Current Status Bill Number:
3450Type of Legislation: General Bill GBIntroducing Body: HouseIntroduced Date: 19950201Primary Sponsor: CatoAll Sponsors: CatoDrafted Document Number: bbm\9829jm.95Residing Body: HouseCurrent Committee: Labor, Commerce and Industry Committee 26 HLCISubject: Reinsurance facility
Body Date Action Description Com Leg Involved ______ ________ _______________________________________ _______ ____________ House 19950201 Introduced, read first time, 26 HLCI referred to CommitteeView additional legislative information at the LPITS web site.
TO AMEND SECTION 38-73-1420, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE SOUTH CAROLINA REINSURANCE FACILITY FILE AN EXPENSE COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT AFTER JUNE 30, 1995, AND ANNUALLY THEREAFTER, THE BOARD SHALL AUTHORIZE A LICENSED RATING ORGANIZATION APPROVED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO FILE WITH THE DIRECTOR AN EXPENSE COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES AND A PURE LOSS COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE WRITTEN BY THOSE INSURERS DESIGNATED PURSUANT TO SECTION 38-77-590(A) FOR RISKS WRITTEN BY THEM THROUGH PRODUCERS DESIGNATED PURSUANT TO THAT SAME SECTION; AND TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-1423 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT MEMBER INSURANCE COMPANIES OF AN AFFILIATED GROUP OF AUTOMOBILE INSURERS MAY UTILIZE DIFFERENT RATES FOR AUTOMOBILE INSURANCE COVERAGES IN ACCORDANCE WITH RATING PLANS FILED WITH AND APPROVED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE AND THAT THESE RATING PLANS MAY PROVIDE FOR DIFFERENT RATES AND RATING PLANS AMONG AFFILIATED COMPANIES AND DIFFERENT RATING TIERS WITHIN THE SAME COMPANY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-73-1420 of the 1976 Code, as added by Act 148 of 1989 and amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1420. After June 30, 1989 1995, and annually thereafter, the Board of Governors of the South Carolina Reinsurance Facility shall authorize a licensed rating organization approved by the director to file with the director an expense component for private passenger automobile insurance rate or premium charges and after the rating organization with the largest number of members or subscribers has filed a pure loss component for private passenger automobile insurance written by those automobile insurers designated pursuant to Section 38-77-590(a), for risks written by them through producers designated pursuant to that same section with the director or his designee. Upon the approval of such component the components by the director or his designee, those automobile insurers designated pursuant to Section 38-77-590(A)(a), for risks written by them through producers designated pursuant to that same section, shall utilize these final rate or premium charges, provided that the final rate or premium charges must be discounted from the actuarially indicated rates so that the projected combined loss ratio for risks subject to the final rate or premium charges is one hundred fifteen percent. This rate adjustment must occur evenly over a four-year period. Pursuant to Section 38-77-610, Reinsurance Facility recoupment charges must be reduced to the extent of resulting reductions in facility operating losses. Automobile insurers designated pursuant to Section 38-77-590(A)(a) are not required to use those same final rates or premium charges for risks written through their agents not appointed pursuant to Section 38-77-590.
The cost reductions realized in operating results of the Reinsurance Facility attributable to Act 136 of 1993 must be applied exclusively to reduce the recoupment charges on all policies of private passenger automobile insurance written in the State of South Carolina."
SECTION 2. The 1976 Code is amended by adding:
"Section 38-73-1423. To promote competition among insurers so as to provide the lowest possible automobile insurance rates, to reduce the number of insureds insured through the Reinsurance Facility, and to reduce recoupment surcharges paid by all policyholders, member companies of an affiliated group of automobile insurers may utilize different rates for automobile insurance coverages in accordance with rating plans filed with and approved by the director. These rating plans may provide for different rates and rating plans among affiliated companies and different rating tiers within the same company. The director shall approve the rating plans if the rates produced are not excessive, inadequate, or unfairly discriminatory.
Each member of a group of affiliated insurers shall not be considered a separate insurer for purposes of compliance with the laws governing the writing, cancellation, or renewal of an automobile insurance policy. Therefore, if one company which is a member of a group of affiliated companies refuses to write, cancels, or refuses to renew a policy but, at the same time, offers to arrange insurance for the applicant or insured with another member of the same group, there has not been a refusal to write, a cancellation, or a refusal to renew by the first company. However, no insurer shall take such action unless it does so on the basis of underwriting guidelines filed with the director. The movement of a policy from one company to another within a group of affiliated companies or the movement of a policy to a different tier within one company resulting in a different rate for the insured may only occur on the renewal date of the policy.
For the purpose of this section, an affiliated group of automobile insurers includes a group of automobile insurers under common ownership, management, or control."
SECTION 3. Except as otherwise specifically provided in this act, this act takes effect upon approval by the Governor.