H*3695 Session 108 (1989-1990)
H*3695(Rat #0227, Act #0148 of 1989) General Bill, By
House Labor, Commerce and Industry
Automobile Insurance Reform Act of 1989.-short title
03/15/89 House Introduced, read first time, placed on calendar
without reference HJ-45
03/16/89 House Debate adjourned until Tuesday, April 4, 1989 HJ-32
03/23/89 House Special order, set for Tuesday, 4/4/89, after
call of uncontested cal (Under H 3755) HJ-33
04/04/89 House Amended HJ-40
04/04/89 House Debate interrupted HJ-41
04/05/89 House Amended HJ-20
04/05/89 House Debate interrupted HJ-45
04/06/89 House Amended HJ-18
04/06/89 House Debate interrupted HJ-48
04/11/89 House Amended HJ-25
04/11/89 House Debate interrupted HJ-42
04/12/89 House Amended HJ-41
04/12/89 House Debate interrupted HJ-125
04/18/89 House Amended HJ-42
04/18/89 House Read second time HJ-51
04/19/89 House Amended HJ-25
04/19/89 House Read third time and sent to Senate HJ-26
04/20/89 Senate Introduced and read first time SJ-8
04/20/89 Senate Referred to Committee on Banking and Insurance SJ-1
05/03/89 Senate Recalled from Committee on Banking and Insurance SJ-99
05/03/89 Senate Read second time SJ-99
05/03/89 Senate Ordered to third reading with notice of
amendments SJ-99
05/04/89 Senate Amended SJ-31
05/04/89 Senate Read third time and returned to House with
amendments SJ-81
05/10/89 House Senate amendment amended HJ-77
05/10/89 House Returned to Senate with amendments HJ-156
05/11/89 Senate Non-concurrence in House amendment SJ-16
05/16/89 House House insists upon amendment and conference
committee appointed Reps. R. Brown, J. Bailey &
Mappus HJ-17
05/16/89 Senate Conference committee appointed Sens. Saleeby,
Moore, and Mullinax SJ-50
05/24/89 House Free conference powers granted HJ-44
05/24/89 House Free conference committee appointed R. Brown, J.
Bailey & Mappus HJ-44
05/24/89 Senate Free conference powers granted SJ-25
05/24/89 Senate Free conference committee appointed Sens.
Saleeby, Moore, Mullinax SJ-28
05/30/89 Senate Free conference report received and adopted SJ-45
05/30/89 House Free conference report received HJ-6
05/31/89 House Free conference report adopted HJ-31
05/31/89 House Roll call Yeas-077 Nays-037 HJ-37
05/31/89 Senate Ordered enrolled for ratification SJ-42
06/02/89 Ratified R 227
06/08/89 Became law without Governor's signature
06/08/89 Act No. 148
06/08/89 See act for exception to or explanation of
effective date
06/19/89 Copies available
(A148, R227, H3695)
AN ACT TO AMEND SECTION 56-9-330, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE FURNISHING OF ABSTRACTS OF MOTOR VEHICLE OPERATING RECORDS, SO
AS TO CHANGE THE REQUIRED FEE AND REQUIRE THE FURNISHING OF A MONTHLY LISTING BY
MAGNETIC OR OTHER ELECTRONIC MEDIA OF ALL DRIVER'S LICENSE NUMBERS THAT HAD
DRIVING VIOLATIONS POSTED ON THEIR RECORDS DURING THE PREVIOUS MONTH; TO AMEND
SECTION 38-73-735, RELATING TO INSURANCE AND PLANS FOR CREDITS AND DISCOUNTS, SO
AS TO REFER TO RISK AND TERRITORIAL CLASSIFICATION PLANS "APPROVED",
AS WELL AS PROMULGATED, UNDER SECTION 38-73-730, AND PROVIDE THAT IF AN INSURANCE
CREDIT OR DISCOUNT PLAN IS GIVEN TO AN INSURED, THE POLICY MAY BE CEDED TO THE
REINSURANCE FACILITY IN ACCORDANCE WITH THE FACILITY'S PLAN OF OPERATION; TO
AMEND SECTION 56-10-240, AS AMENDED, RELATING TO THE REQUIREMENT THAT UPON LOSS
OF INSURANCE THE INSURED OBTAIN NEW INSURANCE OR SURRENDER REGISTRATION AND
PLATES, SO AS TO, AMONG OTHER THINGS, PROVIDE FOR NOTICE BY MAGNETIC OR
ELECTRONIC MEDIA IN A MANNER CONSIDERED SATISFACTORY TO THE DEPARTMENT OF
HIGHWAYS AND PUBLIC TRANSPORTATION, PROVIDE FOR DELIVERY UNDER BULK CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, RATHER THAN CERTIFICATE OF MAILING, PROVIDE FOR
A REINSTATEMENT FEE OF TWO HUNDRED DOLLARS, RATHER THAN ONE HUNDRED DOLLARS, FOR
THE FIRST REFUSAL UNDER THIS SECTION, PROVIDE A FEE OF THREE HUNDRED DOLLARS FOR
EACH SUBSEQUENT REFUSAL, AND PROVIDE A NOMINAL REINSTATEMENT FEE FOR A PERSON WHO
VOLUNTARILY SURRENDERS HIS LICENSE PLATES AND REGISTRATION CERTIFICATE BEFORE
THEIR SUSPENSION; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-161 SO AS TO
PROVIDE THAT NO UNINSURED OR UNDERINSURED MOTORIST COVERAGE NEED BE PROVIDED BY
AN EXCESS OR UMBRELLA POLICY OF INSURANCE; TO AMEND SECTION 38-73-10, RELATING
TO THE DECLARATION OF THE PURPOSE AND THE CONSTRUCTION OF CHAPTER 73 OF TITLE 38
ON PROPERTY, CASUALTY, INLAND MARINE, AND SURETY RATES AND RATE-MAKING
ORGANIZATIONS, SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE AND VEST IN
THE CHIEF INSURANCE COMMISSIONER, RATHER THAN THE STATE RATING AND STATISTICAL
DIVISION, THE AUTHORITY TO PROMULGATE THE RISK CLASSIFICATION AND TERRITORIAL
PLANS, RATHER THAN THE "RISK AND TERRITORIAL CLASSIFICATION PLAN OR
PLANS" TO BE USED BY ALL INSURERS OF AUTOMOBILE INSURANCE IN THIS STATE; TO
AMEND SECTION 38-73-40, RELATING TO THE RECORDING AND REPORTING OF LOSS AND
EXPENSE EXPERIENCE UNDER THE INSURANCE LAWS, SO AS TO ALLOW, RATHER THAN REQUIRE,
THE CHIEF INSURANCE COMMISSIONER TO PROMULGATE STATISTICAL PLANS, AND DELETE
REFERENCES TO REGULATIONS UNDER THIS SECTION; TO AMEND SECTION 38-73-720,
RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND THE POWER TO ESTABLISH
RISK AND TERRITORIAL CLASSIFICATIONS, SO AS TO, AMONG OTHER THINGS, EMPOWER THE
CHIEF INSURANCE COMMISSIONER, RATHER THAN THE DIVISION, TO FIX RISK
CLASSIFICATIONS AND TERRITORIES, AND REQUIRE THE COMMISSIONER, BEFORE THE
BEGINNING OF THE 1990 SESSION OF THE GENERAL ASSEMBLY, TO PROMULGATE BY
REGULATION A CLASSIFICATION PLAN FOR AUTOMOBILE INSURANCE FOR THE ESTABLISHMENT
OF RATES AND PREMIUMS; TO AMEND SECTION 38-73-750, RELATING TO THE FILING OF
PLANS BY INSURERS, THE PROVISION THAT CERTAIN PLANS MAY NOT BE FILED OR APPROVED,
AND THE DISAPPROVAL OF PLANS BY THE CHIEF INSURANCE COMMISSIONER, SO AS TO REFER
TO CLASSIFICATION OF RISKS PROMULGATED BY THE COMMISSIONER RATHER THAN THE STATE
RATING AND STATISTICAL DIVISION; TO AMEND SECTION 38-73-760, RELATING TO UNIFORM
STATISTICAL PLANS UNDER THE INSURANCE LAWS, SO AS TO DELETE CERTAIN LANGUAGE,
DELETE A REFERENCE TO THE STATE RATING AND STATISTICAL DIVISION AND REFER TO THE
CHIEF INSURANCE COMMISSIONER INSTEAD, AND PROVIDE THAT THE COMMISSIONER SHALL
REQUIRE ALL INSURERS TRANSACTING AUTOMOBILE INSURANCE BUSINESS IN THIS STATE TO
ASSESS SURCHARGES AND GRANT SAFE DRIVER DISCOUNTS OF NO LESS THAN TWENTY PERCENT;
TO AMEND SECTION 38-73-770, RELATING TO THE REQUIREMENT THAT A CLASSIFICATION
PLAN MUST BE STRUCTURED TO PRODUCE FAIR RATES, SO AS TO DELETE CERTAIN LANGUAGE,
AND REFER TO CLASSIFICATION PLANS PROMULGATED BY THE CHIEF INSURANCE COMMISSIONER
RATHER THAN THE STATE RATING AND STATISTICAL DIVISION; TO AMEND SECTION
38-77-112, AS AMENDED, RELATING TO THE REQUIREMENT THAT AN APPLICANT FOR
AUTOMOBILE INSURANCE OR A POLICYHOLDER MUST HAVE A DRIVER'S LICENSE AND
EXCEPTIONS, SO AS TO MAKE PROVISION FOR A SPECIAL RESTRICTED DRIVER'S LICENSE;
TO AMEND SECTION 38-77-580, AS AMENDED, RELATING TO THE GOVERNING BOARD OF THE
SOUTH CAROLINA REINSURANCE FACILITY, SO AS TO INCREASE THE MEMBERSHIP OF THE
BOARD, INCLUDING THE ADDITION OF CERTAIN EX OFFICIO MEMBERS, AND DISQUALIFY
CERTAIN PERSONS FOR APPOINTMENT TO THE BOARD TO REPRESENT CONSUMERS; TO AMEND
SECTION 38-77-920, RELATING TO AUTOMOBILE INSURANCE, THE PROHIBITION UPON
INSURERS AND AGENTS FROM REFUSING ACCEPTANCE OF INSURANCE, PROPERTY RIGHTS OF
CERTAIN AGENTS, AND THE RESTRICTION ON MAILINGS TO CERTAIN AREAS, SO AS TO DELETE
CERTAIN LANGUAGE AND TO PREFACE THE SECTION WITH THE LANGUAGE "EXCEPT AS IS
SPECIFICALLY PROVIDED FOR OTHERWISE BY LAW"; TO AMEND SECTION 37-6-604,
RELATING TO FUNCTIONS AND DUTIES OF THE DIVISION OF CONSUMER ADVOCACY, SO AS TO
PROVIDE REFERENCE TO FEDERAL REGULATORY AGENCIES; TO AMEND SECTION 37-6-605,
RELATING TO THE DIVISION OF CONSUMER ADVOCACY AND ACCESS TO RECORDS OF STATE
AGENCIES AND TO BUSINESSES ENGAGED IN PROCEEDINGS BEFORE THE PUBLIC SERVICE
COMMISSION, SO AS TO, AMONG OTHER THINGS, GIVE THE CONSUMER ADVOCATE REASONABLE
ACCESS TO CONFIDENTIAL RECORDS AND INFORMATION, AND GIVE THE DEPARTMENT OF
INSURANCE AND ADVOCATE ACCESS TO RECORDS, INFORMATION, AND DATA OF THE INSURANCE
COMPANIES AS WELL AS ALL OF THEIR SISTER AFFILIATES, SUBSIDIARIES, AND PARENT
COMPANIES; TO AMEND SECTION 38-77-110, RELATING TO THE REQUIREMENT THAT INSURERS
MUST WRITE AND RENEW POLICIES, SO AS TO PROVIDE THAT THEY ARE NOT REQUIRED TO
WRITE INSURANCE COVERAGE OVER CERTAIN LIMITS NOR MAY THEY DISCRIMINATE; TO AMEND
THE 1976 CODE BY ADDING SECTION 38-77-341 SO AS TO DEFINE UNFAIR TRADE PRACTICES
IN THE OPERATION OF AUTOMOBILE INSURANCE BUSINESSES; TO AMEND SECTION 56-10-40,
RELATING TO NOTIFICATION OF LAPSED OR TERMINATED LIABILITY INSURANCE OR APPROVED
SECURITY, SO AS TO DEFINE THE CIRCUMSTANCES WHICH REQUIRE NOTIFICATION TO THE
EXECUTIVE DIRECTOR OF THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION AND
TO PROVIDE THAT THE NOTICES MUST BE IN WRITING OR MAGNETIC MEDIA; TO AMEND
SECTION 56-10-280, RELATING TO REQUIRED LENGTH OF TIME FOR WHICH AN AUTOMOBILE
LIABILITY INSURANCE POLICY MAY BE ISSUED, SO AS TO DEFINE THE CIRCUMSTANCES UNDER
WHICH A POLICY MAY BE CANCELED WITHIN THE FIRST SIXTY DAYS OF ITS ISSUANCE AND
TO PROVIDE FOR THE COLLECTION OF A PENALTY AGAINST A PERSON WHOSE INSURANCE IS
CANCELED FOR NONPAYMENT OF PREMIUMS; TO AMEND SECTION 38-77-160, RELATING TO
ADDITIONAL UNINSURED MOTORIST COVERAGE AND TO UNDERINSURED MOTORIST COVERAGE, SO
AS TO PROVIDE REQUIREMENTS TO BE MET IN AN ACTION BROUGHT UNDER UNDERINSURED
MOTORIST INSURANCE PROVISIONS AND TO PROVIDE THAT NO UNDERINSURED MOTORIST POLICY
MAY REQUIRE THE INSURER'S CONSENT TO SETTLEMENT WITH THE AT-FAULT PARTY IN SUCH
AN ACTION; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-350 SO AS TO REQUIRE
THE USE OF A FORM BY INSURERS OFFERING OPTIONAL COVERAGES TO APPLICANTS FOR
AUTOMOBILE INSURANCE AND TO PRESCRIBE THE PROVISIONS TO BE INCLUDED IN THE FORM;
TO AMEND SECTION 38-55-170, RELATING TO PRESENTING FALSE CLAIMS FOR PAYMENT TO
INSURERS, SO AS TO PROVIDE THAT THE CRIME IS A FELONY INSTEAD OF A MISDEMEANOR;
TO AMEND SECTION 16-11-125, RELATING TO THE CRIME OF MAKING FALSE CLAIMS TO
OBTAIN PAYMENT FOR FIRE OR EXPLOSION LOSSES FROM INSURERS, SO AS TO PROVIDE THAT
IT IS A FELONY INSTEAD OF A MISDEMEANOR; TO AMEND SECTION 16-11-130, RELATING TO
THE CRIME OF BURNING PERSONAL PROPERTY TO DEFRAUD AN INSURER, SO AS TO PROVIDE
THAT IT IS A FELONY INSTEAD OF A MISDEMEANOR; TO PROVIDE THAT THE CRIMES IN
SECTIONS 16-11-125, 16-11-130, AND 38-55-170 AND SECTION 32 OF THIS ACT ARE ADDED
TO THE LIST OF CRIMES CLASSIFIED AS FELONIES IN SECTION 16-1-10; TO AMEND SECTION
23-41-30, RELATING TO RELEASE OF INFORMATION BY AN INSURANCE COMPANY, SO AS TO
PROVIDE THAT WHEN AN INSURANCE COMPANY DENIES PAYMENT OF CLAIM TO AN INSURED FOR
ARSON, MISREPRESENTATION, OR OTHER SIMILAR CLAIM OR DEFENSE, THE INSURER SHALL
NOTIFY IN ALL CASES THE CHIEF INSURANCE COMMISSIONER; TO AMEND SECTION 56-1-80,
RELATING TO APPLICATION FOR LICENSE OR PERMIT, SO AS TO PROVIDE THAT PERSONS
OBTAINING A SOUTH CAROLINA DRIVER'S LICENSE FOR THE FIRST TIME MUST BE FURNISHED
AND MUST COMPLETE A WRITTEN REQUEST FORM TO VERIFY LIABILITY INSURANCE COVERAGE;
TO PROVIDE THAT THE CHIEF INSURANCE COMMISSIONER SHALL PUBLISH, AT LEAST
ANNUALLY, A REPRESENTATIVE SAMPLE OF THE PRIVATE PASSENGER PREMIUMS OF AT LEAST
TWENTY INSURANCE COMPANIES HAVING THE LARGEST MARKET SHARE IN EACH TERRITORY TO
FACILITATE PRICE COMPARISONS BY PERSONS SEEKING NEW COVERAGE; TO AMEND ARTICLE
9, CHAPTER 73, TITLE 38 BY ADDING SECTION 38-73-915 SO AS TO PROVIDE THAT THE
INSURANCE COMMISSIONER IN REVIEWING RATE FILINGS MAY TAKE INTO CONSIDERATION
