S 295 Session 111 (1995-1996)
S 0295 General Bill, By L.E. Richter
A Bill to amend Chapter 43, Title 38, Code of Laws of South Carolina, 1976, by
adding Section 38-43-140 so as to define agent and insurer and to provide a
method of review for insurance agents involuntarily terminated by insurers.
01/10/95 Senate Introduced and read first time SJ-125
01/10/95 Senate Referred to Committee on Banking and Insurance SJ-125
A BILL
TO AMEND CHAPTER 43, TITLE 38, CODE OF LAWS OF
SOUTH CAROLINA, 1976, BY ADDING SECTION 38-43-140
SO AS TO DEFINE AGENT AND INSURER AND TO PROVIDE
A METHOD OF REVIEW FOR INSURANCE AGENTS
INVOLUNTARILY TERMINATED BY INSURERS.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Chapter 43, Title 38 of the 1976 Code is amended
by adding:
"Section 38-43-140. (A) The following definitions shall
be applicable to this section:
(1) `Agent' means a person as defined in Section 38-43-10
who is not an employee of the insurer, who has an agency
contractual relationship that has been in effect for five or more
years, and who writes eighty percent or more of the person's
business through one insurer or its subsidiaries.
(2) `Insurer' means an insurance company writing property or
casualty loss insurance in this State through agents.
(B) An insurer shall establish a termination review process for
an agent involuntarily terminated by the insurer. The review process
is available for use at the option of the agent. The review process
must be completed within fifteen days of the request or before the
date of termination, whichever is later.
(C) If an agent is terminated by an insurer, the agent may
request a hearing before the board of review. If an insurer initiates
the termination of an agent's agreement, the written notice of
termination must advise the agent of the agent's right to a hearing
before the board of review. Upon receipt of an agent's request for a
hearing, the commissioner shall establish a hearing date within
thirty days of the request or longer with the approval of the agent
and the insurer. The agent and the insurer shall be notified in
writing of the date, time, and place of the hearing. The hearing
provided for under this section is not subject to Chapter 23, Title 1.
The review board shall provide the parties to the hearing with an
opportunity to present evidence and arguments in support of their
respective positions.
(D) A three-member board of review shall be selected from a
list of ten agents and ten insurer representatives compiled by the
commissioner. One member shall be selected by the agent and one
by the insurer. The third member shall be mutually agreed upon by
both parties. If the parties do not agree upon a third member, the
commissioner shall request the American Arbitration Association to
provide the commissioner with three names of potential members.
If the American Arbitration Association declines to provide the
names, the Commissioner of the Bureau of Mediation Services shall
provide the names. The agent member and the insurer member
shall each strike one person from the list. The remaining person
shall be selected as the third member of the review board. The
insurer and the agent shall each pay one-half of the fee charged by
the third member. The board member selected by the agent may
not be a relative of the agent. The board members selected by the
agent and insurer may not be presently or formerly associated with
an insurer represented by the agent. An insurer is immune from
civil liability to the agent for disclosures made at the hearing. This
immunity does not extend to disclosures made in bad faith or with
knowledge of their falseness.
(E) Upon completion of the hearing, the board of review shall
determine if the termination of the agent's agreement is justified. If
in the opinion of the board of review an involuntary termination is
not justified, and in the absence of a reasonable contractual
financial provision for termination as determined by the board, the
board shall order the insurer to pay an amount of compensation that
the board considers appropriate to the agent.
If in the opinion of the board of review a voluntary termination
was not voluntary and the insurer is not justified in terminating the
agent's agreement, and in the absence of a reasonable contractual
financial provision for termination as determined by the board, the
board shall order the insurer to pay an amount of compensation that
the board considers appropriate to the agent.
(F) A final determination of the board of review under
subsection (E) may be appealed to circuit court by either party for a
trial de novo. If the insurer appeals and the agent prevails, the
insurer is responsible for the agent's legal fees as approved by the
court.
(G) A person who intimidates or coerces a member of the board
of review is subject to a civil penalty imposed by the commissioner
in an amount not to exceed $25,000.
(H) Failure to comply with a final order or determination of the
review board constitutes a basis for an administrative penalty as
provided in Section 38-2-10.
(I) This section does not apply to an agent whose license has
expired, is revoked, or is currently under suspension."
SECTION 2. This act takes effect upon approval by the
Governor.
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