S*593 Session 107 (1987-1988)
S*0593(Rat #0235, Act #0166 of 1987) General Bill, By
Senate Banking and Insurance
Similar(H 2953)
A Bill to amend Section 38-37-110, Code of Laws of South Carolina, 1976,
relating to the declaration of purpose for the regulation of automobile
insurance in South Carolina, so as to further provide for this declaration of
purpose; to direct the Chief Insurance Commissioner to review the current
system of classifying and rating youthful operators for automobile insurance,
and to promulgate regulations making necessary changes thereto not later than
February 1, 1988; to amend Section 38-37-930, relating to affiliated insurers,
so as to revise the provisions of the Section to establish those conditions
under which applicants or policyholders qualify for the base rate or the
higher objective standards rate and to regulate what rates may be utilized by
member companies of an affiliated group of automobile insurers; to amend
Section 56-11-140, relating to coverage limitations, so as to delete certain
references to collision and comprehensive coverages; to amend Article 5,
Chapter 37, of Title 38, relating to risk classification plans and required
insurance, by adding Section 38-37-315 so as to provide that no insurer is
required to write insurance for any applicant who does not have a valid South
Carolina driver's license and to provide exceptions; to amend Article 9,
Chapter 37, of Title 38, relating to the South Carolina Reinsurance Facility,
by adding Sections 38-37-785, 38-37-795, 38-37-800, and 38-37-810 so as to
require every automobile insurer and rating organization to file with the
Chief Insurance Commission prior to October 1, 1987, a base rate and an
objective standards rate, and to provide that those rates are effective July
1, 1988, under certain conditions; to provide for a facility recoupment charge
on certain base rates, provide the formula for its annual calculation, and
provide for the classification and use of recoupment charges; to amend Article
11, Chapter 37, of Title 38, relating to unlawful acts for purposes of
automobile insurance, by adding Section 38-37-935 so as to provide for the
writing of collision and comprehensive coverage, deductible amounts,
circumstances where an insurer may refuse to write such coverage, terms of
sale, and cession to the Reinsurance Facility; to require the Chief Insurance
Commissioner to promulgate regulations which require each insurer licensed to
write property and casualty insurance in this State, to submit certain
information and supplemental reports relating to its writings in this State
and the United States; to provide for, among other things, the form, coverage,
and contents of the supplemental report; to require the Chief Insurance
Commissioner annually to compile and review all these reports submitted; to
provide that the information submitted must be published and made available to
interested insureds or citizens, and to provide civil penalties for insurers
who fail to comply with the provisions pertaining to these reports; to provide
that, when dealing with the agents of a company who are licensed to sell
automobile insurance, the company may not use any of the business placed in
the Facility in determining the profitability of that agent's business and
that the company shall not ask any agent not to write any kind of automobile
business or hold the facility business against any agent in any manner which
could be construed as being detrimental to the agent; to amend Section
56-11-190, relating to registration of motor vehicles and the maintenance of
required security, so as to further provide for the information furnished to
the Executive Director of the Department of Highways and Public Transportation
regarding this security; to amend Section 56-11-250, relating to agreements to
exclude designated natural persons from coverage, so as to make certain
provisions therein mandatory between the insurer and any named insured; to
amend Section 56-9-810, relating to definitions for purposes of the Financial
Responsibility Act, so as to provide for the definition of an "underinsured
motor vehicle"; to amend Section 56-9-831, relating to additional uninsured
motorist coverage, so as to delete restrictions on adding coverage on other
vehicles and to provide that benefits paid pursuant to this Section are not
subject to subrogation and assignment; to amend Section 38-37-950, relating to
unreasonable use of the Reinsurance Facility by insurers, so as to revise
certain provisions which establish a prima facie case of unreasonable use; to
amend Chapter 1 of Title 38, relating to insurance, by adding Section 38-1-140
so as to provide that the Chief Insurance Commissioner may order rates of
individual insurers to be revised and excessive benefits rebated under certain
conditions; to amend Section 56-9-850, relating to conditions to sue or
recover under the uninsured motorist provision, so as to further provide for
these conditions; to amend Article 5, Chapter 37 of Title 38, relating to risk
classification plans and required insurance, by adding Section 38-37-325 so as
to permit the Chief Insurance Commissioner to promulgate plans to afford
credits or discounts to certain automobile insureds; to amend Section
56-11-110, relating to minimum medical, hospital, and disability benefits,
proof of loss of income and subrogation or assignment of benefits under the
Automobile Reparation Reform Act of 1974, so as to permit assignments to
hospitals, physicians, or other medical providers but that no such provider
may require the assignment as a condition of treatment; to amend Section
38-37-150, relating to the survey by the Chief Insurance Commissioner to
ascertain the state of marketing outlets with respect to automobile insurance
and the requirements for qualification as a designated agent, so as to change
these requirements for qualifying as a designated agent; to provide that the
governing body of the Reinsurance Facility may for a period of three years
designate certain applicants to write property and casualty insurance; to
amend Article 1, Chapter 9, Title 38, relating to the conduct of insurance
business by adding Section 38-9-375 so as to require property or casualty
insurance companies transacting business in this State to maintain at least
one resident adjuster for the purpose of investigation and settlement of
claims, and to provide that failure to so maintain this adjuster is grounds
for revocation of the company's authorization to do business in this State; to
amend Section 38-37-940, relating to the regulation of automobile insurance,
the avoidance of certain classes or types of risk, exceptions, and cancelling
an agent's representation, so as to make it an act of unlawful discrimination
and unfair competition for an insurer to do certain additional acts, to
increase the period of revocation or suspension of the insurer's certificate
of authority as a penalty for these and certain other unlawful, wilful acts,
from six to twelve months, and to prohibit insurers from using business placed
in the Reinsurance Facility when determining quality bonus; to amend Article
7, Chapter 9, of Title 38, relating to cancellation and nonrenewal of property
and casualty insurance, by adding Section 38-9-890 so as to provide that no
insurer may nonrenew a policy of homeowners insurance because the insured has
filed a claim with that insurer for damages resulting from an act of God; and
to amend Article 5, Chapter 37, of Title 38, relating to risk classification
plans and required insurance, by adding Section 38-37-315 so as to require
authorized agents for certain insurers to place signs in their office or place
of business containing certain specified language.-amended title
03/31/87 Senate Introduced, read first time, placed on calendar
without reference SJ-1079
04/01/87 Senate Special order SJ-1131
04/07/87 Senate Read second time SJ-1186
04/07/87 Senate Ordered to third reading with notice of
amendments SJ-1187
04/08/87 Senate Amended SJ-1215
04/08/87 Senate Special order SJ-1230
04/14/87 Senate Amended SJ-1301
04/14/87 Senate Read third time and sent to House SJ-1303
04/15/87 House Introduced and read first time HJ-1873
04/15/87 House Referred to Committee on Labor, Commerce and
Industry HJ-1875
05/13/87 House Committee report: Favorable Labor, Commerce and
Industry HJ-2640
05/20/87 House Objection by Rep. Toal, J Rogers & Haskins HJ-3003
05/21/87 House Special order, set for Tues. 5/26/87 follow Sen.
amends on cal. (Under H 3173) HJ-3089
05/26/87 House Amended HJ-3189
05/26/87 House Debate interrupted HJ-3222
05/27/87 House Amended HJ-3269
05/27/87 House Read second time HJ-3290
05/28/87 House Objection withdrawn by Rep. Haskins HJ-3337
05/28/87 House Read third time HJ-3350
05/28/87 House Returned HJ-3351
05/28/87 Senate Non-concurrence in House amendment SJ-2441
06/01/87 House House insists upon amendment and conference
committee appointed Reps. Wilkins, R. Brown & J.
