South Carolina General Assembly
109th Session, 1991-1992

Bill 1299


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Introducing Body:               Senate
Bill Number:                    1299
Primary Sponsor:                Moore
Committee Number:               02
Type of Legislation:            GB
Subject:                        Motor vehicle insurance, detailed
                                provisions
Residing Body:                  Senate
Current Committee:              Banking and Insurance
Companion Bill Number:          4464
Computer Document Number:       NO5/8053.BD
Introduced Date:                Feb 13, 1992
Last History Body:              Senate
Last History Date:              Feb 13, 1992
Last History Type:              Introduced, read first time,
                                referred to Committee
Scope of Legislation:           Statewide
All Sponsors:                   Moore
Type of Legislation:            General Bill



History


 Bill  Body    Date          Action Description              CMN
 ----  ------  ------------  ------------------------------  ---
 1299  Senate  Feb 13, 1992  Introduced, read first time,    02
                             referred to Committee

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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 6 TO CHAPTER 77, TITLE 38 SO AS TO ESTABLISH A JOINT UNDERWRITING ASSOCIATION FOR AUTOMOBILE INSURANCE; TO AMEND THE 1976 CODE BY ADDING ARTICLE 5 TO CHAPTER 10, TITLE 56 SO AS TO PROVIDE FOR THE REGISTRATION AND LICENSING OF UNINSURED MOTOR VEHICLES; TO AMEND SECTION 38-57-130, RELATING TO MISREPRESENTATIONS, SPECIAL INDUCEMENTS, AND REBATES PROHIBITED IN INSURANCE CONTRACTS, SO AS TO DELETE THE PROHIBITION ON REBATES OR CERTAIN OTHER INDUCEMENTS; TO AMEND SECTION 38-73-457, RELATING TO FILING INFORMATION ON BASE RATES, SO AS TO REVISE THE REQUIREMENTS FOR FILING AND INCLUDE PROVISIONS FOR PREFERRED RATES, STANDARD RATES, AND SUBSTANDARD RATES; TO AMEND SECTION 38-73-735, AS AMENDED, RELATING TO PLANS FOR CREDITS OR DISCOUNTS TO AUTOMOBILE INSUREDS, SO AS TO DELETE THE PROVISIONS AUTHORIZING THE PLANS TO BE CEDED TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-750, AS AMENDED, RELATING TO THE REQUIREMENT THAT AUTOMOBILE INSURERS FILE PLANS FOR ALLOCATING EXPENSES AND PROFIT, SO AS TO DELETE THE REFERENCES TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-760, AS AMENDED, RELATING TO UNIFORM STATISTICAL PLANS FOR THE AUTOMOBILE INSURANCE BUSINESS, SO AS TO DELETE THE REFERENCE TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS PERTAINING TO AUTOMOBILE INSURANCE, SO AS TO DELETE THE DEFINITION OF REINSURANCE FACILITY; TO AMEND SECTION 38-77-112, AS AMENDED, RELATING TO THE REQUIREMENT FOR AN APPLICANT AND POLICYHOLDER TO HAVE A DRIVER'S LICENSE, SO AS TO DELETE REFERENCES TO REPEALED CODE SECTIONS; TO AMEND SECTION 38-77-285, AS AMENDED, RELATING TO THE REQUIREMENT THAT ALL AUTOMOBILE INSURANCE COVERAGES FOR AN INSURED'S AUTOMOBILE MUST BE IN ONE POLICY, SO AS TO PROVIDE FOR THE REQUIREMENT TO APPLY TO INDIVIDUAL PASSENGER AUTOMOBILES INSTEAD OF VEHICLES CEDED TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-920, AS AMENDED, RELATING TO THE PROHIBITION ON AN INSURER'S AND AGENT'S REFUSAL TO ACCEPT INSURANCE, SO AS TO DELETE PROVISIONS REQUIRING RISKS TO BE ACCEPTED BY AN INSURER; TO AMEND SECTION 56-9-350, RELATING TO THE VERIFICATION OF INSURANCE COVERAGE FOLLOWING CERTAIN ACCIDENTS, SO AS TO REVISE THE REQUIREMENTS FOR VERIFICATION; TO AMEND SECTION 56-10-10, RELATING TO SECURITY ON REGISTERED VEHICLES, SO AS TO LIMIT ITS APPLICATION TO CERTAIN DRIVERS; TO AMEND SECTION 56-10-220, RELATING TO THE INSURANCE REQUIREMENT FOR A VEHICLE SOUGHT TO BE REGISTERED, SO AS TO PROVIDE FOR APPLICATION OF THE SECTION TO PERSONS REQUIRED TO PROVIDE SECURITY ON A VEHICLE; TO AMEND SECTION 56-10-240, RELATING TO THE REQUIREMENTS UPON LOSS OF INSURANCE, SO AS TO PROVIDE FOR APPLICATION OF THE SECTION TO VEHICLES FOR WHICH SECURITY IS REQUIRED AND DELETE THE PROVISION REFERENCING THE OBJECTIVE STANDARDS TEST; TO AMEND SECTION 56-10-270, RELATING TO THE OPERATION OF UNINSURED VEHICLES, SO AS TO PROVIDE FOR THE SECTION TO APPLY TO VIOLATIONS OF CHAPTER 10, TITLE 56; TO AMEND ARTICLE 3, CHAPTER 39, TITLE 59, RELATING TO MANDATORY DRIVER EDUCATION AND TRAINING PROGRAMS, SO AS TO PROVIDE FOR STUDENTS ISSUED A BEGINNER'S PERMIT OR SPECIAL RESTRICTED LICENSE TO COMPLETE THE PROGRAM BEFORE THEY RECEIVE A DRIVER'S LICENSE, PROVIDE FOR THE STATE BOARD OF EDUCATION TO ESTABLISH MINIMUM GUIDELINES, AND PROVIDE FOR ADDITIONAL FUNDS TO IMPLEMENT AND MAINTAIN THE PROGRAMS; TO REPEAL SECTION 38-73-455, RELATING TO AUTOMOBILE INSURANCE RATES, SECTION 38-73-460, RELATING TO THE EFFECT ON RATES OF GAINS AND LOSSES BY THE FACILITY, SECTIONS 38-73-1420 AND 38-73-1425, RELATING TO THE REINSURANCE FACILITY, SECTION 38-77-10, RELATING TO THE PURPOSES OF THE AUTOMOBILE INSURANCE PROVISIONS, SECTIONS 38-77-110, 38-77-111, 38-77-115, 38-77-145, AND 38-77-280, RELATING TO THE MANDATE TO WRITE AUTOMOBILE INSURANCE POLICIES, AND SECTIONS 38-77-930, 38-77-940, 38-77-950, AND 38-77-960 AND ARTICLE 5, CHAPTER 77, TITLE 38, RELATING TO THE REINSURANCE FACILITY; AND TO PROVIDE FOR THE FACILITY TO END OPERATION.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Chapter 77, Title 38 of the 1976 Code is amended by adding:

