Current Status Bill Number:4039 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19950412 Primary Sponsor:Richardson All Sponsors:Richardson Drafted Document Number:bbm\10147jm.95 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Motor vehicle insurance, index file and use
Body Date Action Description Com Leg Involved
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House 19950412 Introduced, read first time, 26 HLCI
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND SECTION 38-73-1425, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE FINAL RATE OR PREMIUM CHARGE FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO THE SOUTH CAROLINA REINSURANCE FACILITY, SO AS TO DELETE CERTAIN PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT BEGINNING JANUARY 1, 1995, AND ANNUALLY THEREAFTER, THE FINAL RATE OR PREMIUM CHARGE FOR A PRIVATE PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO THE FACILITY MUST BE CALCULATED SO THAT THE PROJECTED COMBINED RATIO FOR RISKS SUBJECT TO THE FINAL RATE OR PREMIUM CHARGES IS NO MORE THAN ONE HUNDRED PERCENT; TO PROVIDE, AMONG OTHER THINGS, THAT THE PROVISIONS OF SECTION 38-73-1425, AS AMENDED BY THIS ACT, ARE EFFECTIVE ON JANUARY 1, 1996, AND THAT THIS RATE ADJUSTMENT TO A PROJECTED COMBINED RATIO OF ONE HUNDRED PERCENT OR LESS MUST OCCUR EVENLY OVER A TWO-YEAR PERIOD BEGINNING ON JANUARY 1, 1996; AND TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-458 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT INSURERS OF PRIVATE PASSENGER AUTOMOBILE INSURANCE AND INDIVIDUAL MEMBERS OF RATING ORGANIZATIONS MAY ELECT TO FILE PRIVATE PASSENGER AUTOMOBILE INSURANCE RATES OR PREMIUM CHARGES UNDER THE "INDEX FILE AND USE" RATING METHODOLOGY DESCRIBED IN THIS SECTION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. (A) Section 38-73-1425 of the 1976 Code, as added by Act 113 of 1991 and as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1425. Beginning January 1, 1996, and annually thereafter, the final rate or premium charge for a private passenger automobile insurance risk ceded to the facility which does not qualify for the safe driver discount in Section 38-73-760(e) is the final rate or premium charge required by Section 38-73-1420 or the final rate or premium charge approved for use by the insurer, whichever is greater must be calculated so that the projected combined ratio for risks subject to the final rate or premium charges is not more than one hundred percent. The final rate or premium charge must be filed by the Reinsurance Facility with the director for approval. Furthermore, in calculating the final rate or premium charge, it must be based upon the combined ratio of all insurers ceding private passenger automobile insurance risks to the facility."
(B) The provisions of Section 38-73-1425, as amended by Section 1(A) of this act, are effective on January 1, 1996. This rate adjustment to a projected combined ratio of one-hundred percent or less must occur evenly over a two-year period beginning on January 1, 1996. On January 1, 1996, the first year of the two-year period begins for the rate adjustment and the two equal portions of this rate adjustment shall be based upon the losses or combined ratios reported by the facility on or about October 1, 1995. On January 1, 1997, the beginning of the last year of the two-period, the final rate or premium charge for a private passenger automobile insurance risk ceded to the facility shall include the remaining portion of the rate adjustment along with, but not limited to, those adjustments, if any, for losses or combined ratios reported by the facility after October 1, 1995.
SECTION 2. The 1976 Code is amended by adding:
"Section 38-73-458. (A) Notwithstanding any other provision of law, insurers of private passenger automobile insurance and individual members of rating organizations may elect to file private passenger automobile insurance rates or premium charges under the `Index File and Use' rating methodology described in this section.
(B) At least sixty days before their effective dates insurers of private passenger automobile insurance shall file with the Director of the Department of Insurance, or his designee, and the Consumer Advocate proposed rates or premium charges and certify under oath that the average of the overall change in the proposed rates or premium charges for all classes, all territories, and all coverages is equal to or less than the average annual change, for the previous twelve-months, of the Consumer Price Index Medical Care published by the United States Department of Labor, Monthly Labor Review Gross Weekly Earnings published by the United States Department of Labor, and Producer Price Index Motor Vehicles and Equipment published by the United States Department of Labor. Included in each filing also must be exhibits showing what each change would be using the same twelve-months Consumer Price Index published by the United States Department of Labor. In addition, for each filing under this section, the insurer shall file the rate report, with investment income and expense exhibits, set forth in Section 38-73-465 of the 1976 Code.
(C) Filings meeting the requirements of this section are considered approved after being on file at the Department of Insurance for sixty days. However, insurers of private passenger automobile insurance may elect only to file under the `Index File and Use' rating methodology one time during a consecutive six-month period, and the medical, labor, and motor vehicles and equipment index in subsection (B) must be annualized appropriately.
(D) If the Director of the Department of Insurance, or his designee, finds that the filed proposed rates do not meet the requirements of this section he may hold an expedited hearing on the matter that need not meet the requirements of Chapter 23, Title 1, the Administrative Procedures Act. As a result of this hearing, the commissioner may order the return of the filings to insurers for failing to meet the requirements of this section.
(E) If the Director of the Department of Insurance, or his designee, finds that the rates considered approved produce excess profits described in Section 38-73-1100, he shall hold a hearing on the matter in accordance with Section 38-73-1020. As a result of this hearing, the Director of the Department of Insurance, or his designee, may order a reduction in the rates previously considered approved and order rebates as prescribed in Section 38-73-465 of the 1976 Code. However, the amount of rates subject to rebate must be no more than the difference between the filed rates as approved and what they would have been using only the Consumer Price Index referenced in this section."
SECTION 3. Except as otherwise specifically provided in this act, this act takes effect upon approval by the Governor.