Bradley HJ-3390
06/02/87 Senate Conference committee appointed Sens. McConnell,
Fielding and Saleeby SJ-2507
06/03/87 House Free conference powers granted HJ-3538
06/03/87 House Free conference committee appointed Wilkins, R.
Brown & J. Bradley HJ-3540
06/03/87 House Free conference report received HJ-3586
06/03/87 House Free conference report adopted HJ-3616
06/03/87 Senate Free conference powers granted SJ-2575
06/03/87 Senate Free conference committee appointed Sens.
Saleeby, McConnell, Fielding SJ-2575
06/03/87 Senate Free conference report received SJ-2696
06/03/87 Senate Free conference report adopted SJ-2726
06/03/87 Senate Ordered enrolled for ratification SJ-2727
06/04/87 Ratified R 235
06/04/87 Signed By Governor
06/04/87 Effective date 06/04/87
06/04/87 See Act for explanation of effective date
06/04/87 Act No. 166
06/17/87 Copies available
(A166, R235, S593)
AN ACT TO AMEND SECTION 38-37-110, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE DECLARATION OF PURPOSE FOR THE REGULATION OF AUTOMOBILE INSURANCE
IN SOUTH CAROLINA, SO AS TO FURTHER PROVIDE FOR THIS DECLARATION OF PURPOSE; TO
DIRECT THE CHIEF INSURANCE COMMISSIONER TO REVIEW THE CURRENT SYSTEM OF
CLASSIFYING AND RATING YOUTHFUL OPERATORS FOR AUTOMOBILE INSURANCE, AND TO
PROMULGATE REGULATIONS MAKING NECESSARY CHANGES THERETO NOT LATER THAN FEBRUARY
1, 1988; TO AMEND SECTION 38-37-930, RELATING TO AFFILIATED INSURERS, SO AS TO
REVISE THE PROVISIONS OF THE SECTION TO ESTABLISH THOSE CONDITIONS UNDER WHICH
APPLICANTS OR POLICYHOLDERS QUALIFY FOR THE BASE RATE OR THE HIGHER OBJECTIVE
STANDARDS RATE AND TO REGULATE WHAT RATES MAY BE UTILIZED BY MEMBER COMPANIES OF
AN AFFILIATED GROUP OF AUTOMOBILE INSURERS; TO AMEND SECTION 56-11-140, RELATING
TO COVERAGE LIMITATIONS, SO AS TO DELETE CERTAIN REFERENCES TO COLLISION AND
COMPREHENSIVE COVERAGES; TO AMEND ARTICLE 5, CHAPTER 37 OF TITLE 38, RELATING TO
RISK CLASSIFICATION PLANS AND REQUIRED INSURANCE, BY ADDING SECTION 38-37-315 SO
AS TO PROVIDE THAT NO INSURER IS REQUIRED TO WRITE INSURANCE FOR ANY APPLICANT
WHO DOES NOT HAVE A VALID SOUTH CAROLINA DRIVER'S LICENSE AND TO PROVIDE
EXCEPTIONS; TO AMEND ARTICLE 9, CHAPTER 37 OF TITLE 38, RELATING TO THE SOUTH
CAROLINA REINSURANCE FACILITY, BY ADDING SECTIONS 38-37-785, 38-37-795,
38-37-800, AND 38-37-810 SO AS TO REQUIRE EVERY AUTOMOBILE INSURER AND RATING
ORGANIZATION TO FILE WITH THE CHIEF INSURANCE COMMISSIONER PRIOR TO OCTOBER 1,
1987, A BASE RATE AND AN OBJECTIVE STANDARDS RATE, AND TO PROVIDE THAT THOSE
RATES ARE EFFECTIVE JULY 1, 1988, UNDER CERTAIN CONDITIONS; TO PROVIDE FOR A
FACILITY RECOUPMENT
CHARGE ON CERTAIN BASE RATES, PROVIDE THE FORMULA FOR ITS ANNUAL CALCULATION, AND
PROVIDE FOR THE CLASSIFICATION AND USE OF RECOUPMENT CHARGES; TO AMEND ARTICLE
11, CHAPTER 37 OF TITLE 38, RELATING TO UNLAWFUL ACTS FOR PURPOSES OF AUTOMOBILE
INSURANCE, BY ADDING SECTION 38-37-935 SO AS TO PROVIDE FOR THE WRITING OF
COLLISION AND COMPREHENSIVE COVERAGE, DEDUCTIBLE AMOUNTS, CIRCUMSTANCES WHERE AN
INSURER MAY REFUSE TO WRITE SUCH COVERAGE, TERMS OF SALE, AND CESSION TO THE
REINSURANCE FACILITY; TO REQUIRE THE CHIEF INSURANCE COMMISSIONER TO PROMULGATE
REGULATIONS WHICH REQUIRE EACH INSURER LICENSED TO WRITE PROPERTY AND CASUALTY
INSURANCE IN THIS STATE, TO SUBMIT CERTAIN INFORMATION AND SUPPLEMENTAL REPORTS
RELATING TO ITS WRITINGS IN THIS STATE AND THE UNITED STATES; TO PROVIDE FOR,
AMONG OTHER THINGS, THE FORM, COVERAGE, AND CONTENTS OF THE SUPPLEMENTAL REPORT;
TO REQUIRE THE CHIEF INSURANCE COMMISSIONER ANNUALLY TO COMPILE AND REVIEW ALL
THESE REPORTS SUBMITTED; TO PROVIDE THAT THE INFORMATION SUBMITTED MUST BE
PUBLISHED AND MADE AVAILABLE TO INTERESTED INSUREDS OR CITIZENS, AND TO PROVIDE
CIVIL PENALTIES FOR INSURERS WHO FAIL TO COMPLY WITH THE PROVISIONS PERTAINING
TO THESE REPORTS; TO PROVIDE THAT, WHEN DEALING WITH THE AGENTS OF A COMPANY WHO
ARE LICENSED TO SELL AUTOMOBILE INSURANCE, THE COMPANY MAY NOT USE ANY OF THE
BUSINESS PLACED IN THE FACILITY IN DETERMINING THE PROFITABILITY OF THAT AGENT'S
BUSINESS AND THAT THE COMPANY SHALL NOT ASK ANY AGENT NOT TO WRITE ANY KIND OF
AUTOMOBILE BUSINESS OR HOLD THE FACILITY BUSINESS AGAINST ANY AGENT IN ANY MANNER
WHICH COULD BE CONSTRUED AS BEING DETRIMENTAL TO THE AGENT; TO AMEND SECTION
