H 4035 Session 111 (1995-1996)
H 4035 General Bill, By Richardson
Similar(S 84)
A Bill to amend Section 38-73-760, as amended, relating to the State Rating
and Statistical Division and Uniform Statistical Plans, so as to, among other
things, grant a safe driver discount based upon the insured's three year
driving record of no less than ten percent safe driver discount and require no
less than twenty percent safe driver discount for drivers having no chargeable
accidents or violations for five years rather than require no less than twenty
percent safe driver discount for those all eligible.-short title
04/12/95 House Introduced and read first time HJ-25
04/12/95 House Referred to Committee on Labor, Commerce and
Industry HJ-27
A BILL
TO AMEND SECTION 38-73-760, AS AMENDED, RELATING
TO THE STATE RATING AND STATISTICAL DIVISION AND
UNIFORM STATISTICAL PLANS, SO AS TO, AMONG OTHER
THINGS, DELETE CERTAIN PROVISIONS, GRANT A SAFE
DRIVER DISCOUNT BASED UPON THE INSURED'S THREE
YEAR DRIVING RECORD OF NO LESS THAN TEN PERCENT
SAFE DRIVER DISCOUNT AND REQUIRE NO LESS THAN
TWENTY PERCENT SAFE DRIVER DISCOUNT FOR DRIVERS
HAVING NO CHARGEABLE ACCIDENTS OR VIOLATIONS
FOR FIVE YEARS RATHER THAN REQUIRE NO LESS THAN
TWENTY PERCENT SAFE DRIVER DISCOUNT FOR THOSE
ALL ELIGIBLE; TO AMEND SECTION 38-77-280, AS
AMENDED, RELATING TO AUTOMOBILE INSURANCE AND
COLLISION AND COMPREHENSIVE COVERAGES, SO AS TO
DELETE CERTAIN PROVISIONS AND LANGUAGE, AND
PROVIDE, AMONG OTHER THINGS, AUTOMOBILE
INSURERS, INCLUDING THOSE COMPANIES WRITING
PRIVATE PASSENGER PHYSICAL DAMAGE COVERAGES
ONLY, MAY, RATHER THAN "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, HOWEVER, ASSIGNED
PRODUCERS "SHALL OFFER" AND
"MAKE" COLLISION COVERAGE AND EITHER
COMPREHENSIVE OR FIRE, THEFT, AND COMBINED
ADDITIONAL COVERAGE AVAILABLE TO AN INSURED OR
QUALIFIED APPLICANT WHO REQUESTS THE COVERAGE,
THAT BEGINNING JANUARY 1, 1996, AND ANNUALLY
THEREAFTER, THE FACILITY PHYSICAL DAMAGE RATE
FOR A PRIVATE PASSENGER AUTOMOBILE INSURANCE
RISK CEDED TO THE FACILITY MUST BE CALCULATED SO
THAT THE PROJECTED LOSS RATIO FOR RISKS SUBJECT
TO THE FACILITY PHYSICAL DAMAGE RATE IS NO MORE
THAN ONE HUNDRED PERCENT; AND THAT ALL
PHYSICAL DAMAGE COVERAGES ARE CEDED AT THE
FACILITY PHYSICAL DAMAGE RATE; TO AMEND SECTION
38-77-540, RELATING TO THE DUTIES OF A CEDING
INSURER, SO AS TO PROVIDE, AMONG OTHER THINGS,
THAT THE FACILITY SHALL ACCEPT CESSIONS OF
PHYSICAL DAMAGE COVERAGES AT THE FACILITY
PHYSICAL DAMAGE RATE, THAT A FACILITY PHYSICAL
DAMAGE RATE FOR CEDED RISKS IS ESTABLISHED OVER
TWO YEARS; TO AMEND SECTION 38-77-600, AS
AMENDED, RELATING TO THE REINSURANCE FACILITY
RECOUPMENT CHARGE, SO AS TO, AMONG OTHER
THINGS, REVISE THE FORMULA USED TO CALCULATE
RECOUPMENT FOR ALL PRIVATE PASSENGER
AUTOMOBILE INSURANCE POLICIES ISSUED OR
RENEWED JUNE 30, 1995; AND TO REQUIRE ALL
INSURERS SUBJECT TO SECTION 38-77-280 TO SUBMIT
RATE FILINGS TO THE DIRECTOR OF THE DEPARTMENT
OF INSURANCE WITHIN TWELVE MONTHS FOLLOWING
THE EFFECTIVE DATE OF THIS ACT, AND PROVIDE THAT
THESE FILINGS MUST REFLECT THE RATE DECREASES, IF
ANY, ATTRIBUTABLE TO THE PASSAGE OF THIS ACT.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 38-73-760(e) of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"(e) The director or his designee shall require all insurers
transacting automobile insurance business in this State to assess
surcharges and grant safe driver discounts upon reviewing a
three year motor vehicle record in accordance with Section
38-73-455. These insurers shall grant safe driver discounts of
no less than twenty percent unless the private passenger
automobile insurance risk is written by insurers contracted pursuant
to Section 38-77-590(a) or is ceded to the facility. If an private
passenger automobile risk is written by insurers contracted pursuant
to Section 38-77-590(a) or is ceded to the facility, the driver having
no surcharge of points under the Uniform Merit Rating Plan shall
receive:
(1) upon reviewing a three year motor vehicle record, a safe
driver discount of no less than ten percent;
(2) upon reviewing a five year motor vehicle record, a safe
driver discount of no less than twenty percent."