"Article 6

Automobile Joint Underwriting Association

Section 38-77-600. As used in this article:

(1) `Association' means the automobile joint underwriting association established pursuant to this article.

(2) `Automobile liability insurance' means automobile bodily injury and property damage liability insurance.

(3) `Net direct premiums' means gross direct premiums written on automobile liability insurance policies, as computed by the Chief Insurance Commissioner, less return premiums or the unused or unabsorbed portions of premium deposits.

Section 38-77-605. (A) A joint underwriting association is created consisting of all insurers authorized to write within this State, on a direct basis, automobile liability insurance. Every insurer is and must remain a member of the association as a condition of its authority to continue to transact this type of insurance business in this State.

(B) The purpose of the association is to provide automobile liability insurance on a self-supporting basis.

(C) The association is activated when the Insurance Commission finds and declares the existence of an emergency because of the unavailability of automobile liability insurance or the unavailability of the insurance on a reasonable basis through normal channels.

Section 38-77-610. The association, on behalf of its members, may:

(1) issue or cause to be issued policies of insurance to applicants not exceeding the limits of liability set forth in Section 38-77-140;

(2) underwrite automobile liability insurance and adjust and pay related losses or appoint service companies to perform those functions;

(3) cede and assume reinsurance.

Section 38-77-615. (A) Subject to a declaration by the commission as specified in Section 38-77-605(C) the commissioner shall promulgate a plan of operation consistent with this article. The plan of operation is operative no later than thirty days after the declaration of an emergency by the commission.

(B) The plan of operation must provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of automobile liability insurance and may contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of the members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, and appointment of servicing carriers.

(C) The plan of operation must provide that profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend, but profit must not be paid over to or received by an insurer either in currency or other benefit.

(D) Amendments to the plan of operation may be made by the directors of the association with the approval of the commissioner or must be made at the direction of the commissioner after proper notice and public hearing.

Section 38-77-620. (A) Upon the activation of the plan of operation, a licensed driver in this State may apply to the association for coverage. The application must be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant.

(B) If the association determines that the applicant meets the underwriting standards of the association as set forth in the approved plan of operation and there is no unpaid, uncontested premium due from the applicant for prior insurance of the same kind, the association, upon receipt of the premium or a portion of it as prescribed by the plan of operation, shall cause to be issued a policy of automobile liability insurance for six months.

