Current Status Bill Number:4490 Ratification Number:387 Act Number:326 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19960124 Primary Sponsor:Labor, Commerce and Industry Committee HLCI 26 All Sponsors:Labor, Commerce and Industry Committee Drafted Document Number:bbm\10515ac.96 Date Bill Passed both Bodies:19960502 Subject:Reinsurance Facility, motor vehicle insurance
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
------ 19960530 Act No. A326
------ 19960520 Signed by Governor
------ 19960514 Ratified R387
Senate 19960502 Read third time, enrolled for
ratification
Senate 19960423 Read second time, notice of
general amendments
Senate 19960416 Committee report: Favorable 02 SBI
Senate 19960208 Introduced, read first time, 02 SBI
referred to Committee
House 19960208 Read third time, sent to Senate
House 19960207 Read second time
House 19960130 Objection by Representative S. Whipper
Cobb-Hunter
Anderson
McMahand
Scott
Neal
Cato
Law
Young- Brickell
Mason
Walker
R. Smith
Williams
House 19960124 Introduced, read first time
View additional legislative information at the LPITS web site.
(A326, R387, H4490)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-73-775 SO AS TO REQUIRE THE SOUTH CAROLINA REINSURANCE FACILITY ANNUALLY TO DEVELOP AND FILE PHYSICAL DAMAGE LOSS COMPONENTS FOR AUTOMOBILE INSURANCE COVERAGES; TO AMEND SECTIONS 37-2-202 AND 37-3-202, BOTH AS AMENDED, RELATING TO ADDITIONAL CHARGES A CREDITOR AND CONSUMER LENDER, RESPECTIVELY, MAY CHARGE, SO AS TO REQUIRE THAT WHEN SINGLE INTEREST COLLISION COVERAGE IS WRITTEN IN CONNECTION WITH THE PURCHASE OF A MOTOR VEHICLE, NOTICE MUST BE GIVEN THAT THE COVERAGE IS FOR THE BENEFIT OF THE CREDITOR AND OF OTHER OPTIONS AVAILABLE TO THE BUYER; TO AMEND SECTION 38-77-10, AS AMENDED, RELATING TO THE PURPOSES OF THE AUTOMOBILE INSURANCE CHAPTER, SO AS TO CLARIFY THAT THE PURPOSES APPLY TO THE BODILY INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY AUTOMOBILE INSURANCE; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS UNDER AUTOMOBILE INSURANCE, SO AS TO ADD THE DEFINITION OF "FACILITY PHYSICAL DAMAGE RATE"; TO AMEND SECTION 38-77-110, AS AMENDED, RELATING TO THE REQUIREMENT TO WRITE AUTOMOBILE INSURANCE, SO AS TO CLARIFY THAT THIS REQUIREMENT APPLIES TO BODILY INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY COVERAGES; TO AMEND SECTION 38-77-280, AS AMENDED, RELATING TO COLLISION AND COMPREHENSIVE COVERAGES, SO AS TO DELETE CERTAIN COVERAGE REQUIREMENTS, TO ALLOW RATHER THAN REQUIRE INSURERS TO MAKE AVAILABLE COLLISION COVERAGE AND COMPREHENSIVE OR FIRE, THEFT, AND COMBINED ADDITIONAL COVERAGE, TO AUTHORIZE CEDING PHYSICAL DAMAGE INSURANCE COVERAGE TO THE FACILITY, TO PROHIBIT DISCRIMINATION ON CERTAIN GROUNDS IN DETERMINING RATES OR WHETHER TO WRITE OR RENEW COVERAGE, AND TO PROVIDE PENALTIES; AND TO AMEND SECTION 38-77-920, AS AMENDED, RELATING TO DUTIES AND RIGHTS OF INSURERS AND AGENTS, SO AS TO CLARIFY THAT AUTOMOBILE INSURANCE REFERS TO BODILY INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY.
