A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS SO AS TO ENACT THE "INSURANCE RATE REDUCATION AND POLICYHOLDER PROTECTION ACT;" BY AMENDING SECTION 38-3-110, RELATING TO DUTIES OF THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, SO AS TO EXPAND THOSE DUTIES; BY ADDING SECTION 38-55-172 SO AS TO PROHIBIT RESIDENTIAL BUILDERS AND REGISTERED RESIDENTIAL SPECIALTY CONTRACTORS FROM CERTAIN ACTIONS MADE ON BEHALF OF OWNERS OR POSSESSORS OF RESIDENTIAL REAL ESTATE ON INSURANCE CLAIMS IN CONNECTION WITH ROOFING SYSTEM REPAIRS OR REPLACEMENTS TO PROHIBIT RESIDENTIAL BUILDERS AND REGISTERED RESIDENTIAL SPECIALTY CONTRACTORS FROM ADVERTISING OR PROMISING TO PAY OR REBATE AN INSURANCE DEDUCTIBLE AS AN INDUCEMENT TO THE SALE OF GOODS OR SERVICES, TO PROVIDE PENALTIES FOR VIOLATIONS, TO PROVIDE THE INSURANCE FRAUD DIVISION OF THE DEPARTMENT OF INSURANCE MAY INVESTIGATE CLAIMS OF FRAUDULENT ACTIVITY RELATING TO THE PERFORMANCE OF GOODS OR SERVICES FOR A ROOFING SYSTEM PURSUANT TO A WRITTEN CONTRACT AND REFER CERTAIN FINDINGS TO THE DEPARTMENT OF LABOR, LICENSING AND REGULATION; BY AMENDING SECTION 38-55-520, RELATING TO THE PURPOSE OF THE ARTICLE, SO AS TO MAKE A TECHNICAL CHANGE; BY AMENDING SECTION 38-55-530, RELATING TO DEFINITIONS, SO AS TO AMEND THE DEFINITIONS OF "AUTHORIZED AGENCY" AND "FALSE STATEMENT OR MISREPRESENTATIONS"; BY AMENDING SECTION 38-55-550, RELATING TO CIVIL PENALTIES, SO AS TO PRESCRIBE DUTIES OF THE DIRECTOR OF THE DEPARTMENT OF INSURANCE; BY AMENDING SECTION 38-55-560, RELATING TO THE INSURANCE FRAUD DIVISION, SO AS TO ESTABLISH THE INSURANCE FRAUD DIVISION IN THE DEPARTMENT OF INSURANCE AND TO PROVIDE THE DUTIES FOR THE DIVISION, THE ATTORNEY GENERAL, AND THE STATE LAW ENFORCEMENT DIVISION; BY AMENDING SECTION 38-55-570, RELATING TO NOTIFICATION OF FALSE STATEMENTS OR MISREPRESENTATIONS AND ABILITY TO SHARE INFORMATION, SO AS TO REQUIRE THE INSURANCE FRAUD DIVISION TO PROSECUTE CRIMINAL VIOLATIONS OF TITLE 38 AND ANY OTHER CRIMES RELATED TO INSURANCE, AS WELL AS DIVISION STAFF REQUIREMENTS, AND TO PROVIDE FOR INVESTIGATIVE DUTIES OF THE ATTORNEY GENERAL AND THE STATE LAW ENFORCEMENT DIVISION; BY AMENDING SECTION 38-55-590, RELATING TO ANNUAL REPORTS BY THE DIRECTOR OF THE INSURANCE FRAUD DIVISION, SO AS TO MAKE A CONFORMING CHANGE; BY AMENDING SECTION 38-73-1095, RELATING TO ESSENTIAL PROPERTY INSURANCE AND RATING PLAN FACTORS, SO AS TO PROVIDE ADDITIONAL REQUIREMENTS FOR ANY INSURER REQUIRED TO SUBMIT RATES AND RATING PLANS TO THE DEPARTMENT OF INSURANCE RELATED TO ADJUSTMENTS TO REDUCE PREMIUMS AND FOR OWNERS OF INSURABLE PROPERTY CLAIMING A CREDIT OR DISCOUNT; BY AMENDING SECTION 38-75-470, RELATING TO MEMBERSHIP OF THE ADVISORY COMMITTEE FOR THE DIRECTOR OF INSURANCE, SO AS TO PROVIDE MITIGATION OF PROPERTY LOSSES DUE TO WILDFIRE AMONG THE ISSUES TO BE CONSIDERED AND TO PROVIDE FOR TERMS OF SERVICE FOR ADVISORY COMMITTEE MEMBERS; BY AMENDING SECTION 38-75-480, RELATING TO THE LOSS MITIGATION GRANT PROGRAM, SO AS TO PROVIDE FOR WHEN GRANTS MAY BE GIVEN TO LOCAL GOVERNMENTS; BY AMENDING SECTION 38-75-485, RELATING TO THE SOUTH CAROLINA HURRICANE DAMAGE MITIGATION PROGRAM, SO AS ESTABLISH THE "SC SAFE HOME PROGRAM" AND TO ESTABLISH REQUIREMENTS; BY AMENDING SECTION 38-77-122, RELATING TO PROHIBITED FACTORS FOR ISSUING AUTOMOBILE INSURANCE POLICIES OR PREMIUM RATES, SO AS TO ADD UNINSURED AND UNDERINSURED MOTORIST CLAIMS; BY AMENDING SECTION 38-77-123, RELATING TO PROHIBITED FACTORS FOR AUTOMOBILE INSURANCE POLICY RENEWALS OR CANCELLATIONS, SO AS TO ADD UNINSURED AND UNDERINSURED MOTORIST CLAIMS; BY ADDING SECTION 38-77-145 SO AS TO PROHIBIT NONECONOMIC DAMAGES FOR PERSONS OPERATING A MOTOR VEHICLE WHILE KNOWINGLY NOT IN COMPLIANCE WITH AUTOMOBILE INSURANCE REQUIREMENTS AND TO PROVIDE EXCEPTIONS; BY AMENDING SECTION 38-77-280, RELATING TO AUTOMOBILE COLLISION AND COMPREHENSIVE INSURANCE, SO AS TO REQUIRE INSURERS TO OFFER A ZERO DOLLAR DEDUCTIBLE FOR AUTOMOBILE SAFETY GLASS AND TO PROHIBIT INSURERS FROM CONSIDERING UNINSURED OR UNDERINSURED MOTORISTS CLAIMS FOR CERTAIN INSURANCE POLICY DECISIONS; BY AMENDING SECTION 12-6-1620, RELATED TO CATASTROPHE SAVINGS ACCOUNTS, SO AS TO INCLUDE CERTAIN APPROVED RETROFITS TO PRIMARY RESIDENCES FOR HURRICANE OR WIND DAMAGE RESILIENCE, AND FOR THE DEPARTMENT OF REVENUE TO PROVIDE AN ANNUAL REPORT TO THE GENERAL ASSEMBLY; BY AMENDING SECTION 12-6-3660, RELATING TO TAX CREDITS FOR HURRICANE RESISTANT RETROFITS TO RESIDENCES, SO AS TO INCREASE THE TAX CREDIT OPTION FROM ONE THOUSAND TO TWO THOUSAND DOLLARS; BY ADDING SECTION 12-6-3662 SO AS TO ESTABLISH A "DISASTER PREPAREDNESS SALES TAX HOLIDAY" AND TO PROVIDE FOR ITS REQUIREMENTS; BY AMENDING SECTION 12-6-3670, RELATED TO TAX CREDITS FOR EXCESS PAID FOR PROPERTY AND CASUALTY INSURANCE, SO AS TO INCREASE THE CREDIT AMOUNT TO THREE THOUSAND DOLLARS; BY AMENDING SECTION 42-9-440, RELATING TO SUSPECTED FALSE STATEMENTS OR MISREPRESENTATIONS REQUIRED TO BE REPORTED TO THE INSURANCE FRAUD DIVISION, SO AS TO MAKE CONFORMING CHANGES; BY ADDING SECTION 40-11-125 SO AS TO PROVIDE THE DEPARTMENT OF INSURANCE HAS THE EXCLUSIVE AUTHORITY TO ENFORCE ANY VIOLATIONS RELATED TO INSURANCE OR INSURANCE FRAUD ARISING FROM ROOFING SYSTEMS CONTRACTS OR THE DELIVERY OF GOODS OR SERVICES RELATED TO ROOFING SYSTEMS INVOLVING LICENSEES OF THE SOUTH CAROLINA CONTRACTOR'S LICENSING BOARD; BY AMENDING SECTION 40-59-25, RELATING TO ROOFING CONTRACT CANCELLATIONS FOR INSURANCE COVERAGE DENIALS, SO AS TO REMOVE CERTAIN PROVISIONS TRANSFERRED TO THE DEPARTMENT OF INSURANCE AND TO REVISE THE PROVISIONS; BY ADDING SECTION 40-59-27 SO AS TO PROVIDE THE DEPARTMENT OF INSURANCE AS THE EXCLUSIVE AUTHORITY TO ENFORCE ANY VIOLATIONS RELATED TO INSURANCE OR INSURANCE FRAUD ARISING FROM ROOFING SYSTEMS CONTRACTS OR THE DELIVERY OF GOODS OR SERVICES RELATED TO ROOFING SYSTEMS INVOLVING LICENSEES AND REGISTRANTS OF THE SOUTH CAROLINA RESIDENTIAL BUILDERS COMMISSION; TO REQUIRE THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO SUBMIT AN ANNUAL REPORT TO THE GENERAL ASSEMBLY REGARDING THE IMPACT ON INSURANCE RATES AND REQUIRE ANNUAL TESTIMONY BEFORE THE HOUSE LABOR, COMMERCE AND INDUSTRY COMMITTEE AND THE SENATE BANKING AND INSURANCE COMMITTEE; AND TO MAKE CONFORMING OR TECHNICAL CHANGES.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  This act may be cited as the "Insurance Rate Reduction and Policyholder Protection Act".