(C) The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and related statistical and experience data are subject to this article and the provisions of Chapter 73 of Title 38 which are not inconsistent with this article.

Section 38-77-625. The commissioner shall obtain complete statistical data in respect to automobile liability losses and reparation costs as well as all other costs or expenses which underlie or are related to automobile liability insurance. The commissioner shall promulgate a statistical plan he considers necessary to gather data referable to loss and loss adjustment expense experience and other expense experience. When the statistical plan is promulgated all members of the association shall adopt and use it. The commissioner may require from a person obtaining insurance through the association loss, claim, or expense data.

Section 38-77-630. In structuring rates for automobile liability insurance and determining the profit or loss of the association in respect to the insurance, consideration must be given by the commissioner to all investment income so that investment income is a part of the rate-making and setting process.

Section 38-77-635. Within a time the commissioner directs the association shall submit for his approval an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to automobile liability insurance to be written by the association. If the commissioner disapproves the initial filing, in whole or in part, the association shall amend the filing, in whole or in part, in accordance with the direction of the commissioner. If the commissioner is unable to approve the filing or amended filing within the time specified, he shall promulgate the policy forms, classifications, rates, rating plans, and rules to be used by the association in making rates for and writing the insurance.

Section 38-77-640. (A) Policy forms and rate structure must be on an occurrence basis and coverage provided by the association only on that basis.

(B) The policy may not contain a limitation in relation to the existing law in tort as provided by the statute of limitations of this State.

(C) The policy form may not require as a condition precedent to settlement or compromise of a claim the consent or acquiescence of the insured. However, settlement or compromise is not considered an admission of fault or wrongdoing by the insured. (D) The premium rate charged for coverage must be at rates established on an actuarially sound basis, including consideration of trends in the frequency and severity of losses, and must be calculated to be self-supporting.

Section 38-77-645. The association may provide a rate increase or assessment subject to the commissioner's approval.

Section 38-77-650. A deficit sustained by the association in any year must be funded, pursuant to the plan of operation and the rating plan then in effect, by a rate increase applicable prospectively.

Section 38-77-655. (A) After the initial year of operation, rates, rating plans, rating rules, and provisions for funding a deficit through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, with other information based upon this experience and income the commissioner considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting.

(B) If sufficient funds are not available for the sound financial operation of the association, pending funding for a deficit as provided in Section 38-77-650, all members on a temporary basis shall contribute to the financial requirements of the association in the manner provided for in Section 38-77-660. The contribution must be reimbursed to the members following deficit funding as provided in Section 38-77-650.

Section 38-77-660. All insurers which are members of the association shall participate in its writings, expenses, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer otherwise is entitled must not be distributed to the impaired insurer but must be applied toward repayment of an assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made.

Section 38-77-665. Every member of the association is bound by the approved plan of operation of the association and the rules of the board of directors of the association.

Section 38-77-670. (A) If the authority of an insurer to transact automobile liability insurance in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the commissioner has so found and certified to the board of directors.

(B) If a member insurer merges into or consolidates with another insurer authorized to transact insurance in this State or another insurer authorized to transact insurance in this State has reinsured the insurer's entire general liability business in this State, the insurer and its successor or assuming reinsurer are liable for the insurer's obligations to the association.

(C) Unsatisfied net liability of an insolvent member of the association must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned, and the association shall acquire and has all rights and remedies allowed by law in behalf of the remaining members against the estate or funds of the insolvent insurer for funds due the association.

Section 38-77-675. The joint underwriting association is governed by a board of seven directors. One must be appointed by the Governor to represent the general public, and four must be appointed by the commissioner to represent member insurers. One director must be appointed by the Chairman of the Labor, Commerce and Industry Committee of the House of Representatives, and one director must be appointed by the Chairman of the Banking and Insurance Committee of the Senate, both to represent the general public. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of the group may serve as a director at any one time. The commissioner shall appoint the chairman of the board of directors, and he must preside at all meetings of the board.

Section 38-77-680. An applicant for insurance through the association, a person insured pursuant to this article, or his representative, or an insurer adversely affected or claiming to be adversely affected, by a ruling, an action, or a decision by or on behalf of the association may appeal to the commission within thirty days after the ruling, action, or decision.

Section 38-77-685. (A) The association shall file in the office of the commissioner annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement must contain information prescribed by the commissioner and must be in the form he directs.

(B) The commissioner, at a reasonable time, may require the association to furnish additional information concerning its transactions, condition, or a matter connected with it considered to be material and of assistance in evaluating the scope, operations, and experience of the association.

