establish actuarial functions as appropriate for the operation
of the program;
(7) assess reinsuring insurers in accordance with the provisions
of subsection (K), and make advance interim assessments as may be
reasonable and necessary for organizational and interim operating
expenses. Any interim assessments shall be credited as offsets
against any regular assessments due following the close of the fiscal
year;
(8) appoint appropriate legal, actuarial, and other committees as
necessary to provide technical assistance in the operation of the
program, policy and other contract design, and any other function
within the authority of the program;
(9) borrow money to effect the purposes of the program. Any
notes or other evidence of indebtedness of the program not in default
shall be legal investments for insurers and may be carried as admitted
assets;
(H) A reinsuring insurer may reinsure with the program as
provided for in this subsection:
(1) With respect to a basic health insurance plan or a standard
health insurance plan, the program shall reinsure the level of
coverage provided.
(2) A small employer insurer may reinsure an entire employer
group within sixty days of the commencement of the group's
coverage under a health insurance plan.
(3) A reinsuring insurer may reinsure an eligible employee or
dependent within a period of sixty days following the commencement
of the coverage with the small employer. A newly-eligible employee
or dependent of the reinsured small employer may be reinsured
within sixty days of the commencement of his coverage.
(4)(a) The program shall not reimburse a reinsuring insurer with
respect to the claims of a reinsured employee or dependent until the
insurer has incurred an initial level of claims for such employee or
dependent of five thousand dollars in a calendar year for benefits
covered by the program. In addition, the reinsuring insurer shall be
responsible for ten percent of the next fifty thousand dollars of
benefit payments during a calendar year and the program shall
reinsure the remainder. A reinsuring insurers' liability under this
subparagraph shall not exceed a maximum limit of ten thousand
dollars in any one calendar year with respect to any reinsured
individual.
(b) The board annually shall must adjust the
initial level of claims and the maximum limit to be retained by the
insurer to reflect increases in costs and utilization within the standard
market for health insurance plans within the State. The adjustment
shall must not be less than the annual change in the
medical component of the 'Consumer Price Index for All Urban
Consumers' of the Department of Labor, Bureau of Labor Statistics,
unless the board proposes and the commissioner
director approves a lower adjustment factor.
(5) A small employer insurer may terminate reinsurance with
the program for one or more of the reinsured employees or
dependents of a small employer on any anniversary of the health
insurance plan.
(6) A reinsuring insurer shall apply all managed care and claims
handling techniques, including utilization review, individual case
management, preferred provider provisions, and other managed care
provisions or methods of operation consistently with respect to
reinsured and nonreinsured business.
(I)(1) The board, as part of the plan of operation, shall
must establish a methodology for determining premium
rates to be charged by the program for reinsuring small employers
and individuals pursuant to this section. The methodology must
contain a provision surcharging the reinsurance premium rate of a
small employer insurer which does not employ effective cost
containment and managed care arrangements including, but not
limited to:
(a) preferred provider organizations;
(b) utilization review;
(c) case management;
(d) other.
The methodology shall must include a system for
classification of small employers that reflects the types of case
characteristics commonly used by small employer insurers in the
State. The methodology shall must provide for the
development of base reinsurance premium rates which shall
must be multiplied by the factors set forth in paragraph (2)
to determine the premium rates for the program. The base
reinsurance premium rates shall be established by the
board, are subject to the approval of the
commissioner director or his designee, and
shall must be set at levels which reasonably
approximate gross premiums charged to small employers by small
employer insurers for health insurance plans with benefits similar to
the standard health insurance plan.
(2) Premiums for the program shall be as follows:
(a) An entire small employer group may be reinsured for a
rate that is one and one-half times the base reinsurance premium rate
for the group established pursuant to this paragraph.
(b) An eligible employee or dependent may be reinsured for
a rate that is five times the base reinsurance premium rate for the
individual established pursuant to this paragraph.
(3) The board periodically shall must review
the methodology established under paragraph (1), including the
system of classification and any rating factors, to assure that it
reasonably reflects the claims experience of the program. The board
may propose changes to the methodology which shall be
are subject to the approval of the commissioner
director.
(J) If a health insurance plan for a small employer is entirely or
partially reinsured with the program, the premium charged to the
small employer for any rating period for the coverage issued shall
meet the requirements relating to premium rates set forth in Section
38-71-910, et seq. of the 1976 Code.
(K)(1) Before March first of each year, the board shall
must determine and report to the commissioner
director the program net loss for the previous calendar year,
including administrative expenses and incurred losses for the year,
taking into account investment income and other appropriate gains
and losses.
(2) Any net loss for the year shall be recouped by assessments
of reinsuring insurers.
(a) The board shall establish, as part of the plan of operation,
a formula by which to make assessments against reinsuring insurers.
The assessment formula shall be based on:
(i) each reinsuring insurer's share of the total premiums
earned in the preceding calendar year from health insurance plans
delivered or issued for delivery to small employers in this State by
reinsuring insurers; and
(ii) each reinsuring insurer's share of the premiums earned
in the preceding calendar year from newly-issued health insurance
plans delivered or issued for delivery during the calendar year to
small employers in this State by reinsuring insurers.
(b) The formula established pursuant to subparagraph (a)
shall not result in any reinsuring insurer having an assessment share
that is less than fifty percent nor more than one hundred fifty percent
of an amount which is based on the proportion of the reinsuring
insurer's total premiums earned in the preceding calendar year from
health insurance plans delivered or issued for delivery to small
employers in this State by reinsuring insurers to the total premiums
earned in the preceding calendar year from health insurance plans
delivered or issued for delivery to small employers in this State by
all reinsuring insurers.
(c) The board may, with approval of the
commissioner director, change the assessment
formula established pursuant to subparagraph (a) from time to time
as appropriate. The board may provide for the shares of the
assessment base attributable to total premium and to the previous
year's premium to vary during a transition period.
(d) Subject to the approval of the commissioner
director, the board shall must make an
adjustment to the assessment formula for reinsuring insurers that are
approved health maintenance organizations which are federally
qualified under 42 U.S.C. Sections 300, et seq., to the extent, if any,
that restrictions are placed on them that are not imposed on other
small employer insurers.
(3)(a)Before March first of each year, the board shall
must determine and file with the commissioner
director an estimate of the assessments needed to fund the
losses incurred by the program in the previous calendar year.
(b) If the board determines that the assessments needed to
fund the losses incurred by the program in the previous calendar year
will exceed the amount specified in subparagraph (c), the board
shall must evaluate the operation of the program and
report its findings, including any recommendations for changes to the
plan of operation, to the commissioner director
within ninety days following the end of the calendar year in which
the losses were incurred. The evaluation shall must
include an estimate of future assessments and consideration of the
administrative costs of the program, the appropriateness of the
premiums charged, the level of insurer retention under the program,
and the costs of coverage for small employers. If the board fails to
file a report with the commissioner director within
ninety days following the end of the applicable calendar year, the
commissioner director may evaluate the operations
of the program and implement such amendments to the plan of
operation the commissioner director considers
necessary to reduce future losses and assessments.