 

SECTION 2.  Section 38-3-110 of the S.C. Code is amended to read:

 

    Section 38-3-110.  The director or his designee has the following duties:

    (1) supervise and regulate the rates and service of every insurer in this State and fix just and reasonable standards, classifications, regulations, practices, and measurements of service to be observed and followed by every insurer doing business in this State. Nothing contained in this title authorizes or requires a review by the department or the director of any order of the director's designee or the deputy director under the Administrative Procedures Act. This item does not grant any additional authority to the director or his designee with regard to insurance rates other than the ratemaking authority specifically granted to the director or his designee, or the Department of Insurance for certain kinds of insurance in other provisions of this title;

    (2) see that all laws of this State governing insurers or relating to the business of insurance are faithfully executed and make regulations to carry out this title and all other insurance laws of this State, the enforcement or administration of which is not otherwise specifically provided for;

    (3) report to the Attorney General or other appropriate law enforcement officials criminal violations of the laws relative to the business of insurance or the provisions of this title which he considers necessary to report;

    (4) institute civil actions, either through his office or through the Attorney General, relative to the business of insurance or the provisions of this title which he considers necessary to institute.;

    (5) make legislative recommendations to the Governor and the South Carolina General Assembly based on data and market analytics on changes necessary to protect South Carolina consumers and to promote and maintain competitive and solvent insurance markets; and

    (6) recruit insurance companies to do business in this State in a manner which will promote and maintain competitive and solvent insurance markets for the citizens of this State.

    (5)(7)(a) The director may hold a public hearing at a location within the seacoast area, as defined in Section 38-75-310(7), to provide the public with information and an opportunity to discuss and offer input concerning the rates, territory, and other pertinent issues regarding the South Carolina Wind and Hail Underwriting Association. The director must provide publicized notice of the hearing at least thirty days before the date of the public hearing.

       (b) The director must engage in efforts to provide market assistance and promote consumer outreach and education to South Carolina residential property insurance consumers. These efforts may include, but are not limited to:

           (i) posting on its website information to assist consumers in understanding the general provisions of homeowners insurance policies;

           (ii) providing information on the mitigation discounts and credits available pursuant to Section 38-73-1095(C) and other provisions of Title 38, including a summary of those offered by the twenty largest homeowners property insurance issuers by premium volume;

           (iii) providing information regarding the factors that can affect premium rates;

           (iv) providing information to assist consumers in identifying insurers writing property insurance coverage in their area;

           (v) providing a listing of licensed property and casualty producers in their area; and

           (vi) providing information on catastrophe savings accounts available pursuant to Article 11, Chapter 6, Title 12.

       (c) The director must submit a report to the President of the Senate, the Speaker of the House of Representatives, the Chairman of the Senate Banking and Insurance Committee, and the Chairman of the House Labor, Commerce and Industry Committee by January thirty-first of each year regarding the status of the coastal property insurance market. The report shall be posted in an electronic format on the department's website within five days of its submission. The report shall include, but not be limited to, the following:

           (i) status of the South Carolina Wind and Hail Underwriting Association, including any recommended modifications to statutory or regulatory law regarding the operation of the South Carolina Wind and Hail Underwriting Association and its territory;

           (ii) status of operations and grants issued under the South Carolina Hurricane Damage Mitigation Program as provided for in Section 38-75-485;

           (iii) availability and affordability of coverage in the coastal area as defined in Section 38-75-310(5), including any portion of the area as it may be expanded pursuant to Section 38-75-460;

           (iv) consumer outreach and education efforts relating to coastal property insurance issues, including, but not limited to:

               (a) summary of the annual meeting as required pursuant to item (5)(7)(a); and

               (b) specific projects and efforts undertaken pursuant to item (5)(7)(b).

 

SECTION 3.  Article 1, Chapter 55, Title 38 of the S.C. Code is amended by adding:

 

    Section 38-55-172. (A)(1) A licensed residential builder or a registered residential specialty contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an owner or possessor of residential real estate on any insurance claim in connection with the repair or replacement of a roofing system.

       (2) Notwithstanding item (1) or another provision of state law, an owner is not prevented from consulting with a builder, contractor, or other person of his choice to provide an evaluation of the condition of his roofing system and using the evaluation to negotiate the repair or replacement of his roofing system.

    (B) A builder or contractor shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services. As used in this subsection, the term "promise to pay or rebate" means:

       (1) granting any allowance or offering any discount against the fees to be charged including, but not limited to, an allowance or discount in return for displaying a sign or other advertisement at the insured's premises;

       (2) paying the insured or any person directly or indirectly associated with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason; or

       (3) advertising an activity prohibited in this section.

    (C) A person who violates a provision of subsection (A), (B), or both is guilty of a misdemeanor. The violation is grounds for suspension or revocation of licenses or registrations by the Residential Builders Commission.

    (D) The Insurance Fraud Division of the Department of Insurance may investigate claims of fraudulent activity relating to the performance of goods or services for a roofing system pursuant to a written contract. If the investigation yields findings concerning persons or firms that provide goods or services related to a roofing system and to whom the provisions of Section 40-59-25 apply, the Insurance Fraud Division shall refer the findings to the Department of Labor, Licensing and Regulation for use in any action against the person or firm. For purposes of this section, such persons or firms include:

       (1) a person who also is a licensed residential builder or a registered residential specialty contractor; or

       (2) a person or firm who engages or offers to engage in the business of residential building or residential specialty contracting without first having registered with the commission or procured a license from the commission.

 

SECTION 4.  Section 38-55-520 of the S.C. Code is amended to read:

 

    Section 38-55-520. The purpose of this article is to confront aggressively the problem of insurance fraud in South Carolina by facilitating the detection of insurance fraud; to allow reporting of suspected insurance fraud; to grant immunity for reporting suspected insurance fraud; to prescribe penalties for insurance fraud; to require restitution for victims of insurance fraud; to establish a division within the Office of the Attorney General Department of Insurance to prosecute insurance fraud; and to require the investigation of alleged insurance fraud by State Law Enforcement Division.

