H 4380 Session 112 (1997-1998)
H 4380 General Bill, By Cobb-Hunter, Canty, Jennings, Meacham and
Moody-Lawrence
A BILL TO AMEND TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO
INSURANCE, BY ADDING CHAPTER 93 SO AS TO PROVIDE A METHOD FOR REGULATING THE
HOME-SERVICE SYSTEM OF DISTRIBUTION OF INSURANCE POLICIES IN SOUTH CAROLINA,
INCLUDING PROVISIONS, AMONG OTHER THINGS, FOR DEFINING DECEPTIVE ACTS AND FOR
THE PROMULGATION OF REGULATIONS.
12/17/97 House Prefiled
12/17/97 House Referred to Committee on Labor, Commerce and Industry
01/13/98 House Introduced and read first time HJ-50
01/13/98 House Referred to Committee on Labor, Commerce and
Industry HJ-50
A BILL
TO AMEND TITLE 38, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO INSURANCE, BY ADDING
CHAPTER 93 SO AS TO PROVIDE A METHOD FOR
REGULATING THE HOME-SERVICE SYSTEM OF
DISTRIBUTION OF INSURANCE POLICIES IN SOUTH
CAROLINA, INCLUDING PROVISIONS, AMONG OTHER
THINGS, FOR DEFINING DECEPTIVE ACTS AND FOR THE
PROMULGATION OF REGULATIONS.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Title 38 of the 1976 Code is amended by adding:
"CHAPTER 93
Home-Service Insurance
Section 38-93-10. As used in this chapter, unless the context
requires otherwise:
(1) A 'blind' is the collection of a premium from a policy owner
or premium payor who is intentionally not made aware of the correct
paid-to-status of the policy for which the premium is to be applied
because a premium intentionally was not properly recorded.
(2) 'Director' means the Director of the Department of Insurance
of this State.
(3) 'Home-service system of distribution' is a manner of selling
insurance policies which are customarily marketed, issued, or
delivered by an agent in person at a payor's home or business, or is
a manner of collecting premiums in which premiums are customarily
collected in person at a payor's home or business by an agent. This
does not include the sale of commercial policies, crop or hail policies,
or term policies covering crops whether harvested or unharvested, or
policies covering grain, hay, chemicals, or fertilizer.
(4) 'Customarily collected' means that, in his ordinary course of
business, the agent collects premiums for the policy on-site at a
payor's home or business.
(5) 'Customarily marketed, issued, or delivered' means that, in his
ordinary course of business, the agent markets, issues, or delivers the
policy on-site at a payor's home or business. 'Customarily marketed,
issued, or delivered' does not include any solicitation or sale made at
the home or workplace of a person if it will not thereafter be the
ordinary course of business of the agent to either collect premiums
from the person on-site at his home or workplace or regularly service
the premium payor or policy owner on-site at his home or workplace.
Section 38-93-20. Each insurer engaged in the home-service
system of distribution of insurance policies in this State shall:
(1)(a) establish written procedures, subject to the approval of the
director or his designee, to audit agencies engaged in the
home-service system of distribution of policies in this State;
(b) file at the Department of Insurance the audit procedures in
effect each year with the annual statement or provide a certification
with each annual statement that the procedures have been adopted;
(c) conduct audits periodically, or in the manner as prescribed
by regulations promulgated by the director or his designee, at the
field level or premium payor level which reasonably insure that the
premium payor's premium recording item or records accurately
reflect the premium due date and premium paid-to-status of the
policy or policies purchased;
(d) provide a receipt or record to the premium payor reflecting
the amount of the premium paid, the date of payment, and the policy
number, or other identifying characteristics, toward which the
premium is paid if the premium receipt book or other premium
recording record is unavailable for marking the premium payments
of the payor;
(e) provide to a policy owner or premium payor upon request
the current paid-to-status of any and all policies owned within
forty-five days and, in the event the records of the policy owner or
premium payor differ, adjust the company records to credit the policy
any previously uncredited payments for which a receipt or other
reasonable evidence of payment is submitted by the policy owner.
(2) With the delivery of the policy, provide notice in bold print,
with at least ten point font or size, which states:
(a) that a premium savings may be realized by a different or less
frequent method of payment;
(b) that premiums are still due and payable by the person
responsible for premium payments even when an agent does not
collect the premiums; and
(c) the mailing address for payment of premiums to the
company.
Section 38-93-30. For every premium collected on a policy of
property, casualty, life, or disability insurance in this State, the agent
collecting or receiving the premium shall:
(1) furnish the payor with written evidence of payment at the time
the premium is collected which shall include the amount paid, the
date paid, the date paid-to-status of the policy, the policy number, or
the identifying characteristics, for which the payment must be
credited, the signature or signed initials of the agent, and the office
address and phone number of the insurer;
(2) remit to the insurer's home office or applicable district office
the premium collected within ten days of receipt from the premium
payor or policy owner.
Section 38-93-40. The following activities, if committed
intentionally, are deceptive acts under Chapter 57 of this title for
companies or agents engaged in the home-service system of
distribution:
(1) the commission of a blind as defined by Section 38-93-10(1);
(2) the collection of a premium which is not due from a premium
payor or policy owner, and, without the knowledge of the premium
payor or policy owner, the crediting of that premium to future
coverage for a policy owner;
(3) the collection of a premium which is not due from a premium
payor or policy owner, and, without the knowledge of the premium
payor or policy owner, the crediting of that premium for a different
policy owner;
(4) the use or transfer of any excess or unused funds remaining in
the account of the premium payor or policy owner to procure or
revive an insurance policy for a policy owner, without the knowledge
or authorization of the payor;
(5) the collection of a premium by an agent who retains the
premium for his own personal use.
Section 38-93-50. The director has the authority he considers
reasonably necessary to regulate the home-service system of
distribution and, to that end, to promulgate regulations necessary to
regulate the home-service system of distribution."
SECTION 2. This act takes effect upon approval by the Governor.
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