Current Status Introducing Body:
HouseBill Number: 3656Primary Sponsor: D. SmithCommittee Number: 26Type of Legislation: GBSubject: Motor vehicle insuranceResiding Body: HouseCurrent Committee: Labor, Commerce and IndustryCompanion Bill Number: 271Date Tabled: 19930420Computer Document Number: BBM/10309JM.93Introduced Date: 19930308Last History Body: HouseLast History Date: 19930420Last History Type: Tabled in CommitteeScope of Legislation: StatewideAll Sponsors: D. SmithType of Legislation: General Bill
Bill Body Date Action Description CMN Leg Involved ____ ______ ____________ ______________________________ ___ ____________ 3656 House 19930420 Tabled in Committee 26 3656 House 19930308 Introduced, read first time, 26 referred to CommitteeView additional legislative information at the LPITS web site.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-3-65 SO AS TO ALLOW THE CHIEF INSURANCE COMMISSIONER TO SUSPEND THE DRIVER'S LICENSE OF A DRIVER, FOR A PERIOD NOT TO EXCEED THIRTY DAYS, UNDER CERTAIN CONDITIONS AND CIRCUMSTANCES; TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-458 SO AS TO PROHIBIT AN AUTOMOBILE INSURER FROM RAISING AN INSURED'S PREMIUM BASED UPON THE INSURED'S DRIVING RECORD OR ACCIDENT RECORD, OR COMBINATION OF BOTH OF THESE, OR FROM REMOVING AN INSURED'S SAFE DRIVER DISCOUNT UNDER CERTAIN CONDITIONS AND CIRCUMSTANCES, IF THE INSURED COMPLETES AND PASSES A SAFE DRIVER COURSE APPROVED BY THE COMMISSIONER; TO AMEND THE 1976 CODE BY ADDING SECTION 56-1-467 SO AS TO PROVIDE THAT IN ADDITION TO ALL OTHER PENALTIES PROVIDED BY LAW A PERSON MAY HAVE HIS LICENSE TO DRIVE SUSPENDED FOR SIX MONTHS IF HE IS CONVICTED OF, OR PLEADS GUILTY OR NOLO CONTENDERE TO, FIVE TRAFFIC OFFENSES IN A ONE-YEAR PERIOD OR IS CONVICTED OF, OR PLEADS GUILTY OR NOLO CONTENDERE TO, DRIVING UNDER THE INFLUENCE OF ALCOHOL OR DRUGS TWO OR MORE TIMES IN A ONE-YEAR PERIOD, AND PROVIDE THAT THIS SUSPENSION CAN BE WAIVED ONLY UPON A SHOWING TO THE COMMISSIONER OF EXTREME HARDSHIP AND SUBSTANTIAL REHABILITATION; TO AMEND SECTION 38-73-450, RELATING TO FAIRNESS OF AUTOMOBILE INSURANCE RATES OR PREMIUM CHARGES, BURDEN ON INSURER TO PROVE FAIRNESS, AND FACTORS TO BE CONSIDERED BY THE COMMISSIONER, SO AS TO REQUIRE THE COMMISSIONER TO TAKE INTO ACCOUNT INVESTMENT INCOME FROM ALL SOURCES, ALL PROFITS FROM EVERY SOURCE, INCLUDING INVESTMENT INCOME, BOTH ACTIVE AND PASSIVE, AND EARNED INTEREST, PROHIBIT AN INSURER FROM CLAIMING REDUCED PROFIT BY DOING, OR FAILING TO DO, CERTAIN THINGS, REQUIRE THAT ANY PROFIT OF AN INSURER EXCEEDING TEN PERCENT PER ANNUM BE REFUNDED TO ITS INSUREDS UNLESS THE INSURER CAN DEMONSTRATE EXTREME AND COMPELLING HARDSHIP JUSTIFYING THE REFUND OF A LESSER SUM, AND PROVIDE THAT A REQUEST FOR ANY RATE INCREASE OR PREMIUM INCREASE MAY BE DENIED OR DISAPPROVED BY TAKING INTO ACCOUNT AS A FACTOR THE INEFFICIENCY OF THE INSURER OR SUFFICIENT INSURER PROFIT; TO AMEND SECTION 38-73-455, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE RATES, SO AS TO DELETE THE PROVISIONS RELATING TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-735, AS AMENDED, RELATING TO PLANS FOR CREDITS OR DISCOUNTS TO AUTOMOBILE INSUREDS, SO AS TO DELETE THE PROVISIONS AUTHORIZING THE PLANS TO BE CEDED TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-750, AS AMENDED, RELATING TO THE REQUIREMENT THAT AUTOMOBILE INSURERS FILE PLANS FOR ALLOCATING EXPENSES AND PROFIT, SO AS TO DELETE THE REFERENCES TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-760, AS AMENDED, RELATING TO UNIFORM STATISTICAL PLANS FOR THE AUTOMOBILE INSURANCE BUSINESS, SO AS TO DELETE THE REFERENCE TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS PERTAINING TO AUTOMOBILE INSURANCE, SO AS TO DELETE THE DEFINITION OF THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-285, AS AMENDED, RELATING TO THE REQUIREMENT THAT ALL AUTOMOBILE INSURANCE COVERAGES FOR AN INSURED'S AUTOMOBILE MUST BE IN ONE POLICY, SO AS TO PROVIDE FOR THE REQUIREMENT TO APPLY TO INDIVIDUAL PASSENGER AUTOMOBILES INSTEAD OF VEHICLES CEDED TO THE REINSURANCE FACILITY; TO PROVIDE THAT NOTHING IN THIS ACT SHALL BE CONSTRUED TO ELIMINATE THE MANDATE ON AUTOMOBILE INSURERS DOING BUSINESS IN THIS STATE TO WRITE INSURANCE FOR ALL OR FOR SELF-INSURED PLANS APPROVED BY THE COMMISSIONER TO COMPLY WITH THE FINANCIAL RESPONSIBILITY STATUTES OF THIS STATE, AND TO PROVIDE THAT NOTHING IN THIS ACT SHALL BE CONSTRUED TO ELIMINATE COMPULSORY INSURANCE FOR ALL DRIVERS AND COMPLIANCE WITH THE FINANCIAL RESPONSIBILITY STATUTES; TO REQUIRE THE COMMISSIONER TO