RECENT LEGISLATION AND COURT DECISIONS WHICH AFFECT INSURANCE RATES AND MAY ORDER
AN INSURER OR RATING ORGANIZATION TO REDUCE OR INCREASE THE CURRENT RATE LEVELS
AS A RESULT OF THE LEGISLATION OR COURT DECISION; TO PROVIDE THAT NO RATE FILING
FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE MAY INCLUDE OR BE BASED UPON ACTUAL
OR PROJECTED LOSS OR EXPENSE DATA WHICH INCLUDES PAYMENTS MADE ON POLICIES IN
EXCESS OF THE POLICY LIMITS OR MADE AS A RESULT OF TORTIOUS BREACH OF DUTY; TO
PROHIBIT AUTOMOBILE INSURERS OR REPRESENTATIVES FROM WILFULLY INCLUDING IN
PRIVATE PASSENGER INSURANCE RATE FILINGS EXPENSES OR LOSSES GENERATED BY ANOTHER
LINE OF INSURANCE, GENERAL EXPENSES, OR OVERHEAD APPLICABLE TO ALL LINES UNLESS
THE INSURER HAS ALLOCATED PROPERLY THE EXPENSES OR LOSSES AMONG ALL ITS LINES OF
INSURANCE AND PROHIBIT INSURERS FROM ADOPTING DIFFERENT METHODS OF TREATING
EXPENSES OR LOSSES FOR RATE FILINGS IN SOUTH CAROLINA FROM METHODS USED IN OTHER
STATES FOR SIMILAR LINES OF INSURANCE, TO PROVIDE THAT THE CHIEF INSURANCE
COMMISSIONER SHALL CONDUCT EITHER AN EXAMINATION OF THE BOOKS, RECORDS, AND
ACCOUNTS OF INSURERS WHICH WRITE MORE THAN ONE PERCENT OF THE PRIVATE PASSENGER
MARKET IN SOUTH CAROLINA OR REQUEST AN AFFIDAVIT FROM THE INSURERS' CONTROLLER,
ACCOUNTANT, OR ACTUARY TO ENSURE THAT THE COMPANIES' EXPENSES ARE BEING ALLOCATED
AND TREATED PROPERLY, AND CONDUCT SURVEYS OF PRIVATE PASSENGER ACQUISITION COSTS
IN THIS STATE VERSUS SIMILAR STATES IN WHICH THE COMPANIES DO BUSINESS, AND TO
PROVIDE PENALTIES FOR VIOLATIONS; TO AMEND SECTION 38-77-920, RELATING TO
RESTRICTION OF INSURERS AND AGENTS TO REFUSE ACCEPTANCE OF INSURANCE, CERTAIN
AGENTS' PROPERTY RIGHTS, AND RESTRICTIONS OF MAILINGS TO CERTAIN AREAS, SO AS TO
PROVIDE AN EXCEPTION TO THE RESTRICTION OR REFUSAL OF AUTOMOBILE INSURANCE
PURSUANT TO THE PROVISIONS OF SECTION 38-77-110; TO PROVIDE THAT THERE IS NO
PERSONAL INJURY PROTECTION COVERAGE MANDATED UNDER THE AUTOMOBILE INSURANCE LAWS
OF THE STATE, PROVIDE THAT IF AN INSURER SELLS NO-FAULT INSURANCE COVERAGE WHICH
PROVIDES PERSONAL INJURY PROTECTION, MEDICAL PAYMENT COVERAGE, OR ECONOMIC LOSS
COVERAGE, THE COVERAGE MUST NOT BE ASSIGNED OR SUBROGATED AND IS NOT SUBJECT TO
A SET-OFF, AND REQUIRE THE DELETION OF REFERENCES TO PERSONAL INJURY PROTECTION;
TO AMEND SECTION 38-73-465(B), RELATING TO THE DETERMINATION THAT AN INSURANCE
RATE IS UNFAIRLY DISCRIMINATORY, EXCESSIVE, OR UNREASONABLE, SO AS TO REQUIRE THE
INSURANCE DEPARTMENT TO INCLUDE CONSIDERATION OF EXPENSES, PROVIDE FOR THE
MAXIMUM ALLOWABLE EXPENSE LEVEL FOR EACH RESPECTIVE CATEGORY, AND ALLOW THE CHIEF
INSURANCE COMMISSIONER TO EXTEND CERTAIN PROVISIONS OF THIS SECTION 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; TO REQUIRE THE
DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO ASSESS, IN ADDITION TO OTHER
FINES AND PENALTIES IMPOSED BY LAW, A PER DIEM FINE WHENEVER THE DEPARTMENT
DETERMINES THERE WAS A LAPSE IN REQUIRED INSURANCE COVERAGE, PROVIDE EXCEPTIONS,
PROVIDE FOR THE MAXIMUM AMOUNT OF THE FINE FOR A FIRST OFFENSE, AND PROVIDE FOR
THE USE OF THE FINE; TO AMEND SECTION 56-3-1350, RELATING TO THE RETURN OF
SUSPENDED, CANCELED, OR REVOKED MOTOR VEHICLE REGISTRATION CARDS AND LICENSE
PLATES, SO AS TO REQUIRE THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO
FURNISH A PERSON RETURNING A DOCUMENT WITH A RECEIPT INDICATING THE DATE OF
SURRENDER; TO REENACT WITH CHANGES, SECTION 38-73-465 OF THE 1976 CODE (REPEALED
IN 1988), SO AS TO PROVIDE FOR THE CONSIDERATION OF INSURANCE RATE FILINGS, THE
REVIEW OF RATES IN EFFECT FOR AUTOMOBILE INSURANCE, THE REVIEW OF RATE
EXPERIENCE, AND ACTION TO BE TAKEN WHEN AN INSURER HAS REALIZED AN UNFAIRLY
DISCRIMINATORY, EXCESSIVE, OR UNREASONABLE PROFIT; TO AMEND THE 1976 CODE BY
ADDING SECTION 38-77-360 SO AS TO PROVIDE THAT A PERSON WHO IS GUILTY OF A
VIOLATION, FOR A FIRST OFFENSE, OF SECTION 56-5-5310 FOR NOT HAVING A TAILLIGHT
IN GOOD WORKING ORDER OR A PERSON WHO IS GUILTY OF A VIOLATION, FOR A FIRST
OFFENSE, OF SECTION 56-5-1520 FOR DRIVING TOO FAST FOR CONDITIONS MAY NOT HAVE
HIS AUTOMOBILE INSURANCE PREMIUMS INCREASED AS A RESULT OF THAT VIOLATION,
PROVIDE THAT A PERSON VIOLATING SECTION 56-5-5310, FOR A FIRST OFFENSE, HAS TEN
DAYS TO REPAIR THE TAILLIGHT, AND PROVIDE FOR PUNISHMENT AS PROVIDED BY LAW IF
THIS PERSON IS FOUND IN VIOLATION OF SECTION 56-5-5310 AFTER THE TEN-DAY PERIOD;
TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-625 SO AS TO PROVIDE THAT IF AN
INSURED IS INVOLVED IN A MOTOR VEHICLE ACCIDENT WHERE HE IS NOT THE AT-FAULT
DRIVER, HIS FACILITY RECOUPMENT CHARGE MAY NOT BE INCREASED BECAUSE OF THIS
OCCURRENCE; TO AMEND SECTION 38-73-1350, RELATING TO COOPERATION AMONG RATING
ORGANIZATIONS OR AMONG RATING ORGANIZATIONS AND INSURERS IN RATE MAKING OR IN
CERTAIN OTHER MATTERS, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT NOTWITHSTANDING
CERTAIN PROVISIONS OF LAW, AFTER PUBLIC HEARING THE CHIEF INSURANCE COMMISSIONER
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, AND PROVIDE AN
EXCEPTION; TO AMEND THE 1976 CODE BY ADDING SECTIONS 38-73-1370, 38-73-1380,
38-73-1400, 38-73-1410, 38-73-1420, AND 38-73-1430 SO AS TO PROVIDE FOR RATING
ORGANIZATIONS, RATES, RATE INCREASES, PREMIUM CHARGES, UTILIZATION OF A RATE OR
PREMIUM CHARGE, "PURE LOSS COMPONENT", "EXPENSE COMPONENT",
"FINAL RATE OR PREMIUM CHARGE", AND AUTHORITY TO THE CHIEF INSURANCE
COMMISSIONER TO EXTEND THE PROVISIONS OF CERTAIN CODE SECTIONS 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; TO AMEND SECTION
38-77-590, RELATING TO DESIGNATED PRODUCERS OF THE SOUTH CAROLINA REINSURANCE
FACILITY, SO AS TO PROVIDE THAT A DESIGNATED CARRIER WHO FAILS A CLAIMS AUDIT
SHALL HAVE NO NEW DESIGNATED PRODUCER ASSIGNMENTS UNTIL IT PASSES A REAUDIT AND
TO PROVIDE FOR THE DISQUALIFICATION OF THIS CARRIER FOR FAILING MULTIPLE AUDITS;
TO AMEND SECTION 38-77-950, RELATING TO THE UNREASONABLE OR EXCESSIVE USE OF THE
REINSURANCE FACILITY BY INSURERS, SO AS TO FURTHER PROVIDE FOR WHAT CONSTITUTES
EXCESSIVE OR UNREASONABLE USE AND TO PROVIDE THAT UPON THE WRITTEN REQUEST OF THE
POLICYHOLDER, ALL INSURANCE COMPANIES DOING BUSINESS IN THIS STATE SHALL GIVE
WRITTEN NOTICE TO THE POLICYHOLDER INFORMING HIM WHETHER OR NOT HE AND ANY DRIVER
UNDER THE POLICY IS IN THE FACILITY; TO AMEND SECTION 38-77-600, RELATING TO THE
REINSURANCE FACILITY RECOUPMENT CHARGE, SO AS TO REVISE THE MANNER IN WHICH THIS
CHARGE IS COMPUTED AND THE APPLICABILITY OF THIS RECOUPMENT CHARGE TO VARIOUS
POLICIES AND COVERAGES; TO AMEND SECTION 38-77-620, RELATING TO THE INCLUSION OF
RECOUPMENT CHARGES IN RATES, SO AS TO REVISE THE MANNER IN WHICH THE RECOUPMENT
CHARGE IS INCLUDED IN RATES FOR CERTAIN RISKS; TO AMEND SECTION 38-73-465,
RELATING TO THE REVIEW AND REVISION OF AUTOMOBILE INSURANCE RATES, SO AS TO
REQUIRE AUTOMOBILE INSURANCE RATES TO BE DECREASED BY FIVE PERCENT AFTER
SEPTEMBER 30, 1989, UPON THE ELIMINATION OF A SPECIFIED AMOUNT OF THE FACILITY
RECOUPMENT CHARGE AND TO PROVIDE FOR SUBSEQUENT RATE ADJUSTMENTS UNDER CERTAIN
CONDITIONS; TO AMEND CHAPTER 5, TITLE 56, RELATING TO TRAFFIC REGULATIONS BY
ADDING ARTICLE 48 SO AS TO REQUIRE OCCUPANTS OF MOTOR VEHICLES TO WEAR PROPERLY
FASTENED SAFETY BELTS, TO PROVIDE EXCEPTIONS AND TO PROVIDE PENALTIES FOR
VIOLATIONS; TO REQUIRE THE SCHOOL BUS TRANSPORTATION STUDY COMMITTEE TO STUDY THE
FEASIBILITY OF INSTALLING SAFETY BELTS IN SCHOOL BUSES; TO PERMIT THE DEPARTMENT
OF HIGHWAYS AND PUBLIC TRANSPORTATION TO CONTRACT WITH LOCAL LAW ENFORCEMENT
AGENCIES TO CONFISCATE LICENSE PLATES ON UNINSURED AUTOMOBILES; TO AMEND SECTION
38-77-280, RELATING TO COLLISION AND COMPREHENSIVE COVERAGE, SO AS TO REVISE THE
REQUIRED DEDUCTIBLES, TO REQUIRE ALL POLICIES THAT ARE CEDED TO THE REINSURANCE
FACILITY TO HAVE A TWO HUNDRED FIFTY DOLLAR DEDUCTIBLE ON COMPREHENSIVE AND
COLLISION COVERAGE, AND TO EXCLUDE SAFETY GLASS FROM THE DEDUCTIBLE; TO AMEND
SECTION 38-59-40, RELATING TO LIABILITY FOR ATTORNEYS' FEES WHERE THE INSURER HAS
REFUSED TO PAY CLAIM, SO AS TO DELETE THE CEILING ON FEES WHICH MAY BE AWARDED
AND TO EXTEND THE PROVISIONS OF THE SECTION TO CASES FILED IN OR REMOVED TO
FEDERAL COURTS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-111, SO AS TO
PROVIDE THAT AN INSURER MAY CEDE COVERAGES OF AN AUTOMOBILE LIABILITY INSURANCE
POLICY THAT IT IS MANDATED TO WRITE TO THE FACILITY AND MAY NOT CEDE COVERAGES
UNDER A NONMANDATED POLICY AND TO REQUIRE ALL COVERAGES UNDER A MANDATED POLICY
TO BE CEDED IF ANY COVERAGE UNDER THE POLICY IS CEDED; TO AMEND SECTION
38-77-30(14), AS AMENDED, RELATING TO DEFINITIONS FOR PURPOSES OF AUTOMOBILE
INSURANCE, SO AS TO REDEFINE "UNDERINSURED MOTOR VEHICLE" AS A VEHICLE
THAT AT THE TIME OF THE ACCIDENT THE INSURANCE COVERAGE OR BOND ON THE VEHICLE
IS LESS THAN THE AMOUNT OF THE INSUREDS' DAMAGES; TO AMEND SECTION 38-77-170,
RELATING TO THE REQUIREMENTS TO RECOVER UNDER THE UNINSURED MOTORIST PROVISIONS
WHEN THE AT-FAULT PARTY IS UNKNOWN, SO AS TO REQUIRE A WITNESS TO THE ACCIDENT
TO SIGN AN AFFIDAVIT ATTESTING TO THE TRUTH OF THE FACTS ABOUT THE ACCIDENT AND
TO PROVIDE FOR A WARNING STATEMENT TO BE DISPLAYED ON THE AFFIDAVIT; TO AMEND
SECTION 38-39-70(a)(2), RELATING TO PREMIUM SERVICE AGREEMENT, SO AS TO DELETE
THE REQUIREMENT THAT SUCH AGREEMENTS MUST BE NOTARIZED; TO AMEND SECTION
38-77-630, RELATING TO POLICIES CEDED TO THE REINSURANCE FACILITY, SO AS TO
PROVIDE THAT A POLICY MAY BE CEDED ONLY BY THE APPROPRIATE INFORMATION AT THE
POINT OF SALE AND PROVIDE THAT A COPY OF THE APPLICANT'S DRIVER'S LICENSE MUST
BE KEPT WITH THE APPLICATION; TO REPEAL SECTION 38-73-470, RELATING TO THE ONE
DOLLAR OF YEARLY PREMIUM FOR UNINSURED MOTORIST COVERAGE TRANSFERRED TO THE
DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO ENFORCE MOTOR VEHICLE
INSURANCE REQUIREMENTS; TO REPEAL SECTIONS 38-77-240, 38-77-250, 38-77-260(b) AND
(c), 38-77-290, 38-77-300, AND 38-77-310, RELATING TO MEDICAL, HOSPITAL, AND
DISABILITY BENEFITS; INSURANCE POLICY APPLICATIONS; RECOVERY UNDER ONE POLICY;
BENEFITS PAYABLE FOR INJURIES TO OCCUPANTS AND PEDESTRIANS, EFFECTS OF WORKERS'
COMPENSATION BENEFITS AND THE RIGHT TO SUE; PAYMENTS OF BENEFITS AND LIMITATIONS;
PERSON EXCLUDED FROM BENEFITS AND BENEFITS WITH RESPECT TO MOTOR VEHICLES; AND
GENERAL RELEASES, CLAIMS, AND RIGHT TO REIMBURSEMENTS.
Whereas, it is the purpose and intent of the General Assembly in enacting this
legislation to reduce insurance losses, including those of the Reinsurance
Facility, and, consequently, the cost of mandatory automobile insurance. Now,
therefore,
Be it enacted by the General Assembly of the State of South Carolina:
Citation of act
SECTION 1. This act may be cited as the "Automobile Insurance Reform Act
of 1989".
Fee changed; monthly listing of license numbers, violations
SECTION 2. Section 56-9-330(1) of the 1976 Code is amended to read:
"(1) The department, upon request, and the payment of a fee of two
dollars shall furnish any person a certified abstract of the operating record of
any person subject to the provisions of this chapter, which abstract must also
fully designate the motor vehicles, if any, registered in the name of that
person, and, if there is no record of any conviction of that person for violating
any laws relating to the operation of a motor vehicle or of any injury or damage
caused by that person, the department shall so certify. The department, upon
request and the payment of a reasonable fee, shall furnish a monthly listing by
magnetic or other electronic media of all driver's license numbers that had
driving violations posted on their records during the previous month. These
abstracts are not admissible as evidence in any action for damages or criminal
