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A268, R396, S1126
Sponsors: Senator Leatherman
Document Path: l:\s-res\hkl\021prem.jlp.doc
Companion/Similar bill(s): 5017
Introduced in the Senate on April 6, 2004
Introduced in the House on April 29, 2004
Last Amended on May 25, 2004
Passed by the General Assembly on June 2, 2004
Governor's Action: July 6, 2004, Signed
Summary: Premium service contracts
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 4/6/2004 Senate Introduced and read first time SJ-4 4/6/2004 Senate Referred to Committee on Banking and Insurance SJ-4 4/21/2004 Senate Polled out of committee Banking and Insurance SJ-48 4/21/2004 Senate Committee report: Favorable Banking and Insurance SJ-48 4/22/2004 Scrivener's error corrected 4/27/2004 Senate Read second time SJ-33 4/27/2004 Senate Ordered to third reading with notice of amendments SJ-33 4/28/2004 Senate Read third time and sent to House SJ-35 4/29/2004 House Introduced and read first time HJ-8 4/29/2004 House Referred to Committee on Labor, Commerce and Industry HJ-8 5/12/2004 House Committee report: Favorable Labor, Commerce and Industry HJ-6 5/19/2004 House Debate adjourned until Thursday, May 20, 2004 HJ-43 5/20/2004 House Debate adjourned until Tuesday, May 25, 2004 HJ-52 5/25/2004 House Amended HJ-27 5/25/2004 House Requests for debate-Rep(s). J Brown, Cobb-Hunter, Weeks, Clyburn, Lloyd, Mahaffey, Ott, Anthony, Freeman, Skelton, Rhoad, Scarborough, Cato, Witherspoon, Tripp, Hosey, JR Smith Clemmons, Mack, Breeland, R Brown, and Allen HJ-29 5/25/2004 House Read second time HJ-142 5/25/2004 House Roll call Yeas-99 Nays-0 HJ-144 5/26/2004 House Read third time and returned to Senate with amendments HJ-75 6/2/2004 Senate Concurred in House amendment and enrolled SJ-43 6/3/2004 Ratified R 396 7/6/2004 Signed By Governor 7/14/2004 Copies available 7/14/2004 Effective date 07/06/04 7/28/2004 Act No. 268
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
(A268, R396, S1126)
AN ACT TO AMEND SECTION 38-39-70, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PREMIUM SERVICE AGREEMENTS, TO CLARIFY PROVISIONS OF PREMIUM SERVICE CONTRACTS AND DISCLOSURES, INCLUDING RENEWALS; TO AMEND SECTION 38-39-80, RELATING TO PREMIUM SERVICE COMPANIES, TO REQUIRE CERTAIN REGULATIONS BY THE DEPARTMENT OF INSURANCE; AND TO AMEND SECTION 38-39-90, RELATING TO CANCELLATION OF INSURANCE CONTRACTS BY PREMIUM SERVICE COMPANIES UPON DEFAULT, TO CLARIFY CERTAIN NOTICES TO INSUREDS.
Be it enacted by the General Assembly of the State of South Carolina:
Premium service agreements
SECTION 1. Section 38-39-70 of the 1976 Code is amended to read:
"Section 38-39-70. (a) A premium service agreement must:
(1) be at least eight-point type for the printed portion;
(2) be dated and signed by the insured;
(3) contain the name and place of business of the insurance agency or insurance brokerage company negotiating the related insurance contract, the name and residence or the place of business of the insured as specified, the name and place of business of the premium service company to which payments are to be made, a description of the contracts involved, and the amount of the premium; and
(4) contain the following, where applicable, the:
(A) total amount of the premiums;
(B) amount of the down payment;
(C) principal balance, the difference between subitems (A) and (B);
(D) amount of the service charge;
(E) balance payable by the insured, sum of subitems (C) and (D); and
(F) number of installments required, the amount of each installment expressed in dollars, and the due date or period of it.
(b) The subitems provided for in subsection (a)(4) does not need to be stated in the sequence or order in which they appear, and additional subitems may be included to explain the computations made in determining the amount to be paid by the insured.
(c) A premium service contract may include policy premiums, policy fees, agent commissions and fees, premium taxes, inspection fees, charges for motor vehicle (driving record) and claims history reports, and other automobile related services. All amounts must be disclosed on the premium service agreement.
(d) If an insurance policy has been financed pursuant to this chapter, an additional premium to that policy or a renewal or extension of that policy may be financed with the same premium service company without the execution of a new premium service agreement. Upon renewal of the insurance policy, the premium service company shall provide to the insured an addendum to or revision of the existing premium service agreement containing the subitems provided for in subsection (a)(4).
(e) Nothing contained in this chapter or in Section 38-55-50 prohibits a licensed agent or broker from charging and collecting an administrative fee of five dollars for originating a premium service agreement, provided that the agent or broker has no ownership interest in the premium service company to which payments are to be made. The amount, if any, must be disclosed on the premium service agreement and must not be considered in any way a charge by the premium service company."
