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Bill Number: 2606 Ratification Number: 86 Act Number 54 Introducing Body: House Subject: Insurance required of borrowers under the Consumer Finance Law
(A54, R86, H2606)
AN ACT TO AMEND SECTION 34-29-160, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURANCE REQUIRED OF BORROWERS UNDER THE CONSUMER FINANCE LAW, SO AS TO PROVIDE THAT MINIMUM CHARGES OF TWO DOLLARS MAY BE MADE IN CONNECTION WITH THE REQUIRED INSURANCE AND THAT NO REFUND UNDER TWO DOLLARS MUST BE MADE IN CONNECTION WITH THE CANCELLATION OF THE INSURANCE.
Be it enacted by the General Assembly of the State of South Carolina:
Minimum refunds revised
SECTION 1. The third paragraph of Section 34-29-160 of the 1976 Code, as amended by Act 444 of 1986, is further amended to read:
"Life insurance must be in an amount not to exceed the approximate amount of the loan and for a term not exceeding the approximate term of the loan contract. Accident and health insurance and unemployment insurance, or both, must provide periodic benefits which may not exceed an amount which approximately equals the amount of each periodic installment payment to be made under the loan contract. However, when a loan is discharged or a new policy or policies of insurance are issued, the life, property, or accident and health insurance or all three on the prior obligation must be canceled and the unearned portion of the insurance premium or premiums, or identifiable charge, must be refunded to the borrower. However, the method of refunding the premiums on the policies must be pursuant to the Rule of 78 or the Sum of the Digits Method, except that no refund under two dollars must be made; the insurance company shall calculate its reserves on the policies in the same manner or, in the case of credit life insurance, in accordance with a mortality table and interest assumption used for ordinary life policies. Notwithstanding this requirement, if the property insurance policy or policies cover the insurable interest of the borrower as well as the lender, the policy or policies may be continued in force at the request of the borrower."
Minimum charges revised
SECTION 2. The eighth paragraph of Section 34-29-160 of the 1976 Code is amended to read:
"Any accident and health or property insurance sold in conjunction with this chapter must be written on forms and at rates approved by the South Carolina Insurance Commission, provided that a minimum charge of two dollars may be made, pursuant to reasonable regulations adopted by it and having as their purpose the establishment and maintenance of premium rates which are reasonably commensurate with the coverage afforded and which are adequate, not excessive, and not unfairly discriminatory giving due consideration to past or prospective loss experience within or without this State, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to borrowers, to reasonable expense allowances necessary to achieve proper risk distribution and spread, and to all other relevant factors within or without this State. These regulations may include reasonable classification systems or programs based upon identifiable and measurable variations in the hazards or expense requirements and may include statistical plans, systems, or programs, which the insurers may be required to adopt, for the purpose of providing that statistical information and data as may be necessary or reasonably appropriate to the determination of premium rates or rate levels. The premium rates and rate levels must be calculated to produce and maintain a ratio of losses incurred, or reasonably expected to be incurred, to premiums earned, or reasonably expected to be earned, of not less than fifty percent, and rates producing a lesser loss ratio are considered excessive."
SECTION 3. This act takes effect upon approval by the Governor.