Bill 3546

Name changed

SECTION 784. Section 38-73-455(A)(2) of the 1976 Code is amended to read:

"(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 Motor Vehicle Division of the Department of Revenue and Taxation; or"

Name changed

SECTION 785. Section 38-73-455(A)(4) of the 1976 Code is amended to read:

"(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 Motor Vehicle Division of the South Carolina Department of Revenue and Taxation; or"

Name changed

SECTION 786. Section 38-73-456 of the 1976 Code is amended to read:

"Section 38-73-456. An insurer may not increase premiums on or add surcharges to automobile insurance of a person charged with a driving violation unless he is convicted of the violation. The Motor Vehicle Division of the Department of Revenue and Taxation may not report an alleged violation to insurers until the person charged is convicted and when reporting must also report the conviction date."

Name changed

SECTION 787. Section 38-73-470 of the 1976 Code is amended to read:

"Section 38-73-470. One dollar of the yearly premium for uninsured motorist coverage must be transferred to the South Carolina Department of Public Safety, payable on a quarterly basis, to provide funds for the costs of enforcing and administering the provisions of Article 3, Chapter 10, Title 56."

Name changed, defined; powers of director

SECTION 788. Section 38-74-10(13) of the 1976 Code is amended to read:

"(13) `Director' means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the Insurance Department."

Name changed

SECTION 789. Section 38-74-20 of the 1976 Code is amended to read:

"Section 38-74-20. (A) There is created a nonprofit entity to be known as the South Carolina Health Insurance Pool. All insurers authorized to issue or provide health insurance in this State on or after the effective date of this chapter are members of the pool. (B) The director or his designee shall give notice to all insurers of the time and place for the initial organizational meetings. The pool members shall select five directors to sit on the board. The Governor shall appoint three directors to the board. One must be appointed to represent consumers and two must be appointed to represent businesses, other than the insurance industry. In the event of a tie vote of the board on any matter, the issue must be presented to the director for his approval or disapproval. The selection of the administering insurer is subject to approval by the director. The board shall include, to the extent possible, at least two domestic insurance companies selling health insurance in South Carolina, including the domestic company selling the largest amount of health insurance. (C) If, within sixty days of the organizational meeting the board is not selected, the director shall appoint the initial board. (D) The board shall submit to the director or his designee a plan of operation for the pool and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the pool. The director or his designee shall approve the plan of operation provided it is determined to be suitable to assure the fair, reasonable, and equitable administration of the pool and provides for the sharing of pool gains or losses on an equitable basis. The plan of operation is effective upon approval in writing by the director or his designee consistent with the date on which the coverage under this chapter must be made available. If the board fails to submit a suitable plan of operation within one hundred twenty days after the appointment of the board of directors, or at any time thereafter fails to submit suitable amendments to the plan, the department, after notice and hearing, shall promulgate reasonable regulations necessary to effectuate the provisions of this chapter. The regulations shall continue in force until modified by the department or superseded by a plan submitted by the board and approved by the director or his designee. (E) In its plan the board shall: (1) establish procedures for the handling and accounting of assets and monies of the pool; (2) select an administering insurer in accordance with Section 38-74-40 and establish procedures for filling vacancies on the board of directors; (3) establish procedures for the collection of assessments from all members to provide for claims incurred or estimated to be incurred under the plan and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made. The level of payments must be established by the board, pursuant to Section 38-74-50. Assessment occurs at the end of each fiscal year. The board may provide also for interim assessments against members of the pool if necessary to assure the financial capability of the pool. Assessments are due and payable within thirty days of receipt of the assessment notice; (4) develop and implement a program to publicize the existence of the plan, the eligibility requirements, and procedures for enrollment, and to maintain public awareness of the plan. (F) The pool has the general powers granted under the laws of this State to insurance companies licensed to transact accident and health insurance including, but not limited to, the specific authority to: (1) enter into contracts necessary to carry out the provisions of this act, including the authority, with the approval of the director or his designee, to enter into contracts with similar pools of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions; (2) sue or be sued, including taking legal actions necessary or proper for recovery of assessments for, on behalf of, or against pool members; (3) take legal action as necessary to avoid the payment of improper claims against the pool or the coverage provided by or through the pool; (4) establish appropriate rates, rate schedules, rate adjustments, expense allowances, claim reserve formulas, and any other actuarial function appropriate to the operation of the pool; (5) assess members of the pool in accordance with the provisions of this act; (6) subject to the approval of the director or his designee, issue policies of insurance in accordance with the requirements of this chapter; (7) appoint from among members appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the pool, policy, and other contract design, and any other function within the authority of the pool; (8) borrow money to effect the purposes of this act. Notes or other evidence of indebtedness of the pool not in default are legal investments for domestic insurers and may be carried as admitted assets. The pool may not borrow money unless there is a net loss of the operation of the pool which exhausts the assessments of the pool for that year. No money may be borrowed in excess of the loss after assessments have been exhausted. No more than three million dollars may be borrowed in any one year, and the total amount borrowed at any one time may not exceed five million dollars. The members of the pool are responsible for any debt which is incurred by the pool; (9) cause to be audited on an independent basis every two years the finances of the pool and submit the report of audit to the department who shall submit it to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee with recommendations on the operations of the pool. (G) In addition to its general powers, the board may take measures to contain insurance costs subject to the approval of the director or his designee, including, but not limited to: (1) provide for and employ cost containment measures and requirements, including, but not limited to, preadmission screening, second surgical opinion, concurrent utilization review, and individual case management for the purpose of making the benefit plan more cost effective; (2) design, utilize, contract, or otherwise arrange for delivery of cost effective health care services, including establishing or contracting with preferred provider organizations, health maintenance organizations, or other limited network provider arrangements."

Name changed

SECTION 790. Section 38-74-60(C)(2) of the 1976 Code is amended to read:

"(2) The board shall determine the standard risk rate by taking into account the individual standard rate charged by the five largest insurers offering individual coverages in the State comparable to the pool coverage. If five insurers do not offer comparable coverage, the standard risk rate must be established using reasonable actuarial techniques and must reflect anticipated experience and expenses for coverage. Rates initially established for pool coverage are two hundred percent of rates established as applicable for individual standard risks. Rates subsequently established must provide fully for the expected costs of claims and expenses of operation taking into account investment income and any other cost factors, but may not exceed three hundred percent of rates established as applicable for individual standard risks subject to the limitations described in this section. If the total tax credit provided in Section 38-74-80 exceeds five million dollars in any one year for all members of the pool, the board shall establish a rate for all policies which assures that the tax credit does not exceed five million dollars in the following year of operation. All rates and rate schedules must be submitted to the director or his designee for approval."

Name changed; etc.

SECTION 791. Section 38-74-70 of the 1976 Code is amended to read:

"Section 38-74-70. (A) Neither the participation in the pool as members, the establishment of rates, forms, or procedures nor any other joint or collective action required by this chapter may be the basis of any legal action, criminal or civil liability, or penalty against the pool or any of its members. (B) There is no liability on the part of, and no cause of action of any nature may arise against, a member insurer or its agents or employees, the pool's agents, employees, or board of directors, or the director, his designees or his representatives, for any act or omission in the performance of their powers and duties under this chapter. This section does not relieve the pool of any of its liability."

Name changed

SECTION 792. Section 38-75-230 of the 1976 Code is amended to read:

"Section 38-75-230. Any contract to purchase a mobile home shall on its face: (1) clearly include the provisions of Section 38-75-210, and (2) clearly inform the purchaser that it is a violation of the law of this State for the seller of a mobile home or for any person lending money upon the security thereof to require or to attempt to require that hazard insurance be purchased from any particular insurer or agent and shall include the address of the office of the department of the Insurance with instructions to report any violation or attempted violation to his office."

Name changed; notice, hearing before Administrative Law Judge Division; etc.

SECTION 793. Article 5, Chapter 75, Title 38 of the 1976 Code is amended to read:

"Article 5

Wind and Hail Insurance

Section 38-75-310. In this article, unless the context otherwise requires: (1) `Essential property insurance' means insurance against direct loss to property as defined and limited in the wind and hail insurance policy and forms approved by the director or his designee. (2) `Association' means the South Carolina Wind and Hail Underwriting Association established pursuant to the provisions of this article. (3) `Plan of operation' means the plan of operation of the association approved or promulgated by the department pursuant to the provisions of this article. (4) `Insurable property' means immovable property at fixed locations in coastal areas of the State as that term is hereinafter defined, or tangible personal property located therein, which property is determined by the association to be in an insurable condition as determined by reasonable underwriting standards, but not to include farm or manufacturing property, or motor vehicles which are eligible to be licensed for highway use. Any structure commenced on or after September 15, 1971, not built in substantial compliance with the Southern Standard Building Code, including the design-wind requirements therein, is not an insurable risk under the terms of this article. Any structure commenced on or after September 15, 1971, shall comply with any construction and zoning requirements affecting the structure, promulgated or adopted pursuant to the requirements of the Federal Flood Insurance Program. (5) `Coastal area' means: (a) all areas in Beaufort County and Colleton County which are east of the west bank of the intracoastal waterway; (b) the following areas in Georgetown County: Cedar Island, DeBordieu Beach, Litchfield Beach, South Island, Pawley's Island, Retreat Beach, North Island, Magnolia Beach, and Garden City; (c) all areas in Horry County east of a line paralleling and lying one hundred fifty feet east of U. S. Highway No. 17 (Kings Highway); (d) the following areas in Charleston County: Eddingsville Beach, Kiawah Island, Botany Bay Island, Folly Island, Seabrook Island, Morris Island, and all areas north of the city of Charleston which are east of the west bank of the intracoastal waterway. (6) `Net direct premiums' means gross direct premiums excluding reinsurance assumed and ceded written on property other than farm or manufacturing in this State for fire and extended coverage insurance, including the fire and extended coverage components of homeowners policy and commercial multiple peril package policies, less return premiums upon canceled contracts, dividends paid or credited to policyholders, or the unused or unabsorbed portion of premium deposits.

Section 38-75-320. The purpose of this article is to provide a method whereby wind and hail insurance may be obtained more easily and equitably in the coastal areas of this State.

Section 38-75-330. There is created the South Carolina Wind and Hail Underwriting Association, an unincorporated association whose responsibilities, liability, and regulations are governed and defined by this article, consisting of all private insurers authorized to write and engage in writing property insurance within this State on a direct and statewide basis, but excluding insurers whose writings are limited to property wholly owned by parent, subsidiary, or allied organizations, or insurers whose writings are limited to property wholly owned by religious organizations, provided, however, as a condition of exemption from membership such insurers providing property insurance for insurable property in the coastal area as defined by this article shall also provide essential property insurance for such risks. Every such insurer must be a member of the association and must remain a member of the association so long as the association is in existence as a condition of its authority to continue to transact the business of insurance in this State.