56-11-190, RELATING TO REGISTRATION OF MOTOR VEHICLES AND THE MAINTENANCE OF
REQUIRED SECURITY, SO AS TO FURTHER PROVIDE FOR THE INFORMATION FURNISHED TO THE
EXECUTIVE DIRECTOR OF THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION
REGARDING THIS SECURITY; TO AMEND SECTION 56-11-250, RELATING TO AGREEMENTS TO
EXCLUDE DESIGNATED NATURAL PERSONS FROM COVERAGE, SO AS TO MAKE CERTAIN
PROVISIONS THEREIN MANDATORY BETWEEN THE INSURER AND ANY NAMED INSURED; TO AMEND
SECTION 56-9-810, RELATING TO DEFINITIONS FOR PURPOSES OF THE FINANCIAL
RESPONSIBILITY ACT, SO AS TO PROVIDE FOR THE DEFINITION OF AN "UNDERINSURED
MOTOR VEHICLE"; TO AMEND SECTION 56-9-831, RELATING TO ADDITIONAL UNINSURED
MOTORIST COVERAGE, SO AS TO DELETE RESTRICTIONS ON ADDING COVERAGE ON OTHER
VEHICLES AND TO PROVIDE THAT BENEFITS PAID PURSUANT TO THIS SECTION ARE NOT
SUBJECT TO SUBROGATION AND ASSIGNMENT; TO AMEND SECTION 38-37-950, RELATING TO
UNREASONABLE USE OF THE REINSURANCE FACILITY BY INSURERS, SO AS TO REVISE CERTAIN
PROVISIONS WHICH ESTABLISH A PRIMA FACIE CASE OF UNREASONABLE USE; TO AMEND
CHAPTER 1 OF TITLE 38, RELATING TO INSURANCE, BY ADDING SECTION 38-1-140 SO AS
TO PROVIDE THAT THE CHIEF INSURANCE COMMISSIONER MAY ORDER RATES OF INDIVIDUAL
INSURERS TO BE REVISED AND EXCESSIVE BENEFITS REBATED UNDER CERTAIN CONDITIONS;
TO AMEND SECTION 56-9-850, RELATING TO CONDITIONS TO SUE OR RECOVER UNDER THE
UNINSURED MOTORIST PROVISION, SO AS TO FURTHER PROVIDE FOR THESE CONDITIONS; TO
AMEND ARTICLE 5, CHAPTER 37 OF TITLE 38, RELATING TO RISK CLASSIFICATION PLANS
AND REQUIRED INSURANCE, BY ADDING SECTION 38-37-325 SO AS TO PERMIT THE CHIEF
INSURANCE COMMISSIONER TO PROMULGATE PLANS TO AFFORD CREDITS OR DISCOUNTS TO
CERTAIN AUTOMOBILE INSUREDS; TO AMEND SECTION 56-11-110, RELATING TO MINIMUM
MEDICAL, HOSPITAL, AND DISABILITY BENEFITS, PROOF OF LOSS OF INCOME AND
SUBROGATION OR ASSIGNMENT OF BENEFITS UNDER THE AUTOMOBILE REPARATION REFORM ACT
OF 1974, SO AS TO PERMIT ASSIGNMENTS TO HOSPITALS, PHYSICIANS, OR OTHER MEDICAL
PROVIDERS BUT THAT NO SUCH PROVIDER MAY REQUIRE THE ASSIGNMENT AS A CONDITION OF
TREATMENT; TO AMEND SECTION 38-37-150, RELATING TO THE SURVEY BY THE CHIEF
INSURANCE COMMISSIONER TO ASCERTAIN THE STATE OF MARKETING OUTLETS WITH RESPECT
TO AUTOMOBILE INSURANCE AND THE REQUIREMENTS FOR QUALIFICATION AS A DESIGNATED
AGENT, SO AS TO CHANGE THESE REQUIREMENTS FOR QUALIFYING AS A DESIGNATED AGENT;
TO PROVIDE THAT THE GOVERNING BODY OF THE REINSURANCE FACILITY MAY FOR A PERIOD
OF THREE YEARS DESIGNATE CERTAIN APPLICANTS TO WRITE PROPERTY AND CASUALTY
INSURANCE; TO AMEND ARTICLE 1, CHAPTER 9, TITLE 38, RELATING TO THE CONDUCT OF
INSURANCE BUSINESS BY ADDING SECTION 38-9-375 SO AS TO REQUIRE PROPERTY OR
CASUALTY INSURANCE COMPANIES TRANSACTING BUSINESS IN THIS STATE TO MAINTAIN AT
LEAST ONE RESIDENT ADJUSTER FOR THE PURPOSE OF INVESTIGATION AND SETTLEMENT OF
CLAIMS, AND TO PROVIDE THAT FAILURE TO SO MAINTAIN THIS ADJUSTER IS GROUNDS FOR
REVOCATION OF THE COMPANY'S AUTHORIZATION TO DO BUSINESS IN THIS STATE; TO AMEND
SECTION 38-37-940, RELATING TO THE REGULATION OF AUTOMOBILE INSURANCE, THE
AVOIDANCE OF CERTAIN CLASSES OR TYPES OF RISK, EXCEPTIONS, AND CANCELING AN
AGENT'S REPRESENTATION, SO AS TO MAKE IT AN ACT OF UNLAWFUL DISCRIMINATION AND
UNFAIR COMPETITION FOR AN INSURER TO DO CERTAIN ADDITIONAL ACTS, TO INCREASE THE
PERIOD OF REVOCATION OR SUSPENSION OF THE INSURER'S CERTIFICATE OF AUTHORITY AS
A PENALTY FOR THESE AND CERTAIN OTHER UNLAWFUL, WILFUL ACTS, FROM SIX TO TWELVE
MONTHS, AND TO PROHIBIT INSURERS FROM USING BUSINESS PLACED IN THE REINSURANCE
FACILITY WHEN DETERMINING QUALITY BONUS; TO AMEND ARTICLE 7, CHAPTER 9 OF TITLE
38, RELATING TO CANCELLATION AND NONRENEWAL OF PROPERTY AND CASUALTY INSURANCE,
BY ADDING SECTION 38-9-890 SO AS TO PROVIDE THAT NO INSURER MAY NONRENEW A POLICY
OF HOMEOWNERS INSURANCE BECAUSE THE INSURED HAS FILED A CLAIM WITH THAT INSURER
FOR DAMAGES RESULTING FROM AN ACT OF GOD; AND TO AMEND ARTICLE 5, CHAPTER 37 OF
TITLE 38, RELATING TO RISK CLASSIFICATION PLANS AND REQUIRED INSURANCE, BY ADDING
SECTION 38-37-315 SO AS TO REQUIRE AUTHORIZED AGENTS FOR CERTAIN INSURERS TO
PLACE SIGNS IN THEIR OFFICE OR PLACE OF BUSINESS CONTAINING CERTAIN SPECIFIED
LANGUAGE.