SECTION 2. Section 38-77-280 of the 1976 Code, as last
amended by Section 810 of Act 181 of 1993, is further amended to
read:
"Section 38-77-280. (A) Except as provided in subsection
(B), all automobile insurers, including those insurance companies
writing private passenger physical damage coverages only,
shall may make collision coverage and either
comprehensive or fire, theft, and combined additional coverage
available to an insured or qualified applicant who requests the
coverage. Automobile insurers contracted pursuant to Section
38-77-590 for risks written by them through producers assigned by
the facility governing board pursuant to that section shall offer and
make available collision coverage and comprehensive or fire, theft
and combined additional coverage to an insured or qualified
applicant who requests the coverage.
If collision coverage is offered or provided, it
must have a mandatory deductible of two hundred fifty dollars, but
an insured or qualified applicant, at his option, may select an
additional deductible in appropriate increments up to one thousand
dollars.
If comprehensive coverage or fire, theft, and combined
additional coverages are offered or provided, it must have a
mandatory deductible of two hundred fifty dollars, but an insured,
at his option, may select an additional deductible in appropriate
increments up to one thousand dollars. This deductible does not
apply to auto safety glass. It is an unfair trade practice, as
described in Sections 38-57-30 and 38-57-40, for an insurer or an
agent to sell collision insurance, comprehensive coverage, or fire,
theft, and combined additional coverages unless the insured is
notified at the time of application of the savings which may be
realized if the applicant or the insured selects a higher deductible.
This notice is required only at the time of the initial sale and must
be in a form approved by the director or his designee. An insurer
may offer insureds lower deductibles at the insurer's option.
(B) Notwithstanding subsection (A) and Sections 38-77-110
and 38-77-920, automobile insurers may refuse to write automobile
physical damage insurance coverage, including automobile
comprehensive physical damage, collision, fire, theft, and combined
additional coverage, for an applicant or existing policyholder, on
renewal, for a motor vehicle customarily operated by an individual,
either the named insured or another operator not excluded in
accordance with Section 38-77-340 and who resides in the same
household, where one or more of the conditions or factors
prescribed in Section 38-73-455 exist. In addition, automobile
insurers may refuse to write physical damage insurance coverage to
an applicant or existing policyholder, on renewal, who has collected
benefits provided under automobile insurance physical damage
coverage during the thirty six months immediately preceding the
effective date of coverage, for two or more total fire losses or two
or more total theft losses. Automobile insurers may refuse to write
for private passenger automobiles physical damage insurance
coverage, including automobile comprehensive physical damage,
collision, fire, theft, and combined additional coverage, for an
applicant or existing policyholder, on renewal, for a motor vehicle
customarily operated by an individual, either the named insured or
another operator not excluded in accordance with Section 38-77-340
and who resides in the same household, which does not qualify for
the safe driver discount in Section 38-73-760c.
All insurers subject to the provisions of this section writing
single interest collision coverage shall provide an applicant for the
insurance at the time of his application a notice separate and apart
from any other form used in the application. The notice must be
signed by the applicant evidencing his acknowledgement of having
read the notice. The notice must contain the following language
printed in bold face type:
`NOTICE: THE INSURANCE COVERAGE YOU ARE
HEREBY PURCHASING IS SINGLE INTEREST COLLISION
COVERAGE. THE AMOUNT OF INSURANCE DECREASES
AS YOU PAY OFF THE AMOUNT OF YOUR INDEBTEDNESS.
YOU MAY NOT RECEIVE ANY INSURANCE PROCEEDS
OVER AND ABOVE THE AMOUNT OF THE OUTSTANDING
BALANCE ON YOUR LOAN.'
(C) Notwithstanding Section 38-77-110, automobile
physical damage coverage in an automobile insurance policy may
be canceled at any time during the policy period by reason of the
factors or conditions described in Section 38-73-455(A) or
Section 38-77-280(B) which existed before the
commencement of the policy period and which were not disclosed
to the insurer at the commencement of the policy period.
(D) No policy of insurance which provides automobile physical
damage coverage only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for
physical damage insurance coverages different than
from those provided for in Section 38-73-457 if the rates
are filed with the department and approved by the director or his
designee. Any applicant or existing policyholder, to be charged
this different rate, must be denied the coverage pursuant to
subsection (B) at the rate provided in Section 38-73-457.