Section 38-77-690. Each application for coverage in the association must include, in boldfaced type, immediately preceding the applicant's signature, the following: THIS INSURANCE IS BEING AFFORDED THROUGH THE AUTOMOBILE JOINT UNDERWRITING ASSOCIATION AND NOT THROUGH THE PRIVATE MARKET. PLEASE BE ADVISED THAT COVERAGE WITH A PRIVATE INSURER MAY BE AVAILABLE FROM ANOTHER AGENT AT A LOWER COST. AGENT AND COMPANY LISTINGS ARE AVAILABLE IN THE LOCAL YELLOW PAGES.

Section 38-77-695. The commissioner shall make an examination into the financial condition and affairs of the association at least annually and shall file a report on the examination with the commission, the Governor, and the General Assembly. The expenses of the examination must be paid by the association."

SECTION 2. Chapter 10, Title 56 of the 1976 Code is amended by adding:

"Article 5

Registration and Licensing of

Uninsured Motor Vehicles

Section 56-10-510. As used in this chapter:

(1) `Conviction' also includes the entry of a plea of guilty or nolo contendere and the forfeiture of bail or collateral deposited to secure a defendant's appearance.

(2) `Insured motor vehicle' is a motor vehicle as to which one or more of the following apply:

(a) There is bodily injury liability insurance and property damage liability insurance in the amounts specified in Section 38-77-140 issued by an insurer authorized to do business in this State.

(b) A bond has been given or cash or securities delivered in lieu of the insurance.

(c) The owner qualifies as a self-insurer in accordance with Section 56-9-60.

(3) `Uninsured motor vehicle' is a motor vehicle required to be registered as to which one or more of the following apply:

(a) There is no bodily injury liability insurance and property damage liability insurance.

(b) No bond has been given or cash or securities delivered in lieu of bond.

(c) The owner does not qualify as a self-insurer.

Section 56-10-520. In addition to other fees prescribed by law a person registering and licensing an uninsured motor vehicle, as defined in Section 56-10-510, in this State shall pay four hundred dollars upon registering and licensing the vehicle. Credit for payment made on a motor vehicle subsequently transferred during the same licensing year must be applied to a motor vehicle registered by the uninsured motorist during the same licensing year.

Section 56-10-530. The South Carolina Department of Highways and Public Transportation may require a person applying for licensing and registration of a motor vehicle to certify under the penalties in Section 56-10-610 whether or not each motor vehicle is an insured motor vehicle, as defined in Section 56-10-510, or the department in its discretion may require a person to:

(a) produce as evidence of financial responsibility a certificate on a form prescribed by the Department of Insurance or self-insurance complying with the requirements of Section 56-9-60;

(b) give bond or deliver the cash or securities provided in Sections 56-9-570 and 56-9-580; or

(c) pay the fee prescribed in Section 56-10-520.

Section 56-10-540. Upon the termination of insurance by cancellation or failure to renew, notice of the termination must be filed by the insurer with the department not later than five days following the effective date of the termination.

Section 56-10-550. The department, upon receipt of the notice of termination provided in Section 56-10-540, shall revoke the certificate of registration and license plates of the motor vehicle with respect to which the policy was in force unless the owner gives evidence that the vehicle is an insured vehicle in the manner provided in Section 56-10-530 or pays the fee provided in Section 56-10-520.

Section 56-10-560. Funds collected by the department under this chapter must be deposited with the State Treasurer and credited to a special fund to be allocated by the General Assembly in the annual state appropriations act for driver education, training, and safety.

Section 56-10-570. The Chief Insurance Commissioner may promulgate regulations necessary to implement this chapter.

Section 56-10-580. A person who knowingly makes a false certificate as to whether a motor vehicle is an insured motor vehicle or gives to the department false evidence that a motor vehicle sought to be registered is insured is guilty of a misdemeanor and, upon conviction, must be fined not less than five hundred dollars or imprisoned ninety days. The department shall deny, for six months, registration of a motor vehicle for which a false certificate or false evidence is presented to the effect that the vehicle is insured and shall revoke and may not reissue for six months the driver's license of a person making a false certificate or offering false evidence as specified in this section.

Section 56-10-590. This article is cumulative to other provisions in this title."

SECTION 3. Section 38-57-130 of the 1976 Code is amended to read:

"Section 38-57-130. (1) No person may:

(1) make, issue, circulate, or cause to be made, issued, or circulated any an estimate, an illustration, or a circular statement misrepresenting the terms of any a policy issued or to be issued, the benefits or advantages promised thereby by the policy, or the dividends or share of the surplus to be received thereon. on the policy;

(2) No person may make any a false or misleading statement as to the dividends or share of surplus previously paid on similar policies.

(3) No person may pay, allow, or give or offer to pay, allow, or give, directly or indirectly, as inducement to the purchase or the renewal of an insurance contract, any rebate of premiums payable on the contract, any special favor or advantage in any benefits payable thereon, or any valuable consideration or inducement that is not specified in the contract."