Be it enacted by the General Assembly of the State of South Carolina:
Declaration of purpose revised
SECTION 1. Subsection (1) of Section 38-37-110 of the 1976 Code is amended to
read:
"(1) To provide that every such automobile insurance risk which is
insurable on the basis of the criteria established herein is entitled to
automobile insurance from the automobile insurance insurer of the applicant's
choice on the basis of the same rates, policy forms, claims service, and other
services provided by the insurer to all other applicants or insureds falling
within the classification of risk and territory under the applicable risk and
territorial classification plan promulgated by the Commissioner with the approval
of the Commission; provided, that all these applicants or insureds have satisfied
the same objective standards as established in Sections 38-37-930 and
38-37-935;".
Review of youthful operators
SECTION 2. The General Assembly directs the Chief Insurance Commissioner to
review the current system of classifying and rating youthful male and youthful
female operators for automobile insurance under Section 38-37-320 of the 1976
Code. Not later than February 1, 1988, the Commissioner shall by regulation
promulgate any changes in the system he considers necessary fairly and equitably
to classify and rate such operators for insurance purposes and to promote safe
driving performance. The Chief Insurance Commissioner shall by regulation
establish revised driver risk classifications that accurately reflect losses in
each category of risk.
Automobile insurance rates
SECTION 3. Section 38-37-930 of the 1976 Code is amended to read:
"Section 38-37-930. An automobile insurer shall offer two different rates
for automobile insurance, a base rate as defined in Section 38-37-785 and an
objective standards rate which is twenty-five percent above the base rate. Both
of these rates are subject to all surcharges or discounts, if any, applicable
under any approved merit rating plan, credit or discount plan promulgated or
approved by the Commissioner.
Applicants, or a current policyholder, seeking automobile insurance with an
insurer must be written at the base rate, unless one of the conditions or factors
in items (1) through (8) of subsection (A) is present.
(A) The named insured or any operator who is not excluded in accordance with
Section 56-11-250 and who resides in the same household or customarily operates
an automobile insured under the same policy, individually:
(1) has obtained a policy of automobile insurance or continuation thereof
through material misrepresentation within the preceding thirty-six months; or
(2) has had convictions for driving violations on three or more separate
occasions within the thirty-six months immediately preceding the effective date
of coverage as reflected by the motor vehicle record of each insured driver as
maintained by the Department of Highways and Public Transportation; or
(3) has had two or more 'chargeable' accidents within the thirty-six months
immediately preceding the effective date of coverage. A 'chargeable' accident
is defined as one resulting in bodily injury to any person in excess of three
hundred dollars per person, death, or damage to the property of the insured or
other person in excess of seven hundred fifty dollars. Accidents occurring under
the circumstances enumerated below are not considered chargeable.
(a) The automobile was lawfully parked. An automobile rolling from a
parked position is not considered as lawfully parked but is considered as
operated by the last operator.
(b) The applicant or other operator or owner was reimbursed by or on
behalf of a person responsible for the accident or has a judgment against this
person.
(c) The automobile of an applicant or other operator was struck in the
rear by another vehicle and the applicant or other operator has not been
convicted of a moving traffic violation in connection with the accident.
(d) The operator of the other automobile involved in the accident was
convicted of a moving traffic violation and the applicant or other operator was
not convicted of a moving traffic violation in connection therewith.
(e) An automobile operated by the applicant or other operator is damaged
as a result of contact with a 'hit and run' driver, if the applicant or other
operator so reports the accident to the proper authority within twenty-four hours
or, if the person is injured, as soon as the person is physically able to do so.
(f) Accidents involving damage by contact with animals or fowl.
(g) Accidents involving physical damage, limited to and caused by flying
gravel, missiles, or falling objects.
(h) Accidents occurring as a result of the operation of any automobile in
response to an emergency if the operator at the time of the accident was
responding to a call of duty as a paid or volunteer member of any police or fire
department, first aid squad, or any law enforcement agency. This exception does
not include an accident occurring after the emergency situation ceases or after
the private passenger motor vehicle ceases to be used in response to the
emergency; or
(4) has had one 'chargeable' accident and two convictions for driving
violations, all occurring on separate occasions, within the thirty-six months
immediately preceding the effective date of coverage as reflected by the motor
vehicle record of each insured driver as maintained by the Department of Highways
and Public Transportation; or
(5) has been convicted of or forfeited bail during the thirty-six months
immediately preceding the effective date of coverage for operating a motor
vehicle while in an intoxicated condition or while under the influence of drugs;
or
(6) has been convicted or forfeited bail during the thirty-six months
immediately preceding the effective date for:
(a) any felony involving the use of a motor vehicle,
(b) criminal negligence resulting in death, homicide, or assault arising
out of the operation of a motor vehicle,
(c) leaving the scene of an accident without stopping to report,
(d) theft or unlawful taking of a motor vehicle,
(e) operating during a period of revocation or suspension of registration
or license,
(f) knowingly permitting an unlicensed person to drive,
(g) reckless driving,
(h) the making of material false statements in the application for
licenses or registration,
(i) impersonating an applicant for license or registration or procuring
a license or registration through impersonation, whether for himself or another,
(j) filing of a false or fraudulent claim or knowingly aiding or abetting
another in the presentation of such a claim,
(k) failure to stop a motor vehicle when signaled by means of a siren or
flashing light by a law enforcement vehicle; or
(7) has for thirty or more days immediately preceding the effective date of
coverage, owned or operated the automobile to be insured (or if newly acquired,
the automobile it replaces) without liability coverage in violation of the laws
of this State; or
(8) has used the insured automobile as follows or if the insured automobile
is:
(a) used in carrying passengers for hire or compensation, except that the
use of an automobile for a car pool must not be considered use of an automobile
for hire or compensation,
(b) used in the business of transportation of flammables or explosives,
(c) used in illegal operation, or
(d) no longer principally used and garaged within the State, but not to
include students who are operating a motor vehicle registered in this State while
attending an institution located in another state.
(B) In the event that one or more of the conditions or factors prescribed in
items (1) through (8) of subsection (A) exist, the motor vehicle customarily
operated by that individual must be written at the objective standards rate.