APPROVE A TEN PERCENT REDUCTION IN RATE OR PREMIUM CHARGES USED BY AUTOMOBILE INSURERS; AND TO REPEAL SECTIONS 38-73-1420 AND 38-73-1425, RELATING TO THE REINSURANCE FACILITY AND OTHER MATTERS, 38-77-920, RELATING TO THE PROVISION THAT INSURERS AND AGENTS MAY NOT REFUSE ACCEPTANCE OF AUTOMOBILE INSURANCE AND RELATED MATTERS, 38-77-940, RELATING TO AUTOMOBILE INSURANCE AND AVOIDING CERTAIN CLASSES OR TYPES OF RISKS AND CANCELING AN AGENT'S REPRESENTATION, 38-77-950, RELATING TO UNREASONABLE OR EXCESSIVE USE OF THE REINSURANCE FACILITY BY AN INSURER, AND 38-77-960, RELATING TO AUTOMOBILE INSURANCE AGENT'S BUSINESS, AND ARTICLE 5, CHAPTER 77, TITLE 38 RELATING TO THE REINSURANCE FACILITY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-3-65. Notwithstanding any other provision of law, the Chief Insurance Commissioner may suspend the driver's license, for a period not to exceed thirty days, of any driver who has caused two accidents in a single calendar year and has in each such accident received a ticket and pled guilty or nolo contendere, been convicted, or forfeited bond or, if no ticket was issued, signs a statement on a form approved by the commissioner admitting fault and indicating that, if a ticket had been issued, the driver would have pled guilty or nolo contendere. The driver has twenty days to appeal such suspension, in writing to the commissioner, and the commissioner may waive the suspension or reduce the period of suspension below thirty days only upon a showing by the driver of extreme hardship or compelling special circumstances.
The provisions of this section are in addition to, and not in lieu of, any other provision of law providing for driver license suspension and appeal procedures."
SECTION 2. The 1976 Code is amended by adding:
"Section 38-73-458. Notwithstanding any other provision of law, subject to appeal rights and limitations as provided by law no automobile insurer may raise an insured's premium based upon the insured's driving record or accident record, or a combination of the insured's driving record and accident record, or remove an insured's safe driver discount if the insured has had no traffic tickets or accidents for which he received a ticket and was convicted, pled guilty or nolo contendere, or forfeited bond in the preceding ten years prior to the three-year period of having the combination of accidents or traffic tickets described above, if the insured completes and passes a safe-driver course approved by the Chief Insurance Commissioner. The benefit of this provision may be utilized by an insured only one time.
The intent of this section is to provide relief to drivers with a lengthy history of accident-free and ticket-free driving."
SECTION 3. The 1976 Code is amended by adding:
"Section 56-1-467. (A) In addition to all other penalties provided by law of any nature whatever, a person may have his license to drive suspended for six months if:
(1) he is convicted of, or pleads guilty or nolo contendere to, five traffic offenses in a one-year period; or
(2) he is convicted of, or pleads guilty or nolo contendere to, driving under the influence of alcohol or drugs (Section 56-5-2930) two or more times in a one-year period.
(B) The suspension provided for in subsection (A) can be waived only upon a showing to the Chief Insurance Commissioner of extreme hardship and substantial rehabilitation."
SECTION 4. Section 38-73-450(b) of the 1976 Code is amended to read:
"(b) In the approval of automobile insurance rates and in determining whether the final rates or premium charges for automobile insurance are adequate, not excessive, and not unfairly discriminatory, the commissioner shall take into account investment income from all sources, including income from unearned premium and loss reserves as well as all profits from every source, including investment income, both active and passive, and earned interest. Every insurer writing automobile insurance in this State shall file with the commissioner, in a form the commissioner orders, complete financial records showing the amount of profit, in accordance with this subsection, on every line of automobile insurance during the previous year and shall also file records showing profits or losses from such investment income, and all other sources, in accordance with this subsection, which records shall include, but shall not be limited to, investment income or profit on net realized and unrealized capital gains. However, unrealized capital gains or losses may not be considered in the rate-making process."