proceedings arising out of motor vehicle accidents."
Risk, territorial classification plans, promulgated or approved, language added;
cession allowed
SECTION 3. Section 38-73-735 of the 1976 Code is amended to read:
"Section 38-73-735. In addition to risk and territorial classification
plans promulgated or approved under Section 38-73-730, the commissioner may
promulgate plans to afford credits or discounts to automobile insureds, or he may
approve the credit or discount plans filed with him by insurers of automobile
insurance. No automobile insurance credit or discount plan may be promulgated
or approved by the commissioner unless: (1) the criteria for determining
eligibility for credits or discounts under the plan are objective, clear, and
unequivocal; (2) the criteria are based upon factually or statistically
supported data; and (3) the credits or discounts provided under the plan will be
afforded by the insurer on a nondiscriminatory basis to all insureds who are
eligible therefor. If an insurance credit or discount plan is given to an
insured pursuant to this section, the policy may be ceded to the Reinsurance
Facility in accordance with the facility's plan of operation."
Notice by magnetic or electronic media; type of mailing; fine changed; new fine;
etc.
SECTION 4. Section 56-10-240 of the 1976 Code, as last amended by Act 671 of
1988, is further amended to read:
"Section 56-10-240. If, during the period for which it is licensed, a
motor vehicle is or becomes an uninsured motor vehicle, then the vehicle owner
immediately shall obtain insurance on the vehicle or within five days after the
effective date of cancellation or expiration of his liability insurance policy
surrender the motor vehicle license plates and registration certificates issued
for the motor vehicle. If five working days after the last day to pay an
automobile liability insurance premium, whether it is the premium due date or a
grace period that is granted customarily or contractually a motor vehicle is an
uninsured motor vehicle, the insurer shall give written notice, or notice by
magnetic or electronic media in a manner considered satisfactory to the
department, within ten days after the five-day period ends, in addition to that
notice previously given in accordance with law, by delivery under United States
Post Office bulk certified mail, return receipt requested, to the department of
the cancellation or refusal to renew under the following circumstances:
(1) the lapse or termination of such insurance or security occurs within three
months of issuance provided that this subsection only applies to new policies,
and not renewal or replacement policies; or
(2) the lapse or termination occurs after three months for a resident who
fails one or more of the objective standards prescribed in Section 38-73-455.
The department may, in its discretion, authorize insurers to utilize alternative
methods of providing notice of cancellation of or refusal to renew to the
department. The department may not reissue registration certificates and license
plates for that vehicle until satisfactory evidence has been filed by the owner
or by the insurer who gave the cancellation or refusal to renew notice to the
department that the vehicle is insured. Upon receiving information to the effect
that a policy is canceled or otherwise terminated on a motor vehicle registered
in South Carolina, the department shall suspend the license plates and
registration certificate and shall initiate action as required within fifteen
days of the notice of cancellation to pick up the license plates and registration
certificate. A person who has had his license plates and registration certificate
suspended by the department, but who at the time of suspension possesses
liability insurance coverage sufficient to meet the financial responsibility
requirements as set forth in this chapter, has the right to appeal the suspension
immediately to the Chief Insurance Commissioner. If the commissioner determines
that the person has sufficient liability insurance coverage, he shall notify the
department, and the suspension is voided immediately. The department shall give
notice by first class mail of the cancellation or suspension of registration
privileges to the vehicle owner at his last known address. However, when license
plates are surrendered pursuant to this section, they must be held at the
department office in the county where the person who surrenders the plates
resides.
If the vehicle owner unlawfully refuses to surrender the suspended items as
required in this article, the department through its designated agents or by
request to a county or municipal law enforcement agency may take possession of
the suspended license plates and registration certificate and may not reissue the
registration until proper proof of liability insurance coverage is provided and
until the owner has paid a reinstatement fee of two hundred dollars for the first
refusal under this section, and three hundred dollars for each subsequent
refusal. A person who voluntarily surrenders his license plates and registration
certificate before their suspension shall only be charged a reinstatement fee of
five dollars.
A person wilfully failing to return his motor vehicle license plates and
registration certificates as required in this section is guilty of a misdemeanor
and, upon conviction, must be punished as follows:
(1) for a first offense, fined not less than one hundred dollars nor more than
two hundred dollars or imprisoned for thirty days;
(2) for a second offense, fined two hundred dollars or imprisoned for thirty
days, or both;
(3) for a third and subsequent offense, imprisoned for not less than
forty-five days nor more than six months.
Only convictions which occurred within ten years including and immediately
preceding the date of the last conviction constitute prior convictions within the
meaning of this section."
No uninsured, underinsured coverage, excess or umbrella policy
SECTION 5. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by
adding:
"Section 38-77-161. No uninsured or underinsured motorist coverage need
be provided in this State by any excess or umbrella policy of insurance."
References changed; language deleted; etc.
SECTION 6. Section 38-73-10(a)(2) of the 1976 Code is amended to read:
"(2) empower the commissioner to fix, establish, and promulgate any
uniform statistical plan necessary or appropriate to obtain all automobile
insurance loss and loss adjustment expense experience, other expense experience,
and all other appropriate statistical and financial data from insurers, rating
organizations, and advisory organizations engaged in an automobile insurance
business in this State to the end that the commissioner shall promulgate the risk
classification and territorial plans to be used by all insurers of automobile
insurance in this State and in order that the commissioner may test the risk and
territorial differentials previously established against the most recently
available loss experience;".
Promulgation of statistical plans allowed, not required; deletion of language
SECTION 7. Section 38-73-40 of the 1976 Code is amended to read:
"Section 38-73-40. The commissioner may promulgate statistical plans,
reasonably adapted to each of the rating systems on file with him, which may be
modified from time to time and which must be used thereafter by each insurer in
the recording and reporting of its loss and countrywide expense experience, in
order that the experience of all insurers may be made available at least annually
in such form and detail as may be necessary to aid him in determining whether
rating systems comply with the standards set forth in Sections 38-73-330 and
38-73-430, as the case may be. The plans may also provide for the recording and
reporting of expense experience items which are specially applicable to this
State and are not susceptible of determination by a prorating of countrywide
expense experience. In promulgating these plans, the commissioner shall give due
consideration to the rating systems on file with him and, in order that such
plans may be as uniform as is practicable among the several states, to the form
of the plans used for rating systems in other states. The commissioner may
designate one or more rating organizations or other agencies to assist him in
gathering the experience and making compilations thereof. These compilations
must be made available, subject to plans promulgated by the commissioner, to
insurers and rating organizations."
Promulgation of risk classifications and territories by Chief Insurance
Commissioner; classification plan before 1990 session; etc.
SECTION 8. Section 38-73-720 of the 1976 Code is amended to read:
"Section 38-73-720. The commissioner may, through order, fix, establish,
and promulgate fair and reasonable risk classifications and territories for
automobile insurance risks in accordance with the criteria and standards
mentioned in Section 38-73-730 and consistent with the purposes of this chapter
and Chapter 77 of this title.
Before the beginning of the 1990 Session of the General Assembly, the
commissioner shall promulgate by regulation a classification plan for automobile
insurance for the establishment of rates and premiums. The classification plan
when utilized by insurers of automobile insurance must be introduced actuarially
on-balance so that no increase in income level is produced by the filed
classification plans. Decreases for income levels are encouraged. The
classification plan must be consistent with the classification plans approved for
use on a countrywide basis by the rating organization having the largest number
of members or subscribers in South Carolina. In addition, the commissioner shall
not permit within the revised risk classification plan a distinction in bodily
injury liability premiums charged or property damage liability premiums charged
because of the type of private passenger automobile insured."
Deletion of reference to State Rating and Statistical Division; "Chief
Insurance Commissioner" inserted
SECTION 9. Section 38-73-750 of the 1976 Code is amended to read:
"Section 38-73-750. Automobile insurers shall 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 commissioner.
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 commissioner after due notice and hearing, shall disapprove and
disallow the further use of an inconsistent, discriminatory, burdensome, or
competitively unfair plan or system for the allocation of expenses and
profit."
Language deleted; deletion of reference to State Rating and Statistical Division;
"Chief Insurance Commissioner" inserted; minimum safe driver discounts
SECTION 10. Section 38-73-760 of the 1976 Code is amended to read:
"Section 38-73-760. (a) The commissioner, through the State Rating and
Statistical Division, shall fix, establish, and promulgate any uniform
statistical plan that may be necessary or appropriate for the gathering and
compilation of statistical data from insurers, rating organizations, or advisory
organizations transacting or otherwise engaged in the automobile insurance
business in the State. In promulgating any uniform statistical plan consideration
may be given to the extent reasonable or practicable to the rules and forms of
the plans used for rating systems in other states. Upon the promulgation of any
statistical plan for automobile insurance in this State, the same must be adopted
and used by every automobile insurer in this State and every automobile insurer
shall constitute the State Rating and Statistical Division its statistical agent
for automobile insurance in this State.