(C) Member companies of an affiliated group of automobile insurers may not
utilize different filed rates for automobile insurance. For the purpose of this
section, an affiliated group of automobile insurers includes any group of
automobile insurers under common ownership, management, or control. Those
automobile insurers designated pursuant to Section 38-37-150(A), for automobile
insurance risks written by them through producers designated by the Facility
governing board pursuant to that same section, shall utilize the rates or premium
charges by coverage filed and authorized for use by the rating organization
licensed by the Commissioner pursuant to Article 9, Chapter 43 of this title,
which has the largest number of members or subscribers for automobile insurance
rates. However, those automobile insurers designated pursuant to Section
38-37-150(A) are not required to use those same rates or premium charges
described in the preceding sentence for risks written by them through their duly
authorized agents not appointed pursuant to Section 38-37-150.
(D) An automobile insurance policy may be endorsed at any time during the
policy period to reflect the correct rate or premium applicable by reason of the
factors or conditions described in subsection (A) which existed prior to the
commencement of the policy period in which the endorsement is made, regardless
of whether the factors or conditions were known or disclosed to the insurer at
the commencement of the policy period. However, no policy may be endorsed during
a policy period to reflect factors or conditions occurring during that policy
period. A policy may be endorsed during a policy period to recognize the
addition or deletion of an operator or vehicle.
(E) For purposes of determining the applicable rates to be charged an insured,
an automobile insurer shall obtain and review an applicant's motor vehicle
record."
Coverage limitations
SECTION 4. Section 56-11-140 of the 1976 Code is amended to read:
"Section 56-11-140. (a) Nothing in this article is considered to affect
or limit the provisions of Article 7 of Chapter 9 and every such policy of
liability insurance that is issued, renewed, sold, or delivered in this State
must provide the minimum liability and uninsured motorist coverage specified
therein.
(b) Nothing contained in this article or in Article 7 of Chapter 9 prevents an
insurer from issuing, selling, or delivering such a policy of insurance providing
liability coverage in excess of the requirements of Article 7 of Chapter 9.
Nothing in this article may be construed to prohibit an insurer from providing
Christian Science or any licensed healing art care, and treatment and such
Christian Science or any licensed healing art care and treatment constitutes
economic loss."
Driver's license required
SECTION 5. Article 5, Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-315. Notwithstanding Sections 38-37-310, 38-37-920, and
38-37-935, no automobile insurer is required to write coverage for automobile
insurance as defined in Section 38-37-10 for any applicant or existing
policyholder who does not at the time of application or renewal possess a valid
South Carolina motor vehicle 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."
Rates filed and effective date of rates
SECTION 6. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-785. Notwithstanding Sections 38-43-610 and 38-43-910,
every automobile insurer and rating organization shall, prior to October 1, 1987,
file with the Commissioner a base rate, which is defined as a rate by coverage
calculated solely upon the experience generated by the risk for each class and
territory retained by the insurer in its voluntary book of business and which
must not include experience generated by risks ceded or assumed from the
Reinsurance Facility established under Section 38-37-710. An objective standards
rate by coverage must also be filed which is twenty-five percent above the base
rate previously described for each class and territory. The base rate must be
calculated by removing from the rate or premium charge, then in effect for the
automobile insurer, that portion of the rate or premium charge attributable to
the net gain or loss of the insurer as a result of participation in the operating
results of the Facility as required by Section 38-37-780. In determining the
base rate and objective standards rate, by coverage, the Commissioner, in order
that no extra premium revenue is generated by this section, shall require that
the insurer's average rate, by coverage, on October 1, 1987 (computed as a
weighted average of the base rate and objective standards rate, by coverage, as
determined by the Commissioner), not exceed the insurer's average rate, by
coverage, prior to October 1, 1987, as determined by the Commissioner. The
provisions of the Administrative Procedures Act apply to any court appeal of a
base rate or objective standards rate brought thereunder. The base rate or
objective standards rate approved by the Commissioner may be put into effect
under bond in a similar manner that a public utility may put a proposed rate
increase into effect under bond as provided by law. No insurer may file a base
rate for any class or territory which is higher than the rate or premium charge,
exclusive of that portion required by Section 38-37-780, approved by the
Commissioner for use on October 1, 1987. As a result of this section, no insured
may receive an increase in rates for other than an increase in coverage or due
to the provisions of Section 38-37-800, 38-37-930, or 38-37-935, unless the
insurer files additional rates in accordance with this title.
The base rate and objective standards rate filed by each insurer of automobile
insurance are effective if they meet the requirements of this section, on or
after July 1, 1988, for all eligible applicants and upon the renewal date, on or
after July 1, 1988, for all eligible existing policyholders. If the base rate
and objective standards rate filed by an automobile insurer do not meet the
requirements of this section, the Commissioner shall suspend the authority of
that insurer to write automobile insurance until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the Facility
recoupment charge approved or established pursuant to Section 38-37-800 may be
approved for an insurer of automobile insurance unless that rate or premium
charge is calculated in accordance with this section and meets the other
applicable requirements of this title pertaining to the approval of rates or
premium charges.
The Consumer Advocate, upon request to the Commissioner, must be provided by
him with a copy of any base rate filed with the Commissioner along with any
supporting materials, documents, or studies utilized to support the filed base
rate. In addition, every automobile insurer and rating organization shall
promptly respond to requests for information and data requested by the Consumer
Advocate relating to the filed base rate. The Consumer Advocate must be afforded
an opportunity for a hearing before the Commissioner on any filed base rate
before it takes effect that he believes does not meet the requirements of this
section. Final decisions of the Commissioner regarding this hearing are subject
to the provisions of the State Administrative Procedures Act."
Recoupment charge
SECTION 7. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-795. 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 38-37-785 and 38-37-930. 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 industry average expenses and the time value
of money, by 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. This dollar amount represents R in the formula, P0X + 2P1X + 3P2X +
4P3X + 5P4X = R. In this formula to be utilized in determining the Facility
recoupment charge:
(a) P0 is the percentage of risks which have zero surcharge points under the
Uniform Merit Rating Plan promulgated by the Commissioner;
(b) P1 is the percentage of risks which have one surcharge point under the
Uniform Merit Rating Plan;
(c) P2 is the percentage of risks which are subject to a surcharge of two
points under the Uniform Merit Rating Plan;
(d) P3 is the percentage of risks which are subject to a surcharge of three
to eight points under the Uniform Merit Rating Plan;
(e) P4 is the percentage of risks subject to a surcharge of nine or more
points under the Uniform Merit Rating Plan;
(f) X is the dollar amount by coverage, to be charged all risks having zero
surcharge points 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
38-37-785 and 38-37-930 for all risks which have zero surcharge points.
(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 two.
(3) 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 two
points under the Uniform Merit Rating Plan is calculated by multiplying X by a
factor of three.
(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 to eight points under the Uniform Merit Rating Plan is calculated by
multiplying X by a factor of four.
(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
nine or more points under the Uniform Merit Rating Plan is calculated by
multiplying X by a factor of five.
(6) 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."