Section 38-75-340. The association must operate pursuant to a plan of operation which shall set forth the number, qualifications, terms of office, and manner of election of the members of the board of directors and shall provide for the efficient, economical, fair, and nondiscriminatory administration of the association and for the prompt and efficient provision of essential property insurance in the coastal areas of the State so as to promote orderly community development in those areas and to provide means for the adequate maintenance and improvement of the property in such areas. The plan may include the establishment of necessary facilities, management of the association, plan for the assessment of members to defray losses and expenses, reasonable underwriting standards, commissions to be paid to agents or brokers, procedures for the acceptance and cession of reinsurance, procedures for determining the amounts of insurance to be provided to specific risks, time limits and procedures for processing applications for insurance, and for any other provisions considered necessary by the director or his designee to carry out the purposes of this article. Insurance effected pursuant to this article shall have limits of liability provided in the plan of operation. The director or his designee shall approve the limits. Excess insurance is not permitted until the maximum available under the plan has been purchased. Thereafter, excess insurance may be purchased and must be included for the purpose of meeting any coinsurance requirement. The directors of the association may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee shall review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year. After review of the plan the director or his designee may amend the plan upon approval of the directors of the association.

Section 38-75-350. (a) Any person having an insurable interest in insurable property is entitled to apply to the association for coverage and for an inspection of the property. The application must be made on behalf of the applicant by a licensed broker or agent authorized by him. Applications must be submitted on forms prescribed by the association and approved by the director or his designee. The application shall contain a statement as to whether or not there are any unpaid premiums due from the applicant for fire insurance on the property. The term `insurable interest' as used in this section includes any lawful and substantial economic interest in the safety or preservation of property from loss, destruction, or pecuniary damage. (b) If the association determines that the property is insurable and that there is no unpaid premium due from the applicant for prior insurance on the property, the association upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of essential property insurance for a term of at least one year. (c) If the association, for any reason, denies an application and refuses to cause to be issued an insurance policy on insurable property to any applicant or takes no action on an application within the time prescribed in the plan of operation, the applicant may appeal to the director or his designee and the director or a member of his staff designated by him, after reviewing the facts, may direct the association to issue or cause to be issued an insurance policy to the applicant. In carrying out its duties pursuant to this section, the director or his designee may request, and the association shall provide, any information the director or his designee considers necessary to a determination concerning the reasons for the denial or delay of the application.

Section 38-75-360. The association, pursuant to the provisions of this article and the plan of operation, and with respect to essential property insurance on insurable property, has the power on behalf of its members: (a) To cause to be issued policies of insurance to applicants. (b) To assume reinsurance from its members. (c) To cede reinsurance to its members and to purchase reinsurance in behalf of its members.

Section 38-75-370. All members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premium of the member written in this State during the preceding calendar year bears to the aggregate net direct premiums written in this State by all members of the association, as certified to the association by the department after review of annual statements, other reports, and other statistics which the department considers necessary to provide the information required and which the department is authorized to obtain from a member of the association. After certification by the department, the association may rely on the member company's annual statement in determining the company's participation in profits and losses for each year. Each member's participation in the association must be determined annually in the same manner as the initial determination. An insurer authorized to write and engage in writing insurance, the writing of which requires the insurer to be a member of the association pursuant to Section 38-75-330, becomes a member of the association on January first immediately following the authorization. The determination of the insurer's participation in the association must be made as of the date of the membership in the same manner as for all other members of the association. Member insurers shall receive credit annually for essential property insurance voluntarily written in the coastal area and their participation in the writings of the association must be reduced accordingly. The board of directors shall authorize the method of determining the credit. In order to receive credit for essential property voluntarily written in the coastal area, each member company shall submit its requests by March thirty-first of the year for which credit is sought. 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 director or his designee, payment of the assessment would render the insurer insolvent or in danger of insolvency or would otherwise leave the insurer in a condition so that further transaction of the insurer's business would 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 director or his designee 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 its order of deferral, or in necessary subsequent orders, the director or his designee shall prescribe a plan by which the assessment so 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 is otherwise 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, to the other member insurers on the basis at which assessments were made.

Section 38-75-375. (A) If a member company perceives an assessment or interest levied by the association to be unjust or illegal, the company shall pay the assessment or interest under protest in writing within thirty days of the assessment or interest charge. Upon receiving this payment, the association shall pay the money collected into the association account and designate the money as having been paid under protest. (B) A member company paying an assessment or interest under protest shall appeal to the association within thirty days after making the payment. If it is determined in that appeal that the assessment or interest was collected unjustly or illegally, the association shall refund the assessment or interest to the payor. (C) If a member company fails to pay an assessment or interest within thirty days of the assessment or interest charge by the association, the company is subject to disciplinary procedures pursuant to Section 38-5-120 or 38-5-130.

Section 38-75-380. There may be no liability on the part of and no cause of action of any nature may arise against the department or any of its staff or the association or its agents, employees, or any participating insurer for any inspections made hereunder or any statements made in good faith by them in any reports or communications concerning risk submitted to the association or at any administrative hearings conducted in connection therewith under the provisions of this article.

Section 38-75-385. There is no liability on the part of, and no cause of action of any nature may arise against, any member insurer, the association's agents or employees, the board of directors, or the director, his designees, or his representatives for any act or omission in the performance of their powers and duties under this article. This section does not relieve the association of any of its liability.

Section 38-75-390. Any member of the association who is designated to receive and write essential property insurance from or through the association shall one hundred percent cede to the association that essential property insurance.

Section 38-75-400. The rates, rating plans, and rating rules applicable to the insurance written by the association are those approved for use of the association by the director or his designee. Surcharges may be used as approved by the director or his designee. Rates may include rules for classification of risks insured hereunder and rate modifications thereof.

Section 38-75-410. (A) A person insured pursuant to this article or his representative or a member company who is aggrieved by an act, ruling, or decision of the association: (1) regarding rates, classification of risks, assessments, voluntary credits, cancellation or termination of policies, or underwriting shall appeal to the director or his designee within sixty days after the act, ruling, or decision; (2) other than those specified in item (1), may appeal to the director or his designee within thirty days after the act, ruling, or decision. (B) Hearings held by the director or his designee pursuant to this section must be in accordance with the procedures set forth in Chapter 3, Title 38 and Article 3, Chapter 23, Title 1, `Administrative Procedures'.

Section 38-75-420. All reports of inspection performed by or on behalf of the association must be made available to the members of the association, applicants, agent or broker, and the department.

Section 38-75-430. The association shall file with the department by March thirty-first of each year a statement which summarizes the transactions, conditions, operations, and affairs of the association during the preceding fiscal year ending October thirty-first. The statement shall contain any matters and information prescribed by the department and must be in the form required by it. The department may at any time require the association to furnish to it any additional information with respect to its transactions or any other matter which it considers material to assist it in evaluating the operation and experience of the association.

Section 38-75-440. The department may make an examination into the affairs of the association and in undertaking the examination may hold a public hearing. The expense of the examination must be borne and paid by the association.

Section 38-75-450. The department has authority to make reasonable regulations, not inconsistent with law, to enforce, carry out, and make effective the provisions of this article after notice and hearing before the Administrative Law Judge Division.

Section 38-75-460. The director or his designee may, by written order, temporarily expand the area in which the association must provide essential property insurance. The area may not be expanded further inland than east of the west bank of the intracoastal waterway and may not be expanded to cover the area for more than twelve months. If the director or his designee issues an order that expands the area in which the association provides essential property insurance, he shall notify the General Assembly of that order and he shall recommend, through the Director of the Department of Insurance, to the General Assembly any appropriate statutory changes in the law concerning the definition of `coastal area' which he believes needs to be enacted."

Name changed

SECTION 794. Section 38-75-730(a)(5) of the 1976 Code is amended to read:

"(5) loss of the insurer's reinsurance covering all or a significant portion of the particular policy insured, or where continuation of the policy would imperil the insurer's solvency or place that insurer in violation of the insurance laws of this State. Prior to cancellation for reasons permitted in this item (5), the insurer shall notify the director or his designee, in writing, at least sixty days prior to such cancellation and the director or his designee shall, within thirty days of such notification, approve or disapprove such action."

Name changed

SECTION 795. Section 38-75-780 of the 1976 Code is amended to read:

"Section 38-75-780. There is no liability on the part of and no cause of action of any nature may arise against the director or his designees, any insurer, or the authorized representatives, agents, and employees of either or any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation or refusal to write or renew, for any statement made by any of them in complying with this article, or for the providing of information pertaining thereto, unless the person asserting the cause of action establishes that the person against whom the cause of action is asserted was motivated by express malice or gross negligence."

Name changed

SECTION 796. Section 38-75-930 of the 1976 Code is amended to read:

"Section 38-75-930. (A) If a domestic title insurer becomes insolvent, is in the process of liquidation or dissolution, or is in the possession of the director or his designee: (1) the amount of the assets of the title insurance company equal to the reinsurance reserve then remaining may be used with the written approval of the director or his designee to pay for reinsurance of the liability of each title insurer upon all outstanding title insurance policies or reinsurance agreements to the extent for which claims for losses by the holders are not then pending. The balance of the assets, if any, equal to the reinsurance reserve then may be transferred to the general assets of the title insurer; (2) the assets net of the reinsurance reserve must be available to pay claims for losses sustained by holders of title insurance policies then pending or arising up to the time reinsurance is effected. If claims for losses exceed other assets of the title insurer, the claims, when established, must be paid pro rata out of the surplus assets attributable to the reinsurance reserve, to the extent of the surplus, if any. (B) If reinsurance is not obtained, assets equal to the reinsurance reserve and assets constituting minimum capital, or so much as remains after outstanding claims have been paid, constitute a trust fund to be held and invested by the director or his designee for twenty years, out of which claims of policyholders must be paid as they arise. The balance, if any, of the trust fund shall revert to the general assets of the title insurer at the expiration of twenty years."

Name changed

SECTION 797. Section 38-75-940 of the 1976 Code is amended to read:

"Section 38-75-940. (A) All title insurers licensed in this State shall establish and maintain reserves against unpaid losses and loss expenses. (B) Upon receiving written notice from or on behalf of the insured of a title defect in or lien or adverse claim against the title of the insured that may result in a loss or cause expense to be incurred in the proper disposition of the claim, the title insurer shall determine the amount to be added to the reserve which shall reflect a careful estimate of the loss or loss expense likely to result by reason of the claim. (C) Reserves required under this section may be revised from time to time and must be redetermined at least once each year. (D) If the director or his designee determines that the loss and loss expense reserves of the title insurer are inadequate, he may require the title insurer to increase the amount of reserves to an amount he considers reasonable."

Name changed

SECTION 798. Section 38-75-950 of the 1976 Code is amended to read:

"Section 38-75-950. (A) A title insurer may obtain reinsurance for all or any part of its liability under one or more of its title insurance policies or reinsurance agreements and also may reinsure title insurance policies issued by other title insurers on risks located in this State or elsewhere. Reinsurance on policies issued on properties located in this State must be obtained from title insurers licensed to transact title insurance business in this State. (B) Upon application by a title insurer, the director or his designee may permit the insurer to obtain reinsurance from a title insurer not licensed in this State upon the following conditions: (1) the title insurer is unable to obtain reinsurance from a title insurer licensed in this State; and (2) the unlicensed title insurer meets the requirements of approved reinsurers in Section 38-5-60."