(c) For any calendar year, the amount specified in this
subparagraph is five percent of total premiums earned in the previous
calendar year from health insurance plans delivered or issued for
delivery to small employers in this State by reinsuring insurers.
(4) If assessments exceed net losses of the program, the excess
shall be held at interest and used by the board to offset future losses
or to reduce program premiums. As used in this paragraph, 'future
losses' includes reserves for incurred but not reported claims.
(5) Each reinsuring insurer's proportion of the assessment shall
be determined annually by the board based on annual statements and
other reports considered necessary by the board and filed by the
reinsuring insurers with the board.
(6) The plan of operation shall provide for the imposition of an
interest penalty for late payment of assessments.
(7) A reinsuring insurer may seek from the
commissioner director or his designee a deferment
from all or part of an assessment imposed by the board. The
commissioner director or his designee may defer all
or part of the assessment of a reinsuring insurer if the
commissioner director or his designee determines
that the payment of the assessment would place the reinsuring insurer
in a financially impaired condition. If all or part of an assessment
against a reinsuring insurer is deferred, the amount deferred
shall must be assessed against the other participating
insurers in a manner consistent with the basis for assessment set forth
in this subsection. The reinsuring insurer receiving the deferment
shall remain remains liable to the program
for the amount deferred and shall be prohibited from must
not reinsuring reinsure any individuals or
groups with the program until such time as it pays the assessments.
(L) Neither the participation in the program as reinsuring insurers,
the establishment of rates, forms, or procedures, nor any other joint
or collective action required by this article shall be the basis of any
legal action, criminal or civil liability, or penalty against the program
or any of its reinsuring insurers either jointly or separately.
(M) The board, as part of the plan of operation, shall develop
standards setting forth the manner and levels of compensation, if any,
to be paid to agents for the sale of basic and standard health
insurance plans. In establishing such standards, the board shall take
into consideration the need to assure the broad availability of
coverages, the objectives of the program, the time and effort
expended in placing the coverage, the need to provide on-going
service to the small employer, the levels of compensation currently
used in the industry, and the overall costs of coverage to small
employers selecting these plans.
(N) The program shall be exempt from any and all taxes."
SECTION 52. Section 38-71-1420(A) and (B)(2) of the 1976 Code,
as added by Act 339 of 1994, are amended to read:
"(A) The Governor shall must appoint an
advisory committee to the commissioner director
which shall to recommend the form and level of
coverages to be made available by small employer insurers pursuant
to Section 38-71-1360. At least one member of the committee
shall must be a licensed independent insurance agent
who represents multiple health and accident insurance carriers. In
preparing its initial recommendations, the advisory committee
shall must build on the work of the Governor's
Committee on Basic Health Services.
(B)(2) The committee shall must submit the health
insurance plans described in paragraphs (A) and (B) to the
commissioner director for approval by January 1,
1995. If, for any reason, the committee does not provide the
commissioner director with a recommendation as to
the form and level of coverages to be made available pursuant to this
article, the board shall must make such
recommendation to the commissioner director. If,
subsequent to the approval of the benefit levels of the basic and
standard health insurance plans, amendments to the plans become
necessary, the board shall must make such
recommendations to the commissioner director for
his approval."
SECTION 53. Section 38-71-1430 of the 1976 Code, as added by
Act 339 of 1994, is amended to read:
"Section 38-71-1430. The board, in consultation with members
of the committee, shall must study and make a public
report each year to the commissioner director on the
effectiveness of this article. The report shall must
analyze the effectiveness of the act in promoting rate stability,
product availability, and coverage affordability. The report
shall must include the total number of basic and
standard policies sold in the State noting whether these insureds have
ever been denied coverage before July 1, 1995. The report
shall must contain a detailed analysis of the financial
condition of the reinsurance pool including losses and assessments by
year. The report may contain recommendations for actions to
improve the overall effectiveness, efficiency, and fairness of the
small group health insurance marketplace. The report shall
must address whether insurers and agents are fairly
marketing or issuing health insurance plans to small employers in
fulfillment of the purposes of this article. The report may contain
recommendations for market conduct or other regulatory standards
or action."
SECTION 54. Section 38-73-120 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-120. No penalty may be imposed and no license
may be suspended or revoked pursuant to this chapter except
upon a written order of the director or his designee, stating his
findings, made after a hearing before the Administrative Law
Judge Division held upon not less than thirty days' written
notice to the person or organization specifying the alleged violation."
SECTION 55. Section 38-73-130 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-130. Any insurer or rating organization aggrieved
by any order or decision of the director or his designee made
without a hearing made pursuant to this chapter may,
within thirty days after notice of the order to the insurer or
organization, make written request to the Administrative Law Judge
Division for a hearing. The Administrative Law Judge Division
shall hear the party or parties within twenty days after receipt of the
request and shall give not less than ten days' written notice of the
time and place of the hearing. according to the rules of that
agency. Within fifteen days after the hearing the Administrative
Law Judge Division shall must affirm, reverse, or
modify the previous action, specifying his reasons therefor. Pending
the hearing and decision thereon the director or his designee may
suspend or postpone the effective date of his previous action."
SECTION 56. Section 38-73-457 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-457. Notwithstanding Sections 38-73-920 and
38-73-1210, every automobile insurer and rating organization
shall must, prior to October 1, 1987, file with the
department a base rate, which is defined as a rate by coverage
calculated solely upon the experience generated by the risk for each
class and territory retained by the insurer in its voluntary book of
business and which must not include experience generated by risks
ceded or assumed from the Reinsurance Facility established under
Section 38-73-1030. An objective standards rate by coverage must
also be filed which is twenty-five percent above the base rate
previously described for each class and territory. The base rate must
be calculated by removing from the rate or premium charge, then in
effect for the automobile insurer, that portion of the rate or premium
charge attributable to the net gain or loss of the insurer as a result of
participation in the operating results of the facility as required by
Section 38-77-760. In determining the base rate and objective
standards rate, by coverage, the director or his designee, in order that
no extra premium revenue is generated by this section, shall
must require that the insurer's average rate, by coverage, on
October 1, 1987, (computed as a weighted average of the base rate
and objective standards rate, by coverage, as determined by the
Commissioner), not exceed the insurer's average rate, by coverage,
prior to October 1, 1987, as determined by the director or his
designee. The provisions of the Administrative Procedures Act apply
to any appeal of a base rate or objective standards rate brought
thereunder before the Administrative Law Judge Division as provided
by law. The base rate or objective standards rate approved by the
director or his designee may be put into effect under bond in a similar
manner that a public utility may put a proposed rate increase into
effect under bond as provided by law. No insurer may file a base rate
for any class or territory which is higher than the rate or premium
charge, exclusive of that portion required by Section 38-73-460,
approved by the director or his designee for use on October 1, 1987.