 

SECTION 5.  Section 38-55-530 of the S.C. Code is amended to read:

 

    Section 38-55-530. As used in this article:

    (A) "Authorized agency" means any duly constituted criminal investigative department or agency of the United States or of this State; another state; the Department of Insurance; the Department of Revenue; the Department of Public Safety; the Department of Motor Vehicles; the Workers' Compensation Commission; the State Accident Fund; the Second Injury Fund; the Department of Employment and Workforce; the Department of Consumer Affairs; the Human Affairs Commission; the Department of Health and Environmental ControlPublic Health; the Department of Environmental Services; the Department of Social Services; the Department of Health and Human Services; the Department of Labor, Licensing and Regulation; all other state boards, commissions, and agencies; the Office of the Attorney General of South Carolina; or the prosecuting attorney of any judicial circuit, county, municipality, or political subdivision of this State or of the United States, and their respective employees or personnel acting in their official capacity.

    (B) "Insurer" shall have the meaning set forth in Section 38-1-20(25) and includes any authorized insurer, self-insurer, reinsurer, broker, producer, or any agent thereof.

    (C) "Person" means any natural person, company, corporation, unincorporated association, partnership, professional corporation, or other legal entity and includes any applicant, policyholder, claimant, medical providers, vocational rehabilitation provider, attorney, agent, insurer, fund, or advisory organization.

    (D) "False statement or misrepresentation" means a statement or representation made by a person that is false, material, made with the person's knowledge of the falsity of the statement and made with the intent of obtaining or causing another to obtain or attempting to obtain or causing another to obtain an undeserved economic advantage or benefit or made with the intent to deny or cause another to deny any benefit or payment in connection with an insurance transaction, and such shall constitute fraud. "False statement or misrepresentation" specifically includes, but is not limited to, an intentional:

       (1) false report of business activities;

       (2) miscount or misclassification by an employer of its employees;

       (3) failure to timely reduce reserves;

       (4) failure to account for Second Injury Fund reimbursements or subrogation reimbursements; or

       (5) failure to provide verifiable information to public or private rating bureaus and the Department of Insurance.;

       (6) false information on an application for insurance; or

       (7) false information regarding an insurance claim.

    An undeserved economic benefit or advantage includes, but is not limited to, a favorable insurance premium, payment schedule, insurance award, or insurance settlement.

    (E) "Immune" means that neither a civil action nor a criminal prosecution may arise from any action taken pursuant to this article unless actual malice on the part of the reporting person or gross negligence or reckless disregard for the rights of the reported person is present.

 

SECTION 6.  Section 38-55-550 of the S.C. Code is amended to read:

 

    Section 38-55-550. (A) In addition to any criminal liability, any person who is found by a court of competent jurisdiction to have violated any provision of this article, including Section 38-55-170 and Section 38-55-540, is subject to a civil penalty, to be levied by the Director of the Department of Insurance or his designee, for each violation as follows:

       (1) for a first offense, a fine not to exceed five thousand dollars;

       (2) for a second offense, a fine of not less than five thousand dollars but not to exceed ten thousand dollars;

       (3) for a third and subsequent offense, a fine of not less than ten thousand dollars but not to exceed fifteen thousand dollars.

    (B) The civil penalty must be paid to the director of the Insurance Fraud Division to be used in accordance with subsection (D) of this section. The court may also award court costs and reasonable attorneys' fees to the directorDepartment of Insurance. When requested by the director of the Department of Insurance or his designee, the Attorney General may assign one or more deputies attorneys general to assist the bureau in any civil court proceedings against the person.

    (C) Nothing in subsections (A) and (B) shall be construed to prohibit the director of the Insurance Fraud Division and the person alleged to be guilty of a violation of this article from entering into a written agreement in which the person does not admit or deny the charges but consents to payment of the civil penalty. A consent agreement may not be used in a subsequent civil or criminal proceeding relating to any violation of this article.

    (D) All revenues from the civil penalties imposed pursuant to this section must be used to provide funds for the costs of enforcing and administering the provisions of this article.

 

SECTION 7.  Section 38-55-560 of the S.C. Code is amended to read:

 

    Section 38-55-560. (A) There is established in the Office of the Attorney GeneralDepartment of Insurance a division to be known as the Insurance Fraud Division, which must prosecute criminal violations of Sections 38-55-170 and 38-55-540 and related criminal insurance activityTitle 38 and any other crimes related to insurance.  Upon receipt of any claims or allegations of violations of Section 38-55-170 and 38-55-540 and related criminal insurance activity, the Attorney General shall forward the information to the State Law Enforcement Division for investigation.To fulfill this purpose, the Attorney General shall appoint certain attorneys, employed by the Department of Insurance in the Insurance Fraud Division, including the Director of the Insurance Fraud Division, as assistant attorneys general pursuant to Sections 1-7-30 and 1-7-160. The Office of the Attorney General shall cooperate and work with the Insurance Fraud Division by providing access to and use of the Attorney General's criminal justice and prosecution resources including, but not limited to, criminal history record information and insurance claim history using systems such as Criminal Justice Information Services (CJIS), National Crime Information Center (NCIC), National Law Enforcement Telecommunications System (NLETS), Insurance Services Office (ISO), or Verisk ClaimSearch or similar government or private databases. Employees of the Insurance Fraud Division granted such access shall be subject to the same requirements and policies as employees of the Office of the Attorney General for the use of these resources. The Department of Insurance must reimburse the Office of the Attorney General for any additional costs required to access these systems for the Insurance Fraud Division.

    (B) The Attorney GeneralInsurance Fraud Division, upon receipt of any claims or allegations of violations of Sections 38-55-170 and 38-55-540 and related criminal insurance activity, or at any other time, is empowered to:

       (1) refer the matter for investigation to the State Law Enforcement Division;

       (2) present the matter to the Office of the Attorney General for review and approval of the indictment;

       (2)(3) prosecute persons determined to be in violation of Sections 38-55-170 and 38-55-540 and related criminal insurance activity in a court of competent jurisdiction;  and

       (4) resolve the matter through consent agreements in accordance with Section 38-55-550;

       (3)(5) collect fines and restitution ordered by the court. Where considered appropriate, the Attorney GeneralDepartment of Insurance may use the Setoff Debt Collection Act and any other legal means available to state agencies to collect fines and restitution ordered as a result of actions brought pursuant to Sections 38-55-170, and 38-55-540, and 38-55-550.;

       (6) refer the matter to the Attorney General for prosecution;

       (7) refer the matter to another authorized agency;

       (8) refer the matter to any affected insurer; and

       (9) enter into agreements with the Office of the Attorney General or other state, local, or federal agencies related to the deterrence, detection, investigation, and prosecution of insurance fraud.

Nothing in this section shall be interpreted to affect or undermine the criminal jurisdiction, investigative authority, or prosecutorial authority of the Office of the Attorney General or other law enforcement agencies. Subject to availability of resources and funds, the Department of Insurance shall provide State Law Enforcement Division personnel assigned to the Insurance Fraud Division secure office space within the Department of Insurance for daily use, as well as office supplies, office equipment, and furnishings. Also subject to the availability of resources and funds, the Department of Insurance shall reimburse the State Law Enforcement Division for investigative services rendered pursuant to this section. The State Law Enforcement Division shall quarterly submit an itemized bill to the Department of Insurance for the actual payroll, fringe, overtime, fuel, travel, training, and equipment for all investigators assigned to the Insurance Fraud Division pursuant to this section. The department is not liable for reimbursement for time or expenses for the performance of other duties not related to the investigation or prevention of insurance fraud. The State Law Enforcement Division may bill the Department of Insurance for initial nonrecurring expenses for additional employees hired to perform and support the work of the Insurance Fraud Division, and the department may reimburse the State Law Enforcement Division, subject to the availability of funds and approval of the department.

    (C) The State Law Enforcement Division shall investigate thoroughly review all claims or allegations of violations of Sections 38-55-170 and 38-55-540 and related criminal insurance activity received from the Attorney GeneralInsurance Fraud Division pursuant to this section and investigate such matters as deemed appropriate.