(b) The statistical plan may be promulgated so as to provide for any and all
statistical and financial data necessary or appropriate to the implementation of
the policy of this chapter or Chapter 77 of this title or to yield statistical
data reasonably and fairly related to any of the purposes of this article,
including, but not limited to, the fixing, establishing, and promulgating of risk
and territorial classification plans for automobile insurance; determining the
pure loss rate level indications for automobile insurance in South Carolina based
upon all South Carolina loss experience and assisting in the translating of this
information into usable form for insurance consumers in terms of the final rates
or premium charges of each insurer of automobile insurance, determining the
reasonability of loss adjustment expenses, other expenses and profit factors
applied by insurers to their pure loss components in arriving at their final
rates or premium charges for automobile insurance both for purposes of ensuring
that the final rates or premium charges are adequate, not excessive, and not
unfairly discriminatory and for ensuring that improper and undue burdens are not
imposed upon the South Carolina Reinsurance Facility by way of excessive ceding
commissions to ceding insurers; determining the amount, validity, and propriety
of class and territorial differentials applied to the general pure loss rate
levels and testing not less than annually the appropriateness of the existing
differentials in the light of the most recent available loss experience data;
determining the amount, validity, and propriety of surcharges and discounts
referable to any uniform merit rating plan or system which may have been
promulgated by the commissioner or which may be under consideration for
promulgation, the appropriateness of the surcharges and discounts in the light
of the most recent available loss experience data; determining the propriety or
validity of any plan for the classification of risks which may be in effect or
under consideration based upon the propensities of motor vehicles or classes or
types of motor vehicles or their equipment to shield occupants from death or
serious injury as a result of crash or based upon the relative invulnerability
of the motor vehicles or classes or types of motor vehicles to extensive damage
as a result of crash or their repairability at modest expense; or obtaining data
relevant to studies being made or to be made by the State Rating and Statistical
Division in connection with any of the foregoing or in connection with means and
methods for providing appropriate rates for insurance consumers or fostering and
encouraging competition among insurers.
(c) The functions and responsibilities of the State Rating and Statistical
Division acting as statistical agent for automobile insurers may not be
delegated, except that the commissioner may, as the result of competitive
bidding, make an agreement with some suitable person, firm, corporation, or other
organization for the gathering, compilation, recordation, or computerization of
the statistical data. However, these functions are always subject to the
supervision, direction, and control of the commissioner and the examination and
oversight of insurers in respect to their obligations to furnish statistical data
to him remain the direct responsibility of the commissioner and may never be
delegated other than to the State Rating and Statistical Division.
(d) Any merit rating plan or system promulgated by the commissioner pursuant
to the authority contained in subsection (b) likewise extends to and includes
automobile collision insurance. However, nothing contained in this subsection
(d) requires that the same percentage or dollar amounts for discounts or
surcharges apply to collision coverage nor does it require that surcharges
already assessed in respect to the liability coverages of the policy again be
assessed in respect to the collision coverage afforded by the same policy.
(e) The commissioner shall require all insurers transacting automobile
insurance business in this State to assess surcharges and grant safe driver
discounts of no less than twenty percent.
(f) All policies of automobile insurance issued in South Carolina must show
on the initial policy or on an attachment to the initial policy and on all
premium invoices or attached to all premium invoices, in a form to be approved
by the commissioner, the amount of any surcharge (including loss of safe driver
discount) that may be applicable to the policy as a result of any merit rating
plan or system promulgated by the commissioner. Also to be included, presented
in a fashion that is readily understandable, is the reason for the applicable
surcharge or the loss of safe driver discount. The amount of the applicable safe
driver discount also must be shown."
Language deleted; deletion of reference to State Rating and Statistical Division;
"Chief Insurance Commissioner" inserted
SECTION 11. Section 38-73-770 of the 1976 Code is amended to read:
"Section 38-73-770. Every classification plan promulgated by the
commissioner must be so structured as to produce rates or premium charges which
are adequate, not excessive, and not unfairly discriminatory."
Special restricted driver's license
SECTION 12. Section 38-77-112 of the 1976 Code, as last amended by Act 399 of
1988, is further amended to read:
"Section 38-77-112. Notwithstanding Sections 38-77-110, 38-77-920, and
38-77-280, no automobile insurer is required to write coverage for automobile
insurance as defined in Section 38-77-30 for any applicant or existing
policyholder who does not at the time of application or renewal possess a valid
South Carolina motor vehicle or special restricted driver's license. This
section does not apply to an individual who is handicapped and who owns a vehicle
in this State but who does not have a valid driver's license. If an automobile
is principally garaged and operated in this State, the owner of the vehicle must
be offered coverage thereon regardless of whether or not he possesses a valid
South Carolina driver's license if he designates to the insurer who the principal
operator of the vehicle will be and this person has a valid South Carolina
driver's license or otherwise meets the requirements of this section. This
requirement does not apply to personnel of the Armed Forces of the United States
on active duty and officially stationed in this State who possess a valid motor
vehicle driver's license issued by another state or territory of the United
States or the District of Columbia. This requirement is waived ninety days for
individuals who move into South Carolina with the intent of making South Carolina
their place of residence if they possess a valid driver's license issued by
another state or territory of the United States or the District of
Columbia."
Board membership increased; ex officio members; disqualified persons, exception
SECTION 13. The first paragraph of Section 38-77-580 of the 1976 Code, formerly
known as Section 38-37-790 and as last amended by Act 163 of 1987, is further
amended to read:
"The operations and affairs of the facility are under the direction and
control of a governing board of twenty-one persons of whom four must be residents
of South Carolina appointed by the Governor of South Carolina to represent
consumers. The commissioner shall appoint eight persons to represent the
insurance industry; in appointing these persons, the commissioner shall select
two from a list of not less than five nominated by the American Insurance
Association from the officers or employees of insurers licensed in South Carolina
and which are members or subscribers of that organization; he shall select two
from a list of not less than five persons nominated by the American Mutual
Insurance Alliance from the officers or employees of insurers licensed in South
Carolina and which are members or subscribers of that organization; he shall
select two from a list of not less than five persons nominated by the National
Association of Independent Insurers from the officers or employees of insurers
licensed in South Carolina and which are members or subscribers of that
organization; he shall select two persons, one of whom must be an officer or
employee of a stock insurer licensed in South Carolina and not a member or
subscriber of any of these organizations, and one of whom must be an officer or
employee of a nonstock insurer licensed in South Carolina and not a member or
subscriber of any of these organizations; however, of the eight persons appointed
to represent the insurance industry, not less than five must be residents of
South Carolina and those who are not residents of South Carolina must have job
responsibilities that include the supervision over South Carolina operations; not
less than two must be officers or employees of insurers licensed to transact
automobile insurance in South Carolina and domiciled therein. The commissioner
shall appoint four persons to represent producers, all of whom must be residents
of South Carolina; he shall select two such persons from a list of not less than
five nominated by the stock agents' association and two from a list of not less
than five persons nominated by the mutual agents' association. The commissioner
shall 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, the Chairman of the Senate Banking and Insurance
Committee, and the Chairman of the House of Representatives Labor, Commerce and
Industry Committee or their designees are ex-officio members 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."
Exception language added
SECTION 14. Section 38-77-920 of the 1976 Code is amended to read:
"Section 38-77-920. Except as is specifically provided for otherwise by
law, no automobile insurer may refuse acceptance of automobile insurance for an
insurable risk from any applicant nor require that certain classes or types of
risks be placed through some particular agent or employee. This section is not
intended to preclude any insurer from recognizing and giving effect to the
property rights of agents in expirations or renewals.
No agent who represents more than one insurer of automobile insurance may
refuse to accept in behalf of an insurer represented by him automobile insurance
for an insurable risk where the applicant for insurance designates by name or
description the insurer of his choice. If the applicant relies upon the skill
and judgment of the agent to place the risk in any insurer represented by the
agent, the agent may place the risk in the insurer which he considers
appropriate. No insurer may agree, collude, or conspire with an agent or give,
offer, or promise an agent anything of value to place any risk or any class or
type of risk under such circumstances in another insurer. Every such agreement
is utterly void and every act of collusion or conspiracy constitutes an act of
unfair competition by both the insurer and agent which, if proved, must result
in the suspension or revocation of the license of each for not less than one
year, in addition to any other penalties or liabilities applicable.
No automobile insurer authorized to transact automobile insurance in this State
which offers automobile insurance through the mails or uses the mails in
transacting automobile insurance on insurable risks situate in this State may
restrict its mailings or offerings to certain counties, areas, or zip-code
territories of this State. The commissioner is directed to examine an insurer's
records at any time the commissioner considers it necessary to determine that the
insurer is not so restricting or limiting its offerings."
Reference added to federal agencies
SECTION 15. Section 37-6-604 of the 1976 Code is amended to read:
"Section 37-6-604. The functions and duties of the Division of Consumer
Advocacy are:
(1) To provide legal representation of the consumer interest before the state
and federal regulatory agencies as hereinafter provided when those agencies
undertake to fix rates or prices for consumer products or services or to enact
regulations or establish policies related thereto.
(2) To monitor existing regulations, rate structures and policies of that
agency of special interest to consumers and report to the public through the news
media proposed changes therein under consideration and the effect of those
changes on the lives of the citizens of the State.
(3) The annual report required of the Commission on Consumer Affairs must
include a report on the activities of the Division of Consumer Advocacy.
(4) To evaluate and act upon requests from consumers concerning the matters
set forth in (1) and (2) above, except that any proceedings initiated by the
advocate must be brought on behalf of the public at large and not for
individuals; initiation or continuation of any proceedings must be at the sole
discretion of the consumer advocate."
Consumer Advocate, access to confidential records; Department of Insurance and
Advocate, access to records of insurers; etc.
SECTION 16. Section 37-6-605 of the 1976 Code is amended to read:
"Section 37-6-605. In the performance of his assigned functions the
advocate shall have reasonable access to records of all state agencies which are
not classified by law as confidential and all state agencies shall cooperate with
the advocate in the performance of his duties. In addition, the advocate shall
have reasonable access to confidential records and information, provided he
enters a proprietary agreement to insure their confidentiality. The South
Carolina Department of Insurance and advocate also have access to records,
information, and data of the insurance companies as well as all of their sister
affiliates, subsidiaries, and parent companies. During the course of a rate
making or other proceeding before the South Carolina Department of Insurance or
the Public Service Commission, the Consumer Advocate, as a party of record, may
request in writing, in addition to all other methods of discovery as provided by
law for proceedings before the South Carolina Department of Insurance or the
Public Service Commission, the issuance by the Chief Insurance Commissioner or
the Executive Director of the Public Service Commission of an order compelling
a witness or company to either produce or allow inspection of documentary
evidence relevant to the matter before the South Carolina Department of Insurance
or the Public Service Commission. If the executive director issues or refuses to
issue the order, the aggrieved party may appeal to the full commission. The
written request, in addition to showing a general relevance and reasonable scope
of the evidence sought, must also specify with particularity the books, accounts,
papers, records, or other materials of the business desired and the facts
expected to be proved thereby. For good cause shown, in lieu of a written
request, the request for such an order may be made orally upon the record to the
presiding officer at the hearing. Any objections to the issuance of the order
must be filed with the commission within three days of being notified of the
written request for such order. Any objections so filed must list the specific
grounds for objection. The commission shall rule on the objections within ten
days or the objection is denied."
Insurers required to insure - exceptions
SECTION 17. Section 38-77-110 of the 1976 Code is amended to read:
"Section 38-77-110. (A) Automobile insurers other than insurers
designated and approved as specialized insurers by the commissioner may not
refuse to write or renew automobile insurance policies for individual private
passenger automobiles or small commercial risks. These policies may not be
canceled except for reasons which had they existed or been known when the policy
was written would have rendered the risk not an insurable risk. Every automobile
insurance risk constitutes an insurable risk unless the operator's permit of the
named insured has been revoked or suspended and is at the time of application for
insurance so revoked or suspended. However, no insurer is required to write or
renew automobile insurance on any risk if there exists a valid and enforceable
outstanding judgment secured by an insurer, an agent, or licensed premium service
company on account of automobile insurance premiums which the applicant or
insured or any principal operator who is a member of the named insured's
household has failed or refused to pay unless the applicant or insured pays in
advance the entire premium for the full term of the policy sought to be issued
or renewed or the annual premium, whichever is the lesser. An insurer is not
precluded from effecting cancellation of an automobile insurance policy, either
upon its own initiative or at the instance of an agent or licensed premium
service company, because of the failure of any named insured or principal
operator to pay when due any automobile insurance premium or any installment
payment. However, notice of cancellation for nonpayment of premium notifies the
person to whom the notice is addressed that the notice is void and ineffective
if payment of the full amount of the premium or premium indebtedness, whichever
is the greater, is made to the insurer, agent, or licensed premium service
company named in the notice by the otherwise effective date of cancellation.
This notice of cancellation is not considered ineffective for being conditional,
ambiguous, or indefinite.
(B) Notwithstanding subsection (A) of this section, no insurer is required to
write private passenger automobile insurance with higher limits of coverage than:
(1) two hundred fifty thousand dollars, for bodily injury liability to one
person in one accident,
(2) subject to the limit for one person, five hundred thousand dollars
because of bodily injury to two or more persons in one accident,
(3) fifty thousand dollars because of injury to or destruction of property
of others in any one accident,
(4) five hundred thousand dollars combined single limits for either or both
bodily injury and property damage, if any applicant or existing policyholder, on
renewal, for a motor vehicle customarily operated by an individual, either the
named insured or any other operator not excluded in accordance with Section
38-77-340 and who resides in the same household, has one or more of the
conditions or factors prescribed in Section 38-73-455(A) existing and if an
insurer, at its option, writes such a policy, the policy may not be ceded to the
Reinsurance Facility.
(C) With regard to any coverage not required to be written by an insurer
under the mandate to write, no insurer may refuse to write such policy, coverage,
or endorsement of automobile insurance because of the race, color, creed,
national origin, or ancestry of anyone who seeks to become insured."