SECTION 4. Section 38-73-457 of the 1976 Code is amended to read:

"Section 38-73-457. Notwithstanding Sections 38-73-920 and 38-73-1210, 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 38-73-1030. 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 38-77-760. 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 38-73-460, 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 38-77-280, 38-77-610, or 38-73-455, 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 38-77-610 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.

(A) Not later than ninety days after the effective date of this section, as amended, every automobile insurer and rating organization shall file with the commissioner revised rates for automobile insurance policies written by the insurer in this State. Each insurer and rating organization shall file a:

(1) `preferred rate' by driver classification and territory which is a rate less than the `standard rate';

(2) `standard rate' which must be the approved rate by driver classification and territory on July 1, 1992, for a risk qualifying for the safe driver discount, including the safe driver discount;

(3) `substandard rate' by driver classification and territory which is a rate more than the `standard rate' but less than the rate by driver classification and territory for the Automobile Joint Underwriting Association.

(B) The commissioner shall approve the rates filed pursuant to subsection (A) if the rates meet the requirements of the section, and the rates are effective for all policies of automobile insurance issued or renewed after December 31, 1992.

(C) Automobile insurers may place an automobile insurance risk at any of the three rate levels without restriction. However, the Uniform Merit Rating Plan must continue to apply to all risks written by the insurer.

The consumer advocate, upon request to the commissioner, must be provided by him with a copy of any a 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 shall 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 a 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."

SECTION 5. Section 38-73-735 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-73-735. In addition to risk and territorial classification plans promulgated or approved under Section 38-73-730, 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 be ceded to the Reinsurance Facility in accordance with the facility's plan of operation."

SECTION 6. Section 38-73-750 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 37-73-750. Automobile insurers shall file with the State Rating and Statistical Division their plans or systems for allocating expenses and profit as respects the various kinds or types and classes of automobile insurance risks and the classes of risks thereunder. However, no plan or system may be filed which is inconsistent with the classification of risks promulgated by the commissioner. No plan or system may be filed or approved if the purpose or effect is to discriminate unfairly or unreasonably in respect to the allocation of expenses or profit between classes of risks or if the purpose or effect is to impose a burden or detriment upon the South Carolina Reinsurance Facility or to secure to the insurer using the plan or system an unfair or unreasonable competitive advantage to the detriment of the South Carolina Reinsurance Facility or other insurers. The commissioner after due notice and hearing, shall disapprove and disallow the further use of an inconsistent, discriminatory, burdensome, or competitively unfair plan or system for the allocation of expenses and profit."

SECTION 7. Section 38-73-760 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-73-760. (A) The commissioner, through the State Rating and Statistical Division, shall fix, establish, and promulgate any uniform statistical plan that may be necessary or appropriate for the gathering and compilation of statistical data from insurers, rating organizations, or advisory organizations transacting or otherwise engaged in the automobile insurance business in the State. In promulgating any uniform statistical plan consideration may be given to the extent reasonable or practicable to the rules and forms of the plans used for rating systems in other states. Upon the promulgation of any a statistical plan for automobile insurance in this State, the same it must be adopted and used by every automobile insurer in this State South Carolina, and every automobile insurer shall constitute the State Rating and Statistical Division its statistical agent for automobile insurance in this State.

(B) The statistical plan may be promulgated so as to provide for any and all the statistical and financial data necessary or appropriate to the implementation of the policy of this chapter or Chapter 77 of this title or to yield statistical data reasonably and fairly related to any of the purposes of this article, including, but not limited to, the:

(1) fixing, establishing, and promulgating of risk and territorial classification plans for automobile insurance;

(2) determining the pure loss rate level indications for automobile insurance in South Carolina this State based upon all South Carolina loss experience and assisting in the translating of this information into usable form for insurance consumers in terms of the final rates or premium charges of each insurer of automobile insurance,;

(3) determining the reasonability of loss adjustment expenses, other expenses, and profit factors applied by insurers to their pure loss components in arriving at their final rates or premium charges for automobile insurance both for purposes of ensuring that the final rates or premium charges are adequate, not excessive, and not unfairly discriminatory and for ensuring that improper and undue burdens are not imposed upon the South Carolina Reinsurance Facility by way of excessive ceding commissions to ceding insurers;

(4) determining the amount, validity, and propriety of class and territorial differentials applied to the general pure loss rate levels and testing not less than annually the appropriateness of the existing differentials in the light of the most recent available loss experience data;

(5) determining the amount, validity, and propriety of surcharges and discounts referable to any a uniform merit rating plan or system which may have been promulgated by the commissioner or which may be under consideration for promulgation, the appropriateness of the surcharges and discounts in the light of the most recent available loss experience data;

(6) determining the propriety or validity of any a plan for the classification of risks which may be in effect or under consideration based upon the propensities of motor vehicles or classes or types of motor vehicles or their equipment to shield occupants from death or serious injury as a result of crash or based upon the relative invulnerability of the motor vehicles or classes or types of motor vehicles to extensive damage as a result of crash or their repairability at modest expense; or

(7) obtaining data relevant to studies being made or to be made by the State Rating and Statistical Division in connection with any of the foregoing the provisions of this subsection or in connection with means and methods for providing appropriate rates for insurance consumers or fostering and encouraging competition among insurers.