Name changed

SECTION 799. Section 38-75-960 of the 1976 Code is amended to read:

"Section 38-75-960. (A) No title insurer or title insurance agent may accept an order for, issue a title insurance policy to, or provide services to an applicant if it knows or has reason to believe that the applicant was referred to it by any producer of title business or by any associate of the producer where the producer, the associate, or both, have a financial interest in the title insurer or title agent to which business is referred unless the producer has disclosed to the buyer, seller, or lender the financial interest of the producer of title business or associate referring the title business. The disclosure must be made in writing on forms prescribed by the director or his designee. The title insurer or agent shall maintain the disclosure forms for a period of three years. (B) Each title insurer and title agent shall file with the department, on forms prescribed by the director or his designee, reports setting forth the names and addresses of those persons, if any, who have had a financial interest in the title insurer or title agent during the calendar year who are known or reasonably believed by the title insurer or title agent to be producers of title business or associates of producers. (1) Each title insurer shall file the report required under this subsection with its application for a license and at any time there is a change in the information provided in the last report. (2) Each title agent shall file the report required under this subsection with its application for license and at any time there is a change in the information provided in its last report. (3) Each title insurer or title agent licensed on the effective date of this act, shall file the report required under this subsection within ninety days after the effective date of this act."

Name changed

SECTION 800. Section 38-75-980 of the 1976 Code is amended to read:

"Section 38-75-980. (A) A title insurer shall file with the director or his designee the premium rate schedules it proposes to use in this State. If the director or his designee finds in his review of a filing that it does not violate Section 38-75-970, he shall approve the schedule within sixty days of filing. Before the approval, the director or his designee may conduct public hearings with respect to the filing. Filings that the director or his designee has failed to approve or disapprove within sixty days of filing is considered approved. Upon notice to the title insurer, the period for review of the rate filing may be extended for an additional sixty days. (B) If after the approval of filing the director or his designee believes that the filing does not meet the requirements of this section or is otherwise contrary to law, or if any party having an interest in the filing makes a written complaint to the director or his designee setting forth specific and reasonable grounds for the complaint, or if any insurer, upon notice of disapproval by the director or his designee of a filing pursuant to this section, should so request, the director or his designee shall hold a hearing within thirty days and give written notice of the hearing to all parties in interest. The director or his designee may confirm, modify, change, or rescind any previous action if warranted by the facts shown at the hearing."

Name changed

SECTION 801. Section 38-77-10(1) of the 1976 Code is amended to read:

"(1) To provide that every automobile insurance risk which is insurable on the basis of the criteria established in this chapter is entitled to automobile insurance from the automobile 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 department so long as all these applicants or insureds have satisfied the same objective standards as established in Sections 38-77-280 and 38-73-455;"

Name changed

SECTION 802. Section 38-77-30(12) of the 1976 Code is amended to read:

"(12) `Specialized insurer' means an insurer which specializes in certain types of business such as, but without limitation on the generality, commercial automobile business, and which may be relieved, with the approval of the director or his designee, of the obligation to write types of business inconsistent with this specialty, such as private passenger automobile business. However, no insurer may be approved as a specialized insurer or continue to be so approved unless it accepts all insurable risks falling within the types of business to which it confines its writings without distinctions among applicants or policyholders as to policy forms, terms, rates or services other than as the distinctions are reflected in the approved rating plan for the classification of risks. No insurer may be approved as a specialized insurer because it specializes in or purports to specialize in select or preferred risks. A specialized insurer may not cede risks to the Reinsurance Facility and thus does not recoup losses of the facility. Specialized insurers may be excused from using the merit rating plan and the uniform classification and territorial plans upon approval by the director or his designee."

Name changed

SECTION 803. Section 38-77-110(A) of the 1976 Code is amended to read:

"(A) Automobile insurers other than insurers designated and approved as specialized insurers by the director or his designee may not refuse to write or renew automobile insurance policies for individual private passenger automobiles or small commercial risks. These policies may not be canceled except for reasons which had they existed or been known when the policy was written would have rendered the risk not an insurable risk. Every automobile insurance risk constitutes an insurable risk unless the operator's permit of the named insured has been revoked or suspended and is at the time of application for insurance so revoked or suspended. However, no insurer is required to write or renew automobile insurance on any risk if there exists a valid and enforceable outstanding judgment secured by an insurer, an agent, or licensed premium service company on account of automobile insurance premiums which the applicant or insured or any principal operator who is a member of the named insured's household has failed or refused to pay unless the applicant or insured pays in advance the entire premium for the full term of the policy sought to be issued or renewed or the annual premium, whichever is the lesser. An insurer is not precluded from effecting cancellation of an automobile insurance policy, either upon its own initiative or at the instance of an agent or licensed premium service company, because of the failure of any named insured or principal operator to pay when due any automobile insurance premium or any installment payment. However, notice of cancellation for nonpayment of premium notifies the person to whom the notice is addressed that the notice is void and ineffective if payment of the full amount of the premium or premium indebtedness, whichever is the greater, is made to the insurer, agent, or licensed premium service company named in the notice by the otherwise effective date of cancellation. This notice of cancellation is not considered ineffective for being conditional, ambiguous, or indefinite."

Name clarified; etc.

SECTION 804. Section 38-77-113 of the 1976 Code is amended to read:

"Section 38-77-113. If a driver's license is suspended or revoked because the licensee is determined by the Motor Vehicle Division of the South Carolina Department of Revenue and Taxation to have no motor vehicle liability insurance, the Deputy Director of the Motor Vehicle Division or the Director of the Department of Revenue and Taxation or his designee on behalf of the Motor Vehicle Division shall waive the reinstatement fee imposed pursuant to Section 56-1-390 if the licensee had motor vehicle liability coverage when his license was suspended or revoked. The Deputy Director of the Motor Vehicle Division, or the Director of the Department of Revenue and Taxation or his designee, shall document his reasons for waiving the fee in the records of the Department of Revenue and Taxation."

Name changed; notice and hearing before Administrative Law Judge Division

SECTION 805. Section 38-77-115 of the 1976 Code is amended to read:

"Section 38-77-115. The authorized agents for every insurer covered by the provisions of Section 38-77-110 shall post in a conspicuous location in their office or place of business a sign containing language to be required by regulation of the department, after notice and hearing before the Administrative Law Judge Division, 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 director or his designee for appropriate action."

Name changed

SECTION 806. Section 38-77-120 of the 1976 Code is amended to read:

"Section 38-77-120. (a) No cancellation or refusal to renew by an insurer of a policy of automobile insurance is effective unless the insurer delivers or mails, to the named insured at the address shown in the policy, a written notice of the cancellation or refusal to renew. This notice: (1) must be approved as to form by the director or his designee prior to use; (2) shall state the date not less than fifteen days after the date of the mailing or delivering on which the cancellation or refusal to renew becomes effective; (3) shall state the specific reason or reasons of the insurer for cancellation or refusal to renew. (b) Subsection (a) of this section does not apply if the: (1) insurer has manifested to the insured its willingness to renew by actually issuing or offering to the insured to issue a renewal policy, certificate, or other evidence of renewal, or has manifested such intention to the insured by any other means; (2) named insured has demonstrated by some overt action to the insurer or its agent that he expressly intends that the policy be canceled or that it not be renewed."

Name changed

SECTION 807. Section 38-77-150 of the 1976 Code is amended to read:

"Section 38-77-150. No automobile insurance policy or contract may be issued or delivered unless it contains a provision by endorsement or otherwise, herein referred to as the uninsured motorist provision, undertaking to pay the insured all sums which he is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within limits which may be no less than the requirements of Section 38-77-140. The uninsured motorist provision shall also provide for no less than five thousand dollars' coverage for injury to or destruction of the property of the insured in any one accident but may provide an exclusion of the first two hundred dollars of the loss or damage. The director or his designee may prescribe the form to be used in providing uninsured motorist coverage and when prescribed and promulgated no other form may be used. No action may be brought under the uninsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the uninsured motorist provision. The insurer has the right to appear and defend in the name of the uninsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record."

Name changed

SECTION 808. Section 38-77-200 of the 1976 Code is amended to read:

"Section 38-77-200. The uninsured motorist provision may not require arbitration of any claim arising under it, nor may anything not otherwise herein provided for or as may be provided in the form prescribed by the director or his designee be required of the insured except the establishment of legal liability of the uninsured motorist, nor may the insured be restricted or prevented in any manner from employing legal counsel or instituting legal proceedings."

Name changed

SECTION 809. Section 38-77-260 of the 1976 Code is amended to read:

"Section 38-77-260. (a) No person making payment or settlement of benefits for which the person is obligated under Sections 38-77-240 to 38-77-340 and no insurer may in connection with the payment or settlement of a claim for these first-party benefits or for any first-party benefits arising under an automobile insurer's coverage including, but not limited to, medical payments and uninsured motorist coverage, obtain or attempt to obtain from the claimant receiving the benefits any general release, covenant not to sue, assignment, article of subrogation, or any other instrument or document which purports to assign to that person or insurer all or any portion of any claim which the claimant may have against any other party or his insurer arising out of legal liability or which purports to constitute an agreement by the claimant that any amount received as first party benefits must be deducted from any settlement or judgment recoverable from any other party or his insurer arising out of legal liability. Every such purported general release, covenant not to sue, or similar instrument is null and void unless (1) the insurer or other person has delivered to the person entitled to the first-party benefits, or his legal representative, a disclosure statement, on a form approved by the director or his designee, fully and fairly disclosing the fact that the first-party benefits payable under Sections 38-77-240 to 38-77-340 are contractual obligations of the insurer or other person and are entirely separate and distinct from any obligation which the insurer or other person may have because of the legal liability of any person and that the person receiving the first-party benefits is not required and may not be required to release or relinquish any rights which he may have arising out of the legal liability of any person in order to receive payment or settlement of the first-party benefits arising under Sections 38-77-240 to 38-77-340 and (2) an interval of not less than three days has elapsed between the later of (i) the delivery of the disclosure statement or (ii) the payment or settlement of the first-party benefits and the execution of the general release, covenant not to sue, or similar instrument."

Name changed, etc.

SECTION 810. Section 38-77-280 of the 1976 Code is 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 make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage. Collision coverage 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. Comprehensive coverage or fire, theft, and combined additional coverages 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 38-73-760(e). (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 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. (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 may select an additional deductible in appropriate increments up to one thousand dollars. However, the mandatory deductible does not apply to safety glass."

Name changed

SECTION 811. Section 38-77-320 of the 1976 Code is amended to read:

"Section 38-77-320. The department has the authority to issue and promulgate all necessary regulations not inconsistent with the provisions of this article to enforce, carry out, and make effective this article and to review all policies of insurance issued, renewed, sold, or delivered in this State to determine whether they are in compliance with law and the regulations promulgated under the law."