    (D) The Insurance Fraud Division of the Office of Attorney General Department of Insurance and the investigative services of the State lawLaw Enforcement Division as provided by this section must be funded by an annual appropriation of not less than two hundred thousand dollars annually sufficient to fully fund the costs of operating the division based on the positions needed to effectively investigate, prosecute, and prevent insurance fraud from the general revenues of the State. derived from the insurance premium taxes collected by the Department of Insurance and/or from fines assessed under Sections 38-55-170 and 38-55-540 which must be deposited in the general revenue fund to the credit of the Office of the Attorney General and the State Law Enforcement Division to offset the costs of this program;  provided, that the funds generated from these fines, to be utilized by either the Office of the Attorney General or the State Law Enforcement Division shall not total more than five hundred thousand dollars.  These monies must be shared equally on a fifty-fifty basis by the Office of the Attorney General and the State Law Enforcement Division, and the balance must go to the general fund of the State.Additionally, the Department of Insurance may use any fines assessed pursuant to Sections 38-55-170, 38-55-540, and 38-55-550 to offset the costs of the Insurance Fraud Division.

    (E) The Office of the Attorney General is authorized to hire, employ, and reasonably equip one forensic accountant, and this forensic accountant must be assigned to the Insurance Fraud Division of the Office of the Attorney General. A person is not qualified to be hired and the Insurance Fraud Division may not hire a forensic accountant unless he possesses and maintains a current license to engage in the practice of accounting pursuant to the provisions of Chapter 2, Title 40.The Insurance Fraud Division shall be managed by a director who must be eligible to serve as an assistant attorney general. The director of the division and attorneys hired to prosecute insurance fraud are subject to the approval of the Office of the Attorney General in accordance with Sections 1-7-30 and 1-7-160. The director of the division or his designee is authorized to employ the staff members deemed necessary and appropriate by the Director of the Department of Insurance in accordance with state budget procedures.

 

SECTION 8.  Section 38-55-570 of the S.C. Code is amended to read:

 

    Section 38-55-570. (A) Any person, insurer, or authorized agency having reason to believe that another has made a false statement or misrepresentation or has knowledge of a suspected false statement or misrepresentation shall, for purposes of reporting and investigation, notify the Insurance Fraud Division of the Office of the Attorney GeneralDepartment of Insurance of the knowledge or belief and provide any additional information within his possession relative thereto. Failure to comply with the provisions of this subsection shall be subject to the penalties described in Section 38-2-10.

    (B) Upon request by the Insurance Fraud Division and subject to the penalties described in Section 38-2-10, any person, insurer, or authorized agency shall release to the Insurance Fraud Division any or all information relating to any suspected false statement or misrepresentation including, but not limited to:

       (1) insurance policy information relevant to the investigation, including any application for such a politypolicy;

       (2) policy premium payment records, audits, or other documents which are available;

       (3) history of previous claims, payments, fees, commission, service bills, or other documents which are available; and

       (4) other information relating to the investigation of the suspected false statement or misrepresentation.

    (C) Any authorized agency provided with or obtaining information relating to a suspected false statement or misrepresentation as provided for above may release or provide the information to any other authorized agency. The Department of Insurance, the Department of Revenue, the Department of Public Safety, and the Department of Motor Vehicles shall report, but not adjudicate, all cases of suspected or reported false statement or misrepresentation to the Insurance Fraud Division of the Office of Attorney General of South CarolinaDepartment of Insurance for appropriate investigation or prosecution, or both. The Workers' Compensation Commission mayshall refer such cases as provided in Section 42-9-440.

    (D) Except as otherwise provided by law, any information furnished pursuant to this section, or any information or documentation arising out of or in connection with information furnished pursuant to this section, is privileged and shall not be part of any public record. Any information or evidence furnished to an authorized agency pursuant to this section is not subject to subpoena or subpoena duces tecum in any civil or criminal proceeding unless, after reasonable notice to any person, insurer, or authorized agency which has an interest in the information and after a subsequent hearing, a court of competent jurisdiction determines that the public interest and any ongoing investigation will not be jeopardized by obedience of the subpoena or subpoena duces tecum. The Department of Insurance may receive and must maintain as confidential any documents or information furnished to it by the National Association of Insurance Commissioners or insurance departments of other states which is classified as confidential by that association or state. The Department of Insurance may share documents or information, including confidential documents or information, with the National Association of Insurance Commissioners or insurance departments of other states, if the association or other state agrees to maintain the same level of confidentiality as is provided under South Carolina law in accordance with Section 38-55-75.  If the documents or information received by the Department of Insurance from the National Association of Insurance Commissioners or the insurance departments of other states involve allegations of insurance fraud, the documents or information must be forwarded by the Department of Insurance to the Insurance Fraud Division of the Office of the Attorney General.

 

SECTION 9.  Section 38-55-590 of the S.C. Code is amended to read:

 

    Section 38-55-590. The Director of the Insurance Fraud Division in the Office of the Attorney GeneralDepartment of Insurance shall annually report to the General Assembly regarding:

    (A) the status of matters reported to the division, if not privileged information by law;

    (B) the number of allegations or reports received;

    (C) the number of matters referred to the State Law Enforcement Division for investigation;

    (D) the outcome of all investigations and prosecutions under this article, if not privileged by law;

    (E) the total amount of fines levied by the court and paid to or deposited by the division; and

    (F) patterns and practices of fraudulent insurance transactions identified in the course of performing its duties. The director shall also periodically report this information to insurers transacting business in this State, health maintenance organizations transacting business in this State, and other persons, including the State of South Carolina, which provide benefits for health care in this State, whether these benefits are administered directly or through a third person.

 

SECTION 10. Section 38-73-1095 of the S.C. Code is amended to read:

 

    Section 38-73-1095.  (A) Any private insurer licensed to underwrite "essential property insurance" as defined by Section 38-75-310(1), notwithstanding any limitations included within this title, may file and use any rates for the coverages detailed within Section 38-75-310(1) which result in insurance premium rates of ninety percent, or less, of the insurance premium rates then approved for the South Carolina Wind and Hail Underwriting Association for use within the coastal area of South Carolina as defined by Section 38-75-310(5). Filings for these insurance premium rates must be made upon forms prescribed by the director or his designee and must apply only to essential property insurance premium rates for the coastal area. Within thirty days after the filing of the rates, the director or his designee must notify the insurer or rating organization filing the rates of his approval or his disapproval of those rates. If the rates are disapproved, then the director or his designee must notify the insurer or the rating organization of the specific reason for disapproval. The director or his designee may extend for up to an additional thirty days the period within which he must approve or disapprove the rates. Any rates received, which are neither approved nor disapproved by the director, must be deemed approved at the expiration of the thirty-day period or, if that period has been extended, at the expiration of the extended period. However, no insurer or rating organization may use rates considered approved under the provisions of this section unless and until the insurer or rating organization has filed a written notice of its intent to use the rates. The notice must be filed with the director or his designee at least ten days before the insurer's or rating organization's use of the deemed rates.

    (B) In considering any rate filing for insurance premium rates for essential property insurance in the coastal area or in the seacoast area, the director or his designee, in addition to other factors considered under this title, may consider past and prospective expenses and recoveries associated with catastrophe reinsurance and past and prospective loss experience including windstorm catastrophe models and simulations.

    (C) Any insurer required to submit rates and rating plans to the director or his designee shall provide an actuarially justified discount, credit, rate differential, adjustment in deductible, or any other adjustment to reduce the insurance premium to insureds who build or retrofit a structure to comply with the requirements of the SC Uniform Construction Code or the fortified home or fortified commercial standards created by the Insurance Institute for Business and Home Safety.

    (D) Any insurer required to submit rates and rating plans to the director or his designee shall provide an actuarially justified discount, credit, rate differential, adjustment in deductible, or any other adjustment to reduce the insurance premium to insureds who install mitigation improvements or retrofit their property utilizing construction techniques demonstrated to reduce the amount of loss from a windstorm or hurricane. The mitigation improvements or construction techniques shall include, but not be limited to, roof deck attachments; secondary water barriers; roof coverings; brace gable ends; construction techniques which enhance or reinforce roof strength; roof-covering performance; roof-to-wall strength, wall-to-floor-to-foundation strength; opening protection; and window, door, and skylight strength.

    (E)(1) Any insurer required to submit rating plans to the director or his designee shall provide an actuarially justified discount, credit, rate differential, adjustment in deductible, or any other adjustment to reduce the insurance premium charged to any insured who builds or retrofits a structure to comply with the requirements of the fortified home and fortified commercial standards created by the Insurance Institute for Business and Home Safety.