(C) The functions and responsibilities of the State Rating and Statistical Division acting as statistical agent for automobile insurers may must not be delegated, except that the commissioner may, as the result of competitive bidding, may make an agreement with some suitable person, firm, corporation, or other organization for the gathering, compilation, recordation, or computerization of the statistical data. However, these functions are always subject to the supervision, direction, and control of the commissioner and the examination and oversight of insurers in respect to their obligations to furnish statistical data to him remain the direct responsibility of the commissioner and may never must not be delegated other than to the State Rating and Statistical Division.

(D) Any A merit rating plan or system promulgated by the commissioner pursuant to the authority contained in subsection (B) likewise extends to and includes automobile collision insurance. However, nothing contained in this subsection (d) requires that the same percentage or dollar amounts for discounts or surcharges apply to collision coverage nor does it require that surcharges already assessed in respect to the liability coverages of the policy again be assessed in respect to the collision coverage afforded by the same policy.

(E) The commissioner shall require all insurers transacting automobile insurance business in this State to assess surcharges and grant safe driver discounts of no less than twenty percent.

(F) All policies of automobile insurance issued in South Carolina must show on the initial policy or on an attachment to the initial policy and on all premium invoices or attached to all premium invoices, in a form to be approved by the commissioner, the amount of any a surcharge, (including loss of safe driver discount) that may be, applicable to the policy as a result of any a merit rating plan or system promulgated by the commissioner. Also to be included, presented in a fashion that is readily understandable, is The reason for the applicable surcharge or the loss of safe driver discount must be included and presented in a readily understandable fashion. The amount of the applicable safe driver discount also must be shown."

SECTION 8. Section 38-77-30 of the 1976 Code, as last amended by Act 148 of 1989, is further amended by deleting item (5) and renumbering items to conform. Item (5) reads:

"(5) `Facility' means the unincorporated, nonprofit, legal entity created by this chapter to reinsure policies of automobile insurance known as the South Carolina Reinsurance Facility."

SECTION 9. Section 38-77-112 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-77-112. Notwithstanding Sections 38-77-110, 38-77-920, and 38-77-280, No automobile insurer is required to write coverage for automobile insurance as defined in Section 38-77-30 for any an applicant or existing policyholder who does not, at the time of application or renewal, does not possess a valid South Carolina motor vehicle or special restricted 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 principally 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."

SECTION 10. Section 38-77-285 of the 1976 Code, as last amended by Act 146 of 1991, is further amended to read:

"Section 38-77-285. All automobile insurance coverages written by an insurer for an insured's automobile must be written in the same policy except that all automobile insurance policies in effect on the effective date of this section may continue in force until the expiration date of the policy. This section applies only to insurance policies covering vehicles eligible to be ceded to the Reinsurance Facility individual passenger automobiles."

SECTION 11. Section 38-77-920 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-77-920. Except as provided for in Section 38-77-110 and as is specifically provided for otherwise by law, no automobile insurer may refuse acceptance of automobile insurance for an insurable risk from any applicant nor require that certain classes or types of risks be placed through some particular agent or employee. This section is not intended to preclude any insurer from recognizing and giving effect to the property rights of agents in expirations or renewals. No agent who represents more than one insurer of automobile insurance may refuse to accept in behalf of an insurer represented by him automobile insurance for an insurable risk where the applicant for insurance designates by name or description the insurer of his choice. If the applicant relies upon the skill and judgment of the agent to place the risk in any insurer represented by the agent, the agent may place the risk in the insurer which he considers appropriate. No insurer may agree, collude, or conspire with an agent or give, offer, or promise an agent anything of value to place any risk or any class or type of risk under such circumstances in another insurer. Every such agreement is utterly void and every act of collusion or conspiracy constitutes an act of unfair competition by both the insurer and agent which, if proved, must result in the suspension or revocation of the license of each for not less than one year, in addition to any other penalties or liabilities applicable.