Be it enacted by the General Assembly of the State of South Carolina:
Reinsurance Facility annually to file physical damage loss component
SECTION 1. The 1976 Code is amended by adding:
"Section 38-73-775. (A) The governing board of the South Carolina Reinsurance Facility annually shall develop and file physical damage loss components for automobile insurance coverages based on the total experience of all risks ceded to the facility which are actuarially-sound and supported by statistical evidence. The governing board shall contract with independent actuarial services to develop the loss component. Due consideration must be given to actual loss experience within the facility for the most recent three-year period for which such information is available.
(B) The loss component developed under this section is applicable to the risk and territorial classification plan promulgated and approved by the director or the director's designee. Nothing in this section precludes the governing board of the South Carolina Reinsurance Facility from filing for approval, or the Director of the Department of Insurance from requiring the governing board to file for approval, variations in loss components and rates which are based upon differences in risk characteristics including, but not limited to, differences in driving records.
(C) The governing board of the South Carolina Reinsurance Facility annually shall review the automobile physical damage loss components to determine if they are actuarially sound and supported by statistical evidence. If rate changes are required, the governing board shall submit appropriate filings for approval with the director. These rate filings are subject to public hearings pursuant to applicable provisions of the Administrative Procedures Act."
Creditor notice required on single interest collision coverage
SECTION 2. Section 37-2-202(2)(c) of the 1976 Code is amended to read:
"(c) with respect to vendor's single interest insurance, but only (i) to the extent that the insurer has no right of subrogation against the consumer, and (ii) to the extent that the insurance does not duplicate the coverage of other insurance under which loss is payable to the creditor as his interest may appear, against loss of or damage to property for which a separate charge is made to the consumer pursuant to paragraph (a), and (iii) if a clear, conspicuous, and specific statement in writing is furnished by the creditor to the consumer setting forth the cost of the insurance if obtained from or through the creditor and stating that the consumer may choose the person through whom the insurance is to be obtained, and (iv) upon application of the consumer for the insurance or for a transaction in which this coverage may be offered in connection with the purchase of a motor vehicle or with the placement of a motor vehicle as collateral, the following notice printed in no smaller than bold-face 13-point type:
`NOTICE: THE INSURANCE COVERAGE YOU ARE PURCHASING IS FOR THE BENEFIT OF THE CREDITOR. IT WILL NOT REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE, BUT IT MAY PAY THE CREDITOR FOR THE DAMAGES IF YOU CANNOT PAY. YOU HAVE THE RIGHT TO PURCHASE INSURANCE THAT WILL REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE EITHER THROUGH THE CREDITOR IF OFFERED BY THE CREDITOR OR THROUGH YOUR OWN AGENT.'
This notice must be signed by the applicant evidencing his acknowledgment of having read the notice, and be separate and apart from any other form used in the application."
Consumer lender notice required on single interest collision coverage
SECTION 3. Section 37-3-202(2)(c) of the 1976 Code is amended to read:
"(c) vendor's single interest insurance, but only:
(i) to the extent that the insurer has no right of subrogation against the debtor;
(ii) to the extent that the insurance does not duplicate the coverage of other insurance under which loss is payable to the creditor as his interest may appear, against loss of or damage to property for which a separate charge is made to the debtor pursuant to paragraph (a); and
(iii) if a clear, conspicuous, and specific statement in writing is furnished by the creditor to the debtor setting forth the cost of the insurance if obtained from or through the creditor and stating that the debtor may choose the person through whom the insurance is to be obtained; and
(iv) upon application of the consumer for the insurance or for a transaction in which this coverage may be offered in connection with the purchase of a motor vehicle or with the placement of a motor vehicle as collateral, the following notice printed in no smaller than bold-face 13-point type:
`NOTICE: THE INSURANCE COVERAGE YOU ARE PURCHASING IS FOR THE BENEFIT OF THE CREDITOR. IT WILL NOT REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE, BUT IT MAY PAY THE CREDITOR FOR THE DAMAGES IF YOU CANNOT PAY. YOU HAVE THE RIGHT TO PURCHASE INSURANCE THAT WILL REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE EITHER THROUGH THE CREDITOR IF OFFERED BY THE CREDITOR OR THROUGH YOUR OWN AGENT.'