       (2) To obtain a credit or discount provided in this subsection, an insurable property located in this State shall be certified as constructed in accordance with the fortified home or fortified commercial standards provided by the Insurance Institute for Business and Home Safety or other standard designated by the director or his designee via order of the director.

       (3) An insurable property shall be certified as in conformance with the fortified home or fortified commercial standards only after inspection and certification by an Insurance Institute for Business and Home Safety or other certified inspector.

       (4) An owner of insurable property claiming a credit or discount shall maintain and provide certification records and construction records, including certification of compliance with the Insurance Institute for Business and Home Safety standards or other applicable standard, for which the owner seeks a discount. Such documents may include, but are not limited to, receipts for contractors, receipts for materials, and records from local building officials.

       (5) An owner of insurable property claiming a credit or discount shall maintain the Insurance Institute for Business and Home Safety certification documents, which shall be considered evidence of compliance with the fortified home or fortified commercial standards. The certification shall be presented to the insurer or potential insurer of a property owner before the adjustment becomes effective for the insurable property along with any other necessary records.

       (6) The credit or discount shall apply only to policies that provide wind coverage and may apply to the portion of the premium for wind coverage or to the total premium, if the insurer does not separate out the premium for wind coverage in the rate filing. The adjustment shall apply exclusively to the premium designated for the improved insurable property. The adjustment is not required to be in addition to other mitigation adjustments provided by the insurer and shall be in lieu of those other adjustments, if they are deemed to be duplicated.

       (7) The records required by this subsection shall be subject to audit by the director or his designee.

       (8) Nothing in this section shall prohibit insurers from offering additional adjustments in deductible, other credit rate differentials, or a combination thereof. These adjustments shall be available under the terms specified in this section to any owner who builds or locates a new insurable property in this State to resist loss due to hurricane, tornado, or other catastrophic windstorm events.

    (C)(F) Rating plans for essential property insurance in the coastal area or in the seacoast area, shall include discounts and credits or surcharges and debits calculated upon the following rating factors:

       (1) use of storm shutters;

       (2) use of roof tie downs;

       (3) construction standards;

       (4) building codes;

       (5) distance from water;

       (6) elevation;

       (7) flood insurance;

       (8) Insurance Institute for Business and Home Safety FORTIFIED ROOF;

       (8)(9) policy deductibles; and

       (9)(10) other applicable factors requested by the insurer or rating organization or selectedestablished by order of the director involving the risk or hazard. An order issued pursuant to this section must comply with the requirements of Section 1-23-140.

        The director or his designee may conduct a study or otherwise review data concerning mitigation discounts and credits offered in the State. The department may by regulation or order: (1) establish minimum discounts or credits to be offered for specific mitigation measures, or (2) define how the implementation of these factors qualify for credits or discounts based on the data or study findings. The regulation must specify what evidence or proof the policyholder or applicant shall present to obtain the credit or discount. This section applies to policies issued or renewed after December 31, 2007.

    (D)(G) This section does not preclude any insurer from using consent-to-rate pursuant to Section 38-73-1060 for any essential property insurance risk in the coastal area or the seacoast area of this State.

 

SECTION 11. Section 38-75-470 of the S.C. Code is amended to read:

 

    Section 38-75-470. (A) The Director of Insurance shall appoint an advisory committee to the director to study issues associated with the development of strategies for reducing loss of life and to address the mitigation of property losses due to hurricane, earthquake, flood, wildfire, and fire. The advisory committee also shall consider the associated costs to individual property owners. The advisory committee is composed of:

       (1) the director or his designee;

       (2) the Chairman of the Building Codes Council or his designee;

       (3) a representative from Clemson University involved with wind engineering;

       (4) a representative from an academic institution involved with the study of earthquakes;

       (5) a representative from an insurer writing property insurance in South Carolina;

       (6) a representative from the Department of Commerce;

       (7) a representative from the South Carolina's Municipal Association;

       (8) a representative from the South Carolina Association of Counties;

       (9) a representative from the Homebuilders Association;

       (10) a representative from the Manufactured Housing Institute of South Carolina;

       (11) a representative from the State Fire Marshal's office;

       (12) a representative from the South Carolina Emergency Management Division;

       (13) a representative from the State Flood Mitigation Program;

       (14) two at-large members appointed by the director;

       (15) two at-large members appointed by the Governor;

       (16) a general contractor;

       (17) a representative from the South Carolina Association of Realtors; and

       (18) a structural engineer.

    (B) Members shall serve for terms of two years and shall receive no per diem, mileage, or subsistence be appointed by the Director of Insurance and shall serve at the pleasure of the director. The term for a member is for four years and may be reappointed by the director; however, in no event shall any member serve more than three consecutive four-year terms. Members shall not receive per diem, mileage, or subsistence. Vacancies must be filled in the same manner as the original appointment.

    (C) Within thirty days after its appointment, the advisory committee shall meet at the call of the Director of Insurance. The advisory committee shall elect from its members a chairmanchair and a secretary and shall adopt rules not inconsistent with this chapter. Meetings may be called by the chairmanchair on his own initiative and must be called at the request of three or more members of the advisory committee. All members must be notified by the chairmanchair of the time and place of the meeting at least seven days in advance of the meeting. All meetings must be open to the public. At least two-thirds vote of those members in attendance at the meeting shall constitute an official decision of the advisory committee. Implementation of this program and continued existence of this program is subject to the availability of funding through legislative appropriations or alternative funding sources.

 

SECTION 12. Section 38-75-480 of the S.C. Code is amended to read:

 

    Section 38-75-480. (A) There is established within the Department of Insurance a loss mitigation grant program to aid local governments in the development of mitigation strategies to reduce certain losses. Funds may be appropriated to the grant program, and any funds appropriated must be used for the purpose of making grants to local governments or for the study and development of strategies for reducing loss of life and mitigating property losses due to hurricane, flood, earthquake, and fire. Grants to local governments must be for the following purposes:

       (1) mitigating losses for eligible residential properties within the local jurisdiction in accordance with the guidelines established by the director or his designee; and

       (2) providing technical assistance to and acting as an information resource for local governments in the development of proactive hazard mitigation strategies as they relate to reducing the loss of life and mitigating property losses due to natural hazards to include hurricane, flood, earthquake, and fire.

    (B) Funds may be appropriated for a particular grant only after a majority affirmative vote on each grant by the advisory committee and submission of a resolution approved by a majority of the members of the relevant local governing body approving the application for grant funds local government project following approval by the director or his designee.

    (C) The Department of Insurance may make application and enter into contracts for and accept grants in aid from federal and state government and private sources for the purposes of:

       (1) mitigating losses for eligible residential properties in accordance with the guidelines established by the director or his designee; and

       (2) conducting loss mitigation studies for the development of strategies or measures aimed at reducing loss of life and mitigating property losses due to hurricane, flood, earthquake, and fire; or

       (3) any other purposes consistent with this article.

 

SECTION 13. Section 38-75-485 of the S.C. Code is amended to read:

 

    Section 38-75-485. (A) There is established within the Department of Insurance, the South Carolina Hurricane Damage Mitigation Program to aid eligible homeowners in retrofitting insurable property to reduce losses due to hurricane, tornado, or other catastrophic windstorm events. This program shall be known as the "SC Safe Home Program." The advisory committee, established pursuant to Section 38-75-470, shall provide advice and assistance to the program administrator with regard to his administration of the program.

    (B) This section does not create an entitlement for property owners or obligate the State in any way to fund the inspection or retrofitting of residential property in this State. Implementation of this program is subject to the availability of funds through annual legislative appropriations, receipt of federal grants or funds, or funding from other sources.

    (C) The program shall develop and implement a comprehensive and coordinated approach for hurricane damage mitigation that includes the following:

       (1) The program may award matching or nonmatching grants based upon the availability of funds. The program administrator also shall apply for financial grants to be used to assist single-family, site-built or manufactured or modular, owner-occupied, residential property owners to retrofit their primary legal residence to make them less vulnerable to hurricane damage.