As a result of this section, no insured may receive an increase in rates
for other than an increase in coverage or due to the provisions of
Section Sections 38-77-280, 38-77-610, or
38-73-455, unless the insurer files additional rates in accordance with
this title.
The base rate and objective standards rate filed by each insurer of
automobile insurance are effective if they meet the requirements of
this section, on or after July 1, 1988, for all eligible applicants and
upon the renewal date, on or after July 1, 1988, for all eligible
existing policyholders. If the base rate and objective standards rate
filed by an automobile insurer do not meet the requirements of this
section, the director or his designee shall must
suspend the authority of that insurer to write automobile insurance
until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the
facility recoupment charge approved or established pursuant to
Section 38-77-610 may be approved for an insurer of automobile
insurance unless that rate or premium charge is calculated in
accordance with this section and meets the other applicable
requirements of this title pertaining to the approval of rates or
premium charges.
The consumer advocate, upon request to the director or his
designee, must be provided by him with a copy of any base rate filed
with the director or his designee along with any supporting materials,
documents, or studies utilized to support the filed base rate. In
addition, every automobile insurer and rating organization
shall must promptly respond to requests for
information and data requested by the consumer advocate relating to
the filed base rate. The consumer advocate must be afforded an
opportunity for a hearing before the director or his designee
Administrative Law Judge Division on any filed base rate
before it takes effect that he believes does not meet the requirements
of this section. Final decisions of the director or his designee
regarding this hearing are subject to the provisions of the State
Administrative Procedures Act and may be appealed to the
Administrative Law Judge Division as provided by law."
SECTION 57. Section 38-73-465(B)8(c) of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"(c) The director or his designee may extend the provisions of this
item to other lines of property and casualty insurance, by
order, after public hearing, when the determination is made
that to do so is in the public interest. An insurer may appeal the
decision of the director or his designee to the circuit court of
Richland County."
SECTION 58. Section 38-73-750 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-750. Automobile insurers shall
must file with the State Rating and Statistical Division their
plans or systems for allocating expenses and profit as respects the
various kinds or types of automobile insurance risks and the classes
of risks thereunder. However, no plan or system may be filed which
is inconsistent with the classification of risks promulgated by the
department. No plan or system may be filed or approved if the
purpose or effect is to discriminate unfairly or unreasonably in
respect to the allocation of expenses or profit between classes of risks
or if the purpose or effect is to impose a burden or detriment upon the
South Carolina Reinsurance Facility or to secure to the insurer using
the plan or system an unfair or unreasonable competitive advantage
to the detriment of the South Carolina Reinsurance Facility or other
insurers. The director or his designee after due notice and
hearing, shall must disapprove and disallow the further
use of an inconsistent, discriminatory, burdensome, or competitively
unfair plan or system for the allocation of expenses and profit,
and the insurer may have the disapproval reviewed by the
Administrative Law Judge Division pursuant to Section
38-3-170."
SECTION 59. Section 38-73-775(C) of the 1976 Code, as added by
Act 326 of 1996, is amended to read:
"(C) The governing board of the South Carolina Reinsurance
Facility annually shall must review the automobile
physical damage loss components to determine if they are actuarially
sound and supported by statistical evidence. If rate changes are
required, the governing board shall must submit
appropriate filings for approval with the director. These rate filings
are subject to public hearings before the Administrative Law
Judge Division pursuant to applicable provisions of the
Administrative Procedures Act."
SECTION 60. Section 38-73-910 of the 1976 Code, as last amended
by Act 378 of 1996, is further amended to read:
"Section 38-73-910. No increase in the premium rates may be
granted for automobile, 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 must state the amount of increase,
the type and line of coverage, and the proposed effective date and
shall must 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. If
the director or his designee finds good cause, he may issue an order
granting an additional fifteen days for the consumer advocate or any
interested party before notifying the Administrative Law Judge
Division of the request for hearing.
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)."
SECTION 61. Section 38-73-915(B) of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"(B) The director or his designee may order an insurer or rating
organization to reduce or increase its current rate levels as a result of
recently passed legislation or recently rendered court decisions. The
director or his designee shall must give the insurer
or rating organization and the consumer advocate thirty days' notice
of his intention to order a reduction or increase in an insurer's or
rating organization's rate level. The insurer or rating organization or
the consumer advocate may request a hearing before the director
or his designee Administrative Law Judge Division
under the Administrative Procedures Act to contest the proposed
order. The consumer advocate may participate as a party in any such
hearings."
SECTION 62. Section 38-73-990 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-990. If within the waiting period or any extension
thereof as provided in Section 38-73-960 the director or his designee
finds that a filing or a part of a filing does not meet the requirements
of this chapter, he shall must send to the insurer or
rating organization which made the filing written notice of
disapproval of the filing or part of a filing specifying therein in what
respects he finds the filing or part thereof fails to meet the
requirements of this chapter and stating that the filing or the part may
not become effective. The insurer or rating organization may
request a public hearing before the Administrative Law Judge
Division for a review of the disapproval."
SECTION 63. Section 38-73-1000 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1000. If, within thirty days after a specific inland
marine rate on a risk specially rated by a rating organization subject
to Section 38-73-970 has become effective, the director or his
designee finds that the filing does not meet the requirements of this
chapter, he shall must send to the rating organization
which made the filing written notice of disapproval of the filing
specifying therein in what respects he finds that the filing fails to
meet the requirements of this chapter and stating when, within a
reasonable period thereafter, the filing is no longer effective. This
disapproval does not affect any contract made or issued prior to the
expiration of the period set forth in the notice. The insurer or
rating organization may request a public hearing before the
Administrative Law Judge Division for a review of the
disapproval."
SECTION 64. Section 38-73-1010 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1010. If, within thirty days after a special surety
or guaranty filing subject to Section 38-73-980 has become effective,
the director or his designee finds that the filing does not meet the
requirements of this chapter, he shall must send to
the insurer or rating organization which made the filing written notice
of disapproval of the filing specifying therein in what respects he
finds that the filing fails to meet the requirements of this chapter and
stating when, within a reasonable period thereafter, the filing is
considered no longer effective. This disapproval does not affect any
contract made or issued prior to the expiration of the period set forth
in the notice. The insurer or rating organization may request a
public hearing before the Administrative Law Judge Division for a
review of the disapproval."
SECTION 65. Section 38-73-1020 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1020. If at any time after the applicable review
period provided for in Sections 38-73-990 to 38-73-1010 the director
or his designee finds that a filing does not meet the requirements of
this chapter, he shall, after a hearing held upon not less
than thirty days' written notice to every insurer and rating
organization which made the filing, specifying the matters to be
considered at the hearing, issue an order to every insurer and
rating organization which made the filing, specifying in what
respects he finds that the filing fails to meet the requirements of this
chapter and stating when, within a reasonable period thereafter, the
filing is considered no longer effective. Copies of the order must be
sent to every insurer and rating organization which made the filing.