Unfair trade practices
SECTION 18. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by
adding:
"Section 38-77-341. It is an unfair trade practice as defined in Section
39-5-20 to:
(1) knowingly and wilfully make or cause to be made any false statement or
representation of a material fact for use in an application for payment or for
use in determining the right to payment under this chapter;
(2) submit or cause to be submitted bills or requests for payment containing
charges for services rendered which are substantially in excess of the person's
customary charges or in applicable cases substantially in excess of the person's
costs for such services, unless there is good cause for the bills or requests
containing the charges or costs;
(3) submit bills or requests for payment for work covered by insurance which
are in excess of those submitted for similar work not covered by insurance;
(4) submit bills or requests for payment which are inflated for the purpose
of relieving the insured of the obligation for making a payment for such goods
and services as a result of a deductible or copayment clause; or
(5) charge for copies of medical records or other records provided more than
fifty cents per page, except that a minimum charge of ten dollars for furnishing
copies of these records is authorized to be charged by insurers or health care
providers."
Notification of lapse or termination
SECTION 19. Section 56-10-40 of the 1976 Code is amended to read:
"Section 56-10-40. Every insurer writing automobile liability insurance
in this State and every provider of other security approved and accepted by the
Executive Director of the Department of Highways and Public Transportation in
lieu of such insurance shall immediately notify the Executive Director of the
Department of Highways and Public Transportation of the lapse or termination of
any such insurance or security issued to or provided for a resident of this State
in the following circumstances:
(1) the lapse or termination of such insurance or security occurs within three
months of issuance provided that this subsection only applies to new policies,
and not renewal or replacement policies; or
(2) the lapse or termination occurs after three months for a resident who
fails one or more of the objective standards prescribed in Section 38-73-455.
This notification must be in writing or magnetic media in a manner considered
satisfactory to the department. Upon receipt of any such notice the Executive
Director of the Department of Highways and Public Transportation shall make a
reasonable effort to notify the person that his certificate of registration has
been suspended and shall recover the certificate from such person and the motor
vehicle registration plates from the vehicles concerned."
Insurance must be issued for six months or more - when may be canceled - penalty
SECTION 20. Section 56-10-280 of the 1976 Code is amended to read:
"Section 56-10-280. All contracts or policies of insurance issued to meet
the financial responsibility requirements prescribed in this chapter must be
issued for not less than six months. A contract or policy of insurance remains
in full force and effect at least sixty days notwithstanding any power of
attorney which may purport to give the attorney-in-fact the right to effect
cancellation on behalf of the insured; however, a contract or policy may be
canceled within the first sixty days only under the following circumstances:
(1) a check or bank draft tendered by the insured for payment of premium is
returned unpaid for insufficient funds or other reason by the insured's financial
institution; or
(2) the insured produces satisfactory proof from the Department of Highways
and Public Transportation that he has sold or otherwise disposed of the insured
vehicle or surrendered its tags and registration.
The provisions of this section do not prohibit refunds to the insured for
cancellations after sixty days resulting from causes other than nonpayment of
premium. Where an insurance company cancels a contract or policy pursuant to
this section for nonpayment of premium under the circumstances described above
which occurs within the first sixty days, the insurance company or agent is
entitled to charge and collect a fifteen dollar penalty in addition to that
otherwise provided by law, and the penalty charge is not a premium charge."
Actions under underinsured motorists provisions
SECTION 21. Section 38-77-160 of the 1976 Code is amended by adding:
"No action may be brought under the underinsured motorist provision unless
copies of the pleadings in the action establishing liability are served in the
manner provided by law upon the insurer writing the underinsured motorist
provision. The insurer has the right to appear and defend in the name of the
underinsured motorist in any action which may affect its liability and has thirty
days after service of process on it in which to appear. The evidence of service
upon the insurer may not be made a part of the record. In the event the
automobile insurance insurer for the putative at-fault insured chooses to settle
in part the claims against its insured by payment of its applicable liability
limits on behalf of its insured, the underinsured motorist insurer may assume
control of the defense of action for its own benefit. No underinsured motorist
policy may contain a clause requiring the insurer's consent to settlement with
the at-fault party."
Form to be used when optional coverages are offered
SECTION 22. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by
adding:
"Section 38-77-350. (A) Not later than September 1, 1989, the Chief
Insurance Commissioner shall approve a form which automobile insurers shall use
in offering optional coverages required to be offered pursuant to law to
applicants for automobile insurance policies. This form must be used by insurers
for all new applicants after December 1, 1989. The form, at a minimum, must
provide for each optional coverage required to be offered:
(1) a brief and concise explanation of the coverage,
(2) a list of available limits and the range of premiums for the limits,
(3) a space for the insured to mark whether the insured chooses to accept
or reject the coverage and a space for the insured to select the limits of
coverage he desires,
(4) a space for the insured to sign the form which acknowledges that he has
been offered the optional coverages,
(5) the mailing address and telephone number of the Insurance Department
which the applicant may contact if the applicant has any questions that the
insurance agent is unable to answer.
(B) If this form is properly completed and executed by the named insured it
is conclusively presumed that there was an informed, knowing selection of
coverage and neither the insurance company nor any insurance agent has any
liability to the named insured or any other insured under the policy for the
insured's failure to purchase any optional coverage or higher limits.
(C) An automobile insurer is not required to make a new offer of coverage on
any automobile insurance policy which renews, extends, changes, supercedes, or
replaces an existing policy. However, the first renewal notices for existing
policies after December 1, 1989, must include the form provided in subsection
(A).
(D) Compliance with this section satisfies the insurer and agent's duty to
explain and offer optional coverages and higher limits and no person, including,
but not limited to, an insurer and insurance agent is liable in an action for
damages on account of the selection or rejection made by the named insured.
(E) If the insured fails or refuses to return an executed offer form within
thirty days to the insurer, the insurer shall add on uninsured motorist and
underinsured motorist coverages with the same policy limits as the insured's
liability limits.
False claims for payment - felony
SECTION 23. Section 38-55-170 of the 1976 Code is amended to read:
"Section 38-55-170. Any person who knowingly causes to be presented to
an insurer transacting business in this State a false claim for payment, or who
knowingly assists, solicits, or conspires with another to present a false claim
for payment, is guilty of a felony and, upon conviction, must be imprisoned for
not more than five years or fined not more than five thousand dollars, or
both."
False claims to obtain insurance benefits for fire or explosion losses - felony
SECTION 24. Section 16-11-125 of the 1976 Code is amended to read:
"Section 16-11-125. Any person who wilfully and knowingly presents or
causes to be presented a false or fraudulent claim, or any proof in support of
such claim, for the payment of a fire loss or loss caused by an explosion, upon
any contract of insurance or certificate of insurance which includes benefits for
such a loss, or prepares, makes, or subscribes to a false or fraudulent account,
certificate, affidavit, or proof of loss, or other documents or writing, with
intent that such documents may be presented or used in support of such claim, is
guilty of a felony and, upon conviction, must be fined not more than ten thousand
dollars or imprisoned for not more than five years or both in the discretion of
the court.
The provisions of this section are supplemental to and not in lieu of existing
law relating to falsification of documents and penalties therefor."
Burning personal property to defraud insurer - felony
SECTION 25. Section 16-11-130 of the 1976 Code is amended to read:
"Section 16-11-130. Any person who (a) wilfully and with intent to injure
or defraud an insurer sets fire to or burns or causes to be burned or (b) aids,
counsels, or procures the burning of any goods, wares, merchandise, or other
chattels or personal property of any kind, whether the property of himself or of
another, which is at the time insured by any person against loss or damage by
fire is guilty of a felony and, upon conviction, must be imprisoned for not less
than one nor more than five years."
Crimes, included as felonies
SECTION 26. The crimes in Sections 16-11-125, 16-11-130, and 38-55-170 of the
1976 Code and Section 32 of this act are added to the list of crimes classified
as felonies in Section 16-1-10.
Denial of claim, notification
SECTION 27. Section 23-41-30 of the 1976 Code is amended to read:
"Section 23-41-30. (a) Any authorized agency may require, in writing, the
insurance company at interest to release to the requesting agency any or all
relevant information or evidence deemed important to the authorized agency which
the company may have in its possession relating to the fire loss in question.
Relevant information includes:
(1) Pertinent insurance policy information relevant to a fire loss under
investigation and any application for such a policy;
(2) Policy premium payment records which are available;
(3) History of previous claims made by the insured;
(4) Material relating to the investigation of the loss, including statements
of any person, proof of loss, and any other evidence relevant to the
investigation.
(b) When an insurance company has reason to believe that a fire loss in which
it has an interest may be of other than accidental cause, the company may notify,
in writing, an authorized agency and provide it with any or all material
developed from the company's inquiry into the fire loss; however, when such
information includes possible evidence of arson or other unlawful burning
involving specifically named persons, the information in all cases may be
furnished to the solicitor in the circuit where the fire occurred and he shall
furnish the information to other properly authorized agencies if he considers
such action to be appropriate. When an insurance company provides any one of the
authorized agencies with notice of a fire loss, it is sufficient notice for the
purpose of this chapter.
(c) When an insurance company denies payment of a claim to an insured on
grounds of arson, false swearing, material misrepresentation, fraud, or similar
claim or defense such insurer shall in all cases notify in writing the Chief
Insurance Commissioner. The commissioner may, after the investigation, notify
an authorized agency if he considers the action to be appropriate.
(d) The authorized agency provided with information pursuant to this chapter
may release or provide such information to any agency asked to participate in the
investigation.
(e) Any insurance company providing information to an authorized agency
pursuant to this chapter has the right to be informed, upon written request, as
to the status of the case by such agency within a reasonable time, as determined
by the authorized agency.
(f) Any insurance company or authorized agency which notifies the Chief
Insurance Commissioner or provides or releases information, whether oral or
written, and any person acting in their behalf, pursuant to this chapter is
immune from any liability arising out of such notification or release."
License, first time; complete, verification form
SECTION 28. Section 56-1-80 of the 1976 Code is amended to read:
"Section 56-1-80. Every application for a driver's license or permit
must:
(1) be made upon the form furnished by the department;
(2) be accompanied by the proper fee, and acceptable proof of date and place
of birth;
(3) contain the full name, date of birth, sex, race, and residence address of
the applicant and briefly describe the applicant;
(4) state whether the applicant has been licensed as an operator or chauffeur
and, if so, when and by what state or country; and
(5) state whether any such license has ever been suspended or revoked or
whether an application has ever been refused and, if so, the date of and reason
for such suspension, revocation, or refusal.
Whenever application is received from a person previously licensed in another
state, the department shall request copy of the applicant's record from the other
state. When received, the record becomes a part of the driver's record in this
State with the same force and effect as though entered on the operator's record
in this State in the original instance. Every person who obtains a driver's
license for the first time in South Carolina, and every person who renews his
driver's license in South Carolina must be furnished a written request form for
completion and verification of liability insurance coverage.
The completed and verified form or an affidavit prepared by the department that
neither he, nor any resident relative, owns a motor vehicle subject to the
provisions of this chapter, must be returned to the department within thirty days
from the date the license is issued or renewed. Failure to return the form or
affidavit results in the suspension of the newly issued or renewed driver's
license until a properly executed form or affidavit is returned to the
department."
Sample, premiums of; published
SECTION 29. The Chief Insurance Commissioner shall no less than annually cause
to have published and make available a representative sample of the private
passenger premiums being charged by at least the twenty insurance companies
having the largest market share in each territory to facilitate price comparisons
by insureds and prospective insureds who are seeking new coverage.
Commissioner, authority granted; legislation, court decision, effect of
SECTION 30. Article 9, Chapter 73, Title 38 of the 1976 Code is amended by
adding:
"Section 38-73-915. (A) The commissioner in reviewing rate filings may
take into consideration recently passed legislation or recently rendered court
decisions which will have an effect on insurance rates. The commissioner may use
such information to reduce or increase the rate level of the insurer or the
rating organization.
(B) The commissioner 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 commissioner shall 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 under the Administrative Procedures Act to contest the proposed order.
The Consumer Advocate may participate as a party in any such hearings."
Rate filings; information based upon, exceptions
SECTION 31. No rate filing for private passenger automobile insurance may
include or be based upon actual or projected loss or expense data which includes
payments made on policies, wherein the amount of the settlement, judgment, or
other payment by the insurer was in excess of the policy limits, exclusive of
interest and costs. No rate filing for private passenger automobile insurance
may include or be based upon actual or projected loss or expense data which
includes payments made as a result of the insurer's tortious breach of it's duty
of good faith and fair dealing.
Provisions to ensure expenses allocated, treated properly
SECTION 32. (A) No automobile insurer or representative of any automobile
insurer may wilfully include in a private passenger automobile insurance rate
filing any expense or loss which was generated in whole or part by either another
line of insurance or general expenses or overhead applicable to all lines, unless
the insurer has allocated properly the expense or loss among all its lines of
insurance. The insurer's compliance with generally accepted accounting and
actuarial principles constitutes a complete defense to an action brought under
this section. No insurer may adopt a different method or usage of allocating or
treating expenses or losses for purposes of rate filings in South Carolina from
that which it uses in other states for similar lines of insurance, unless
different treatment is required by statute or regulation.
(B) The Chief Insurance Commissioner, at least once every four years, shall
make or cause to be made, for each insurer which writes more than one percent of
the private passenger market in South Carolina, an examination of each insurer's
books, records, and accounts to ensure that the expenses are being allocated or
treated properly. In lieu of an independent examination, the commissioner may
request a sworn affidavit from the insurer's controller, accountant, or actuary
that the companies' expenses are being allocated and treated properly and that
private passenger automobile insureds are not being charged an inequitable or
unfair share of the insurer's expenses, acquisition costs, overhead, or other
expenses. The Chief Insurance Commissioner shall survey for the companies at
appropriate intervals a comparison of the acquisition cost of private passenger
business in South Carolina versus other similar states in which the companies do
business.
(C) An insurer violating the provisions of this section is subject to a civil
penalty of not less than twenty-five thousand dollars. A person who violates the
provisions of this section is guilty of a felony and, upon conviction, must be
imprisoned for not more than ten years or fined not less than ten thousand
dollars, or both.
Nonrefusal of insurance; exception provided
SECTION 33. Section 38-77-920 of the 1976 Code is amended to read:
"Section 38-77-920. No automobile insurer may refuse acceptance of
automobile insurance for an insurable risk from any applicant nor require that
certain classes or types of risks be placed through some particular agent or
employee, except as provided for in Section 38-77-110. This section is not
intended to preclude any insurer from recognizing and giving effect to the
property rights of agents in expirations or renewals.