Filing of recoupment charges
SECTION 8. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-800. Before December second of each year, the governing
board of the Facility shall file the Facility recoupment charges calculated
pursuant to Section 38-37-795 with the Commissioner. The Commissioner shall then
hold a public hearing subject to the provisions of the Administrative Procedures
Act to determine if the Facility recoupment charges were calculated in accordance
with the provisions of Section 38-37-795. The Facility recoupment charges must
be approved if it is determined that they were properly calculated. If it is
determined that the Facility recoupment charges were improperly calculated, the
Commissioner shall then establish the appropriate charges. The provisions of the
Administrative Procedures Act apply to any court appeal brought thereunder and
the charges approved by the Commissioner may be put into effect under bond in a
similar manner that a public utility may put a proposed rate increase into effect
under bond as provided by law."
Inclusion of recoupment charges in rates
SECTION 9. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-810. The Facility recoupment charges approved or
established pursuant to Section 38-37-800 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 38-37-785
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 the following:
(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 38-37-10, consideration must be given to the net gains or
losses incurred by insurers as a result of participation in the operating results
and expenses, respectively, of the Facility."
Collision and comprehensive coverage
SECTION 10. Article 11, Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-935. (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 any insured or qualified applicant who requests such coverage.
Collision coverage must have a mandatory deductible of 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 may
not be subject to any mandatory deductible, but an insured, at his option, may
select a deductible of from fifty to one thousand dollars in appropriate
increments. It is an unfair trade practice, as described in Sections 38-55-30
and 38-55-40, for an insurer or an agent to sell collision insurance with a fifty
dollar deductible or comprehensive coverage or fire, theft, and combined
additional coverages without a deductible 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.
(B) Notwithstanding subsection (A) and Sections 38-37-310 and 38-37-920,
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 56-11-250 and who resides in the same household, where
one or more of the conditions or factors prescribed in Section 38-37-930 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 38-37-310, 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 38-37-930(A)
which existed prior to 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 38-37-785 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 38-37-785.
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."
Loss and expense experience
SECTION 11. The Chief Insurance Commissioner shall promulgate regulations which
shall require each insurer licensed to write property or casualty insurance in
the State to record and report its loss and expense experience and other data as
may be necessary to determine whether rates are not excessive, inadequate, or
unfairly discriminating. The Commissioner may designate one or more rate service
organizations or advisory organizations to gather and compile this experience and
data. In addition, each insurer licensed to write property and casualty
insurance in this State, as a supplement to its annual statement, must submit a
report on a form furnished by the Commissioner showing the insurer's direct
writings in this State and the United States and also the information required
by Sections 12 and 13 of this act.
The Commissioner may adopt data disclosure requirements developed by the
National Association of Insurance Commissioners, and if adopted, shall be deemed
to be in full compliance with Sections 11 through 17 of this act.
Supplemental report required
SECTION 12. The supplemental report required by Section 11 must include, but is
not limited to, the following types of insurance written by the insurer:
(a) political subdivision liability insurance reported separately in the
following categories:
(1) municipalities;
(2) school districts;
(3) other political subdivisions;
(b) public official liability insurance;
(c) dram shop liability insurance;
(d) day care center liability insurance;
(e) labor, fraternal, or religious organizations liability insurance;
(f) errors and omissions liability insurance;
(g) officers and directors liability insurance reported separately as follows:
(1) nonprofit entities;
(2) for-profit entities;
(h) products liability insurance;
(i) medical malpractice insurance;
(j) attorney malpractice insurance;
(k) architects and engineers malpractice insurance; and
(l) motor vehicle insurance reported separately for commercial and private
passenger vehicles as follows:
(1) motor vehicle liability insurance first-party benefits;
(2) motor vehicle bodily injury liability insurance;
(3) motor vehicle property liability insurance;
(4) uninsured motorist insurance; and
(5) underinsured motorist insurance.
Data in supplemental report
SECTION 13. The supplemental report must include the following data both as to
this State and the United States for the previous year ending on December
thirty-first:
(a) direct premiums written,
(b) direct premiums earned,
(c) net investment income, including net realized capital gains and losses,
using appropriate estimates where necessary,
(d) incurred claims, developed as the sum of the following (the report shall
include data for each of the following categories used to develop the sum of
incurred claims):
(1) dollar amount of claims closed with payment, plus
(2) dollar amount of payments on claims still open, plus
(3) reserves for reported claims at the end of the current year, minus
(4) reserves for reported claims at the end of the previous year, plus
(5) reserves for incurred but not reported claims at the end of the current
year, minus
(6) reserves for incurred but not reported claims at the end of the previous
year, plus
(7) loss adjustment expenses for claims closed, plus
(8) reserves for loss adjustment expense at the end of the current year,
minus
(e) actual incurred expenses allocated separately to loss adjustment,
commissions, other acquisition costs, advertising, general office expenses,
taxes, licenses and fees, and all other expenses;
(f) net underwriting gain or loss;
(g) net operation gain or loss, including net investment income;
(h) the number and dollar amount of claims closed with payment, by year
incurred and the amount reserved for them;
(i) the number of claims closed without payment and the dollar amount reserved
for those claims;
(j) federal income tax recoverable; and
(k) any other information requested by the Commissioner.
Supplemental report contents
SECTION 14. For the first year only in which the insurer is required to file
this report, the data required by items (a) through (g) of Section 13 shall
include the previous calendar year and each of the preceding two calendar years.
Review of supplemental reports
SECTION 15. It is the duty of the Commissioner to annually compile and review
all such reports submitted by insurers pursuant to this act to determine the
appropriateness of premium rates for property and casualty insurance in this
State. The commission's findings and filings must be published, provided to the
General Assembly, and made available to any interested insured or citizen. If
the Commissioner finds at any time that any rate is excessive, inadequate, or
unfairly discriminating, he shall issue an order withdrawing its approval. The
order shall specify reasons for withdrawal of approval and must be furnished to
each affected insurer and rating organization and is effective in not less than
sixty days from its issuance unless an affected insurer meets the burden of
showing that the rate is in fact fair and appropriate.
Filing of required information
SECTION 16. Each insurance company shall file all of the information required
under Sections 11 through 17 of this act with the Commissioner as a prerequisite
to obtaining permission to write coverage, to continue to do business, or to file
for rate increases.
Penalty for failure to comply
SECTION 17. Each insurer who fails to comply with the terms of Sections 11
through 17 of this act shall pay a civil penalty of a fine of twenty thousand
dollars and thereafter a fine of one thousand dollars daily until the named
sections of the act are complied with.
Automobile insurance agent's business
SECTION 18. When dealing with the agents of the company, who are licensed to
sell automobile insurance, the company may not use any of the business placed in
the Facility in determining the profitability of that agent's business. Further,
the company shall not ask any agent not to write any kind of automobile business
or hold the Facility business against any agent in any manner which could be
construed as being detrimental to the agent.