The order does not affect any contract or policy made or issued prior
to the expiration of the period set forth in the order. The insurer
or rating organization may request a public hearing before the
Administrative Law Judge Division for a review of the
disapproval."
SECTION 66. Section 38-73-1030 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1030. Any person or organization aggrieved with
respect to any filing which is in effect may make written application
to the director or his designee Administrative Law Judge
Division for a hearing thereon, except that the insurer or rating
organization that made the filing may not proceed under this section.
The application shall must specify the grounds to be
relied upon by the applicant. If, within thirty days after receipt of the
application, the director or his designee administrative
law judge finds that the application is made in good faith, that
the applicant would be so aggrieved if his grounds are established,
and that the grounds otherwise justify holding a hearing, he
shall must hold a hearing upon not less than thirty
days' written notice to the applicant and to every insurer and rating
organization which made the filing. Upon good cause shown, the
Administrative Law Judge may permit any person to intervene,
appear, and be heard at the hearing by counsel or in person. If,
after the hearing, the director or his designee
administrative law judge finds that the filing does not meet
the requirements of this chapter, he shall must issue
an order specifying in what respects he finds that the filing fails to
meet the requirements of this chapter and stating when, within a
reasonable period thereafter, the filing is considered no longer
effective. Copies of the order must be sent to the applicant and to
every insurer and rating organization which made the filing. The
order does not affect any contract or policy made or issued prior to
the expiration of the period set forth in the order."
SECTION 67. Section 38-73-1080 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
Section 38-73-1080. Every rating organization and every insurer
which makes its own rates shall must, within a
reasonable time after receiving written request therefor and upon
payment of such reasonable charge as it may make, furnish to any
insured affected by a rate made by it or to the authorized
representative of the insured all pertinent information as to the rate.
Every rating organization and every insurer which makes its own
rates shall must provide within this State reasonable
means whereby any person aggrieved by the application of its rating
system may be heard, in person or by his authorized representative,
on his written request to review the manner in which the rating
system has been applied in connection with the insurance afforded
him. If the rating organization or insurer fails to grant or reject the
request within thirty days after it is made, the applicant may proceed
in the same manner as if his application had been rejected. Any party
affected by the action of the rating organization or the insurer on the
request may, within thirty days after written notice of the action,
appeal to the director or his designee, who, after a hearing held
upon not less than thirty days' written notice to the appellant and to
the rating organization or insurer, may affirm or reverse the
action. The insurer or rating organization may then request a
public hearing before the Administrative Law Judge Division."
SECTION 68. Section 38-73-1090 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1090. The director or his designee, upon his own
motion, or upon written complaint, has the power in the first instance
to determine whether or not any rate fixed by any individual, bureau,
or insurer is unfairly discriminatory. If he concludes, after careful
and diligent inquiry and a full hearing and investigation, that
there is unfair discrimination, he shall must order the
discrimination removed and require the individual rate maker,
bureau, or insurer to promulgate a rate which is not unfairly
discriminatory. The insurer or rating organization may request
a public hearing before the Administrative Law Judge Division to
review this decision."
SECTION 69. Section 38-73-1095(A) of the 1976 Code, as added
by Act 360 of 1996, is amended to read:
"(A) Any private insurer licensed to underwrite 'essential
property insurance' as defined by Section 38-75-310(1), not
withstanding any limitations included with this title, may file and use
any rates for the coverages detailed within Section 38-75-310(l)
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). Filings
for these insurance premium rates must be made upon forms
prescribed by the director or his designee and must apply only to
essential property insurance premium rates for the coastal area.
Within thirty days after the filing of the rates, the director or his
designee must notify the insurer or rating organization filing the rates
of his approval or his disapproval of those rates. If the rates are
disapproved, then the director or his designee must notify the insurer
or the rating organization of the specific reason for disapproval. The
director or his designee may extend for up to an additional thirty days
the period within which he must approve or disapprove the rates.
The insurer or rating organization may then request a public
hearing before the Administrative Law Judge Division to review a
disapproval. Any rates received, which are neither approved nor
disapproved by the director, must be deemed approved at the
expiration of the thirty-day period or, if that period has been
extended, at the expiration of the extended period. However, no
insurer or rating organization may use rates considered approved
under the provisions of this section unless and until the insurer or
rating organization has filed a written notice of its intent to use the
rates. The notice must be filed with the director or his designee at
least ten days before the insurer's or rating organization's use of the
deemed rates."
SECTION 70. Section 38-73-1100 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1100. If at any time it appears to the director or
his designee that rates charged for property, casualty, surety, marine,
title, or allied lines of insurance in this State are excessive or
unreasonable, in that the results of the business of the insurer in this
State during the five years immediately preceding the year in which
the investigation is made, as indicated by the insurer's annual
statements and any supplements to them, show an aggregate
operating profit in excess of a reasonable amount, then the director
or his designee may order a general reduction in rates which will
reduce the operating profit to a reasonable amount. Any reduction
ordered by the director or his designee must be applied to the class or
classes of risks as the insurer or rating bureau may elect, and they
may not be compelled to reduce rates on classes which have not
produced a reasonable operating profit for the five-year period. In
addition to ordering a general reduction in rates, the director or his
designee may also order a pro rata refund of any excessive or
unreasonable profits found to have been realized by the insurer,
together with interest. The director or his designee shall
must determine the rate of interest which must be the
insurer's average rate of return for the five-year period. The
insurer or rating organization may request a public hearing before the
Administrative Law Judge Division to review this decision. Any
refund which is ordered must be equitably apportioned among the
policyholders entitled to it, and may be given either in the form of a
cash refund or as a credit toward future premiums or a combination
of these two methods. In determining the question of a reasonable
operating profit under this section, the director or his designee as a
protection to policyholders shall must give proper
and reasonable consideration to conflagration liabilities, both within
and without this State."
SECTION 71. Section 38-73-1240 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1240. Licenses issued pursuant to Section
38-73-1230 may be suspended or revoked by the director or his
designee, after hearing before the Administrative Law Judge
Division, in the event the rating organization ceases to meet the
requirements of this article."
SECTION 72. Section 38-73-1260 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1260. Subject to rules and regulations which have
been approved by the department as reasonable, each rating
organization shall must permit any insurer, not a
member, to be a subscriber to its rating services for any kind of
insurance, subdivision, or class of risk or part or combination thereof
for which it is authorized to act as a rating organization. If the rating
organization refuses to admit an insurer as a subscriber or fails to
grant or reject an insurer's application for subscribership within thirty
days after it was made, the insurer may request a review by the
director or his designee Administrative Law Judge
Division. Upon review the failure to act must be treated as a
rejection of the application. If the director or his designee
administrative law judge finds at a hearing, held upon at
least thirty days' written notice to the rating organization, that the
insurer has been refused admittance to the rating organization as a
subscriber without justification, he shall must order
the rating organization to admit the insurer as a subscriber. If he
finds that the action of the rating organization was justified, the
director or his designee shall must make an order
affirming its action.