No agent who represents more than one insurer of automobile insurance may
refuse to accept in behalf of an insurer represented by him automobile insurance
for an insurable risk where the applicant for insurance designates by name or
description the insurer of his choice. If the applicant relies upon the skill
and judgment of the agent to place the risk in any insurer represented by the
agent, the agent may place the risk in the insurer which he considers
appropriate. No insurer may agree, collude, or conspire with an agent or give,
offer, or promise an agent anything of value to place any risk or any class or
type of risk under such circumstances in another insurer. Every such agreement
is utterly void and every act of collusion or conspiracy constitutes an act of
unfair competition by both the insurer and agent which, if proved, results in the
suspension or revocation of the license of each for not less than one year, in
addition to any other penalties or liabilities applicable.
No automobile insurer authorized to transact automobile insurance in this State
which offers automobile insurance through the mails or uses the mails in
transacting automobile insurance on insurable risks situate in this State may
restrict its mailings or offerings to certain counties, areas, or zip-code
territories of this State. The commissioner is directed to examine an insurer's
records at any time the commissioner considers it necessary to determine that the
insurer is not so restricting or limiting its offerings."
No PIP coverage; references to PIP deleted; no assignment, subrogation, or
set-off
SECTION 34. There is no personal injury protection (PIP) coverage mandated
under the automobile insurance laws of this State. Any reference to personal
injury protection in Titles 38 or 56 of the 1976 Code of Laws or elsewhere is
deleted. If an insurer sells no-fault insurance coverage which provides personal
injury protection, medical payment coverage, or economic loss coverage, the
coverage must not be assigned or subrogated and is not subject to a set-off.
Consideration of expenses; maximum allowable expense level; etc.
SECTION 35. Section 38-73-465(B) of the 1976 Code, as reenacted by this act,
is amended by adding an appropriately numbered item to read:
"____________ (a) In making a determination that an insurance rate is
unfairly discriminatory, excessive, or unreasonable, the Insurance Department,
in accordance with generally accepted and reasonable actuarial techniques, shall
include consideration of expenses. Effective after June 30, 1989, expenses must
be given effect in all private passenger automobile insurance rates by inclusion
in rates of a level of expenses approximating an efficient company for the
appropriate category in which each insurer qualifies. Insurers must be
categorized by the marketing mechanism utilized, either as a nonagency insurer,
captive agency insurer, or independent agency insurer. Nonagency insurers are
those who market the automobile insurance policy primarily through the mail.
Captive agency insurers are those who market the automobile insurance policy
primarily through agents, compensated by salary or commission or both, but who
are restricted by contract with the insurer from contracting with other insurers
for marketing of automobile insurance. Independent agency insurers are those who
market the automobile insurance policy primarily through agents who are not
restricted by contract from marketing automobile insurance with other insurers.
(b) For purposes of this item, the maximum allowable expense level for each
respective category is the weighted average for the past three years for which
data is reported of the average expenses by insurer category for the top ten most
efficient insurers in that category writing automobile insurance in this State.
If there are not ten insurers in any given category, then the expense level is
the weighted average for all the insurers in that category. The Chief Insurance
Commissioner may reward an insurer actually achieving less than the maximum
expense level allowable by allowing a higher underwriting profit than would
otherwise result. However, this reward may not exceed the difference between the
insurer's actual expense level achieved and the maximum level allowable in rates
in a given year.
(c) The commissioner 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."
Per diem fine for lapse in required coverage
SECTION 36. Whenever a person furnishes proof of liability insurance, or
surrenders or has his registration or license tags confiscated for failure to
produce proof of insurance, after the Department of Highways and Public
Transportation receives notice of the lapse or termination of the required
liability insurance, the department shall compare the effective date of the lapse
or termination with the date of the proof of insurance or the date of the
confiscation or surrender. If the department determines there was a lapse in the
required coverage the department shall assess, in addition to other fines or
penalties imposed by the law, a per diem fine in the amount of five dollars. The
department shall collect and keep this fine to defer the costs of the financial
responsibility program. The fine provided for in this section must not be
assessed if the person furnishes proof, as documented by his sworn statement,
that the motor vehicle upon which the coverage has lapsed or been terminated has
not been operated upon the roads, streets, or highways of this State during the
lapse or termination, and the lapse or termination is due to military service or
illness as documented by a signed physician's statement. The total amount of the
fine provided for in this section may not exceed two hundred dollars for a first
offense.
Receipt for returned document
SECTION 37. Section 56-3-1350 of the 1976 Code is amended to read:
"Section 56-3-1350. Whenever the department, as authorized under this
chapter, cancels, suspends, or revokes the registration and license of a vehicle
or the registration card, license plate, revalidation sticker, or other document
issued by it pursuant to this chapter, the owner or person in possession of the
document shall immediately return it to the department. The department in all
cases shall furnish the person returning the document with a receipt indicating
the date of surrender."
Unfairly discriminatory, excessive, or unreasonable profits, rates, review of
rates, rate experience
SECTION 38. Section 38-73-465 of the 1976 Code is reenacted to read:
"Section 38-73-465. (A) In considering any rate filing or in reviewing
any rate in effect for automobile insurance, or upon complaint or petition by the
Consumer Advocate, or any other interested party, the Chief Insurance
Commissioner shall review the rate experience. If the insurer has realized an
unfairly discriminatory, excessive, or unreasonable profit, in the opinion of the
commissioner, the commissioner shall order the same removed and require that the
individual insurer promulgate a rate which is not unfairly discriminatory,
excessive, or unreasonable and order a pro rata rebate of any unfairly
discriminatory, excessive, or unreasonable amount charged together with interest
at the rate of twelve percent per annum either in the form of a cash refund or
as a credit toward the future premiums. The commissioner shall rescind the order
of rebate only upon a showing that compliance would cause an insolvency.
(B) In making the determination that a rate is unfairly discriminatory,
excessive, or unreasonable, the Insurance Department, in accordance with
generally accepted and reasonable actuarial techniques, shall include
consideration of the following factors:
1. past and prospective loss experience within and without this State;
2. past and prospective expenses;
3. the degree of competition among insurers for the risk insured;
4. investment income. Investment income also must be given effect in all
other property or casualty insurance rates and the commissioner may order the use
of similar instructions and exhibits by replacement of that company's insurance
data for other lines instead of the private passenger data referenced in this
subitem. Companies shall supply the information requested in this item
regardless of whether or not the references to the Annual Statements change.
Exhibit 1. Expected Underwriting Results with Unchanged Premium: This exhibit
must display the following data and calculations:
i. total limits premium at current level;
ii. forecasted losses;
iii. forecasted loss adjustment expenses;
iv. other underwriting expense;
v. underwriting result (profit or loss);
which must be calculated as total limits premium at current level by coverage,
less losses, less loss adjustment expenses, less other underwriting expenses; and
vi. underwriting result (profit or loss) as a percent of premium, which must
be calculated as the ratio of underwriting result to earned premium at current
levels.
Exhibit 2. Analysis of Earnings Requirements: This exhibit must display the
following information:
i. the amount of surplus allocated to each coverage for South Carolina
private-passenger automobile insurance as calculated in investment income Exhibit
4, Line 4;
ii. the target rate of return on surplus which the filer believes is
appropriate for the coverage in question. Testimony and evidence in support of
this target rate of return must accompany the filing;
iii. the required dollar return on surplus to produce the target rate of
return;
iv. the ratio of investment income to premium earned as calculated on
Investment Income Exhibit 4, Line 11;
v. forecasted South Carolina premium earned by coverage;
vi. the expected dollar return from investment calculated by multiplying the
ratio of investment income to premium earned by forecasted premium earned;
vii. required underwriting return calculated as the required return on
surplus less the dollar return from investment; and
viii. the ratio of the required underwriting return to forecasted premium
earned.
EXHIBIT 1. EXPECTED UNDERWRITING
BODILY PROPERTY
INJURY DAMAGE
1. Earned Premium at
Current Level $_______________ $______________
2. Forecasted Loss $_____________ $______________
3. Forecasted Loss
Adjustment $__________________ $______________
4. Other Underwriting
Expenses $____________________ $______________
5. Underwriting Result $_________ $______________
6. Underwriting Result
as a Percent of
Premium ____________________% _____________%
RESULTS WITH UNCHANGED PREMIUM
COMPREHENSIVE COLLISION
$_______________ $_____________
$_______________ $_____________
$_______________ $_____________
$_______________ $_____________
$_______________ $_____________
_______________ % ____________%
EXHIBIT 2. ANALYSIS OF EARNINGS REQUIREMENTS
BODILY PROPERTY
INJURY DAMAGE
1. Surplus by Line,
Inv. Inc.
Exhibit 4, Line 4 $___________ $__________
2. Target Rate of Return
on Surplus __________% __________%
3. Required on Surplus
(1) x (2) $___________________ $__________
4. Ratio of Investment
Income to Premium
Earned Inv. Inc.
Exhibit 4, Line 11 ____________ __________
5. Forecasted Premium
Earned $______________________ $__________
6. Return from Investment
(4) x (5) $___________________ $__________
7. Required Underwriting
Return (3) - (6) $____________ $__________
8. Ratio, Required Under-
writing to Premium
Earned (7) / (5) _____________% _________%
COMPREHENSIVE COLLISION
$______________ $______________
_____________% _____________%
$______________ $______________
______________ _____________
$______________ $______________
$______________ $______________
$______________ $______________
_____________% _____________%
Instructions for Completing Investment
Income Exhibits
(A) Each filer shall provide the following exhibits pertaining to investment
income associated with private passenger automobile insurance in the formats
specified by Investment Income Exhibits 1, 2, 3, and 4.
1. Investment Income Exhibit 1: The filer shall provide the following
information according to the format specified in Investment Income Exhibit 1,
Investment Income from Loss and Loss Expense Reserves:
i. Net investment gain, from the filer's most recent annual statement,
page 4, line 9a;
ii. cash and invested assets, from the filer's most recent annual
statement, page 2, line 8A, for the two most recent years and mean cash and
invested assets calculated for those two years;
iii. rate of return on investments calculated as the ratio of net
investment gain to mean cash and invested assets;
iv. South Carolina loss reserves (Incl. IBNR) by coverage as of December
thirty-first of the two most recent calendar years;
v. South Carolina loss adjustment expense reserves (Incl. IBNR) as of
December thirty-first of the two most recent calendar years;
vi. mean loss and loss adjustment expense reserves for the period;
vii. premium earned by coverage;
viii. the ratio of loss and loss expense reserves to premium earned; and
ix. investment income from reserves as a percent of premium earned.
2. Investment Income Exhibit 2: The filer shall provide the following
information according to the format specified in Investment Income Exhibit 2,
Investment Income from Unearned Premium Reserves:
i. South Carolina unearned premium reserves by coverage as of December
thirty-first of the two most recent calendar years and the mean unearned premium
reserve calculated for that period;
ii. premium earned by coverage;
iii. the ratio of unearned premium reserve to earned premium, by coverage;
iv. rate of return on investments; and
v. investment income as a percent of premium earned, by coverage.
3. Investment Income Exhibit 3: Each filer shall provide the following
information according to the format specified in Investment Income Exhibit 3,
Companywide Reserves, Surplus, and Invested Assets. The references on the
exhibit pertain to the filer's most recent annual statement:
i. loss reserves for the most recent calendar year;
ii. loss adjustment expenses reserves for the most recent calendar year
and the ratio of unpaid loss adjustment expenses to unpaid losses;
iii. unearned premium reserves for the most recent calendar year;
iv. total reserves;
v. cash and invested assets as of December thirty-first of the most
recent calendar year;
vi. surplus as of December thirty-first of the most recent calendar
year;
vii. the percent of surplus invested, calculated as cash and invested
assets less reserves divided by surplus; and
viii. the ratio of surplus to reserves.
4. Investment Income Exhibit 4: The filer shall provide the following
information according to the format specified in Investment Income Exhibit 4,
Investment Income as a percent of premium:
i. items 1 through 3 on the exhibit mean South Carolina premium, loss,
and loss adjustment reserves, and the sum of these three components of reserves,
by coverage;
ii. item 4 of the exhibit means the dollar amount of South Carolina
surplus by coverage, calculated by multiplying total South Carolina reserves by
coverage times the ratio of surplus to reserves;
iii. items 5 and 6 of the exhibit mean the dollar amount of invested South
Carolina surplus by coverage, calculated as the product of South Carolina surplus
times the percent of surplus invested;
iv. items 7 through 9 of the exhibit mean the sum of South Carolina
reserves and surplus and the dollar amount of investment income earned on these
reserves and surplus;
v. items 10 and 11 of the exhibit mean investment income as a percent
of premium earned by coverage.
Charts To Follow
INVESTMENT INCOME EXHIBIT 1.
INVESTMENT INCOME FROM LOSS
1. Net Investment Gain,
Annual Statement
P-4, Line 9a $_________________
2. Cash Invested Assets,
Annual Statement
P-2, Line 9a
a. As of * $_____________________
t. As of ** $____________________
Mean Cash & Invested Assets $_____________________
3. Rate of Return on Investments (1./2c.)_____________%
BODILY PROPERTY
INJURY DAMAGE
4. S. C. Loss Reserves
a. As of * $____________________ $_____________________
b. As of ** $___________________ $_____________________
5. S. C. Loss Adjustment
Expense Reserves
a. As of * $____________________ $_____________________ b. As
of ** $___________________ $_____________________
6. Mean Loss & LAX Reserves
((4a. + 4b.)/2) +
((5a. + 5b.)/2) $__________________ $_____________________
7. Premium Earned * $__________________ $_____________________
8. Ratio Loss & LAX Reserves
to Earned Premium
(6./7.) ________________% __________________ %
9. Investment Income as a
Percent of Premium
(3. x 8.)_______________% _________________ %
* Current Calendar Year Available
** Previous Calendar Year Available
AND LOSS EXPENSE RESERVES, SOUTH CAROLINA
COMPREHENSIVE COLLISION
$______________ $ _______________
$______________ $ _______________
$______________ $ _______________
$______________ $ _______________
$______________ $ _______________
$______________ $ _______________
____________ % ____________ %
____________ % ____________ %
INVESTMENT INCOME EXHIBIT 2.