Name changed

SECTION 812. Section 38-77-330 of the 1976 Code is amended to read:

"Section 38-77-330. No claim for damage to property resulting from a motor vehicle accident may be denied or payment delayed because the person who is entitled to payment or any other person has a claim pending for bodily injury which may have arisen from the same or any other accident. Whenever an insurer has the appropriate motor vehicle coverage for the party liable and there is no dispute as to either the liability for the payment of the full property damages or the amount of monetary equivalent of these damages, then the amount payable is immediately due and owing and must be paid promptly. If the director or his designee determines that the payment of the amount was unnecessarily delayed, he may assess interest on the amount at the rate of eight percent per annum."

Name changed

SECTION 813A. Section 38-77-340 of the 1976 Code is amended to read:

"Section 38-77-340. Notwithstanding the definition of `insured' in Section 38-77-30, 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. The agreement, when signed by the named insured and the person to be excluded, or by someone acting in the excluded person's behalf, is binding upon every insured to whom the policy applies. However, no natural person may be excluded unless (1) his driver's license has been turned in to the Motor Vehicle Division of the South Carolina Department of Revenue and Taxation or (2) an appropriate policy of liability insurance or other security as may be authorized by law has been properly executed in the name of the person to be excluded. The agent of the insurer writing the policy of insurance excluding a named driver shall determine that the necessary driver's license has been delivered to the Motor Vehicle Division of the Department of Revenue and Taxation or that a policy of insurance or security described in item (2) of this section is in effect before submitting the application for exclusion of a named driver. The Motor Vehicle Division of the Department of Revenue and Taxation shall furnish to the agent an affidavit either stating that the necessary driver's license has been delivered to it or certifying that a policy of insurance or security described in item (2) of this section is in effect."

Name changed

SECTION 813B. Section 38-77-340 of the 1976 Code is amended to read:

"Section 38-77-340. Notwithstanding the definition of `insured' in Section 38-77-30, the insurer and any named insured must, by the terms of a written amendatory endorsement, the form of which has been approved by the director or his designee, 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. The agreement, when signed by the named insured and the person to be excluded, or by someone acting in the excluded person's behalf, is binding upon every insured to whom the policy applies. However, no natural person may be excluded unless (1) his driver's license has been turned in to the Motor Vehicle Division of the South Carolina Department of Revenue and Taxation or (2) an appropriate policy of liability insurance or other security as may be authorized by law has been properly executed in the name of the person to be excluded. The agent of the insurer writing the policy of insurance excluding a named driver shall determine that the necessary driver's license has been delivered to the Motor Vehicle Division of the Department of Revenue and Taxation or that a policy of insurance or security described in item (2) of this section is in effect before submitting the application for exclusion of a named driver. The Motor Vehicle Division of the Department of Revenue and Taxation shall furnish to the agent an affidavit either stating that the necessary driver's license has been delivered to it or certifying that a policy of insurance or security described in item (2) of this section is in effect."

Name changed; language deleted

SECTION 814. Subsection (A) of Section 38-77-350 of the 1976 Code is amended to read:

"(A) The director or his designee shall approve a form which automobile insurers shall use in offering optional coverages required to be offered pursuant to law to applicants for automobile insurance policies. This form must be used by insurers for all new applicants. The form, at a minimum, must provide for each optional coverage required to be offered: (1) a brief and concise explanation of the coverage, (2) a list of available limits and the range of premiums for the limits, (3) a space for the insured to mark whether the insured chooses to accept or reject the coverage and a space for the insured to select the limits of coverage he desires, (4) a space for the insured to sign the form which acknowledges that he has been offered the optional coverages, (5) the mailing address and telephone number of the Insurance Department which the applicant may contact if the applicant has any questions that the insurance agent is unable to answer."

Name changed; Reinsurance Facility considered a "using agency"; etc.

SECTION 815. Section 38-77-510 of the 1976 Code is amended to read:

"Section 38-77-510. There is created a nonprofit, unincorporated legal entity known as the South Carolina Reinsurance Facility which is subject to regulations promulgated by the department and orders promulgated by the director or his designee which are not inconsistent with the purposes of this chapter. The facility shall reinsure, at the option of the ceding automobile insurer and subject to the provisions of this chapter, the risk covered under any policy of automobile insurance. However, these cessions must be confined to quota share reinsurance of either a one hundred percent quota share of the risk or to any other percentage of quota share reinsurance the commissioner may permit by regulations promulgated by him. The facility is considered to be a `using agency' as defined by Section 11-35-310."

Name changed; Reinsurance Facility considered a "using agency"; etc.

SECTION 816. Section 38-77-510 of the 1976 Code is amended to read:

"Section 38-77-510. There is created a nonprofit, unincorporated legal entity known as the South Carolina Reinsurance Facility which is subject to regulations promulgated by the department and orders promulgated by the director or his designee which are not inconsistent with the purposes of this chapter. The facility shall reinsure, at the option of the ceding automobile insurer and subject to the provisions of this chapter, the risk covered under any policy of automobile insurance. However, these cessions must be confined to quota share reinsurance of either a one hundred percent quota share of the risk or to any other percentage of quota share reinsurance the department may permit by regulations promulgated by it. The facility is considered to be a `using agency' as defined by Section 11-35-310."

Name changed

SECTION 817. Section 38-77-520 of the 1976 Code is amended to read:

"Section 38-77-520. No automobile insurer may be licensed to transact automobile insurance in this State unless it becomes a participating member of the facility with respect to automobile insurance and thereafter continues participation so long as it transacts automobile insurance in this State. Every member is bound by the plan of operation of the facility as approved or promulgated by the director or his designee and by any rules the governing board of the facility lawfully prescribes. If the authority of an insurer to transact automobile insurance in this State terminates for any reason its obligations as a member of the facility nevertheless continue until all obligations have been fulfilled and the director or his designee has so found and certified to the governing board of the facility. If an insurer merges into or consolidates with another insurer authorized to transact automobile insurance in this State, or another insurer authorized to transact automobile insurance in this State has reinsured the insurer's entire automobile insurance business in this State, both the insurer and its successor or the assuming reinsurer, as the case may be, are liable for the insurer's obligations in respect to the facility. Any unsatisfied net liability to the facility of an insolvent insurer which is a member of the facility must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned. The facility thereupon acquires 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 sums due the facility."

Name changed; "division" changed to "category"

SECTION 818. Section 38-77-530 of the 1976 Code is amended to read:

"Section 38-77-530. The plan of operation of the facility is subject to the approval of the director or his designee which may be granted only if the plan provides for equitable apportionment of the operating expenses and profits or losses among the members. The plan may, if the director or his designee considers it feasible and equitable, make provision for separate apportionments between private passenger automobile insurance business and commercial automobile insurance business, or, alternatively or in addition to that division, the plan may make provision for separate apportionments between automobile liability insurance business, including medical payments and uninsured motorist insurance, and automobile physical damage insurance business. Any such apportionments shall give consideration to a comparison between the writings or car-year exposures of each insurer of automobile insurance and the total writings or car-year exposures of all automobile insurers or, in the case of any separate apportionments approved by the director or his designee, a comparison between the writings or car-year exposures of each insurer within the applicable category of automobile insurance and the writings or car-year exposures of all insurers within that category. In connection with his approval of the plan, the director or his designee may require that the plan make provision for such comparisons for a one-year period or for a longer period not to exceed five years and may provide for weighing the experience so as to attach a greater weight to the more recent experience. In connection with the approval of the plan's provisions respecting equitable apportionment of the operating expenses or gains or losses of the facility, the director or his designee may require that the plan make provision for a comparison between each insurer's percentage of the aggregate written premiums or car-year exposures respecting automobile insurance or any such category thereof and the insurer's percentage of total cessions to the facility of such insurance or category thereof so as to provide that the insurer's portion of the operating expenses or gains or losses must be the average of the two percentages; or the director or his designee may approve or require any other similar or comparable provision for the apportionment of the expenses or gains or losses of the facility which relates insurers' shares to their respective utilization of the facility."

Name changed

SECTION 819. Section 38-77-570 of the 1976 Code is amended to read:

"Section 38-77-570. The funds and reserves of the facility must be invested in lawful investments permitted to property and casualty insurers under the laws and regulations governing investments of property and casualty insurers. In determining the net profit or loss resulting from the operations of the facility, all investment income and profits must be taken into consideration. No distribution of the funds, assets, property, or profits of the facility may be made except pursuant to the written order of the director or his designee."

Name changed; etc.

SECTION 820. Section 38-77-580 of the 1976 Code is amended to read:

"Section 38-77-580. The operations and affairs of the facility are under the direction and control of a governing board of nineteen persons of whom four must be residents of South Carolina appointed by the Governor of South Carolina to represent consumers. The director shall appoint eight persons to represent the insurance industry; in appointing these persons, the director shall select two from a list of not less than five nominated by the American Insurance Association from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two from a list of not less than five persons nominated by the American Mutual Insurance Alliance from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two from a list of not less than five persons nominated by the National Association of Independent Insurers from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two persons, one of whom must be an officer or employee of a stock insurer licensed in South Carolina and not a member or subscriber of any of these organizations, and one of whom must be an officer or employee of a nonstock insurer licensed in South Carolina and not a member or subscriber of any of these organizations; however, of the eight persons appointed to represent the insurance industry, not less than five must be residents of South Carolina and those who are not residents of South Carolina must have job responsibilities that include the supervision over South Carolina operations; not less than two must be officers or employees of insurers licensed to transact automobile insurance in South Carolina and domiciled therein. The director shall appoint four persons to represent producers, all of whom must be residents of South Carolina; he shall select two such persons from a list of not less than five nominated by the stock agents' association and two from a list of not less than five persons nominated by the mutual agents' association. The director shall appoint two persons to represent the designated agents, one of whom must be an officer of a premium service finance company and the other of whom must be a designated agent and both of whom must be residents of South Carolina. In addition the Consumer Advocate is an ex-officio member of the governing board of the Reinsurance Facility. No person who is associated with any business within the meaning of Section 8-13-20, which is either subject to regulation by the Department of Insurance or which provides goods or services to the facility for compensation, is eligible for appointment to the board to represent consumers, except that any person serving on the board representing consumers on the effective date of this provision who would otherwise be disqualified from serving based on this provision may continue to serve for the remainder of his current term. The director is chairman of the board, ex officio, but has no vote except in the case of a tie. The director, or his designated representative, shall preside over all meetings which must be held not less than quarterly in South Carolina at the times and places the director designates. However, upon the filing with the director of a request for a meeting signed by not fewer than five members of the board and specifying the subjects to be discussed at the proposed meeting, the director shall call a special meeting of the board to be held not less than fifteen nor more than thirty days after receipt of the request. Notice, in writing, of the special meeting must be provided members of the board. Members of the board shall serve one year or until their successors are appointed and have qualified. Amendment of the plan of operation may be made only at the annual meeting of the board or at a special meeting called by the director for that purpose and so specified in the notice of meeting. Amendments of the plan require the affirmative vote of two-thirds of all the board members and are subject to the approval of the director or his designee. The director or his designee may approve amendments only if they are consistent with the purposes of this chapter. If the consumer-representative members of the board unanimously dissent from a proposed amendment and specify their reasons for dissent in writing, the director or his designee may not approve the amendment until after a public hearing addressed to the reasons for the dissent. The director may make provision for voting by proxy at meetings. The director or his designee, through the department, may propose to the board any amendment to or modification of the plan that the director or his designee considers to be necessary to render the plan reasonable or consistent with the purposes of this chapter, specifying in writing the reasons for any proposed amendment or modification. In the event that the board fails to adopt his proposed amendment or modification, the director or his designee may, after notice and public hearing addressed to the reasons for the proposed amendment or modification, promulgate the amendment or modification considered necessary to render the plan reasonable or consistent with the purposes of this chapter."