           (a) To be eligible for a matching grant, a residential property must:

               (i) be the applicant's primary legal residence;

               (ii) be actually owned and occupied by the applicant;

               (iii) be the owner's legal residence as described in Section 12-43-220(c);

               (iv) be a single-family, site-built, manufactured, or modular, owner-occupied residential property;

               (v) be a residential property covered by a current homeowners or dwelling insurance policy that:

                  (A) is issued by an insurer licensed in this State or a surplus lines insurer, where the policy is lawfully placed by a broker authorized to do business in this State; and

                  (B) provides insurance coverage of the residential property equal to or greater than the fair market value of the residential property as defined in Section 12-37-3135(a)(2) and reflected in the county records;

               (vi) have undergone an acceptable wind certification and hurricane mitigation inspection in accordance with program requirements.

           (b) All matching grants must be matched on a dollar-for-dollar basis up to the maximum allowed depending on the type of retrofit. Grants will be awarded based on the following requirements:

               (i) a Resilient Mitigation Award will be awarded for roof retrofits meeting SC Safe Homes Retrofit Guidelines and Insurance Institute for Business and Home Safety Fortified RoofFORTIFIED ROOF Retrofit Guidelines for a residential property and may not exceed seven thousand five hundred dollars the dollar amount outlined in the annual allocation bulletin published by the Department of Insurance for nonmatching grant awards or six thousand dollars for matching grants; and

               (ii) a Sustainable Mitigation Award will be awarded for roof retrofits meeting SC Safe Home Retrofit Guidelines only or for Window Replacement and Opening Protection Retrofits meeting SC Safe Home Opening Protection Guidelines for residential property and mayshall not exceed five thousand dollars for nonmatching grants awards or four thousand dollars the dollar amount outlined in the annual allocation bulletin published by the Department of Insurance for matching grants.  For Hurricane Shuttering and Protective Barrier Systems only meetingmust meet SC Safe Home Opening Protection Guidelines, grants may not exceed three thousand dollars and must not exceed the dollar amount outlined in the annual allocation bulletin published by the Department of Insurance for both matching and nonmatching grants.

           (c) The program must create a process in which mitigation contractors agree to participate and seek reimbursement from the State and homeowners. selected Homeowners may select the contractor of their choice from a list of participating contractors provided on the SC Safe Home Program webpage under Participating Contractors and Inspectors.  All mitigation projects must be based upon the securing of To be eligible for a mitigation grant, all required local permits and inspections must be secured and the property must have successfully completed a SC Safe Home Program inspection. Mitigation projects are subject to random reinspection. The program may reinspect up to ten percent of all projects in any fiscal year.

           (d) Matching fund grants also must be made available to local governments and nonprofit entities, on a first-come, first-served basis, for projects that reduce hurricane damage to single-family, site-built or manufactured or modular owner-occupied, residential property, provided that:

               (i) no matching grant for any one local government or nonprofit entity may exceed fifty thousand dollars the dollar amount outlined in the annual allocation bulletin published by the Department of Insurance in any fiscal year;

               (ii) the total amount of matching grants awarded to all local governments and nonprofit entities combined may not exceed two hundred fifty thousand dollarsthe dollar amount outlined in the annual allocation bulletin published by the Department of Insurance in any fiscal year;  and

               (iii) the difference between two hundred fifty thousand dollars and the total amount of grants awarded to all local governments and nonprofit entities combined in any fiscal year may be applied to grants to individual homeowners who meet the qualifications for a grant described in subitems (a) through (d) or in subitem (g).subject to the availability of funds and a disaster declaration by the Governor, the director may award additional loss mitigation grants for SC Safe Home Program eligible residential properties within ninety days following a wind or hail related catastrophic event that do not exceed the dollar amount outlined in the annual allocation bulletin published by the Department of Insurance; and

               (iv) grants awarded by the SC Safe Home Program must be used for approved mitigation projects to retrofit an insurable property to resist losses due to hurricane, tornado, or other catastrophic windstorm events if permitted under the SC Safe Home Program operating rules and procedures. Any nonprofit must administer the grant in accordance with SC Safe Home Program standards, operating rules, and procedures. The nonprofit entity must prepare and maintain documentation required by the SC Safe Home Program and produce that documentation immediately upon the request of the director or his designee.

           (e) Grants may be used for the following improvements:

               (i) roof deck attachment;

               (ii) secondary water barrier;

               (iii) roof covering;

               (iv) brace gable ends;

               (v) reinforce roof-to-wall connections;

               (vi) opening protection;

               (vii) exterior doors, including garage doors;

               (viii) tie downs;

               (ix) problems associated with weakened trusses, studs, and other structural components;

               (x) inspection and repair or replacement of manufactured home piers, anchors, and tiedown straps; and

               (xi) any other mitigation techniques approved by the advisory committee.

           (f) To be eligible for a nonmatching grant, a residential property must comply with the requirements set forth in subsection (C)(1)(a), (c), and (e).

               (i) For nonmatching grants, applicants who otherwise meet the requirements of subitems (a), (c), and (e) may be eligible for a grant of up to seven thousand five hundred dollars for a Resilient Mitigation Grant Award and may not be required to provide a matching amount to receive a Resilient Mitigation Grant Award, up to five thousand dollars for a Sustainable Mitigation Grant Award or up to three thousand dollars for a Sustainable Mitigation Hurricane Shutters and Protective Barrier Systems Award.  These grants must be used to retrofit single-family, site-built or manufactured or modular, owner-occupied, residential properties in order to make them less vulnerable to hurricane damage. The grant must be used for the retrofitting measures set forth in Section 38-75-485(C)(1)(e).

               (ii) Nonmatching grant award amounts will be determined based on the cost of the mitigation project and a percentage of the total adjusted household income of the applicant according to the most recent federal income tax return. Those applicants with a total annual adjusted gross household income of which does not exceed eighty percent of the median annual adjusted gross income for households within the county in which the person or family resides may be eligible for the maximum grant award amount. Applicants with a higher total annual adjusted household income may be awarded a lower amount. The director or his designee shall issue a bulletin annually that sets forth the maximum grant award amounts based on the total annual adjusted gross household income of the applicant adjusted for family size relative to the county area median income or the state median family income, whichever is higher, as published annually by the United States Department of Housing and Urban Development. If the cost of the mitigation project exceeds the amount of the grant award, the remaining cost is the applicant's responsibility.

       (2) The department shall define by order or regulation the details of the mitigation measures necessary to qualify for the grants described in this section.

       (3) Multimedia public education, awareness, and advertising efforts designed to specifically address mitigation techniques must be employed, as well as a component to support ongoing consumer resources and referral services. Additionally, the SC Safe Home Program shall support ongoing consumer education resources and referral services.

       (4) The department shall use its best efforts to obtain grants or funds from the federal government to supplement the financial resources of the program. In addition to state appropriations, if any, this program must be implemented by the department through the use of the premium taxes due to this State by the South Carolina Wind and Hail Underwriting Association, and onefive percent of the premium taxes collected annually and remitted to the Department of Insurance.

       (5) Mitigation grants for insurable residential properties are subject to the availability of funds and must meet the eligibility criteria established by the SC Safe Home Program. Grant funding shall be allocated as follows:

           (a) mitigation grants in the seacoast areas or coastal counties, as defined by Section 38-73-485, of the State shall be funded by the premium taxes collected by the South Carolina Wind and Hail Joint Underwriting Association; and

           (b) of the five percent of additional premium taxes collected pursuant to item (4):

               (i) fifty percent shall be allocated to residential and loss mitigation grants in the seacoast areas or coastal counties, as defined by Section 38-73-485, of the State; and

               (ii) fifty percent shall be allocated to retrofitting eligible insurable residential properties on a first-come, first-served basis and to local loss mitigation grants in other parts of the State.

       (5)(6) The director or his designee may promulgate regulations or issue orders necessary to implement the provisions of this article.

 

SECTION 14. Section 38-77-122 of the S.C. Code is amended to read:

 

    Section 38-77-122. (A) No insurer or agent shall refuse to issue an automobile insurance policy as defined in Section 38-77-30 because of any one or more of the following factors: the age, sex, location of residence in this State, race, color, creed, national origin, ancestry, marital status, or income level, or the existence of uninsured or underinsured motorist claims. No insurer or agent shall refuse to issue an automobile insurance policy as defined in Section 38-77-30 solely because of any one of the following factors: the previous refusal of automobile insurance by another insurer, prior purchase of insurance through the Associated Auto Insurers Plan, or lawful occupation, including the military service, of the person seeking the coverage. Nothing in this section prohibits any insurer from limiting the issuance of motor vehicle insurance policies only to persons engaging in or who have engaged in a particular profession or occupation, or who are members of a particular religious sect.