INVESTMENT INCOME
BODILY PROPERTY
INJURY DAMAGE
1. S.C. Unearned Premium
Reserves
a. As of * $____________________ $________________
b. As of ** $____________________ $________________
c. Mean Premium
Reserve
(1a. + 1b.)/2 $______________ $________________
2. Premium Earned * $ $
3. Ratio, Unearned Premium
Reserves to Earned
Premium (1c./2.) ______________ % _________________ %
4. Rate of Return on
Investments
Investment Income
Exhibit 1, Line 3 ______________ % _________________ %
5. Investment Income as a
Percent of Premium
(3) x (4) ______________ % _________________ %
* Current Calendar Year Available
** Previous Calendar Year Available
FROM UNEARNED PREMIUM RESERVE, SOUTH CAROLINA
COMPREHENSIVE COLLISION
$________________ $_______________
$________________ $_______________
$________________ $_______________
$________________ $_______________
______________% _____________%
______________% _____________%
______________% _____________%
INVESTMENT INCOME EXHIBIT 3. COMPANYWIDE
RESERVES, SURPLUS AND INVESTED ASSETS
ITEM AMOUNT ANNUAL STATEMENT
REFERENCE
1. Loss Reserve* Page 10, Part 3A,
$____________ Line 32, Col. 5
2. Loss Adjustment Page 10, Part 3A,
Reserve* $__________ Line 32, Col. 6
3. Unearned Premium* Page 7, Part 2,
$_____________ Line 31, Col. 3
4. Total Reserves
(1+2+3) $______________
5. Cash and Invested Page 2, Line 8A,
Assets* $______________ Col. 1
6. Surplus * Page 4, Line 32,
$ __________________ Col. 1
7. Percent of
Surplus Invested
((5-4)/6) ______________%
8. Rate of Surplus
to Reserves ____________%
(6/4)
* Current Calendar Year Available
INVESTMENT INCOME EXHIBIT 4.
INVESTMENT INCOME
BODILY PROPERTY
INJURY DAMAGE
1. Mean S.C. Premium
Reserve Investment Income
Exhibit 2, Line 1c. $________________ $_________________
2. Mean S.C. Loss &
Loss Adj. Reserve Investment
Income Exhibit 1, Line 6 $___________ $_________________
3. Total S.C. Reserves $____________ $_________________
4. S.C. Surplus,
(3) x Inv. Inc. Exhibit
3, Line 8 $__________________ $_________________
5. Percent of Surplus
Invested Investment Income
Exhibit 3, Line 7 _______________ % _____________ %
6. Invested Surplus,
(4)x(5) $________________ $________________
7. Sum, Reserves, and
Invested Surplus (3)+(6) $____________ $________________
8. Rate of Return on
Investments Investment
Income Exhibit 1, Line 3 _____________ % ________________%
9. Investment Income
Earned on Reserves and
Invested Surplus (7)x(8) $____________ $________________
10. Premium Earned,
Investment Income
Exhibit 1, Line 7 $___________________ $________________
11. Investment Income as
a % of Premium
Earned (9)/(10) ___________________% ________________%
AS A PERCENT OF PREMIUM, SOUTH CAROLINA
COMPREHENSIVE COLLISION
$______________ $________________
$______________ $________________
$______________ $________________
______________ % ________________ %
$______________ $________________
$______________ $________________
______________ % ________________ %
$______________ $________________
$______________ $________________
______________ % ________________ %
The Chief Insurance Commissioner may reward an insurer actually achieving less
than the maximum expense level allowable in rates after the initial three-year
period by allowing a higher underwriting profit than would otherwise result from
use of the instructions and exhibits set forth in this item. However, this
reward may not exceed the difference between the insurer's actual expense level
achieved and the maximum level allowable in rates in a given year.
5. the reasonableness of the judgment reflected in the filing;
6. a reasonable margin for underwriting profit and contingencies which may
be a negative margin;
7. other relevant factors such as those which impact upon the frequency or
severity of claims or upon expenses or profits, percentage of surplus relative
to earned premium, as well as additional factors to be considered as a result of
the enactment of the Automobile Insurance Reform Act of 1989.
(C) In reviewing a rate filing, the department may require the insurer to
provide at the insurer's expense all information necessary to evaluate the
condition of the company and the reasonableness of the filing according to the
criteria enumerated in this section and including statutorily-required notice
provisions relative to rate filings."
No increase in auto insurance premiums after certain first offense violations;
etc.
SECTION 39. The 1976 Code is amended by adding:
"Section 38-77-360. (A) A person who is guilty of a violation, for a
first offense, of Section 56-5-5310 for not having a taillight in good working
order or a person who is guilty of a violation, for a first offense, of Section
56-5-1520 for driving too fast for conditions may not have his automobile
insurance premiums increased as a result of that violation.
(B) A person violating Section 56-5-5310, for a first offense, has ten days
to repair the taillight. If this person is found in violation of Section
56-5-5310 as stated in subsection (A), after the ten-day period, he must be
punished as provided by law."
No increase in recoupment charge
SECTION 40. The 1976 Code is amended by adding:
"Section 38-77-625. If an insured is involved in a motor vehicle accident
where he is not the at-fault driver, his facility recoupment charge may not be
increased by his insurer because of this occurrence."
Cooperation prohibited, exception, prior approval for filings; rating
organizations, rates, rate increases, premium charges, extension to other lines;
etc.
SECTION 41. A. Section 38-73-1350 of the 1976 Code is 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 Chief Insurance Commissioner 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
commissioner that the anti-competitive effects of this cooperation outweigh
practical constraints of prohibitions. All property/casualty filings are subject
to prior approval by the Chief Insurance Commissioner. The provisions of Title
1, Chapter 23 (Administrative Procedures Act) apply to all property/casualty rate
filings."
B. Article 11, Chapter 73, Title 38 of the 1976 Code is amended by adding:
"Section 38-73-1370. After June 30, 1989, no rating organization may file
a rate increase with the commissioner 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 commissioner. After a public hearing, the commissioner 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 and approved by the commissioner pursuant to Section 38-73-1380.
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 and approved by the commissioner. 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 and
approved by the commissioner, 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 commissioner unless it has been the subject of a public
hearing, 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.
Section 38-73-1400. (1) After June 30, 1989, the 'pure loss component' of the
final rate or premium charge for private passenger automobile insurance is that
portion of the final rate or premium charge applicable to calendar/accident year
incurred losses (the sum of paid losses plus loss reserves including incurred but
not reported loss reserves) and loss adjustment expense (those expenses directly
related to the payment of claims) in this State, trended to include both the past
and prospective loss experience. If the insurer writes one percent or more of
the written premium for automobile insurance during the previous calendar year,
that insurer must file its own trending methodology as independently derived.
(2) The 'expense component' of the final rate or premium charge for private
passenger automobile insurance is that portion of the final rate or premium
charge applicable to production costs (including commissions and other
acquisition expenses), underwriting costs, administrative costs (including the
actual costs of taxes, licenses and fees), and profit margin in this State.
(3) The 'final rate or premium charge' is the approved pure loss component
added to the approved expense component. In the determination of whether the pure
loss component should be approved and in the determination of whether the expense
component should be approved, neither may be inadequate, excessive, nor unfairly
discriminatory and the commissioner shall take into account investment income
from unearned premium and loss reserves, surplus and realized capital gains.
Section 38-73-1410. After June 30, 1989, upon the effective date of this
section, nothing herein should be construed to require a rating organization or
its members or subscribers to immediately refile final rates or premium charges
previously approved by the commissioner for private passenger automobile
insurance coverages. Members or subscribers of a rating organization are
authorized to continue to use automobile insurance rates or premium charges,
approved before the effective date of this section, or decreases from those rates
or premium charges filed by the rating organization and, subsequently, approved
after the effective date of this section.
Section 38-73-1420. After June 30, 1989, the Board of Governors of the South
Carolina Reinsurance Facility shall file an expense component for private
passenger 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 commissioner.
Upon the approval of such component, 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 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 38-73-1430. After June 30, 1989, the commissioner 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."
Claims audits
SECTION 42. Section 38-77-590 of the 1976 Code is amended by adding:
"(h) A designated carrier who fails a claims audit shall have no new
designated producer assignments until the time it passes a re-audit within a
reasonable time prescribed by the governing board. If this carrier fails two
claims audits, including a re-audit, within any three-year period that carrier
is disqualified for renewal of its contract with the facility upon expiration of
its existing contract."
Severability
SECTION 43. If any provision of this act or the application of it to any person
or circumstance is held invalid, the remainder of the act and the application of
that provision to other persons or circumstances is not affected.
Unreasonable use and notification to policyholders
SECTION 44. Section 38-77-950 of the 1976 Code is amended to read:
"Section 38-77-950. It is the intent of this chapter that the facility
may not be excessively nor unreasonably utilized by automobile insurers for
unfairly competitive purposes or for purposes of unfairly discriminating against
certain classes or types of automobile insurance risks having the same or similar
objective risk characteristics as other risks in the same class under the rating
plan for the classification of risks promulgated by the department, nor for the
purpose of discriminating against such risks or any risks in certain rating
territories. The commissioner shall prohibit unreasonable or excessive
utilization of the facility.
A prima facie case of excessive or unreasonable utilization is established upon
a showing that an automobile insurance insurer or a group of such insurers under
the same management has ceded or is about to cede more than thirty-five percent
of total direct cedeable written premiums on South Carolina automobile insurance
as reported in the most recently filed annual statement(s) of such insurer or
group.
Upon the written request of the policyholder, all insurance companies doing
business in this State shall give written notice to the policyholder informing
him whether or not he and any driver under the policy is in the facility."
Computation of recoupment charge and applicability thereof revised; small
commercial automobile risks, rates
SECTION 45. A. Section 38-77-600 of the 1976 Code is amended to read:
"Section 38-77-600. The rate or premium charged by insurers of private
passenger automobile insurance must include a facility recoupment charge, which
must be added to the appropriate base rate or objective standards rate prescribed
in Sections 38-73-455 and 38-73-457. The operating losses of the facility for
a twelve-month period must be recouped in the subsequent twelve-month period.
(1) Prior to December first of each year, the governing board of the facility
shall calculate the recoupment amount, by coverage, by dividing the net facility
operating loss, adjusted to reflect prudently incurred expenses, consistent with
the provisions of Section 38-73-465, and the time value of money, by mandated
coverage for the preceding facility accounting year, by the total number of
earned car years in South Carolina, by coverage, for the same period of time.
.386 multiplied by the recoupment is to be bourne by risks having zero surcharge
points under the Uniform Merit Plan promulgated by the commissioner. The
remainder of the recoupment (.614 multiplied by the recoupment) represents R in
the formula, P1X + 2P2X + 3P3X + 4P4X + 5P5X + 6P6X + 7P7X + 8P8X + 9P9X + 10P10X
= R. In this formula to be utilized in determining the facility recoupment
charge:
(a) P1 is the percentage of risks which have one surcharge point under the
Uniform Merit Rating Plan;
(b) P2 is the percentage of risks which have two surcharge points under the
Uniform Merit Rating Plan;
(c) P3 is the percentage of risks which are subject to a surcharge of three
points under the Uniform Merit Rating Plan;
(d) P4 is the percentage of risks which are subject to a surcharge of four
points under the Uniform Merit Rating Plan;
(e) P5 is the percentage of risks subject to a surcharge of five points
under the Uniform Merit Rating Plan;
(f) P6 is the percentage of risks subject to a surcharge of six points under
the Uniform Merit Rating Plan;
(g) P7 is the percentage of risks subject to a surcharge of seven points
under the Uniform Merit Rating Plan;
(h) P8 is the percentage of risks subject to a surcharge of eight points
under the Uniform Merit Rating Plan;
(i) P9 is the percentage of risks subject to a surcharge of nine points
under the Uniform Merit Rating Plan;
(j) P10 or more is the percentage of risks subject to a surcharge of ten or
more points under the Uniform Merit Rating Plan;
(k) X is the dollar amount by coverage, to be charged all risks having one
surcharge point under the Uniform Merit Rating Plan promulgated by the
commissioner. This dollar amount, by coverage, is the facility recoupment charge
to be added to the base rate or objective standards rate prescribed in Sections
38-73-455 and 38-73-457 for all risks which have one surcharge point.
(2) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which have one surcharge point under
the Uniform Merit Rating Plan is calculated by multiplying X by a factor of one.
(3) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which have two surcharge points under
the Uniform Merit Rating Plan is calculated by multiplying X by a factor of two.
(4) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of
three points under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of three.
(5) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of
four points under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of four.
(6) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of
five points under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of five.
(7) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of six
points under the Uniform Merit Rating Plan is calculated by multiplying X by a
factor of six.
(8) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of
seven points under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of seven.
(9) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of
eight points under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of eight.
(10) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of
nine points under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of nine.
(11) The facility recoupment charge by coverage to be added to the base rate
or objective standards rate for all risks which are subject to a surcharge of ten
or more points under the Uniform Merit Rating Plan is calculated by multiplying
X by a factor of ten.
(12) In determining the number of surcharge points a risk has for the purposes
of this section, no surcharge points assigned under the Uniform Merit Rating Plan
because the principal operator of the automobile has not been licensed in any
state for at least one year immediately preceding the writing of the risk or as
a result of a failure of any motor vehicle equipment requirement may be
considered.
(13) This section applies to all private passenger automobile insurance
policies issued or renewed after June 30, 1989. However, insurers unable to
comply with the provisions of this section and renewal provisions required by law
may comply with this section at any time after June 30, 1989, but in no event
later than October 1, 1989."
B. Section 38-77-620 of the 1976 Code is amended to read:
"Section 38-77-620. The facility recoupment charges approved or
established pursuant to Section 38-77-610 must be added to the approved base rate
and objective standards rate in effect for each automobile insurer. The combined
rate or premium charge is effective on July first of each year and the recoupment
charges must remain constant until July first of the following year. The base
rate and objective standards rate may change in accordance with Section 38-73-457
and the other applicable requirements of this title pertaining to the approval
of rates or premium charges. Facility recoupment charges must be considered in
accordance with :
(1) Any recoupment charge paid by policyholders must be considered premium for
the purpose of calculating premium taxes and commissions and is subject to normal
policy cancellation procedures.
(2) Any net operating gains resulting from the operation of the facility must
be retained by the facility, and the gains and any investment income derived from
the gains must be used to offset future operating losses.