Name changed

SECTION 821. Subsection (a) of Section 38-77-590 of the 1976 Code is amended to read:

"(a) Not more than six months after July 9, 1974, or at an earlier time as the director or his designee considers necessary by reason of complaints regarding want of access to automobile insurance in particular areas or want of outlets for producers, the director or his designee shall survey the various areas of the State to ascertain if sufficient marketing outlets exist in all areas or are available to all producers. Upon a finding by the director or his designee that insufficient marketing outlets exist in particular areas or that certain producers have been deprived of a market for risks previously serviced by them, the director or his designee may, after consultation with the facility, designate one or more insurers to service the areas through agents appointed by them or may designate the producers as the agents of any insurer. The arrangements shall include provision for one hundred percent quota share reinsurance through the facility of any automobile insurance policy marketed through the arrangements, at the option of the insurer, and the reinsurance is not subject to the statutory provisions or regulations regarding excessive utilization of the facility."

Name changed

SECTION 822. Subsection (b) of Section 38-77-590 of the 1976 Code is amended to read:

"(b) After the effective date of this section, those producers previously designated by the director or his designee may continue to serve in that capacity under the jurisdiction and control of the governing board of the facility, except that any change in the rate of commissions allowed designated producers is subject to the approval of the director or his designee."

Name changed

SECTION 823. Subsection (e) of Section 38-77-590 of the 1976 Code is amended to read:

"(e) The governing board shall assign a specific location to each producer designated. The governing board shall determine from the director or his designee the locations assigned by him to those producers whom the director or his designee has designated. Designated producers may not open or maintain any other locations without the written authorization of the governing board; provided, however, that an applicant maintaining multiple offices on June 4, 1987, is entitled to maintain two locations as a designated agent which he owned and operated at that time and through which premiums in at least the amount of seventy-five thousand dollars were written. The governing board shall terminate the designation, and the director or his designee shall revoke all agents' licenses of any producer who does not comply with this requirement upon demand by the governing board. Upon termination, the producer's expirations on designated business become the property of the facility."

Name changed

SECTION 824. Subsection (f) of Section 38-77-590 of the 1976 Code is amended to read:

"(f) The designation of a producer by the director or his designee or the governing board is transferable to a spouse, child, parent, brother, or sister of the producer upon the designated producer's retirement, incapacity, or death. The duties of a designated producer may be performed by one or more qualified employees of the producer or the producer's corporate agency."

Name changed

SECTION 825. Subsection (g) of Section 38-77-590 of the 1976 Code is amended to read:

"(g) Neither a designated producer, nor any employee of a designated producer or the producer's corporate agency, nor any partner or shareholder in any related insurance agency, related premium service company, or related other business, may have 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 cedable to the facility. The governing board shall terminate the designation of any producer, and the director or his designee shall revoke all licenses of the producer and of any other insurance agent and premium service company knowingly involved in this connection. Upon termination, the producer's expirations on designated business become the property of the facility."

Name changed

SECTION 826. Section 38-77-600 of the 1976 Code is 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 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, 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) 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. In this formula to be utilized in determining the facility recoupment charge: (a) P(1) is the percentage of risks which have one surcharge point under the Uniform Merit Rating Plan; (b) P(2) is the percentage of risks which have two surcharge points under the Uniform Merit Rating Plan; (c) P(3) is the percentage of risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan; (d) P(4) is the percentage of risks which are subject to a surcharge of four 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) X is the dollar amount by coverage, to be charged all risks having one surcharge point under the Uniform Merit Rating Plan promulgated by the department. 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 surcharge point. (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. (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. (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 points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of three. (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 points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of four. (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) 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) This section applies to all private passenger automobile insurance policies issued or renewed after June 30, 1989. 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."

Name changed

SECTION 827. Section 38-77-610 of the 1976 Code is amended to read:

"Section 38-77-610. Before December second of each year, the governing board of the facility shall file the facility recoupment charges calculated pursuant to Section 38-77-600 with the director or his designee. The director or his designee 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 38-77-600. 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 director or his designee 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 director or his designee 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."

Name changed

SECTION 828. Article 9, Chapter 77, Title 38 of the 1976 Code is amended to read:

"Article 9

Unlawful Acts Generally

Section 38-77-910. It is an act of unlawful discrimination for an automobile insurer to make any distinction between automobile insurance policyholders or applicants for automobile insurance with respect to coverage, rates, claims, or other services except as the distinctions are provided for in the rating plans for the classification of risks and territories promulgated by the department.

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 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 director or his designee is directed to examine an insurer's records at any time the director or his designee considers it necessary to determine that the insurer is not so restricting or limiting its offerings.

Section 38-77-940. 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 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.

Section 38-77-950. It is the intent of this chapter that the facility must not be excessively nor unreasonably utilized by automobile insurers for unfairly competitive purposes or for purposes of unfairly discriminating against certain classes or types of automobile insurance risks having the same or similar objective risk characteristics as other risks in the same class under the rating plan for the classification of risks promulgated by the department, nor for the purpose of discriminating against the risks or risks in certain rating territories. The director or his designee shall prohibit unreasonable or excessive utilization of the facility. A prima facie case of excessive or unreasonable utilization is established upon a showing that an automobile insurance insurer or a group of insurers under the same management has ceded or is about to cede more than thirty-five percent of total direct cedeable written premiums on South Carolina automobile insurance as reported in the most recently filed annual statement of the insurer or group. Upon the written request of the policyholder, insurance companies doing business in this State shall give written notice to the policyholder informing him whether or not he and a driver under the policy is in the facility. Insurers shall give written notice to the policyholder of a risk ceded to the facility which does not qualify for the safe driver discount in Section 38-73-760(e).

Section 38-77-960. 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."

Name changed

SECTION 829. Section 38-77-1120(a) of the 1976 Code is amended to read:

Section 38-77-1120. As used in this article: "(a) `Authorized agency' means: (1) the South Carolina State Law Enforcement Division, the Division of the State Highway Patrol of the Department of Public Safety, the sheriff's department of any county of this State, and any duly constituted criminal investigative department or agency of another state of the United States; (2) the Attorney General of this State, any circuit solicitor of this State, any prosecuting attorney for a county, circuit, or district of another state or of the United States; (3) the South Carolina Department of Insurance, the Division of Motor Vehicles of the Department of Revenue and Taxation, and the South Carolina Department of Consumer Affairs of the Attorney General's Office; and (4) the United States Department of Justice and its Federal Bureau of Investigation."

Name changed

SECTION 830. Articles 1 and 3, Chapter 79, Title 38 of the 1976 Code is amended to read:

Article 1

General Provisions

Section 38-79-10. All medical malpractice insurance claims filed in the State with any insurer must be reported to the department by the insurer in the form and under the terms and conditions that the director or his designee prescribes. The director or his designee shall maintain complete and accurate records on all medical malpractice claims, including the causes of the complaints, the disposition of each claim, and any other information which he considers important in observing and reporting on professional liability trends in this State, including, but not limited to, the reserves set aside for each claim, the amounts paid in settlement or awarded by jury, and the names of the claimant and defendant. The director or his designee may release to appropriate disciplinary and licensing agencies any such data or information which may assist the agencies in improving the quality of health care. The department may promulgate regulations necessary to carry out the provisions of this section.

Section 38-79-20. All medical malpractice insurance carriers shall file with the appropriate professional or occupational licensing board all final judgments, settlements, agreements, and awards against any licensee of that board. All information relative to parties involved is and shall remain confidential.

Article 3

South Carolina Medical Malpractice Liability Joint Underwriting Association

Section 38-79-110. As used in this article: (1) `Association' means any joint underwriting association established pursuant to the provisions of this article. (2) `Licensed health care providers' means physicians and surgeons, nurses, oral surgeons, dentists, pharmacists, chiropractors, podiatrists, hospitals, nursing homes, or any similar major category of licensed health care providers. (3) `Medical malpractice insurance' means medical professional liability insurance or insurance protection against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence or malpractice in rendering or failing to render professional service by any licensed physician, licensed health care provider, or hospital. (4) `Net direct premiums' means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee, less return premiums or the unused or unabsorbed portions of premium deposits.

Section 38-79-120. (1) A joint underwriting association (association) is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact such kind of insurance in this State. (2) The purpose of the association is to provide medical malpractice insurance on a self-supporting basis to the fullest extent possible. (3) The association must be called into operation at any time that the department finds and declares the existence of an emergency because of the unavailability of medical malpractice liability insurance, or the unavailability of medical malpractice liability insurance on a reasonable basis through normal channels, in respect to all or any one or more of the major categories of licensed health care providers listed in item (2) of Section 38-79-110.

Section 38-79-130. The association, pursuant to the provisions of this article and the approved plan of operation in respect to medical malpractice insurance, has the power on behalf of its members: (1) To issue, or cause to be issued, policies of insurance to applicants including incidental coverages, such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed one hundred thousand dollars for each claimant under one policy and three hundred thousand dollars for all claimants under one policy in any one year. (2) To underwrite medical malpractice insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions. (3) To cede and assume reinsurance.

Section 38-79-140. (1) The association must operate pursuant to a plan of operation which shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of medical malpractice 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, commissions arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association. (2) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend. (3) The plan of operation becomes effective and operative no later than thirty days after the declaration of any emergency by the department. (4) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after due notice and public hearing.

Section 38-79-150. Any licensed health care provider in a category in which the department has declared an emergency exists is entitled to apply to the association for coverage. The application may be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant. 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 any prior insurance of the same kind, the association, upon receipt of the premium, or a portion thereof as prescribed by the plan of operation, shall cause to be issued a policy of medical malpractice liability insurance for a term of one year. The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this article and to those provisions of Chapter 73 of this title which are not inconsistent with the purposes and provisions of this article.

Section 38-79-160. The director or his designee shall obtain complete statistical data in respect to medical malpractice losses and reparation costs as well as all other costs or expenses which underlie or are related to medical malpractice liability insurance. He shall promulgate any statistical plan he considers necessary for the purpose of gathering data referable to loss and loss adjustment expense experience and other expense experience. When a statistical plan is promulgated all members of the association shall adopt and use it. The director or his designee shall also obtain statistical data in respect to the costs of compensating or rehabilitating victims of medical malpractice without respect to insurance for purposes of studying the feasibility or desirability of alternative medical malpractice compensation systems and estimating the impact of medical malpractice loss and insurance costs upon other compensation and insurance systems such as workers' compensation and accident and health insurance. He may require from any person obtaining insurance through the association loss, claim, or expense data. This information or data is confidential and the physician-patient privilege must be preserved.