No automobile insurer authorized to transact automobile insurance business in this State which offers automobile insurance through the mails or uses the mails in transacting automobile insurance on insurable risks situate in this State may restrict its mailings or offerings to certain counties, areas, or zip-code territories of this State. The commissioner is directed to shall examine an insurer's records at any time when the commissioner considers it necessary to determine that the insurer is not so restricting or limiting its offerings."

SECTION 12. Section 56-9-350 of the 1976 Code is amended to read:

"Section 56-9-350. The operator or owner of a motor vehicle involved in an accident resulting in property damage of four hundred dollars or more, or in bodily injury or death, must be furnished a written request form at the time of the accident, or as soon after the accident as possible, by the investigating officer for completion and verification of liability insurance coverage, the form to be in a manner prescribed by the Department.

The completed and verified form must be returned by the operator or owner to the Department within fifteen days from the date the form was delivered by the officer. Failure to return the form, verified in the proper manner, is prima facie evidence that the vehicle was uninsured.

The operator or owner of a motor vehicle involved in an accident resulting in property damage of four hundred dollars or more, or in bodily injury or death, which was not investigated by a law enforcement officer shall furnish to the Department a written report and verification of liability insurance coverage, the proof to be in a manner prescribed by the Department within fifteen days after the accident, shall forward a written report of the accident to the department on a form prescribed by the department. The report must contain information to enable the department to determine whether the requirements for the deposit of security under Section 56-9-351 are inapplicable by reason of the existence of insurance or other exceptions specified in this title. Failure to return the form in the proper verified manner is prima facie evidence that the vehicle was not registered in compliance with this title."

SECTION 13. Section 56-10-10 of the 1976 Code is amended to read:

"Section 56-10-10. Every owner of a motor vehicle required to be registered in this State shall maintain the security required by Section 56-10-20 with respect to each such motor vehicle owned by him throughout the period the registration is in effect. Security in the amount required by Section 56-10-20 must be maintained on every motor vehicle required to be registered in this State where the owner or other operator not excluded in accordance with Section 38-77-340 and who resides in the same household does not qualify for the safe driver discount authorized pursuant to Section 38-73-735. The security must be maintained with respect to each 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."

SECTION 14. Section 56-10-220 of the 1976 Code is amended to read:

"Section 56-10-220. Every person required to provide security on a motor vehicle as provided in Section 56-10-10 applying for registration for a motor vehicle shall at the time of such registration and licensing shall declare the vehicle to be an insured motor vehicle under the penalty set forth in Section 56-10-260 and shall execute and furnish to the department his certificate that such the motor vehicle is an insured motor vehicle and that he will maintain insurance thereon on it during the registration period. The certificate must be in the form prescribed by the department. The department may require any a registered owner or any an applicant for registration and licensing of a motor vehicle declared to be an insured motor vehicle to submit a certificate of insurance executed by an authorized agent or representative of an insurance company authorized to do business in this State. Such The certificate also must also be in a form prescribed by the department."

SECTION 15. The first paragraph of Section 56-10-240 of the 1976 Code is amended to read:

"If, during the period for which it is licensed, a motor vehicle for which security is required as provided in Section 56-10-10 is or becomes an uninsured motor vehicle, then the vehicle owner immediately shall obtain insurance on the vehicle or within five days after the effective date of cancellation or expiration of his liability insurance policy surrender the motor vehicle license plates and registration certificates issued for the motor vehicle. If five working days after the last day to pay an automobile liability insurance premium, whether it is the premium due date or a grace period that is granted customarily or contractually a motor vehicle is an uninsured motor vehicle, the insurer shall give written notice, or notice by magnetic or electronic media in a manner considered satisfactory to the department, within ten days after the five-day period ends, in addition to that notice previously given in accordance with law, by delivery under United States Post Office bulk certified mail, return receipt requested, to the department of the cancellation or refusal to renew under the following circumstances:

(1) the lapse or termination of such the insurance or security occurs within three months of issuance provided that. This subsection provision only applies to new policies, and not renewal or replacement policies; or

(2) the lapse or termination occurs after three months for a resident who fails one or more of the objective standards prescribed in Section 38-73-455. The department may, in its discretion, may authorize insurers to utilize alternative methods of providing notice of cancellation of or refusal to renew to the department. The department may not reissue registration certificates and license plates for that vehicle until satisfactory evidence has been filed by the owner or by the insurer who gave the cancellation or refusal to renew notice to the department that the vehicle is insured. Upon receiving information to the effect that a policy is canceled or otherwise terminated on a motor vehicle registered in South Carolina, the department shall suspend the license plates and registration certificate and shall initiate action as required within fifteen days of the notice of cancellation to pick up the license plates and registration certificate. A person who has had his license plates and registration certificate suspended by the department, but who at the time of suspension possesses liability insurance coverage sufficient to meet the financial responsibility requirements as set forth in this chapter, has the right to may appeal the suspension immediately to the Chief Insurance Commissioner. If the commissioner determines that the person has sufficient liability insurance coverage, he shall notify the department, and the suspension is voided immediately. The department shall give notice by first class mail of the cancellation or suspension of registration privileges to the vehicle owner at his last known address. However, when license plates are surrendered pursuant to this section, they must be held at the department office in the county where the person who surrenders the plates resides."