However, automobile physical damage coverages ceded to the
facility by an insurer or servicing carrier shall be at the rate
provided for in accordance with Section 38-77-540.
(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 my select an additional deductible in appropriate
increments up to one thousand dollars. However the mandatory
deductible does not apply to safety glass. In determining the
premium rates to be charged on automobile insurance, it is unlawful
to consider race, color, creed, religion, national origin, ancestry,
location of residence, occupation, or economic status. If the
Director of Insurance makes a finding that the insurer is
participating in discriminatory practices, the director may impose a
fine on the insurer of up to two hundred thousand
dollars."
SECTION 3(A). Section 38-77-540 of the 1976 Code is amended
to read:
"Section 38-77-540. The ceding insurer shall transfer or
credit to the Facility on any policy of automobile insurance
reinsured by the Facility the pure loss component of its rate or
premium charge together with the profit and contingency
component of the rate or premium charge as determined under its
rating plan or system as filed with the Department. The ceding
insurer shall retain as and for its ceding commission the allocated
loss adjustment expense component as well as the underwriting and
administrative expense components of the rate or premium charge
under ceding insurer's rating plan or system as filed with the
Department. However, no ceding insurer may include in the
agents' commissions component of its underwriting expenses any
amount greater than it has actually paid its agent as commission on
the reinsured risk.
Notwithstanding any other provision of the law, beginning
October 1, 1996, and annually thereafter, the facility shall accept
cessions of automobile physical damage coverages on a policy of
private passenger automobile insurance at the option of an insurer
but only at the facility physical damage rate so that no operating
loss is attributable to the facility's experience with private passenger
automobile physical damage coverages. The facility physical
damage rate must be calculated so that the projected loss ratio for
the risk is no more than one hundred percent. The facility physical
damage rate must be filed by the Reinsurance Facility with the
director for approval."
(B) The provisions of Section 38-77-540, as amended by Section
3(A) of this act, are effective on January 1, 1996. This rate
adjustment to a projected loss ratio of one-hundred percent or less
must occur evenly over a two-year period beginning on October 1,
1996. On October 1, 1996, the first year of the two-year period
begins for the rate adjustment and the two equal portions of this
rate adjustment shall be based upon the losses reported by the
facility on or about October 1, 1995 and other relevant information.
On October 1, 1997, the beginning of the last year of the
two-period, the facility physical damage rate for automobile
physical damage coverages on a policy of private passenger
automobile insurance risk ceded to the facility shall include the
remaining portion of the rate adjustment along with, but not limited
to, those adjustments, if any, for losses reported by the facility after
October 1, 1995.
SECTION 4. Section 38-77-600 of the 1976 Code, as last
amended by Section 826 of Act 181 of 1993, is further 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 Before 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, industry average
expenses 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 borne by risks having zero surcharge points
under the Uniform Merit Plan promulgated by the department. The
remainder of the recoupment (.614 multiplied by the
recoupment)This dollar amount represents R in the
formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X +
6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(1)+I0X = R
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
director or his designee;
(a) P(1) (b) P1 is the percentage of risks
which have one surcharge point under the Uniform Merit Rating
Plan;
(b) P(2) (c) P2 is the percentage of risks
which have two surcharge points under the Uniform Merit Rating
Plan;
(c) P(3) (d) P3 is the percentage of risks
which are subject to a surcharge of three to eight points
under the Uniform Merit Rating Plan;
(d) P(4) (e) P4 is the percentage of risks
which are subject to a surcharge of four nine or
more points under the Uniform Merit Rating Plan;
(e) P(5) is the percentage of risks subject to a surcharge of
five points under the Uniform Merit Rating Plan;
(f) P(6) is the percentage of risks subject to a surcharge of
six points under the Uniform Merit Rating Plan;
(g) P(7) is the percentage of risks subject to a surcharge of
seven points under the Uniform Merit Rating Plan;
(h) P(8) is the percentage of risks subject to a surcharge of
eight points under the Uniform Merit Rating Plan;
(i) P(9) is the percentage of risks subject to a surcharge of
nine points under the Uniform Merit Rating Plan;
(j) P(1)+I0 or more is the percentage of risks subject to a
surcharge of ten or more points under the Uniform Merit Rating
Plan;
(k)(f) X is the dollar amount by coverage, to
be charged all risks having one zero surcharge
point points under the Uniform Merit Rating Plan
promulgated by the department director or his
designee. 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 zero surcharge
point 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 one two.
(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 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 three 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 four nine or more points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of four five.
(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)(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.
(13)(7) This section applies to all private
passenger automobile insurance policies issued or renewed after
June 30, 1989 1996. 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."
SECTION 5. All insurers subject to the provisions of Section
38-77-280 of the 1976 Code shall submit rate filings to the Director
of the Department of Insurance within twelve months following the
effective date of this act. These filings must reflect the rate
decreases, if any, attributable to the passage of this act.
SECTION 6. Except as otherwise specifically provided in this
act, this act takes effect upon approval by the Governor.
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