Premium service company
SECTION 2. Section 38-39-80 of the 1976 Code is amended to read:
"Section 38-39-80. (a) A premium service company may not write any insurance or sell any other service or commodity in connection with a premium service contract.
(b) A premium service company may not charge, contract for, receive, or collect a service charge other than as permitted by this chapter.
(c) The service charge must be computed on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the premium service agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium service agreement is payable, unless the service charge is computed as a fixed amount for each installment.
(d) An initial charge up to twenty dollars for each premium service contract, addendum, and revision is permitted, which may not be refunded upon cancellation or prepayment. The amount of the initial charge must be filed with the department.
(e) The service charge is the greater of the rate of one percent for each month computed on the remainder of the outstanding balance or an amount for each installment filed with and approved or promulgated by the department. However, if there is a cancellation by the borrower before maturity of the contract, the unearned service charge must be refunded on a short rate basis as determined by the department. With respect to the service charge for a premium service agreement which is for other than personal, family, or household purposes, the parties may contract for the payment by the debtor of a service charge at any rate, but no rate charged pursuant to the provisions of this subsection may be unconscionable. 'Unconscionable' is defined as a rate substantially exceeding the usual and customary charge for financing insurance premiums.
(f) A premium service company may not induce an insured to become obligated under more than one premium service agreement for the purpose of obtaining more than one nonrefundable initial charge, and a premium service company may not intentionally cancel an insurance contract for the purpose of obtaining an additional nonrefundable initial charge on a new premium service agreement accepted within sixty days of the cancellation on the prior agreement.
(g) A premium service agreement may provide for the payment by the insured of a delinquency charge on each installment in default for a period of not less than five days of one dollar to a maximum of five percent of the installment. However, if the loan is primarily for personal family and household purposes, the amount of the delinquency charge must be filed with and approved or promulgated by the department, and may be charged on each installment in default for one or more days. Only one delinquency charge may be collected on an installment regardless of the period during which it remains in default.
(h) A premium service company may charge an amount for payments made by the borrower or on the borrower's behalf through alternative payment mechanisms. This amount must be filed with and approved or promulgated by the department."
Cancellation of insurance contract by premium service company, conditions
SECTION 3. Section 38-39-90 of the 1976 Code is amended to read:
"Section 38-39-90. (a) If a premium service agreement contains a power of attorney enabling the company to cancel an insurance contract listed in the agreement, the insurance contract may not be canceled by the premium service company unless the cancellation is effectuated in accordance with this section.
(b) The premium service company shall deliver to the insured at least ten days' written notice of its intent to cancel the insurance contract if there is a default. This notice must be mailed or delivered not more than ten days before the due date.
(c) Not less than five days after the expiration of the notice required pursuant to the provisions of subsection (b), the premium service company may after that time request in the name of the insured cancellation of the insurance contract by delivering to the insurer a notice of cancellation. The insurance contract must be canceled as if the notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract. The premium service company also shall deliver a notice of cancellation to the insured at his last address as provided for in its records by the date the notice of cancellation is delivered to the insurer. It is sufficient to give notice either by delivering it to the person or by depositing it in the United States mail, postage prepaid, addressed to the last address of the person. Notice delivered in accordance with the provisions of this section is sufficient proof of delivery. If a notice of cancellation effected in accordance with this chapter is issued, a nonrefundable cancellation charge is permitted. The amount of the cancellation charge must be filed with and promulgated by the department.
(d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or to holders of certificates of insurance apply where cancellation is effected pursuant to the provisions of this section; otherwise, provided the provisions of subsections (a), (b), and (c) have been met, upon receipt of the notice by the insurer, the insurance contract must be canceled effective the date of cancellation on the notice of cancellation issued by the premium service company. The insurer shall give the prescribed notice in behalf of itself or the insured to any governmental agency, mortgagee, or holders of certificates of insurance by the second business day after the day it receives the notice of cancellation from the premium service company and shall determine the effective date of cancellation taking into consideration the number of days' notice required to complete the cancellation.
(e) If an insurance contract is canceled, the insurer shall return whatever gross unearned premiums are due under the insurance contract to the premium service company which financed the premium for the account of the insured. The gross unearned premiums due on personal lines insurance contracts financed by premium service companies must be computed on a pro rata basis.
(f) If the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium service company promptly shall refund the excess to the insured or the agent of record. A refund is not required if it amounts to less than five dollars.
(g) A cancellation of an insurance contract by a premium service company must be effected exclusively by the forms, method, and timing provided for in this chapter.
(h) A payment made by an insured, or on the insured's behalf, to the agent of the insurer in an amount required by the premium service company to extend or renew financing for a renewal policy period which is made on or before the policy renewal date causes the policy to be renewed without a lapse in coverage upon receipt of the policy premium from the agent or premium service company by the insurer.
(i) The gross unearned premiums due on cancellations of personal lines insurance contracts effected pursuant to the provisions of this chapter may not be reduced by any amounts due the insurer from a prior policy term or other policies."
SECTION 4. This act takes effect upon approval by the Governor.
Ratified the 3rd day of June, 2004.
Approved the 6th day of July, 2004.
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