This notice must be signed by the applicant evidencing his acknowledgment of having read the notice, and be separate and apart from any other form used in the application;"
Bodily injury and property damage liability included in purposes of this chapter
SECTION 4. Section 38-77-10(1) and (2) of the 1976 Code, as last amended by Act 181 of 1993, is further 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 bodily injury liability and property damage liability 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;
(2) To provide a Reinsurance Facility for bodily injury liability and property damage liability automobile insurers in which all automobile insurers which provide bodily injury liability insurance, property damage liability insurance, or both, must participate to the end that the operating expenses and net profit or loss of the facility may be shared equitably by all the insurers transacting bodily injury liability and property damage liability automobile insurance business in this State giving appropriate consideration to degrees of utilization of the facility by the several insurers of bodily injury liability and property damage liability automobile insurance and to provide prohibitions or penalties in respect to excessive utilization of the facility."
Definition added
SECTION 5. Section 38-77-30 of the 1976 Code, as last amended by Act 181 of 1993, is further amended by adding an appropriately numbered item to read:
"( ) `Facility physical damage rate' means the final rate or premium charge for physical damage coverage which must be established by adding the physical damage loss component developed under Section 38-73-780 to the expense component developed under Section 38-73-1420."
The requirement to write automobile insurance includes bodily injury and property damage liability coverage
SECTION 6. Section 38-77-110(A) of the 1976 Code, as last amended by Act 181 of 1993, is further 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 bodily injury liability and property damage liability coverage 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."
Coverage requirements revised; ceding physical damage insurance coverage authorized; discrimination prohibited, penalties
SECTION 7. Section 38-77-280 of the 1976 Code, as last amended by Act 181 of 1993, is further amended to read:
"Section 38-77-280. (A) All automobile insurers, including those insurance companies writing private passenger physical damage coverages only, may, at their own election, make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage at such rates and under such rules as have been approved by the director. Automobile insurers contracted pursuant to Section 38-77-590 for risks written by them through producers assigned by the facility governing board pursuant to that section may make available collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage. Notwithstanding Section 38-77-590(g), a designated producer may have one or more voluntary outlets for automobile physical damage.
(B) Any automobile physical damage insurance coverage deductible or policy deductible does not apply to automobile safety glass.
(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 the uniform merit rating plan 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. Notwithstanding Section 38-77-111, automobile physical damage insurance coverage may be ceded to the facility. However, automobile physical damage coverages ceded to the facility by an insurer or servicing carrier must be at the facility physical damage rate as defined in Section 38-77-30.
(F) In determining the premium rates to be charged on physical damage coverage or single interest collision coverage, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. Nor may an insurer, agent, or broker refuse to write or renew physical damage insurance coverage or single interest collision coverage based upon race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director. If the Director of the Department of Insurance or the director's designee finds that an insurer, agent, or broker is participating in a pattern of unfair discrimination, the director or the director's designee may impose a fine of up to two hundred thousand dollars. The director or the director's designee at any time may examine an insurer, agent, or broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker."
Duties and rights of insurers include bodily injury and property damage liability duties and rights
SECTION 8. Section 38-77-920 of the 1976 Code, as last amended by Section 828 of Act 181 of 1993, is further amended to read:
"Section 38-77-920. Except as provided for in Section 38-77-110 and as is specifically provided for otherwise by law, no automobile insurer may refuse acceptance of bodily injury liability and property damage liability 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 bodily injury liability and property damage liability automobile insurance may refuse to accept in behalf of an insurer represented by him bodily injury liability and property damage liability 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 bodily injury liability and property damage liability automobile insurance in this State which offers bodily injury liability and property damage liability automobile insurance through the mails or uses the mails in transacting bodily injury liability and property damage liability 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."
Initial reporting
SECTION 9. The development of the initial physical damage loss components for automobile insurance coverages required by Section 38-73-775 of the 1976 Code, as added by Section 1 of this act, must be filed and approved by October 1, 1996, and this filing is not required to comply with the otherwise applicable provisions of the Administrative Procedures Act.
Time effective
SECTION 10. This act takes effect October 1, 1996, unless otherwise specified.
Approved the 20th day of May, 1996.