Each rating organization shall must furnish its
rating services without discrimination to its members and
subscribers."
SECTION 73. Section 38-73-1270 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1270. Notice of proposed changes in the rules and
regulations referred to in Section 38-73-1260 must be given to
subscribers.
The reasonableness of any rule or regulation in its application to
subscribers must, at the request of any subscriber or any insurer, be
reviewed by the director or his designee at a hearing held upon at
least thirty days' written notice to the rating organization and to the
subscriber or insurer. If the director or his designee finds that the
rule or regulation is unreasonable in its application to subscribers, he
shall must order that the rule or regulation is not
applicable to subscribers. The insurer or rating organization may
request a public hearing before the Administrative Law Judge
Division for a de novo review of this decision."
SECTION 74. Section 38-73-1320 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1320. Upon the filing of an application under
either Section 38-73-1300 or Section 38-73-1310 the director or his
designee shall must set a time and place for a hearing at
which the insurer and the rating organization may be heard and
shall must not give them not less than thirty
days' written notice thereof. In the event the director or his designee
is advised by the rating organization that it does not desire a hearing
he may, upon the consent of the applicant, waive the hearing. In
considering an application under Section 38-73-1300 for permission
to file a deviation the director or his designee shall
must give consideration to the available statistics and the
principles for rate making as provided in Section 38-73-330. The
director or his designee shall must issue an order
permitting the deviation or modification for the insurer to be filed if
he finds it to be justified. Upon issuance of the order the deviation
or modification becomes effective. The director or his designee
shall must issue an order denying the application if
he finds that the resulting premiums would be excessive, inadequate,
or unfairly discriminatory or, in the case of an application filed under
Section 38-73-1310, if he finds the modification requested is not
justified. Each deviation permitted to be filed, which, when
approved, would result in a uniform percentage decrease, remains
effective until disapproved by the director or his designee. Each
deviation permitted to be filed, which, when approved, would result
in a uniform percentage increase, is effective for a period of one year
from the date of the permission unless terminated sooner with the
approval of the director or his designee."
SECTION 75. Section 38-73-1340 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1340. Any member of or subscriber to a rating
organization may appeal to the Administrative Law Judge Division
from the action or decision of the rating organization in approving or
rejecting any proposed change in or addition to the filings of the
rating organization. The Administrative Law Judge Division
shall must, after a hearing held before it upon not
less than thirty days' written notice to the appellant and to the rating
organization, issue an order approving the action or decision of the
rating organization or directing it to give further consideration to the
proposal, or, if the appeal is from the action or decision of the rating
organization in rejecting a proposed addition to its filings,
the Administrative Law Judge Division may, in the event it
finds that the action or decision was unreasonable, issue an order
directing the rating organization to make an addition to its filings on
behalf of its members and subscribers in a manner consistent with its
findings, within a reasonable time after the issuance of the order.
If the appeal in the case of an insurer to whom the provisions of
Article 5 of this chapter are applicable is based upon the failure of the
rating organization to make a filing on behalf of the member or
subscriber which is based on a system of expense provisions which
differs, in accordance with the right granted in item (2) of Section
38-73-430, from the system of expense provisions included in a filing
made by the rating organization, the Administrative Law Judge
Division shall must, if it grants the appeal, order the
rating organization to make the requested filing for use by the
appellant. In deciding the appeal the Administrative Law Judge
Division shall must apply the standards set forth in
Section 38-73-430.
The actual cost to the Administrative Law Judge Division, and
the Department of Insurance provided it participates in the hearing,
in connection with the appeal may be charged by the Administrative
Law Judge Division to the parties making the appeal in any
proportion he considers proper and must be immediately paid by the
respective parties."
SECTION 76. Section 38-73-1350 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1350. Notwithstanding the provisions of Sections
38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410, 38-73-1420, and
38-73-1430, after public hearing the director or his designee
may prohibit cooperation among or within property/casualty rating
or advisory organizations by insurers or among or within these rating
or advisory organizations and insurers in rate making or in other
matters within the scope of this chapter, except to the extent that
these organizations may compile and disseminate only historic loss
data with no mathematical trending or analytical methodologies, upon
a finding by the director or his designee that the anti-competitive
effects of this cooperation outweigh practical constraints of
prohibitions. All property/casualty filings are subject to prior
approval by the director or his designee. The provisions of Title
1, Chapter 23 (Administrative Procedures Act) apply to all
property/casualty rate filings."
SECTION 77. Section 38-73-1370 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1370. After June 30, 1989, no rating organization
may file a rate increase with the department for any previously
approved final rate or premium charge for any private passenger
automobile insurance coverage. A rating organization may file the
pure loss component of the rate or premium charge for any private
passenger automobile insurance coverage, by class and territory, for
the approval of the director or his designee pursuant to Section
38-73-910. After a public hearing, the director or his
designee may approve the pure loss component of the rate or
premium charge for use by the members or subscribers of the rating
organization. No member or subscriber may use the approved
pure loss component of the rate or premium charge unless and until
the expense component of the rate or premium charge has also been
filed with the department and approved by the director or his
designee pursuant to Section 38-73-1380."
SECTION 78. Section 38-73-1380 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1380. After June 30, 1989, No member
or subscriber of a rating organization may utilize a rate or premium
charge for any private passenger automobile insurance coverage
unless and until the final rate or premium charge has been filed with
the Division and approved by the director or his designee. After the
effective date of this section, the final rate or premium charge is the
pure loss component filed and approved by a rating organization on
behalf of its members or subscribers added to the expense component
of the rate or premium charge, filed with the department and
approved by the director or his designee, by each member or
subscriber of a rating organization independently.
No expense component filed by a member or subscriber of a rating
organization may be approved by the director or his designee unless
it has been the subject of a public hearing before the
Administrative Law Judge Division, if that member's or
subscriber's total written private passenger automobile insurance
premium during the previous calendar year equaled or exceeded one
percent of the total written private passenger automobile insurance
premium in this State during the previous calendar year.
For other lines of insurance the requirements of this section are not
activated unless the members' or subscribers' total written premium
during the previous calendar year equaled or exceeded three percent
of the total written insurance premium for that specific line of
insurance in this State during the previous calendar year."
SECTION 79. Section 38-73-1420 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1420. After June 30, 1989, The Board of
Governors of the South Carolina Reinsurance Facility shall
must file an expense component for private passenger
automobile insurance rate or premium charges after the rating
organization with the largest number of members or subscribers has
filed a pure loss component for private passenger automobile
insurance with the director or his designee. Upon the approval of
such component by the director or his designee, those automobile
insurers designated pursuant to Section 38-77-590(A), for risks
written by them through producers designated pursuant to that same
section, shall must utilize these final rate or premium
charges. Automobile insurers designated pursuant to Section
38-77-590(A) are not required to use those same final rates or
premium charges for risks written through their agents not appointed
pursuant to Section 38-77-590."