(3) The total funds recouped by all insurers less commission and premium tax
expenses and time value of money considerations must be paid to the Reinsurance
facility in accordance with the plan of operation. The governing board shall
redistribute the funds to the insurers based upon each insurer's share of the
Reinsurance Facility losses. Recoupment must be used solely for the purpose of
recovering past facility operating deficits. The plan of operation must provide
that the amount ultimately received by an individual company is not more than
the company's share of the Reinsurance Facility losses, plus the time value of
money.
(4) In the making and approval of rates for small commercial automobile risks,
as defined in Section 38-77-30, consideration must be given to the net gains or
losses incurred by insurers as a result of participation in the operating results
and actual, prudently incurred expenses, respectively, of the facility."
Reduction of rates and subsequent adjustments
SECTION 46. Section 38-73-465 of the 1976 Code as reenacted by this act is
amended by adding:
"D. As a result of the enactment of the Automobile Insurance Reform Act
of 1989, automobile insurance rates must be decreased on the policy anniversary
date of each insured after September 30, 1989, by five percent after elimination
of the appropriate amount of the recoupment charge. After the first year
following the reductions, an insurer may apply to the Chief Insurance
Commissioner for a rate adjustment, based on its actual experience, and include
consideration of the time value of money. In every filing following the
effective date of this section for an increase in automobile insurance rates,
every insurer shall include in that filing a rate report under this methodology.
Every rate filing, after that time, is effective only after prior approval of the
Chief Insurance Commissioner, consistent with provisions of Chapter 23 of Title
1."
Safety belts
SECTION 47. (A) Chapter 5, Title 56 of the 1976 Code is amended by adding:
"Article 48
Safety Belts
Section 56-5-6510. As used in this article:
(1) 'Motor vehicle' means a passenger car, truck, van, or recreational vehicle
required to be equipped with safety belts by Federal Motor Vehicle Safety
Standard No. 208 (49 CFR 571.208), manufactured after July, 1966.
(2) 'Driver' means a person who drives or is in actual physical control of
a motor vehicle.
Section 56-5-6520. The driver and every occupant of a motor vehicle, when it
is being operated on the public streets and highways of this State, shall wear
a fastened safety belt which complies with all provisions of federal law for
their use. The driver is charged with the responsibility of requiring each
occupant over six and under seventeen years of age to wear a safety belt.
Section 56-5-6530. The provisions of this article do not apply to:
(1) a driver or occupant who possesses a written verification from a physician
that he is unable to wear a safety belt for physical or medical reasons;
(2) medical or rescue personnel attending to injured or sick individuals in
an emergency vehicle when operating in an emergency situation as well as the
injured or sick individuals;
(3) school, church, or day care buses;
(4) public transportation vehicles except taxis;
(5) occupants of vehicles in parades;
(6) United States mail carriers;
(7) an occupant for which no safety belt is available because all belts are
being used by other occupants;
(8) a driver or occupant frequently stopping or leaving a motor vehicle for
pick up or delivery purposes;
(9) occupants of the back seat of a motor vehicle unless the vehicle is
equipped with a shoulder harness in addition to the lap belt;
(10) children under six years of age who must be properly restrained as
provided by Article 47, Chapter 5 of Title 56.
Section 56-5-6540. (A) A person violating the provisions of this article,
upon conviction, must be fined not more than ten dollars, all or part of which
may be suspended. No court costs may be assessed against the person convicted.
No person may be fined more than twenty dollars for any one incident of one or
more violations of the provisions of this article. No custodial arrest for a
violation of this article may be made, except upon a warrant issued for failure
to appear in court when summoned or for failure to pay an imposed fine. A
conviction for violation of this article does not constitute a criminal offense.
(B) A law enforcement officer may not stop a driver for a violation of this
article in the absence of another violation of the motor vehicle laws except when
the stop is made in conjunction with a driver's license check or registration
check conducted at a checkpoint established to stop all drivers on a certain road
for a period of time. A citation for a violation of this article must not be
issued without citing the violation that initially caused the officer to effect
the enforcement stop.
(C) A violation of this article does not constitute negligence per se or
contributory negligence and is not admissible as evidence in a civil action.
Section 56-5-6550. No points provided for in Section 56-1-720 or any other
provision of law may be assessed for a violation of this article."
(B) For six months after the effective date of this section, only warnings may
be issued for violations of Article 48, Chapter 5, Title 56, Code of Laws of
South Carolina, 1976.
(C) (1) The School Bus Transportation Study Committee created pursuant to
Senate Bill 1152 of 1988, in addition to its other duties, shall continue to meet
during fiscal year 1989-90 to evaluate the feasibility of installing lap seat
belts and lap/shoulder safety belts on small school buses and school vans
weighing less than ten thousand pounds, on large school buses manufactured after
April 1, 1977, and on large and small school buses and school vans purchased by
the State Department of Education after July 1, 1990. The committee also has the
following responsibilities:
(a) Determine the feasibility of, cost of, and appropriate anchorage
requirements for installing lap seat belts and lap/shoulder safety belts on large
and small school buses and school vans as defined above;
(b) Determine if mandatory usage of seat belts on large and small school
buses will improve the safety of school bus passengers and could be enforced;
(c) Study the potential liability, if any, of installing and mandating seat
belt usage on large and small school buses and school vans as defined above;
(d) Determine the effect that installation of and mandatory usage of seat
belts on school buses would have on teaching students to form the 'buckle-up'
habit when riding in or driving a motor vehicle.
(2) The committee shall report its findings to the House Education and Public
Works Committee, the Senate Education Committee, the Department of Education, and
the South Carolina Department of Highways and Public Transportation by January
1, 1990. All state agencies shall provide services the committee may require in
conducting its study of seat belt installation and usage on school buses.
Confiscation of license plates
SECTION 48. For the purpose of recovering motor vehicle registration plates as
required by Section 56-10-40 of the 1976 Code, the department may contract with
or make working arrangements with local law enforcement agencies including
sheriffs and municipal law enforcement departments for them to confiscate these
plates, upon a contract or working arrangement being agreed to. The local law
enforcement agencies are authorized to confiscate these plates. The local law
enforcement agencies must be paid for this service in the manner agreed upon
between them and the executive director from funds of the department which are
to be used for this purpose.
Deductible on comprehensive and collision coverage
SECTION 49. Section 38-77-280 of the 1976 Code is amended to read:
"Section 38-77-280. (A) Except as provided in subsection (B), all
automobile insurers, including those insurance companies writing private
passenger physical damage coverages only, shall make collision coverage and
either comprehensive or fire, theft, and combined additional coverage available
to an insured or qualified applicant who requests the coverage.
Collision coverage must have a mandatory deductible of two hundred fifty
dollars, but an insured or qualified applicant, at his option, may select an
additional deductible in appropriate increments up to one thousand dollars.
Comprehensive coverage or fire, theft, and combined additional coverages must
have a mandatory deductible of two hundred fifty dollars, but an insured, at his
option, may select an additional deductible in appropriate increments up to one
thousand dollars. This deductible does not apply to auto safety glass. It is
an unfair trade practice, as described in Sections 38-57-30 and 38-57-40, for an
insurer or an agent to sell collision insurance, comprehensive coverage, or fire,
theft, and combined additional coverages unless the insured is notified at the
time of application of the savings which may be realized if the applicant or the
insured selects a higher deductible. This notice is required only at the time
of the initial sale and must be in a form approved by the Chief Insurance
Commissioner. An insurer may offer insureds lower deductibles at the insurer's
option.
(B) Notwithstanding subsection (A) and Sections 38-77-110 and 38-77-920,
automobile insurers may refuse to write automobile physical damage insurance
coverage, including automobile comprehensive physical damage, collision, fire,
theft, and combined additional coverage, for any applicant or existing
policyholder, on renewal, for a motor vehicle customarily operated by an
individual, either the named insured or any other operator not excluded in
accordance with Section 38-77-340 and who resides in the same household, where
one or more of the conditions or factors prescribed in Section 38-73-455 exist.
In addition, automobile insurers may refuse to write physical damage insurance
coverage to any applicant or existing policyholder, on renewal, who has collected
benefits provided under any automobile insurance physical damage coverage during
the thirty-six months immediately preceding the effective date of coverage, for
two or more total fire losses or two or more total theft losses.
(C) Notwithstanding Section 38-77-110, automobile physical damage coverage in
an automobile insurance policy may be canceled at any time during the policy
period by reason of the factors or conditions described in Section 38-73-455(A)
or Section 38-77-280(B) which existed before the commencement of the policy
period and which were not disclosed to the insurer at the commencement of the
policy period.
(D) No policy of insurance which provides automobile physical damage coverage
only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for physical damage
insurance coverages different than those provided for in Section 38-73-457 if the
rates are filed and approved by the Chief Insurance Commissioner. Any applicant
or existing policyholder, to be charged this different rate, must be denied the
coverage pursuant to subsection (B) at the rate provided in Section 38-73-457.
No policy of automobile insurance which includes physical damage insurance
coverages offered to an applicant or existing policyholder pursuant to this
paragraph may be ceded to the facility.
(F) A carrier may not cede collision coverage, comprehensive coverage, or
fire, theft, and combined additional coverages with a deductible of less than two
hundred fifty dollars. An insured or qualified applicant may select an
additional deductible in appropriate increments up to one thousand dollars.
However, the mandatory deductible does not apply to safety glass."
Attorneys' fees
SECTION 50. Section 38-59-40 of the 1976 Code is amended to read:
"Section 38-59-40. (1) In the event of a claim, loss, or damage which
is covered by a policy of insurance or a contract of a nonprofit hospital service
plan or a medical service corporation and the refusal of the insurer, plan, or
corporation to pay the claim within ninety days after a demand has been made by
the holder of the policy or contract and a finding on suit of the contract made
by the trial judge that the refusal was without reasonable cause or in bad faith,
the insurer, plan, or corporation is liable to pay the holder, in addition to any
sum or any amount otherwise recoverable, all reasonable attorneys' fees for the
prosecution of the case against the insurer, plan, or corporation. The amount
of reasonable attorneys' fees must be determined by the trial judge and the
amount added to the judgment. The amount of the attorneys' fees may not exceed
one-third of the amount of the judgment.
(2) If attorneys' fees are allowed and, on appeal to the Supreme Court by the
defendant, the judgment is affirmed, the Supreme Court shall allow to the
respondent an additional sum as the court adjudges reasonable as attorneys' fees
of the respondent on the appeal.
(3) Nothing in this section may be construed to alter or affect the Tyger
River Pine Co. v. Maryland Casualty Co., 161 SE 491, 163 SC 229, doctrine.
(4) This section applies to cases filed or removed to federal court and cases
appealed in the federal court system."
Policies ceded
SECTION 51. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by
adding:
"Section 38-77-111. An automobile insurer may cede the coverages of an
automobile insurance policy that it is mandated to write to the Reinsurance
Facility but it may not cede coverages under a policy that it is not mandated by
law to write. However, if an insurer cedes a coverage it is mandated to write
by law, it shall cede all coverages under that policy that it is mandated to
write."
Definition
SECTION 52. Section 38-77-30(14) of the 1976 Code, as last amended by Act 399
of 1988, is further amended to read:
"(14) 'Underinsured motor vehicle' means a motor vehicle as to which
there is bodily injury liability insurance or a bond applicable at the time of
the accident in an amount of at least that specified in Section 38-77-140 and the
amount of the insurance or bond is less than the amount of the insureds'
damages."
Uninsured motorist coverage
SECTION 53. Section 38-77-170 of the 1976 Code is amended to read:
"Section 38-77-170. If the owner or operator of any motor vehicle which
causes bodily injury or property damage to the insured is unknown, there is no
right of action or recovery under the uninsured motorist provision, unless:
(1) the insured or someone in his behalf has reported the accident to some
appropriate police authority within a reasonable time, under all the
circumstances, after its occurrence;
(2) the injury or damage was caused by physical contact with the unknown
vehicle, or the accident must have been witnessed by someone other than the owner
or operator of the insured vehicle; provided however, the witness must sign an
affidavit attesting to the truth of the facts of the accident contained in the
affidavit;
(3) the insured was not negligent in failing to determine the identity of the
other vehicle and the driver of the other vehicle at the time of the accident.
The following statement must be prominently displayed on the face of the
affidavit provided in subitem (2) above: A FALSE STATEMENT CONCERNING THE FACTS
CONTAINED IN THIS AFFIDAVIT MAY SUBJECT THE PERSON MAKING THE FALSE STATEMENT TO
CRIMINAL PENALTIES AS PROVIDED BY LAW."
Agreement
SECTION 54. Section 38-39-70(a)(2) of the 1976 Code is amended to read:
"(2) Must be dated and signed by the insured;".
Policies ceded
SECTION 55. Section 38-77-630 of the 1976 Code is amended to read:
"Section 38-77-630. (A) A policy, other than a renewal policy, may be
ceded to the South Carolina Reinsurance Facility only when the application is
accompanied by either a renewal notice from another insurer or a motor vehicle
report (MVR), issued at the point of sale, together with the full premium
correctly reflecting the facts shown on the MVR or consistent with the premium
quoted in the renewal notice.
(B) To facilitate compliance with this requirement, a carrier shall require
an applicant other than a renewal applicant, to obtain the MVR or a renewal
notice from the insurance carrier who provided the insurance coverage then in
effect and present it to the agent upon making an application. In those cases,
the applicant must be credited for the amount paid for the MVR.
(C) In the case of an applicant who holds a valid driver's license from
another state but is not yet licensed in this State, a copy of this out-of-state
driver's license may be submitted with the application in lieu of the MVR or
renewal notice above required in this section. The MVR, renewal notice, or copy
of the applicant's driver's license, as applicable, must be kept with the
application by the carrier in the manner the facility requires."
Repeal
SECTION 56. Section 38-73-470 is repealed effective March 1, 1991.
Repeal
SECTION 57. Sections 38-77-240, 38-77-250, 38-77-290, 38-77-300, 38-77-310, and
subsections (b) and (c) of Section 38-77-260 are repealed.
Time effective
SECTION 58. Sections 17, 20, 28, 44, 49, 51, 52, and 55 of this act take effect
October 1, 1989.
Time effective
SECTION 59. Except as otherwise specifically provided herein, this act takes
effect July 1, 1989. |