Security information required
SECTION 19. Section 56-11-190 of the 1976 Code is amended to read:
"Section 56-11-190. Every owner of a motor vehicle required to be
registered in this State shall maintain the security required by Section
56-11-200 with respect to each such motor vehicle owned by him throughout the
period the registration is in effect. No certificate of registration may be
issued or transferred to an owner by the Executive Director unless the owner or
prospective owner produces satisfactory evidence that the security is in effect,
including the name of the owner's automobile liability insurer, the name of the
agent, the identification number of the insurance policy, and the effective dates
of the policy, except in cases where other security is approved."
Required endorsement
SECTION 20. The first sentence of Section 56-11-250 of the 1976 Code is amended
to read:
"Notwithstanding the definition of 'insured' in Article 7 of Chapter 9,
the insurer and any named insured must, by the terms of a written amendatory
endorsement, the form of which has been approved by the Chief Insurance
Commissioner, agree that coverage under such a policy of liability insurance
shall not apply while the motor vehicle is being operated by a natural person
designated by name."
Underinsured motor vehicle definition
SECTION 21. Section 56-9-810 of the 1976 Code is amended by adding:
"(5) '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 56-9-820 and the
amount of the insurance or bond:
(a) is less than the limit for underinsured motorist coverage under the
insured's policy; or
(b) has been reduced by payments to persons, other than an insured, injured
in the accident to an amount less than the limit for underinsured motorist
coverage under the insured's policy."
Coverage restrictions deleted and benefits not subject to subrogation and
assignment
SECTION 22. Section 56-9-831 of the 1976 Code, as added by Act 569 of 1978, is
amended to read:
"Section 56-9-831. Automobile insurance carriers shall offer, at the
option of the insured, uninsured motorist coverage up to the limits of the
insured's liability coverage in addition to the mandatory coverage prescribed by
Section 56-9-830. Such carriers shall also offer, at the option of the insured,
underinsured motorist coverage up to the limits of the insured liability coverage
to provide coverage in the event that damages are sustained in excess of the
liability limits carried by an at fault insured or underinsured motorist. If,
however, an insured or named insured is protected by uninsured or underinsured
motorist coverage in excess of the basic limits, the policy shall provide that
the insured or named insured is protected only to the extent of the coverage he
has on the vehicle involved in the accident. If none of the insured's or named
insured's vehicles is involved in the accident, coverage is available only to the
extent of coverage on any one of the vehicles with the excess or underinsured
coverage. Benefits paid pursuant to this section are not subject to subrogation
and assignment."
Unreasonable use of Facility
SECTION 23. The second paragraph of Section 38-37-950 of the 1976 Code is
amended to read:
"A prima facie case of excessive or unreasonable utilization shall be
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
forty percent of total direct written premiums on South Carolina automobile
insurance as reported in the most recently filed annual statement(s) of such
insurer or group."
Revision and rebate of rates
SECTION 24. Chapter 1 of Title 38 of the 1976 Code is amended by adding:
"Section 38-1-140. (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 if the petition for review is granted shall review the previous
three years experience with the rate being reviewed, or as much of the period as
is available. 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 rate maker, bureau,
or insurer to promulgate a rate which is not unfairly discriminatory, excessive,
or unreasonable profit, in the opinion of the Commissioner, the commissioner
shall order the same removed and require that the individual rate maker, bureau,
or insurer to 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 shall, in accordance with
generally accepted and reasonable actuarial techniques, 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 reasonably expected by the insurer, consistent with the
insurer's investment practices, from investable premiums anticipated in the
filing, plus any other expected income from currently invested assets
representing the amount expected on unearned premium reserves and loss reserves.
The department may promulgate rules utilizing reasonable techniques of actuarial
science and economics to specify the manner in which insurers shall calculate
investment income attributable to such classes of insurance written in this State
and the manner in which such investment income shall be used in the calculation
of insurance rates. Such manner shall contemplate allowances for an underwriting
profit factor and full consideration of investment income which produce a
reasonable rate of return; however, investment income from invested surplus shall
be considered;
5. the reasonableness of the judgment reflected in the filing;
6. dividends, savings, or unabsorbed premium deposits allowed or returned
to South Carolina policyholders, members, or subscribers;
7. the adequacy of loss reserves;
8. the cost of reinsurance;
9. trend factors, including trends in actual losses per insured unit for the
insurer making the filing;
10. a reasonable margin for underwriting profit and contingencies;
11. other relevant factors which impact upon the frequency or severity of
claims or upon expenses.
(C) After consideration of the rate factors provided in paragraph (B) a rate
may be found by the department to be excessive, unreasonable, or unfairly
discriminatory based upon the following standards:
1. Rates shall be deemed excessive if they are likely to produce a profit
from South Carolina business that is unreasonably high in relation to the risk
involved in the class of business or if expenses are unreasonably high in
relation to services rendered.
2. Rates shall be deemed excessive if, among other things, the rate
structure established by a stock insurance company provides for replenishment of
surpluses from premiums, when the replenishment is attributable to investment
losses.
3. Rates shall be deemed inadequate if they are clearly insufficient,
together with the investment income attributable to them, to sustain projected
losses and expenses in the class of business to which they apply.
4. A rate shall be deemed inadequate as to the premium charged to a risk or
group of risks if discounts or credits are allowed which exceed a reasonable
reflection of expense savings and reasonably expected loss experience from the
risk or group of risks.
5. A rate shall be deemed unfairly discriminatory as a risk or group of
risks if the application of premium discounts, credits, or surcharges among such
risks does not bear a reasonable relationship to the expected loss and expense
experience among the various risks.
(D) 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."
Conditions for suit revised
SECTION 25. Section 56-9-850 of the 1976 Code is amended to read:
"Section 56-9-850. 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;
(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."
Plan for credits and discounts
SECTION 26. Article 5 of Chapter 37 of Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-325. In addition to risk and territorial classification
plans promulgated under Section 38-37-320, 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 not be ceded to the Reinsurance Facility."
Assignment of benefits to medical providers
SECTION 27. Section 56-11-110 of the 1976 Code is amended to read:
"Section 56-11-110. Except as otherwise provided in this article, no
policy or contract, hereinafter referred to as a policy, of liability insurance
as defined in Article 7 of Chapter 9 or other security as provided for in Section
56-11-210 may be issued, delivered, sold, or renewed in this State after October
1, 1978, unless such policy at the option of the insured also affords either the
minimum medical, hospital, disability, and loss of income benefits or the minimum
medical and hospital benefits, excluding disability and loss of income benefits,
set forth herein. The insured's option shall include that of rejecting either or
both of the foregoing described benefit coverages. The benefits or their
equivalent shall cover the named insured and members of his family residing in
his household, except such persons as may be specifically excluded in accordance
with law, injured in any motor vehicle accident, including an accident involving
an uninsured motor vehicle or a motor vehicle whose identity cannot be
ascertained, other persons injured while occupying the insured motor vehicle as
a guest or passenger or while using it with the express or implied permission of
the named insured, except such persons as may be specifically excluded in
accordance with law, and pedestrians injured in an accident in which the insured
motor vehicle is involved. The minimum medical, hospital, and disability benefits
if the insured exercises the option to receive such benefits shall include up
to an amount of one thousand dollars per person for payment of all reasonable
expenses arising from the accident and sustained within three years from the date
thereof for necessary medical, surgical, chiropractic, X-ray, and dental
services, including prosthetic devices, and necessary ambulance, hospital,
professional nursing, and funeral services; and in the case of an income producer
who exercises the option to receive such benefit payment of benefits for loss of
income as the result of the accident; and where the person injured in the
accident was not an income or wage producer at the time of the accident, payments
of benefits must be made in reimbursement of necessary and reasonable expenses,
incurred for essential services ordinarily performed by the injured person for
care and maintenance of the family or family household. The insurer providing
loss of income benefits may require, as a condition of receiving such benefits,
that the injured person furnish the insurer reasonable medical proof of his
injury causing loss of income. No benefit payable pursuant to this section is
subject to subrogation or assignment except that assignments may be made to
hospitals, physicians, or other medical providers, provided, however, that no
medical provider may require assignment as a condition of treatment."