SECTION 80. Section 38-73-1430 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1430. After June 30, 1989, The director
or his designee may extend the provisions of Sections 38-73-1370,
38-73-1380, 38-73-1400, and 38-73-1410 to other lines of property
and casualty insurance, by order, after public hearing
when the determination is made that to do so is in the public interest.
The insurer or rating organization may appeal the decision of the
director or his designee to the circuit court of Richland County."
SECTION 81. Section 38-73-1530 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1530. If, after a hearing, the director or
his designee finds that the furnishing of information or assistance
involves any act or practice which is unfair, unreasonable, or
otherwise inconsistent with the provisions of this chapter, he may
issue a written order specifying in what respects the act or practice is
unfair, unreasonable, or otherwise inconsistent with the provisions of
this chapter and requiring the discontinuance of the act or practice.
The director or his designee may also impose the penalties in
Section 38-2-10. The order may be subject to a hearing before the
Administrative Law Judge Division pursuant to Section
38-3-170."
SECTION 82. Section 38-73-1720 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-1720. If, after a hearing, the director or
his designee finds that any activity or practice of any such group,
association, or other organization is unfair or unreasonable or
otherwise inconsistent with the provisions of this chapter, he may
issue a written order specifying in what respects the activity or
practice is unfair or unreasonable or otherwise inconsistent with the
provisions of this chapter and requiring the discontinuance of the
activity or practice. The director or his designee may also impose
the penalties in Section 38-2-10. The order may be subject to a
hearing before the Administrative Law Judge Division pursuant to
Section 38-3-170."
SECTION 83. Section 38-74-20(D) of the 1976 Code, as last
amended by Section 789 of Act 181 of 1993, is further amended to
read:
"(D) The board shall must submit to the director
or his designee a plan of operation for the pool and any amendments
necessary or suitable to assure the fair, reasonable, and equitable
administration of the pool. The director or his designee shall
must approve the plan of operation provided it is
determined to be suitable to assure the fair, reasonable, and equitable
administration of the pool and provides for the sharing of pool gains
or losses on an equitable basis. The plan of operation is effective
upon approval in writing by the director or his designee consistent
with the date on which the coverage under this chapter must be made
available. If the board fails to submit a suitable plan of operation
within one hundred twenty days after the appointment of the board
of directors, or at any time thereafter fails to submit suitable
amendments to the plan, the department director,
after notice and hearing, shall must promulgate
reasonable regulations orders necessary to effectuate
the provisions of this chapter. The orders are subject to review
by the Administrative Law Judge Division. The
regulations orders shall otherwise
continue in force until modified by the department director or
superseded by a plan submitted by the board and approved by the
director or his designee."
SECTION 84. Section 38-75-370 of the 1976 Code, as last amended
by Section 793 of Act 181 of 1993, is further amended to read:
"Section 38-75-370. All members of the association shall
must participate in its writings, expenses, profits, and losses
in the proportion that the net direct premium of the member written
in this State during the preceding calendar year bears to the aggregate
net direct premiums written in this State by all members of the
association, as certified to the association by the department after
review of annual statements, other reports, and other statistics which
the department considers necessary to provide the information
required and which the department is authorized to obtain from a
member of the association. After certification by the department, the
association may rely on the member company's annual statement in
determining the company's participation in profits and losses for each
year.
Each member's participation in the association must be determined
annually in the same manner as the initial determination. An insurer
authorized to write and engage in writing insurance, the writing of
which requires the insurer to be a member of the association pursuant
to Section 38-75-330, becomes a member of the association on
January first immediately following the authorization. The
determination of the insurer's participation in the association must
be made as of the date of the membership in the same manner as for
all other members of the association. Member insurers shall
must receive credit annually for essential property insurance
voluntarily written in the coastal area and their participation in the
writings of the association must be reduced accordingly. The board
of directors shall must authorize the method of
determining the credit. In order to receive credit for essential
property voluntarily written in the coastal area, each member
company shall must submit its requests by March
thirty-first of the year for which credit is sought.
The director or his designee may order the assessment of
a member insurer after hearing may be ordered deferred in
whole or in part upon application by the insurer if, in the opinion of
the director or his designee after conducting a hearing,
payment of the assessment would render the insurer insolvent or in
danger of insolvency or would otherwise leave the insurer in a
condition so that further transaction of the insurer's business would
be hazardous to its policyholders, creditors, members, subscribers,
stockholders, or the public. The director or his designee may
hold a hearing before issuing his order. The order may be appealed
as provided in Section 38-3-210. If payment of an assessment
against a member insurer is deferred by order of the director or his
designee in whole or in part, the amount by which the assessment is
deferred must be assessed against other member insurers in the same
manner as provided in this section. In its his order
of deferral, or in necessary subsequent orders, the director or his
designee shall must prescribe a plan by which the
assessment so deferred must be repaid to the association by the
impaired insurer with interest at the six-month treasury bill rate
adjusted semiannually. Profits, dividends, or other funds of the
association to which the insurer is otherwise entitled must not be
distributed to the impaired insurer but must be applied toward
repayment of an assessment until the obligation has been satisfied.
The association shall must distribute the repayments,
including interest, to the other member insurers on the basis at which
assessments were made."
SECTION 85. Section 38-75-410(A) of the 1976 Code, as last
amended by Section 793 of Act 181 of 1993, is further amended to
read:
"(A) A person insured pursuant to this article or his representative
or a member company who is aggrieved by an act, ruling, or decision
of the association:
(1) regarding rates, classification of risks, assessments,
voluntary credits, cancellation or termination of policies, or
underwriting shall must appeal to the director or his
designee within sixty days after the association's act, ruling,
or decision;. The director or his designee may, in his
discretion, hold a hearing on the matter before issuing an order. The
order of the director or his designee is subject to review by the
Administrative Law Judge Division.
(2) other than those specified in item (1), may appeal to the
director or his designee within thirty days after the act, ruling, or
decision."
SECTION 86. Section 38-75-980 of the 1976 Code, as last amended
by Section 800 of Act 181 of 1993, is further amended to read:
"Section 38-75-980. (A) A title insurer shall must
file with the director or his designee the premium rate schedules it
proposes to use in this State. If the director or his designee finds in
his review of a filing that it does not violate Section 38-75-970, he
shall must approve the schedule within sixty days of
filing. Before the approval, the director or his designee may
conduct public hearings with respect to the filing. Filings that
the director or his designee has failed to approve or disapprove within
sixty days of filing is are considered approved.
The insurer may request a hearing before the Administrative Law
Judge Division for a review of the disapproval. Upon notice to
the title insurer, the period for review of the rate filing may be
extended for an additional sixty days.
(B) If after the approval of filing the director or his designee
believes that the filing does not meet the requirements of this section
or is otherwise contrary to law, or if any party having an interest in
the filing makes a written complaint to the director or his designee
setting forth specific and reasonable grounds for the complaint,
he may disapprove the filing. or if Any insurer,
upon within thirty days of receiving notice of
disapproval by the director or his designee of a filing pursuant to this
section, should so may request, the director or
his designee shall hold a hearing within thirty days and give
written notice of the hearing to all parties in interest before
the Administrative Law Judge Division to review the
disapproval. The director or his designee
administrative law judge may confirm, modify, change, or
rescind any previous action the decision of the director or
his designee if warranted by the facts shown at the hearing."