    Nothing in this section prohibits any insurer from setting rates in accordance with relevant actuarial data.

    (B) In determining the premium rates to be charged for an automobile insurance policy as defined in Section 38-77-30, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level, or the existence of uninsured or underinsured motorist claims. The existence of uninsured or underinsured motorist claims shall not be considered when determining an insured's eligibility for premium discounts. Nor may an insurer, agent, or broker refuse to write or renew an automobile insurance policy as defined in Section 38-77-30 based upon age, sex, race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level, or the existence of uninsured or underinsured motorist claims. However, nothing in this subsection may preclude the use of a territorial plan approved by the director. Any insurer or agent who violates this section shall be subject to the penalties as provided in Section 38-2-10. If the director of the Department of Insurance or his designee finds that an insurer or agent is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. Provided, however, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer or agent to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.

 

SECTION 15. Section 38-77-123(A) of the S.C. Code is amended to read:

 

    (A)(1) No insurer shall refuse to renew an automobile insurance policy because of any one or more of the following factors:

           (a) age;

           (b) sex;

           (c) location of residence in this State;

           (d) race;

           (e) color;

           (f) creed;

           (g) national origin;

           (h) ancestry;

           (i) marital status;

           (j) income level.

       (2) No insurer shall refuse to renew an automobile insurance policy solely because of any one of the following factors:

           (a) lawful occupation, including the military service;

           (b) lack of driving experience or number of years of driving experience;

           (c) lack of supporting business or lack of the potential for acquiring such business;

           (d) one or more accidents or violations that occurred more than thirty-six months immediately preceding the upcoming anniversary date;

           (e) one or more claims submitted under the uninsured motorists coverage or the underinsured motorists coverage of the policy where the uninsured motorist is known or there is physical evidence of contact;

           (f) single claim by a single insured submitted under the medical payments coverage or medical expense coverage due to an accident for which the insured was neither wholly nor partially at fault;

           (g) one or more claims submitted under the comprehensive or towing coverages. However, nothing in this section prohibits an insurer from modifying or refusing to renew the comprehensive or towing coverages at the time of renewal of the policy on the basis of one or more claims submitted by an insured under those coverages, provided that the insurer mails or delivers to the insured at the address shown in the policy, written notice of the change in coverage at least thirty days before the renewal;

           (h) two or fewer motor vehicle accidents within a three-year period unless the accident was caused either wholly or partially by the named insured, a resident of the same household, or other customary operator; or

           (i) an insured who uses his personal automobile for volunteer emergency services and who provides a copy of the policy promulgated by the chief of his department to his insurer on request.

       (3) Nothing contained in subsection (A)(1)(f), (g), and (h) prohibits an insurer from refusing to renew a policy where a claim is false or fraudulent. Nothing in this section prohibits an insurer from setting rates in accordance with relevant actuarial data except that no insurer may set rates based in whole or in part on race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level, or the existence of uninsured or underinsured motorist claims. The existence of uninsured or underinsured motorist claims shall not be considered when determining an insured's eligibility for premium discounts. However, nothing in this subsection may preclude the use of a territorial plan approved by the director.

 

SECTION 16. Article 3, Chapter 77, Title 38 of the S.C. Code is amended by adding:

 

    Section 38-77-145. (A) A person who suffers personal injury or death may not recover noneconomic damages if the injury or death occurred while the person was operating a motor vehicle and that person knew that he was not in compliance with the automobile insurance policy requirements pursuant to Section 38-77-140, except as otherwise provided in subsection (B). For purposes of this section only, "noneconomic damages" has the same meaning as in Section 15-32-210(9).

    (B) The prohibition against the recovery of noneconomic damages shall not apply if the person who is liable for the personal injury or wrongful death:

       (1) was driving a motor vehicle in this State while under the influence of alcohol, drugs, or a combination of alcohol and drugs;

       (2) acted intentionally, recklessly, or with gross negligence;

       (3) fled from the scene of the accident; or

       (4) was acting in furtherance of an offense or in immediate flight from an offense that constitutes a crime for which a sentence of imprisonment for a term of more than one year is authorized.

 

SECTION 17. Section 38-77-280 of the S.C. Code is amended to read:

 

    Section 38-77-280. (A) Any automobile insurer may, at its 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.Every automobile insurer offering automobile physical damage insurance coverage must offer a zero dollar deductible option for automobile safety glass.

    (C) 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.

    (D)(C) 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, or the existence of uninsured or underinsured motorist claims. The existence of uninsured or underinsured motorist claims shall not be considered when determining an insured's eligibility for premium discounts. 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, or the existence of uninsured or underinsured motorist claims. 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.

    (D) No insurer may increase an automobile insurance premium, cancel, or refuse to renew an automobile insurance policy for a named insured as a result of a motor vehicle accident unless it is determined that the accident was caused, in whole or in part, by an insured or a permissive user of the insured vehicle.

 

SECTION 18. Section 12-6-1620(B) of the S.C. Code is amended to read:

 

    (B)(1) As used in this article, "Catastrophe Savings Account" means a regular savings account or money market account established by an insurance policyholder for residential property in this State to cover: (a) SC Safe Home or Insurance Institute for Business and Home Safety approved retrofits for the insured property owner's primary residence to make the property resilient to hurricane or other wind-related damage; or (b) an insurance deductible under an insurance policy for the taxpayer's legal residence property that covers hurricane, rising floodwaters, or other catastrophic windstorm event damage or by an individual to cover self-insured losses for the taxpayer's legal residence from a hurricane, rising floodwaters, or other catastrophic windstorm event. The account must be labeled as a Catastrophe Savings Account in order to qualify as a Catastrophe Savings Account as defined in this article. A taxpayer shall establish only one Catastrophe Savings Account and shall specify that the purpose of the account is to cover the amount of retrofits, insurance deductibles and other uninsured portions of risks of loss from hurricane, rising floodwater, or other catastrophic windstorm event.

       (2) A Catastrophe Savings Account is not subject to attachment, levy, garnishment, or legal process in this State.

       (3) The total amount that may be contributed to a Catastrophe Savings Account must not exceed:

           (a) in the case of an individual whose qualified deductible is less than or equal to one thousand dollars, two thousand dollars;

           (b) in the case of an individual whose qualified deductible is greater than one thousand dollars, the amount equal to the lesser of fifteen thousand dollars or twice the amount of the taxpayer's qualified deductible; or

           (c) in the case of a self-insured individual who chooses not to obtain insurance on his legal residence, two hundred fifty thousand dollars, but shall not exceed the value of the individual taxpayer's legal residence.

       (4) If a taxpayer contributes in excess of the limits provided in item (3), the taxpayer shall withdraw the amount of the excess contributions and include that amount in South Carolina income for purposes of Section 12-6-510 in the year of withdrawal.

       (5) The South Carolina Department of Revenue shall provide an annual report to the South Carolina General Assembly on the number of exemptions or the total amount of tax credits that have been claimed by South Carolina taxpayers for mitigation or retrofitting measures.

 

SECTION 19. Section 12-6-3660(D) of the S.C. Code is amended to read:

 

    (D) The tax credit allowed pursuant to this section for any taxable year must not exceed the lesser of:

       (1) twenty-five percent of the cost incurred; or

       (2) onetwo thousand dollars.

 

SECTION 20. Chapter 6, Title 12 of the S.C. Code is amended by adding:

 

    Section 12-6-3662. (A) There is established an annual "Disaster Preparedness Sales Tax Holiday." The initial tax holiday shall begin at 12:01 a.m. on Friday, May 2, 2026, and end at 11:59 p.m. on Sunday, May 4, 2026, with subsequent years beginning at 12:01 a.m. on the Friday of the last full weekend in April and ending at 11:59 p.m. the immediately following Sunday. This section describes the items eligible for tax exemption during the Disaster Preparedness Sales Tax Holiday.