Section 38-79-170. In respect to the structuring of rates for medical malpractice liability insurance and the determination of the profit or loss of the association in respect to that insurance, due consideration must be given by the director or his designee to all investment income.

Section 38-79-180. Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to medical malpractice liability insurance to be written by the association. In the event the director or his designee 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 director or his designee. If the director or his designee 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 38-79-190. (1) The director or his designee shall specify whether policy forms and the rate structure must be on a `claims-made' or `occurrence' basis and coverage may be provided by the association only on the basis specified by the director or his designee. The director or his designee shall specify the `claims-made' basis only if the contract makes provision for residual `occurrence' coverage upon the retirement, death, disability, or removal from the State of the insured. Provision may be made for a premium charge allocable to any such residual `occurrence' coverage and the premium charges for the residual coverage must be segregated and separately maintained for such purpose which may include the reinsurance of all or a part of that portion of the risk. (2) The policy may not contain any limitation in relation to the existing law in tort as provided by the statute of limitations of the State of South Carolina. (3) The policy form whether on a `claims-made' or `occurrence' basis may not require as a condition precedent to settlement or compromise of any claim the consent or acquiescence of the insured. However, such settlement or compromise may never be held or considered to be an admission of fault or wrongdoing by the insured. (4) The premium rate charged for either or both `claims-made' or `occurrence' 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 38-79-200. The association is authorized to provide a rate increase or assessment which is subject to the approval of the director or his designee.

Section 38-79-210. Any deficit sustained by the association in any year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures: (1) An assessment upon the policyholders which may not exceed one additional annual premium at the then current rate. (2) A rate increase applicable prospectively.

Section 38-79-220. Effective after the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase, must be based upon the association's loss and expense experience and investment income, together with any other information based upon such experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting. In the event that sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-79-210, all members shall, on a temporary basis, contribute to the financial requirements of the association in the manner provided for in Section 38-79-230. Any such contribution must be reimbursed to the members following recoupment as provided in Section 38-79-210.

Section 38-79-230. All insurers which are members of the association shall participate in its writings, expenses, profits, 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 department. 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 director or his designee, 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 director or his designee 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 director or his designee 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 is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any 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 38-79-240. Every member of the association is bound by the approved plan of operation of the association and by any other rules the board of directors of the association lawfully prescribes.

Section 38-79-250. (1) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason its obligations as a member of the association nevertheless continue until all its obligations have been fulfilled and the director or his designee has so found and certified to the board of directors. (2) If a member insurer merges into or consolidates with another insurer authorized to transact such insurance in this State or another insurer authorized to transact such insurance in this State has reinsured the insurer's entire general liability business in this State, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations in respect to the association. (3) Any unsatisfied net liability of any 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 thereupon acquire and have 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 38-79-260. The association is governed by a board of twenty-one directors, nine of whom are appointed by the Governor, one of whom represents consumers, two of whom represent licensed insurance agents or brokers, three of whom are members of the South Carolina Medical Association, two of whom are members of the South Carolina Hospital Association, and one of whom is a member of the South Carolina Dental Association. Twelve members are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. 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 such a group may serve as a director at any one time. The insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the Director of the Department of Insurance. The Director of the Department of Insurance is chairman of the board of directors, ex officio, and he, or his designee, must preside at all meetings of the board but has no vote except in the case of a tie.

Section 38-79-270. Any applicant for insurance through the association, person insured pursuant to this article or his representative, or any insurer adversely affected or claiming to be adversely affected by any ruling, action, or decision by or on behalf of the association may appeal to the department within thirty days after notice of the ruling, action, or decision.

Section 38-79-280. The association shall file in the office of the department annually, by March first, a statement which contains information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain such matters and information as are prescribed by the director or his designee and must be in the form he directs. The director or his designee may, at any reasonable time, require the association to furnish additional information with respect to its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation, and experience of the association.

Section 38-79-290. The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association."

Name changed

SECTION 831. Section 38-79-430 of the 1976 Code is amended to read:

"Section 38-79-430. The Board of Governors (Board) is created to manage and operate the Fund. The Board is composed of the Director of the Department of Insurance, three physicians to be appointed by the Governor after consultation with the South Carolina Medical Association, two dentists to be appointed by the Governor after consultation with the South Carolina Dental Association, two hospital representatives to be appointed by the Governor after consultation with the South Carolina Hospital Association, two insurance representatives to be appointed by the Governor after consultation with the insurance industry, one attorney to be appointed by the Governor after consultation with the South Carolina Bar, one attorney to be appointed by the Governor after consultation with the South Carolina Trial Lawyers Association, and two representatives of the general public appointed by the Governor who are unaffiliated with insurance or health care industries or the medical or legal professions. The appointed members shall serve for a term of six years. However, of those first appointed, one physician, one dentist, one hospital representative, and one insurance representative must be appointed for a term of two years and one representative of the general public, one attorney, one insurance representative, and one hospital representative must be appointed for a term of four years. The Board must meet at the call of the chairman or a majority of the members but in any event it must meet at least once a year. A majority of the Board members shall constitute a quorum for the transaction of any business of the Board. The affirmative vote by a majority of the quorum present at a duly called meeting after notice is required to exercise any function of the Board. The Board may promulgate any regulations necessary to carry out the provisions of this article. The Director of the Department of Insurance must act in an advisory capacity and as chairman of the Board but has no vote. He may designate a deputy or other officer of his agency to serve in his behalf on the Board."

Name changed; etc.

SECTION 832. Articles 1 and 3, Chapter 81, Title 38 of the 1976 Code is amended to read:

Article 1

Reporting Requirements

Section 38-81-10. All legal professional malpractice insurance claims filed in the State with any insurer must be reported to the department by the insurer in the form and under the terms and conditions that he prescribes. The director or his designee shall maintain complete and accurate records on all the claims including the causes of the complaints, the disposition of each claim, and any other information which he considers important in observing and reporting on professional liability trends in this State, including, but not limited to, the reserves set aside for each claim, the amounts paid in settlement or awarded by jury, and the names of the claimant and defendant. The director or his designee may release to appropriate disciplinary and licensing agencies any data or information which may assist the agencies in improving the quality of legal professional service. The department may promulgate regulations necessary to carry out the provisions of this chapter.

Section 38-81-20. There is no liability on the part of, and no cause of action of any nature may arise against, any insurer, its officers, its agents, or employees or the director, his designees, or his representatives for any action taken by them in performance of their powers and duties under this chapter.

Article 3

Legal Professional Liability Insurance Joint Underwriting Association

Section 38-81-210. The General Assembly declares that there exists the potential for a legal professional liability insurance crisis for attorneys in this State because of the high cost of liability insurance and a want of competition. These conditions could result in a situation in which liability insurance would not be available to attorneys in the State. The public interest requires that a contingency program for providing legal professional liability insurance be enacted and that the Insurance Department of South Carolina (department) activate this program upon finding that an emergency exists because insurance is not available through normal channels or is not available on a reasonable basis because of lack of competition or otherwise.

Section 38-81-220. As used in this article: (1) `Association' means any joint underwriting association established pursuant to this article. (2) `Legal professional liability insurance' means insurance protection against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of legal service to or representation of any person as the result of negligence or malpractice in rendering or failing to render professional service. (3) `Net direct premiums' means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee less return premiums or the unused or unabsorbed portions of premium deposits.

Section 38-81-230. (A) A joint underwriting association is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State. (B) The purpose of the association is to provide legal professional liability insurance on a self-supporting basis to the fullest extent possible. (C) The association is activated when the department finds and declares the existence of an emergency because of the unavailability of legal professional liability insurance or the unavailability of such insurance on a reasonable basis through normal channels.

Section 38-81-240. The association has the power on behalf of its members to: (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed five million dollars for all claimants under one policy in any one year; (2) underwrite legal professional liability insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions; (3) cede and assume reinsurance.

Section 38-81-250. (A) Not less than thirty nor more than ninety days after the effective date of this article the director or his designee, after consultation with the members of the association, representatives of the public, the South Carolina Bar, and other affected individuals and organizations, shall promulgate a plan of operation consistent with this article. The plan of operation becomes effective and operative no later than thirty days after the declaration of an emergency by the department. (B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient- provision of legal professional 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, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association. (C) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend. (D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing.

Section 38-81-260. Upon the activation of the plan of operation, any attorney licensed in this State is entitled to apply to the association for coverage. The application may be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant. 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 any prior insurance of the same kind, the association, upon receipt of the premium, or a portion thereof as prescribed by the plan of operation, shall cause to be issued a policy of legal professional liability insurance for a term of one year. The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this act and to those provisions of Chapter 73, Title 38, Code of Laws of South Carolina, 1976, which are not inconsistent with this article.

Section 38-81-270. The director or his designee shall obtain complete statistical data in respect to legal professional liability losses and reparation costs as well as all other costs or expenses which underlie or are related to legal professional liability insurance. The department shall promulgate any statistical plan he considers necessary for the purpose of gathering 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 director or his designee also shall obtain statistical data in respect to the costs of compensating victims of legal professional liability. The director or his designee may require from any person obtaining insurance through the association loss, claim, or expense data. This information or data is confidential and the attorney-client privilege must be preserved.

Section 38-81-280. In structuring rates for legal professional liability insurance and determining the profit or loss of the association in respect to such insurance, consideration must be given by the director or his designee to all investment income.

Section 38-81-290. Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to legal professional liability insurance to be written by the association. If the director or his designee 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 director or his designee. If the director or his designee 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 38-81-300. (A) The director or his designee shall specify whether policy forms and the rate structure must be on a `claims-made' or `occurrence' basis and coverage may be provided by the association only on the basis specified by the director or his designee. The director or his designee shall specify the claims-made basis only if the contract makes provision for residual occurrence coverage upon the retirement, death, disability, or removal from the State of the insured. Provision may be made for a premium charge allocable to any residual occurrence coverage and the premium charges for the residual coverage must be segregated and separately maintained for such purpose which may include the reinsurance of all or part of that portion of the risk. (B) The policy may not contain any limitation in relation to the existing law in tort as provided by the statute of limitations of this State. (C) The policy form whether on a claims-made or occurrence basis may not require as a condition precedent to settlement or compromise of any claim the consent or acquiescence of the insured. However, such settlement or compromise is not considered an admission of fault or wrongdoing by the insured. (D) The premium rate charged for either or both claims-made or occurrence 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 38-81-310. The association may provide a rate increase or assessment subject to the approval of the director or his designee.

Section 38-81-320. Any deficit sustained by the association in any year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures: (1) an assessment upon the policyholders, which may not exceed one additional annual premium at the then current rate; (2) a rate increase applicable prospectively.

Section 38-81-330. After the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting. If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-81-320, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided for in Section 38-81-340. Any such contribution must be reimbursed to the members following recoupment as provided in Section 38-81-320.