Qualifications for designated agent revised
SECTION 28. Section 38-37-150(C) of the 1976 Code is amended to read:
"(C) A producer may be designated by the governing board of the Facility
upon application for designation and is eligible for designation upon a finding
by the governing board that the applicant meets the following qualifications:
(1) The applicant has been, for five continuous years, a licensed, resident
property and casualty insurance agent and agency owner or principal with
authority from one or more licensed insurers to write liability and physical
damage insurance on private passenger automobiles;
(2) At the time of application the applicant is servicing and owns the
renewals on private passenger and commercial automobile insurance business, the
net premiums on which exceeded seventy-five thousand dollars of potential
cedeable automobile insurance during any one of the previous five calendar years
preceding the application;
(3) Neither the applicant, nor any employee of the applicant or the
applicant's corporate agency, nor any partner or shareholder in any related
insurance agency, related premium service company, or related other business, has
any direct or indirect connection with any voluntary market outlet for the
purpose of writing any type of automobile insurance in this State except for
motorcycle insurance and types not cedeable to the Facility;
(4) The applicant has not contributed to his termination as agent by any
insurer because of any illegal breach of agency agreement or other related,
improper, or unethical conduct; and
(5) The books, records, and accounts of the insurance business of the
applicant have been audited at the expense of the applicant and found by the
governing board to be indicative of a financially sound operation."
Designation of agents
SECTION 29. The governing body of the Facility may, for a period of three years
beginning on the effective date of this act, designate an applicant who meets all
other requirements but is prohibited from writing property and casualty insurance
by an insurance company or had a broker agreement or contract with another agency
that was licensed to write property and casualty insurance in this State.
Resident adjuster required
SECTION 30. Article 1, Chapter 9, Title 38 of the 1976 Code is amended by
adding:
"Section 38-9-375. Every property or casualty insurance company
transacting business in this State shall at all times maintain in the State at
least one resident adjuster for the purpose of investigation and settlement of
claims. The name, current address, and current telephone number of the adjuster
so employed must be maintained on file with the Chief Insurance Commissioner by
the company which information must be available to the public. Any change in the
name, address, or telephone number of the adjuster must be reported to the
Commissioner by the insurance company within thirty days.
Failure to maintain the adjuster on file as required herein is grounds for the
Chief Insurance Commissioner to revoke the company's authorization to do business
in this State."
Additional unlawful acts, penalties, and bonus computation
SECTION 31. Section 38-37-940 of the 1976 Code is amended to read:
"Section 38-37-940. No insurer of automobile insurance shall directly or
indirectly by offer or promise of reward or imposition or threat of penalty or
through any artifice or device whatsoever, confer any benefit upon any agent or
impose any detriment upon any such agent for the purpose of avoiding any class
or type of automobile insurance risk which the insurer considers it necessary to
reinsure in the Facility; nor shall any offer or promise of reward or imposition
or threat of penalty in connection with any other line or type of insurance be
so tied to automobile insurance as to have a tendency to induce the agent to
avoid any such class or type of automobile insurance risk; nor shall any insurer
of automobile insurance provide to agents, directly or indirectly, orally or in
writing, any listing of classes or types of automobile insurance risks which it
considers necessary to reinsure in the Facility; nor shall any insurer of
automobile insurance terminate its insurance business with any one agent over the
writing of certain classes or types of automobile insurance risks without also
pulling out of the entire State or terminating its similar insurance business
with all other agents in the State at the same time for a period of time of at
least 365 days, except that if the insurer reinstates the agent within thirty
days of the determination that the termination was unlawful, then this provision
shall not apply; nor shall any insurer of automobile insurance do anything
unfair, or unfairly fail to do anything, which has the effect of, or which
results in, causing any ceded insurance business to have a detrimental effect on
any incentive bonuses paid by the insurer to agents. Any act in violation of
this section constitutes an act of unlawful discrimination and unfair
competition which, if wilful, shall result in the suspension or revocation of the
insurer's certificate of authority for not less than twelve months. Any
agreement made in violation of this section shall be void.
Nothing in this section may be considered to preclude or impair agreements
between insurers and their agents or some of their agents to pay contingency
commissions or a profit-sharing bonus based upon the quality of business; nor
shall the insurers, in any manner, use that business placed in the Facility when
determining the quality bonus; nor may it be considered to preclude an agreement
between any agent and an insurer of automobile insurance to exclude from any
profit-sharing or contingency arrangement automobile insurance business coming
unsolicited to the agent and written by him solely because of the mandate of
coverage provided in Articles 1 to 15 of this chapter.
No insurer of automobile insurance shall cancel its representation by an agent
primarily because of the volume of automobile insurance placed with it by the
agent on account of the statutory mandate of coverage nor because of the amount
of the agent's automobile insurance business which the insurer has considered it
necessary to reinsure in the Facility."
Nonrenewal of homeowners insurance
SECTION 32. Article 7, Chapter 9, Title 38 of the 1976 Code is amended by
adding:
"Section 38-9-890. No insurer may nonrenew a policy of homeowners
insurance because the insured has filed a claim with that insurer for damages
resulting from an act of God."
Signs required in agent's place of business
SECTION 33. Article 5, Chapter 37, Title 38 of the 1976 Code is amended by
adding:
"Section 38-37-315. The authorized agents for every insurer covered by
the provisions of Section 38-37-310 shall post in a conspicuous location in their
office or place of business a sign containing language to be required by
regulation of the Chief Insurance Commissioner that stipulates that insurer and
agent may not refuse to write or renew that type of insurance, that tactics
designed to avoid writing or renewing that type of insurance are not permissible
including unreasonable delays in meeting with applicants, and that violations of
the above should be reported to the Commissioner for appropriate action."
Time effective
SECTION 34. This act takes effect upon approval by the Governor, with the first
reports required under Sections 11, 12, 13, 14, 15, 16, and 17 of this act to be
filed on July 1, 1988, and on July first of each following year. |