    (B) The following emergency supply items which sell for sixty dollars or less per item shall be tax exempt during the Disaster Preparedness Sales Tax Holiday:

       (1) any package of AAA-cell, AA-cell, C-cell, D-cell, 6-volt, or 9-volt batteries, but excludes coin batteries, automobile batteries, and boat batteries;

       (2) any cellular phone battery or cellular phone charger;

       (3) any portable self-powered or battery-powered radio, two-way radio, weather band radio, or NOAA weather radio;

       (4) any portable self-powered light source, including battery-powered flashlights, lanterns, or emergency glow sticks;

       (5) any tarpaulin, plastic sheeting, plastic drop cloths, or other flexible, waterproof sheeting;

       (6) any ground anchor system including, but not limited to, bungee cords, rope, or tie-down kits;

       (7) any duct tape;

       (8) any plywood, window film, or other materials specifically designed to protect window openings;

       (9) any nonelectric food storage cooler or water storage container;

       (10) any nonelectric can opener;

       (11) any artificial ice, blue ice, ice packs, or reusable ice;

       (12) any self-contained first-aid kit;

       (13) any fire extinguisher, smoke detector, or carbon monoxide detector;

       (14) any gas or diesel fuel tank or container that can hold five gallons or less.

    (C) In addition, portable generators and power cords that may be used to provide light, communications, or preserve food in the event of a power outage, are exempt from sales tax up to the first one thousand dollars of the sales price.

    (D) Items normally sold in pairs or packages shall not be separated to qualify for the exemption provided for in this section.

 

SECTION 21. Section 12-6-3670 of the S.C. Code is amended to read:

 

    Section 12-6-3670. (A) An individual taxpayer may claim a credit against the income tax imposed pursuant to Section 12-6-510 for excess premium paid during the applicable tax year for property and casualty insurance, as defined in Articles 1, 3, and 5 of Chapter 75, Title 38, providing coverage on the taxpayer's legal residence pursuant to Section 12-43-220(c).

    (B) For the purposes of computing the credit allowed by this section, excess premium paid is the amount by which the premium paid exceeds five percent of the taxpayer's adjusted gross income.

    (C)(1) The credit allowed pursuant to this section for any taxable year may not exceed one thousand two hundred fifty three thousand dollars.

       (2) If the credit allowed under this section exceeds the state income tax liability for the taxable year, any unused credit may be carried forward for five succeeding taxable years.

 

SECTION 22. Section 42-9-440 of the S.C. Code is amended to read:

 

    Section 42-9-440.  The commission shall report all cases of suspected false statement or misrepresentation, as defined in Section 38-55-530(D), to the Insurance Fraud Division of the Office of the Attorney GeneralDepartment of Insurance for investigation and prosecution, if warranted, pursuant to the Omnibus Insurance Fraud and Reporting Immunity Act.

 

SECTION 23. Chapter 11, Title 40 of the S.C. Code is amended by adding:

 

    Section 40-11-125. Notwithstanding another provision of this chapter, the Department of Insurance has the exclusive authority to enforce any violations related to insurance or insurance fraud arising from roofing systems contracts or the delivery of goods or services related to roofing systems as provided in Article 5, Chapter 55, Title 38.

 

SECTION 24. Section 40-59-25 of the S.C. Code is amended to read:

 

    Section 40-59-25.  (A)(1) A person who enters into a written contract for goods or services related to a roofing system with a party who will be paid from proceeds of a property and casualty insurance policy and who subsequently receives written notice from the insurer that all or part of the claim or contract is not a covered loss under the policy may cancel the contract prior to midnight on the fifth business day after the insured has received the written notice of the denial of coverage.

       (2) This section applies to the following persons performing goods or services related to a roofing system:

           (a) a licensed residential builder;

           (b) a registered residential specialty contractor; and

           (c) a person or firm who engages or offers to engage in the business of residential building or residential specialty contracting without first having registered with the commission or procured a license from the commission.

       (3) Cancellation must be evidenced by the insured giving written notice of cancellation to the builder or contractor at the address provided in the contract. Notice of cancellation, if given by mail, must be effective upon deposit into the United States mail, postage prepaid and properly addressed to the builder or contractor. Notice of cancellation need not take a particular form and shall be sufficient if it indicates, by any form of written expression, the intention of the insured not to be bound by the contract.

       (4) For purposes of this subsection, "roof system" means a roof covering, roof sheathing, roof weatherproofing, roof framing, roof ventilation system, or insulation.

    (B) Before entering a contract as provided in subsection (A), the builder or contractor shall:

       (1) provide the insured a statement in boldface type of a minimum size of ten points, in substantially the following form:

    "You may cancel this contract at any time before midnight on the fifth business day after you have received written notification from your insurer that all or any part of this claim or contract is not a covered loss under the insurance policy. This right to cancel is in addition to any other rights of cancellation which may be found in state or federal law or regulation. See attached notice of cancellation form for an explanation of this right"; and

       (2) provide each insured a fully completed form, in duplicate, prominently captioned "NOTICE OF CANCELLATION", which must be attached to the contract but easily detachable, and which must contain in boldface type of a minimum size of ten points the following statement:

    "NOTICE OF CANCELLATION

    If you are notified by your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy, you may cancel the contract by mailing or delivering a signed and dated copy of this cancellation notice or any other written notice to (insert name of contractor) at (insert address of contractor's place of business) any time prior to midnight on the fifth business day after you have received such notices from your insurer.

    I HEREBY CANCEL THIS TRANSACTION

    ______________________________________

    DATE

    ______________________________________

    SIGNATURE OF INSURED"

    (C) In circumstances in which payment may be made from the proceeds of a property and casualty insurance policy, a builder or contractor shall not require any payments from an insured until the five-day cancellation period has expired. If, however, the builder or contractor has performed any emergency services, acknowledged by the insured in writing to be necessary to prevent damage to the premises, the builder or contractor must be entitled to collect the amount due for the emergency services at the time they are rendered. A provision in a contract as provided in subsection (A) that requires payment of any fee for anything except emergency services must not be enforceable against an insured who has canceled a contract under this section.

    (D)(1) A builder or contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an owner or possessor of residential real estate on any insurance claim in connection with the repair or replacement of roof systems.

       (2) Notwithstanding item (1), or any other provision of state law, an owner is not prevented from consulting with a builder, contractor, or other person of his choice to provide an evaluation of the condition of his roof system and using the evaluation he receives in the negotiation for the repair or replacement of his roof system.

    (E)(1) A builder or contractor shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services.

       (2) A person who violates a provision of this subsection is guilty of a misdemeanor. The violation is grounds for suspension or revocation of licenses issued pursuant to this chapter.

       (3) As used in this subsection, the term "promise to pay or rebate" means:

           (a) granting any allowance or offering any discount against the fees to be charged, including, but not limited to, an allowance or discount in return for displaying a sign or other advertisement at the insured's premises;  or

           (b) paying the insured or any person directly or indirectly associated with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason.

 

SECTION 25. Article 1, Chapter 59, Title 40 of the S.C. Code is amended by adding:

 

    Section 40-59-27.  Notwithstanding another provision of this chapter, the Department of Insurance has the exclusive authority to enforce any violations related to insurance or insurance fraud arising from roofing systems contracts or the delivery of goods or services related to roofing systems as provided in Article 5, Chapter 55, Title 38.

 

SECTION 26. No later than January 31, the director of the Department of Insurance shall submit an annual report to the General Assembly that provides data illustrating the impact this act has had on insurance rates for South Carolina policyholders. This annual report must also include information regarding South Carolina's insurance rates in this State for the preceding five years. Additionally, the director or his designee shall provide annual testimony before the House Labor, Commerce and Industry Committee and the Senate Banking and Insurance Committee regarding the status of the insurance market and the performance of that market during the previous year.

 

SECTION 27. The General Assembly finds that the sections presented in this act constitute one subject as required by Section 17, Article III of the South Carolina Constitution, in particular finding that each change and each topic relates directly to or in conjunction with other sections to the subject of insurance rates and policyholder protection as clearly enumerated in the title. The General Assembly further finds that a common purpose or relationship exists among the sections, representing a potential plurality but not disunity of topics, notwithstanding that reasonable minds might differ in identifying more than one topic contained in the act.

 

SECTION 28. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

 

SECTION 29. This act takes effect upon approval by the Governor.

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