Section 38-81-340. All insurers which are members of the association shall participate in its writings, expenses, profits, 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 department. 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 director or his designee, 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 director or his designee 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 director or his designee 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 is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any 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 38-81-350. 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 38-81-360. (A) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the director or his designee 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, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association. (C) Any unsatisfied net liability of any 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 have 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 38-81-370. The association is governed by a board of seven directors, one of whom is appointed by the Governor, with the advice and consent of the Senate, to represent the general public and three of whom are members of the South Carolina Bar appointed by the Governor. Three directors are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. 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 such a group may serve as a director at any one time. The insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the Director of the Department of Insurance. The Director of the Department of Insurance is chairman of the board of directors, ex officio, and he, or his designee, must preside at all meetings of the board but has no vote except in the case of a tie.

Section 38-81-380. Any applicant for insurance through the association, any person insured pursuant to this article, or his representative, or any insurer adversely affected, or claiming to be adversely affected, by any ruling, action, or decision by or on behalf of the association, may appeal to the director or his designee within thirty days after the ruling, action, or decision.

Section 38-81-390. The association shall file in the office of the department annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain information prescribed by the director or his designee and must be in the form he directs. The director or his designee, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.

Section 38-81-400. The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association."

Name changed

SECTION 833. Chapter 83, Title 38 of the 1976 Code is amended to read:

"CHAPTER 83

Joint Underwriting Association for Writing of Professional Liability Insurance

Section 38-83-10. As used in this chapter: (1) `Association' means any joint underwriting association established pursuant to this chapter. (2) `Professional liability insurance' means insurance protection against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of service to or representation of any person as the result of negligence or malpractice in rendering or failing to render a professional service. (3) `Net direct premiums' means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee less return premiums or the unused or unabsorbed portions of premium deposits.

Section 38-83-20. (A) A joint underwriting association is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State. (B) The purpose of the association is to provide professional liability insurance on a self-supporting basis to the fullest extent possible. (C) The association is activated when the department of Insurance finds and declares the existence of an emergency because of the unavailability of professional liability insurance or the unavailability of such insurance on a reasonable basis through normal channels.

Section 38-83-30. The association has the power on behalf of its members to: (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed five million dollars for all claimants under one policy in any one year; (2) underwrite professional liability insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions; (3) cede and assume reinsurance.

Section 38-83-40. (A) Upon application by the members of a professional association seeking creation of a joint underwriting association, the Department of Insurance shall promulgate a plan of operation consistent with this chapter. The plan of operation is operative no later than thirty days after the declaration of an emergency by the Department of Insurance. (B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of professional 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, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association. (C) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend but under no circumstances whatsoever shall any profit be paid over to or received by an insurer either in currency or any other benefit of any kind. (D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing.

Section 38-83-50. Upon the activation of the plan of operation, any professional licensed in this State is entitled to apply to the association for coverage. The application shall be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant. 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 any prior insurance of the same kind, the association, upon receipt of the premium, or a portion thereof as prescribed by the plan of operation, shall cause to be issued a policy of professional liability insurance for a term of one year. The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this chapter and to those provisions of Chapter 73, Title 38, Code of Laws of South Carolina, 1976, which are not inconsistent with this chapter.

Section 38-83-60. The director or his designee shall obtain complete statistical data in respect to professional liability losses and reparation costs as well as all other costs or expenses which underlie or are related to professional liability insurance. The Department of Insurance shall promulgate any statistical plan he considers necessary for the purpose of gathering 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 director or his designee also shall obtain statistical data in respect to the costs of compensating victims of professional liability. The director or his designee may require from any person obtaining insurance through the association loss, claim, or expense data.

Section 38-83-70. In structuring rates for professional liability insurance and determining the profit or loss of the association in respect to such insurance, consideration must be given by the director or his designee to all investment income so that investment income is a part of the rate-making and setting process.

Section 38-83-80. Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to professional liability insurance to be written by the association. If the director or his designee 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 director or his designee. If the director or his designee 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 38-83-90. (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 any limitation in relation to the existing law in tort as provided by the statute of limitations of this State. (C) The policy form shall not require as a condition precedent to settlement or compromise of any claim the consent or acquiescence of the insured. However, such 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 38-83-100. The association may provide a rate increase or assessment subject to the approval of the director or his designee.

Section 38-83-110. Any deficit sustained by the association in any year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures: (1) an assessment upon the policyholders, which may not exceed one additional annual premium at the then current rate; (2) a rate increase applicable prospectively.

Section 38-83-120. After the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting. If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-83-110, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided for in Section 38-83-130. Any such contribution must be reimbursed to the members following recoupment as provided in Section 38-83-110.

Section 38-83-130. 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 Department of Insurance. 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 director or his designee, 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 director or his designee 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 director or his designee 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 is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any 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 38-83-140. 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 38-83-150. (A) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the director or his designee 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, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association. (C) Any unsatisfied net liability of any 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 have 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 38-83-160. Each joint underwriting association is governed by a board of seven directors, one of whom is appointed by the Governor to represent the general public and four of whom are appointed by the Governor and represent professionals covered under the association. Two directors are the Chairman of the Labor, Commerce and Industry Committee of the House of Representatives or his designee and the Chairman of the Banking and Insurance Committee of the Senate or his designee, both of whom shall serve ex officio. 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 such a group may serve as a director at any one time. The Director of the Department of Insurance is chairman of the board of directors, ex officio, and he, or his designee, must preside at all meetings of the board but has no vote except in the case of a tie.

Section 38-83-170. Any applicant for insurance through the association, any person insured pursuant to this chapter, or his representative, or any insurer adversely affected, or claiming to be adversely affected, by any ruling, action, or decision by or on behalf of the association, may appeal to the director or his designee within thirty days after the ruling, action, or decision.

Section 38-83-180. The association shall file in the office of the Department of Insurance annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain information prescribed by the director or his designee and must be in the form he directs. The director or his designee, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.

Section 38-83-190. The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the Department of Insurance, the Governor, and the General Assembly. The expenses of the examination must be paid by the association."

Name changed

SECTION 834. Section 38-85-70 of the 1976 Code is amended to read:

"Section 38-85-70. No group policy or group certificate of mortgage insurance used in connection with a consolidation, nor any application, endorsement, or rider which becomes a part of any such group policy or certificate, may be issued or delivered in this State until a copy of the form has been filed with and approved by the director or his designee."

Name changed

SECTION 835. Section 38-85-80 of the 1976 Code is amended to read:

"Section 38-85-80. The department is authorized to promulgate regulations to implement this chapter."

Name changed, defined; powers of director

SECTION 836. Subsection (1) of Section 38-87-20 of the 1976 Code is amended to read:

"(1) `Commissioner' means the commissioner, director, or superintendent of insurance in a state. Director means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the South Carolina Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the Insurance Department."

Provisions re-enacted without change

SECTION 837. Section 38-87-20(8)(h) of the 1976 Code of Laws is amended to read:

"(h) such other matters as may be prescribed by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state;"

Provisions re-enacted without change

SECTION 838. Section 38-87-20(11)(c)(ii) of the 1976 Code of Laws is amended to read:

"(ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group must be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Liability Risk Retention Act of 1986);"

Name changed

SECTION 839. Section 38-87-30 of the 1976 Code of Laws is amended to read:

"Section 38-87-30. (A) A risk retention group must, pursuant to the provisions of this title, be chartered and licensed to write only liability insurance under this chapter and, except as provided elsewhere in this chapter, shall comply with all of the laws, regulations, and requirements applicable to such insurers chartered and licensed in this State and with Section 38-87-40 to the extent such requirements are not a limitation on laws, regulations, or requirements of this State. (B) Before it may offer insurance in any state, each risk retention group chartered in this State shall submit for approval to the director or his designee of this State a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten days of any such change. The group may not offer any additional kinds of liability insurance, in this State or in any other state, until a revision of such plan or study is approved by the director or his designee. (C) At the time of filing its application for charter, the risk retention group shall provide to the director or his designee in summary form the following information: the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the director or his designee may forward such information to the National Association of Insurance Commissioners. Providing notification to the National Association of Insurance Commissioners is in addition to, and is not sufficient to satisfy, the requirements of Section 38-87-40 or any other provision of this chapter."

Name changed

SECTION 840. Section 38-87-40 of the 1976 Code of Laws is amended to read:

"Section 38-87-40. Section 38-87-40. Risk retention groups chartered and licensed in states other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows: (1) Notice of Operations and Designation of director or his designee as Agent. (a) Before offering insurance in this State, a risk retention group shall submit to the director or his designee: (i) a statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, charter date, its principal place of business, and such other information, including information on its membership, as the director or his designee of this State may require to verify that the risk retention group is qualified under Section 38-87-20(11); (ii) a copy of its plan of operations or feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed; however, the provision relating to the submission of a plan of operation or feasibility study does not apply with respect to any line or classification of liability insurance which: (A) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986; and (B) was offered before such date by any risk retention group which had been chartered and operating for not less than three years before such date. (b) The risk retention group shall submit a copy of any revision to its plan of operation or feasibility study required by Section 38-87-30(B) at the same time that such revision is submitted to the commissioner of its chartering state. (c) A statement of registration and a notice designating the commissioner as agent for the purpose of receiving service of legal documents or process must be submitted on such forms as the director or his designee may prescribe or approve. (d) Annual license fees, equal to the license fees required of an admitted liability insurer licensed to transact business in this State, must be paid in this State. (2) Financial Condition. Any risk retention group doing business in this State shall submit to the director or his designee: (a) a copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which must be certified by an independent public accountant and shall contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a loss reserve specialist qualified under such criteria as the director or his designee may prescribe or approve; (b) a copy of each examination of the risk retention group as certified by the commissioner of its chartering state or other public official conducting the examination; (c) upon request by the director or his designee, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group; (d) such information as may be required to verify its continuing qualification as a risk retention group under Section 38-87-20(11). (3) Taxation. (a) Each risk retention group is liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State and shall report to the director or his designee the net premiums written for risks resident or located within this State. Such risk retention group is subject to taxation, including any applicable fines and penalties related thereto, on the same basis as a foreign admitted insurer. (b) To the extent licensed agents or brokers are utilized pursuant to Section 38-87-120, they shall report to the department the premiums for direct business for risks resident or located within this State which such licensees have placed with or on behalf of a risk retention group not chartered in this State. (c) To the extent that insurance agents or brokers are utilized pursuant to Section 38-87-120, such agent or broker shall keep a complete and separate record of all policies procured from each such risk retention group, which record must be open to examination by the director or his designee or his representative on demand. These records shall, for each policy and each kind of insurance provided thereunder, include the following: (i) the limit of liability; (ii) the time period covered; (iii) the effective date; (iv) the name of the risk retention group which issued the policy; (v) the gross premium charged; (vi) the amount of return premiums, if any; (vii) such additional information as the director or his designee may require. (4) Compliance with Claims Settlement Practices Laws. Every risk retention group, its agents, and its representatives shall comply with the claims settlement practices laws of this State, including, but not limited to, Section 38-57-70, Chapter 59 of Title 38, and such other provisions relative to claims settlement practices required by law. (5) Deceptive, False, or Fraudulent Practices. Every risk retention group shall comply with the laws of this State regarding deceptive, false, or fraudulent acts or practices, including, but not limited to, Chapter 57 of this title and such other provisions relative to deceptive, false, or fraudulent practices required by law. (6) Examination Regarding Financial Condition. A risk retention group shall submit to an examination by the director or his designee to determine its financial condition if the director or his designee of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty days after a request by the director or his designee of this State. The examination must be coordinated to avoid unjustified repetition and must be conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioners' Examiner's Handbook. (7) Notice to Purchasers. Every application form for insurance from a risk retention group, and every policy (on its front and declaration pages) issued by a risk retention group, must contain in ten point type the following notice: NOTICE This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group. (8) Prohibited Acts Regarding Solicitation or Sale. The following acts by a risk retention group are prohibited: (a) the solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in the group; (b) the solicitation or sale of insurance by, or operation of, a risk retention group that is in hazardous financial condition or financially impaired. (9) Prohibition on Ownership by an Insurance Company. No risk retention group is allowed to do business in this State if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies. (10) Prohibited Coverage. The terms of any insurance policy issued by any risk retention group may not provide, or be construed to provide, coverage prohibited generally by statute of this State or declared unlawful by the Supreme Court of South Carolina. (11) Delinquency Proceedings. A risk retention group not chartered in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment after an examination under Section 38-87-40(6). (12) Penalties. A risk retention group that violates any provision of this chapter is subject to fines and any other penalties, including revocation of its right to do business in this State, applicable to licensed insurers generally. (13) Operation Prior to Enactment of this Chapter. In addition to complying with the requirements of this section, any risk retention group operating in this State prior to enactment of this chapter shall comply within thirty days after the effective date of this chapter with the provisions of item (1)(a) of this section."