SECTION 16. Section 56-10-270 of the 1976 Code is amended to read:

"Section 56-10-270. (A) Any A person knowingly operating an uninsured motor vehicle subject to registration in this State in violation of this chapter or any a person knowingly allowing the operation of an uninsured motor vehicle subject to registration in this State in violation of this chapter is guilty of a misdemeanor and, upon conviction, must be fined not less than one hundred dollars nor more than two hundred dollars or imprisoned for thirty days and, upon conviction of for a second offense, be fined two hundred dollars or imprisoned for thirty days, or both, and, upon conviction, for a third and subsequent offenses must be offense, imprisoned for not less than forty-five days nor more than six months. Only convictions which occurred within five years including and immediately preceding the date of the last conviction constitute prior convictions within the meaning of this section. An uninsured motor vehicle includes an insured vehicle with respect to which the operator has been excluded from coverage pursuant to the provisions of Section 38-77-340.

(B) The department upon receipt of information to the effect that any person has been convicted of violating subsection (A) of this section shall suspend the driving privilege and all license plates and registration certificates issued in the person's name for a period of thirty days and may not reinstate that person's privileges until proof of financial responsibility has been filed.

(C) Any A person whose license plates and registration certificates which are suspended as provided in this section, which are and not suspended for any other another reason, may have them immediately restored, if he files proof of financial responsibility with the department."

SECTION 17. Article 3, Chapter 39, Title 59 of the 1976 Code is amended to read:

"Article 3

Mandatory Driver Education and Training

Section 59-39-310. The governing board of any a school district maintaining a secondary school which includes any grades nine through twelve, inclusive, shall establish driver education and training programs for students in high school grades. Students who have been issued a beginner's permit as provided in Section 56-1-50 or a special restricted license as provided in Section 56-1-180 shall complete the program before receiving a driver's license and provide certification of completion to licensing officials of the South Carolina Department of Highways and Public Transportation.

Section 59-39-320. The State Board of Education shall promulgate rules and regulations for to establish guidelines for driver education and training programs required in Section 59-39-310 establishment by local school districts of approved driver education and training courses, and when duly promulgated shall have full force and effect of law. Such regulations shall require that credit for completion of a driver education training course shall not be given unless the course shall have included The guidelines must include, but are not limited to the requirements of not less than thirty classroom hours of instruction in driver education, and not less than six hours of actual behind-the-wheel driving.

Section 59-39-330. The rules and regulations of the State Board of Education and Driver education and training course shall programs must be under the supervision of a qualified driver education teacher. Such rules and regulations shall include instrumental standards, teacher qualifications, reimbursement procedure, and other requirements which will further implement the purposes and intent of this article.

Section 59-39-340. The State Board of Education shall allow to each school district operating a driver education training program an amount equal to thirty dollars per for each pupil completing the standard prescribed course in the its driver education and training program in that school district during the preceding fiscal year in accordance with the regulations set forth by the State Board of Education for instructing pupils in driver education and training. Additional funds to implement and maintain the programs required by this article are available to school districts as determined by the General Assembly pursuant to Section 56-10-560."

SECTION 18. Sections 38-73-455, 38-73-460, 38-73-1420, 38-73-1425, 38-77-10, 38-77-110, 38-77-111, 38-77-115, 38-77-145, 38-77-280, 38-77-930, 38-77-940, 38-77-950, and 38-77-960 and Article 5, Chapter 77, Title 38 of the 1976 Code are repealed.

SECTION 19. The requirements in Section 59-39-310 of the 1976 Code, as amended in this act, for certain students to complete a driver education and training program before receiving a driver's license applies to students anticipating graduation from high school in 1995 and after.

SECTION 20. Effective September 30, 1992, the Reinsurance Facility may accept no further cessions of private passenger or small commercial risks. The commissioner shall instruct the facility to begin winding up operations upon approval of this act by the Governor and shall develop a plan of operation necessary to effectuate this purpose. A net result of operations of the facility resulting in an operating deficit must be recouped as provided by law, regulation, and operating policies of the facility before September 30, 1992. A net result of operations of the facility resulting in an operating surplus must be distributed to the Automobile Joint Underwriting Association.

SECTION 21. This act takes effect September 30, 1992.

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