SECTION 87. Section 38-77-115 of the 1976 Code, as last amended
by Section 805 of Act 181 of 1993, is further amended to read:
"Section 38-77-115. The authorized agents for every insurer
covered by the provisions of Section 38-77-110 shall
must post in a conspicuous location in their office or place
of business a sign containing language to be required by
regulation of the department, after notice and hearing before the
Administrative Law Judge Division order of the director or
his designee, that stipulates that insurer and agent may not refuse
to write or renew that type of insurance, that tactics designed to avoid
writing or renewing that type of insurance are not permissible
including unreasonable delays in meeting with applicants, and that
violations of the above should be reported to the director or his
designee for appropriate action."
SECTION 88. Section 38-77-580 of the 1976 Code, as last amended
by Section 820 of Act 181 of 1993, is further amended to read:
"Section 38-77-580. The operations and affairs of the facility are
under the direction and control of a governing board of nineteen
persons of whom four must be residents of South Carolina appointed
by the Governor of South Carolina to represent consumers. The
director shall must appoint eight persons to represent
the insurance industry; in appointing these persons, the director
shall must select two from a list of not less than five
nominated by the American Insurance Association from the officers
or employees of insurers licensed in South Carolina and which are
members or subscribers of that organization; he shall
must select two from a list of not less than five persons
nominated by the American Mutual Insurance Alliance from the
officers or employees of insurers licensed in South Carolina and
which are members or subscribers of that organization; he
shall must select two from a list of not less than five
persons nominated by the National Association of Independent
Insurers from the officers or employees of insurers licensed in South
Carolina and which are members or subscribers of that organization;
he shall must select two persons, one of whom must
be an officer or employee of a stock insurer licensed in South
Carolina and not a member or subscriber of any of these
organizations, and one of whom must be an officer or employee of a
nonstock insurer licensed in South Carolina and not a member or
subscriber of any of these organizations; however, of the eight
persons appointed to represent the insurance industry, not less than
five must be residents of South Carolina and those who are not
residents of South Carolina must have job responsibilities that
include the supervision over South Carolina operations; not less than
two must be officers or employees of insurers licensed to transact
automobile insurance in South Carolina and domiciled therein. The
director shall must appoint four persons to represent
producers, all of whom must be residents of South Carolina; he
shall must select two such persons from a list of not
less than five nominated by the stock agents' association and two
from a list of not less than five persons nominated by the mutual
agents' association. The director shall must appoint
two persons to represent the designated agents, one of whom must be
an officer of a premium service finance company and the other of
whom must be a designated agent and both of whom must be
residents of South Carolina. In addition the consumer advocate is an
ex-officio member of the governing board of the Reinsurance
Facility. No person who is associated with any business within the
meaning of Section 8-13-20, which is either subject to regulation by
the Department of Insurance or which provides goods or services to
the facility for compensation, is eligible for appointment to the board
to represent consumers, except that any person serving on the board
representing consumers on the effective date of this provision who
would otherwise be disqualified from serving based on this provision
may continue to serve for the remainder of his current term.
The director is chairman of the board, ex officio, but has no vote
except in the case of a tie. The director, or his designated
representative, shall preside presides over all
meetings which must be held not less than quarterly in South
Carolina at the times and places the director designates. However,
upon the filing with the director of a request for a meeting signed by
not fewer than five members of the board and specifying the subjects
to be discussed at the proposed meeting, the director shall
must call a special meeting of the board to be held not less
than fifteen nor more than thirty days after receipt of the request.
Notice, in writing, of the special meeting must be provided members
of the board.
Members of the board shall must serve one year or
until their successors are appointed and have qualified.
Amendment of the plan of operation may be made only at the
annual meeting of the board or at a special meeting called by the
director for that purpose and so specified in the notice of meeting.
Amendments of the plan require the affirmative vote of two-thirds of
all the board members and are subject to the approval of the director
or his designee. The director or his designee may approve
amendments only if they are consistent with the purposes of this
chapter. If the consumer-representative members of the board
unanimously dissent from a proposed amendment and specify their
reasons for dissent in writing, the director or his designee may not
approve the amendment until after he has held a
public hearing addressed to the reasons for the dissent.
The director may make provision for voting by proxy at meetings.
The director or his designee, through the department, may propose
to the board any amendment to or modification of the plan that the
director or his designee considers to be necessary to render the plan
reasonable or consistent with the purposes of this chapter, specifying
in writing the reasons for any proposed amendment or modification.
In the event that the board fails to adopt his proposed amendment or
modification, the director or his designee may, after giving
notice and conducting a public hearing addressed to the
reasons for the proposed amendment or modification, promulgate the
amendment or modification considered necessary to render the plan
reasonable or consistent with the purposes of this chapter."
SECTION 89. Section 38-77-610 of the 1976 Code, as last amended
by Section 827 of Act 181 of 1993, is further amended to read:
"Section 38-77-610. Before December second of each year, the
governing board of the facility shall must file the
facility recoupment charges calculated pursuant to Section 38-77-600
with the director or his designee. The director or his designee
the Administrative Law Judge Division shall
must then hold a public hearing subject to the provisions of
the Administrative Procedures Act to determine if the facility
recoupment charges were calculated in accordance with the
provisions of Section 38-77-600. The facility recoupment charges
must be approved if it is determined that they were properly
calculated. If it is determined that the facility recoupment charges
were improperly calculated, the director or his designee shall
must then establish the appropriate charges. The provisions
of the Administrative Procedures Act apply to any court appeal
brought thereunder and the charges approved by the director or
his designee the Administrative Law Judge Division
may be put into effect under bond in a similar manner that a public
utility may put a proposed rate increase into effect under bond as
provided by law."
SECTION 90. Section 38-79-140(4) of the 1976 Code, as last
amended by Section 830 of Act 181 of 1993, is further amended to
read:
"(4) Amendments to the plan of operation may be made by the
directors of the association with the approval of the director or his
designee or must be made at the direction of the director or his
designee after due notice and public hearing. The directors
of the association may, subject to the approval of the director or his
designee, amend the plan of operation at any time. The director or
his designee must review the plan of operation, including the rate
structure and loss experience, not less than once in each calendar
year. After review of the plan the director or his designee may
amend the plan upon approval of the directors of the
association."