Name changed

SECTION 841. Subsection (D) of Section 38-87-50 of the 1976 Code is amended to read:

"(D) The director or his designee may require a risk retention group to participate in any mechanism established or authorized under the law of this State for the equitable apportionment among insurers of liability insurance losses and expenses incurred on policies written through such mechanism, and such risk retention group shall submit sufficient information to the department to enable him to apportion on a nondiscriminatory basis the risk retention group's proportionate share of such losses and expenses."

Name changed; etc.

SECTION 842. Section 38-87-80 of the 1976 Code is amended to read:

"Section 38-87-80. (A) A purchasing group prior to doing business in this State shall furnish notice to the department, on forms prescribed or approved by it, which shall: (1) identify the state in which the group is domiciled; (2) identify all other states in which the group intends to do business; (3) specify the lines and classifications of liability insurance which the purchasing group intends to purchase; (4) identify the insurance company from which the group intends to purchase its insurance and the domicile of such company; (5) specify the method by which, and the person, if any, through whom insurance will be offered to its members whose risks are resident or located in this State; (6) identify the principal place of business of the group; (7) provide other information as may be required by the director or his designee to verify that the purchasing group is qualified under Section 38-87-20(10). (B) A purchasing group shall notify, within ten days, the director or his designee of any changes in any of the items set forth in subsection (A) of this section. (C) The purchasing group shall register with the department and designate the Director of the Department of Insurance as its agent solely for the purpose of receiving service of legal documents or process, except that such requirements do not apply in the case of a purchasing group which satisfies the director or his designee that it only purchases insurance that was authorized under the Federal Products Liability Risk Retention Act of 1981, and: (1) that in any state of the United States (a) it was domiciled before April 1, 1986; and (b) it is domiciled on and after October 27, 1986; (2) that (a) before October 27, 1986, it purchased insurance from an insurance carrier licensed in any state; and (b) since October 27, 1986, it purchased its insurance from an insurance carrier licensed in any state; or (3) that it was a purchasing group under the requirements of the Product Liability Risk Retention Act of 1981 before October 27, 1986. (D) Each purchasing group that is required to give notice pursuant to subsection (A) of this section also shall furnish such information as may be required by the director or his designee to: (1) verify that the entity qualifies as a purchasing group; (2) determine where the purchasing group is located; (3) determine appropriate tax treatment."

Name changed

SECTION 843. Section 38-87-110 of the 1976 Code is amended to read:

"Section 38-87-110. (A) The director or his designee is authorized to use any power established under this title to enforce the insurance laws of this State not specifically preempted by the Liability Risk Retention Act of 1986, including, but without limitation, the administrative authority of the director or his designee to investigate, issue subpoenas, conduct depositions and hearings, issue orders, impose monetary penalties, and seek injunctive relief. With regard to any investigation, administrative proceedings, or litigation, the director or his designee may rely on the procedural laws of this State. (B) Whenever the director or his designee determines that any person, risk retention group, purchasing group, or insurer of a purchasing group has violated, is violating, or is about to violate any provision of this chapter or any other insurance law of this State applicable to such person or entity, or has failed to comply with a lawful order of his, he may, in addition to any other lawful remedies or penalties, cause a complaint to be filed in the Court of Common Pleas for Richland County to enjoin and restrain such person, risk retention group, purchasing group, or insurer from engaging in such violation, or to compel compliance with such order of the director or his designee. The court has jurisdiction of the proceeding and has the power to enter a judgment and order for injunctive or other relief. In any action by the director or his designee under this subsection, service of process must be made upon the Secretary of State, who shall forward the order, pleadings, or other process to the person, risk retention group, purchasing group, or insurer in accordance with the procedures specified in Section 38-25-510. Nothing herein may be construed to limit or abridge the authority of the director or his designee to seek injunctive relief in any district court of the United States as provided in Section 38-87-130."

Name changed; etc.

SECTION 844. Section 38-87-140 of the 1976 Code is amended to read:

"Section 38-87-140. The department may promulgate regulations considers necessary to carry out the provisions of this chapter."

Name changed

SECTION 845. Chapter 89, Title 38 of the 1976 Code is amended to read:

"CHAPTER 89

Day Care Joint Underwriting Association

Section 38-89-10. As used in this chapter: (1) `Association' means a joint underwriting association established pursuant to this subdivision. (2) `Day care liability insurance' means insurance protection against the day care liability of the insured and against loss, damage, or expense incident to a claim arising out of day care service to a person as the result of negligence in rendering or failing to render day care service. (3) `Net direct premiums' means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee less return premiums or the unused or unabsorbed portions of premium deposits.

Section 38-89-20. (A) A joint underwriting association is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State. (B) The purpose of the association is to provide day care liability insurance on a self-supporting basis to the fullest extent possible. (C) The association is activated when the Department of Insurance finds and declares the existence of an emergency because of the unavailability of day care liability insurance or the unavailability of such insurance on a reasonable basis through normal channels.

Section 38-89-30. The association has the power on behalf of its members to: (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed five million dollars for all claimants under one policy in any one year; (2) underwrite day care liability insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions; (3) cede and assume reinsurance.

Section 38-89-40. (A) Not less than thirty nor more than ninety days after the effective date of this subdivision the director or his designee, after consultation with representatives of the public, day care owners and operators, and other affected individuals and organizations, shall promulgate a plan of operation consistent with this chapter. The plan of operation becomes effective and operative no later than thirty days after the declaration of an emergency by the department. (B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of day care 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, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association. (C) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend. (D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing.

Section 38-89-50. Upon the activation of the plan of operation, a day care owner or operator licensed in this State is entitled to apply to the association for coverage. The application may be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant. 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 any 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 day care liability insurance for one year. The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this chapter and to those provisions of Chapter 73, Title 38 of the 1976 Code which are not inconsistent with this subdivision.

Section 38-89-60. The director or his designee shall obtain complete statistical data in respect to day care liability losses and reparation costs as well as all other costs or expenses which underlie or are related to day care liability insurance. The Department of Insurance shall promulgate any statistical plan he considers necessary for the purpose of gathering 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 director or his designee also shall obtain statistical data in respect to the costs of compensating victims of day care liability. The director or his designee may require loss, claim, or expense data from any person obtaining insurance through the association. This information or data is confidential.

Section 38-89-70. In structuring rates for day care liability insurance and determining the profit or loss of the association in respect to the insurance, consideration must be given by the director or his designee to all investment income.

Section 38-89-80. Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to day care liability insurance to be written by the association. If the director or his designee 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 director or his designee. If the director or his designee 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 38-89-90. (A) The director or his designee shall specify whether policy forms and the rate structure must be on a `claims-made' or `occurrence' basis, and coverage may be provided by the association only on the basis specified by the director or his designee. The director or his designee shall specify the claims-made basis only if the contract makes provision for residual occurrence coverage upon the retirement, death, disability, or removal from the State of the insured. Provision may be made for a premium charge allocable to any residual occurrence coverage, and the premium charges for the residual coverage must be segregated and separately maintained for such purpose which may include the reinsurance of all or part of that portion of the risk. (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, whether on a claims-made or occurrence basis, may not require as a condition precedent to settlement or compromise of a claim the consent or acquiescence of the insured. However, the settlement or compromise is not considered an admission of fault or wrongdoing by the insured. (D) The premium rate charged for either or both claims-made or occurrence 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 38-89-100. The association may provide a rate increase or assessment subject to the approval director or his designee.

Section 38-89-110. A deficit sustained by the association in a year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures: (1) an assessment upon the policyholders, which may not exceed one additional annual premium at the then current rate; (2) a rate increase applicable prospectively.

Section 38-89-120. After the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting. If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-89-110, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided in Section 38-89-130. A contribution must be reimbursed to the members following recoupment as provided in Section 38-89-110.

Section 38-89-130. All insurers which are members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premium 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 department of Insurance. No member may be obligated in any one year to reimburse the association because of its proportionate share in the deficit from operations of the association in that year in excess of one percent of its surplus to policyholders and the aggregate amount not so reimbursed must be reallocated among the remaining members in accordance with the method of determining participation prescribed in this subsection after excluding from the computation the total net direct premiums of all members not sharing in the excess deficit. If the deficit from operations allocated to all members of the association in a calendar year exceeds one percent of their respective surplus to policyholders, the amount of the deficit must be allocated to each member in accordance with the method of determining participation prescribed in this subsection.

Section 38-89-140. 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 38-89-150. (A) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the director or his designee 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, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association. (C) An 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 have 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 38-89-160. The association is governed by a board of seven directors, one of whom is appointed by the Governor, with the advice and consent of the Senate, to represent the general public and three of whom are day care owners or operators appointed by the Governor. Three directors are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. 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 insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the director of the department. The director of the department is chairman of the board of directors, ex officio, and he, or his designee, must preside at all meetings of the board but has no vote except in the case of a tie.

Section 38-89-170. An applicant for insurance through the association, a person insured pursuant to this chapter, or his representative, or an insurer adversely affected, or claiming to be adversely affected, by a ruling, action, or decision by or on behalf of the association, may appeal to the director or his designee within thirty days after the ruling, action, or decision.

Section 38-89-180. The association shall file in the office of the Department of Insurance 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 director or his designee and must be in the form he directs. The director or his designee, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.

Section 38-89-190. The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association."