SECTION 91. Section 38-79-230 of the 1976 Code, as last amended
by Section 830 of Act 181 of 1993, is further amended to read:
"Section 38-79-230. All insurers which are members of the
association shall must participate in its writings,
expenses, profits, and losses in the proportion that the net direct
premiums of each member (excluding that portion of premiums
attributable to the operation of the association) written during the
preceding calendar year bear to the aggregate net direct premiums
written in this State by all members of the association. Each insurer's
participation in the association must be determined annually on the
basis of the net direct premiums written during the preceding
calendar year, as reported in the annual statements and other reports
filed by the insurer with the department. The director or his
designee may order the assessment of a member insurer after
hearing may be ordered deferred in whole or in part upon
application by the insurer if, in the opinion of the director or his
designee, payment of the assessment may render the insurer insolvent
or in danger of insolvency or otherwise may leave the insurer in a
condition so that further transaction of the insurer's business would
be hazardous to its policyholders, creditors, members, subscribers,
stockholders, or the public. The director or his designee may
hold a hearing before issuing his order. The order may be appealed
as provided in Section 38-3-210. If payment of an assessment
against a member insurer is deferred by order of the director or his
designee in whole or in part, the amount by which the assessment is
deferred must be assessed against other member insurers in the same
manner as provided in this section. In the order of deferral or in
subsequent orders as may be necessary, the director or his designee
shall must prescribe a plan by which the assessment
deferred must be repaid to the association by the impaired insurer
with interest at the six-month treasury bill rate adjusted semiannually.
Profits, dividends, or other funds of the association to which the
insurer is otherwise entitled may not be distributed to the impaired
insurer but must be applied toward repayment of any assessment until
the obligation has been satisfied. The association shall
must distribute the repayments, including interest on them,
to the other member insurers on the basis on which assessments were
made."
SECTION 92. Section 38-81-250(D) of the 1976 Code, as last
amended by Section 832 of Act 181 of 1993, is further amended to
read:
"(D) Amendments to the plan of operation may be made by
the directors of the association with the approval of the director or his
designee or must be made at the direction of the director or his
designee after proper notice and public hearing. The
directors of the association may, subject to the approval of the
director or his designee, amend the plan of operation at any time.
The director or his designee must review the plan of operation,
including the rate structure and loss experience, not less than once in
each calendar year. After review of the plan the director or his
designee may amend the plan upon approval of the directors of the
association."
SECTION 93. Section 38-81-340 of the 1976 Code, as last amended
by Section 832 of Act 181 of 1993, is further amended to read:
"Section 38-81-340. All insurers which are members of the
association shall must participate in its writings,
expenses, profits, and losses in the proportion that the net direct
premiums of each member, excluding that portion of premiums
attributable to the operation of the association, written during the
preceding calendar year bear to the aggregate net direct premiums
written in this State by all members of the association. Each insurer's
participation in the association must be determined annually on the
basis of the net direct premiums written during the preceding
calendar year, as reported in the annual statements and other reports
filed by the insurer with the department. The director or his
designee may order the assessment of a member insurer after
hearing may be ordered deferred in whole or in part upon
application by the insurer if, in the opinion of the director or his
designee after conducting a hearing, payment of the
assessment may render the insurer insolvent or in danger of
insolvency or otherwise may leave the insurer in a condition
so that further transaction of the insurer's business
may be hazardous to its policyholders, creditors, members,
subscribers, stockholders, or the public. The director or his
designee may hold a hearing before issuing his order. The order may
be appealed as provided in Section 38-3-210. If payment of an
assessment against a member insurer is deferred by order of the
director or his designee in whole or in part, the amount by which the
assessment is deferred must be assessed against other member
insurers in the same manner as provided in this section. In the order
of deferral or in subsequent orders as may be necessary, the director
or his designee shall must prescribe a plan by which
the assessment deferred must be repaid to the association by the
impaired insurer with interest at the six-month treasury bill rate
adjusted semiannually. Profits, dividends, or other funds of the
association to which the insurer is otherwise entitled may not be
distributed to the impaired insurer but must be applied toward
repayment of any assessment until the obligation has been satisfied.
The association shall must distribute the repayments,
including interest on them, to the other member insurers on the basis
on which assessments were made."
SECTION 94. Section 38-83-40(D) of the 1976 Code, as last
amended by Section 833 of Act 181 of 1993, is further amended to
read:
"(D) Amendments to the plan of operation may be made by
the directors of the association with the approval of the director or his
designee or must be made at the direction of the director or his
designee after proper notice and public hearing. The
directors of the association may, subject to the approval of the
director or his designee, amend the plan of operation at any time.
The director or his designee must review the plan of operation,
including the rate structure and loss experience, not less than once in
each calendar year. After review of the plan the director or his
designee may amend the plan upon approval of the directors of the
association."
SECTION 95. Section 38-83-130 of the 1976 Code, as last amended
by Section 833 of Act 181 of 1993, is further amended to read:
"Section 38-83-130. All insurers which are members of the
association shall must participate in its writings,
expenses, and losses in the proportion that the net direct premiums of
each member, excluding that portion of premiums attributable to the
operation of the association, written during the preceding calendar
year bear to the aggregate net direct premiums written in this State by
all members of the association. Each insurer's participation in the
association must be determined annually on the basis of the net direct
premiums written during the preceding calendar year, as reported in
the annual statements and other reports filed by the insurer with the
Department of Insurance. The director or his designee may
order the assessment of a member insurer after hearing may
be ordered deferred in whole or in part upon application by the
insurer if, in the opinion of the director or his designee after
conducting a hearing, payment of the assessment may render the
insurer insolvent or in danger of insolvency or otherwise may leave
the insurer in a condition so that further transaction of the
insurer's business may be hazardous to its policyholders, creditors,
members, subscribers, stockholders, or the public. The director
or his designee may hold a hearing before issuing his order. The
order may be appealed as provided in Section 38-3-210. If
payment of an assessment against a member insurer is deferred by
order of the director or his designee in whole or in part, the amount
by which the assessment is deferred must be assessed against other
member insurers in the same manner as provided in this section. In
the order of deferral or in subsequent orders as may be necessary, the
director or his designee shall must prescribe a plan
by which the assessment deferred must be repaid to the association
by the impaired insurer with interest at the six-month treasury bill
rate adjusted semiannually. Profits, dividends, or other funds of the
association to which the insurer is otherwise entitled may not be
distributed to the impaired insurer but must be applied toward
repayment of any assessment until the obligation has been satisfied.
The association shall must distribute the repayments,
including interest on them, to the other member insurers on the basis
on which assessments were made."
SECTION 96. Section 38-89-40(D) of the 1976 Code, as last
amended by Section 845 of Act 181 of 1993, is further amended to
read:
"(D) Amendments to the plan of operation may be made by
the directors of the association with the approval of the director or his
designee or must be made at the direction of the director or his
designee after proper notice and public hearing. The
directors of the association may, subject to the approval of the
director or his designee, amend the plan of operation at any time.
The director or his designee must review the plan of operation,
including the rate structure and loss experience, not less than once in
each calendar year. After review of the plan the director or his
designee may amend the plan upon approval of the directors of the
association."
SECTION 97. Except as otherwise may be specifically provided in
this act, this act takes effect upon approval by the Governor.
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