SECTION 5. Section 38-73-450 of the 1976 Code is amended by adding:
"(c) No insurer may claim reduced profit under subsection (b) by:
(1) artificially allocating funds to salaries, dividends, or other payouts so as to reduce profit; or
(2) failing to include all sources of income, including investment income, both active and passive, and earned interest.
(d) Any profit of an insurer exceeding ten percent per annum must be refunded to its insureds unless the insurer is able to demonstrate by clear and convincing evidence, after a hearing before the Chief Insurance Commissioner allowing all interested persons and representatives of consumer groups to speak and present evidence, that extreme and compelling hardship will occur to the extent that the insurer cannot continue to do business unless a lesser sum is refunded to its insureds.
(e) A request for any rate increase or premium increase by an insurer may be denied or disapproved by taking into account as a factor (1) inefficiency of the insurer for any valid reason or based upon excessive overhead or based upon premiums and income collected compared with claims paid out or based upon excessive salaries, benefits, sales commissions, or other compensation to executives, employees, officers, directors, or managers at all levels or based upon excessive amounts paid out to defend or litigate claims or based upon delay in paying valid claims; or (2) sufficient insurer profit such that a rate increase or premium increase is not in the best interest of the public."
SECTION 6. Section 38-73-455 of the 1976 Code, as last amended by Act 113 of 1991, is further amended by deleting subsection (C) which reads:
"(C) Member companies of an affiliated group of automobile insurers may not utilize different filed rates for automobile insurance coverages which they are mandated by law to write. For the purpose of this section, an affiliated group of automobile insurers includes a group of automobile insurers under common ownership, management, or control. Those automobile insurers designated pursuant to Section 38-77-590(a), for automobile insurance risks written by them through producers designated by the facility governing board pursuant to that section, shall utilize the rates or premium charges by coverage filed and authorized for use by the rating organization licensed by the commissioner pursuant to Article 11, Chapter 73 of this title, which has the largest number of members or subscribers for automobile insurance rates. However, those automobile insurers designated pursuant to Section 38-77-590(a) are not required to use those same rates or premium charges described in the preceding sentence for risks written by them through their authorized agents not appointed pursuant to Section 38-77-590."
SECTION 7. Section 38-73-735 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-73-735. In addition to risk and territorial classification plans promulgated or approved under Section 38-73-730, the commissioner may promulgate plans to afford credits or discounts to automobile insureds, or he may approve the credit or discount plans filed with him by insurers of automobile insurance. No automobile insurance credit or discount plan may be promulgated or approved by the commissioner unless:
(1) The criteria for determining eligibility for credits or discounts under the plan are objective, clear, and unequivocal;.
(2) The criteria are based upon factually or statistically supported data; and.
(3) The credits or discounts provided under the plan will be afforded by the insurer on a nondiscriminatory basis to all insureds who are eligible therefor. If an insurance credit or discount plan is given to an insured pursuant to this section, the policy may be ceded to the Reinsurance Facility in accordance with the facility's plan of operation."
SECTION 8. Section 38-73-750 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-73-750. Automobile insurers shall file with the State Rating and Statistical Division their plans or systems for allocating expenses and profit as respects the various kinds or types and classes of automobile insurance risks and the classes of risks thereunder. However, no plan or system may be filed which is inconsistent with the classification of risks promulgated by the commissioner. No plan or system may be filed or approved if the purpose or effect is to discriminate unfairly or unreasonably in respect to the allocation of expenses or profit between classes of risks or if the purpose or effect is to impose a burden or detriment upon the South Carolina Reinsurance Facility or to secure to the insurer using the plan or system an unfair or unreasonable competitive advantage to the detriment of the South Carolina Reinsurance Facility or other insurers. The commissioner after due notice and hearing, shall disapprove and disallow the further use of an inconsistent, discriminatory, burdensome, or competitively unfair plan or system for the allocation of expenses and profit."
SECTION 9. Section 38-73-760 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-73-760. (A) The commissioner, through the State Rating and Statistical Division, shall fix, establish, and promulgate any uniform statistical plan that may be necessary or appropriate for the gathering and compilation of statistical data from insurers, rating organizations, or advisory organizations transacting or otherwise engaged in the automobile insurance business in the State. In promulgating any a uniform statistical plan consideration may be given to the extent reasonable or practicable to the rules and forms of the plans used for rating systems in other states. Upon the promulgation of any a statistical plan for automobile insurance in this State, the same it must be adopted and used by every automobile insurer in this State South Carolina, and every automobile insurer shall constitute the State Rating and Statistical Division its statistical agent for automobile insurance in this State.
(B) The statistical plan may be promulgated so as to provide for any and all the statistical and financial data necessary or appropriate to the implementation of the policy of this chapter or Chapter 77 of this title or to yield statistical data reasonably and fairly related to any of the purposes of this article, including, but not limited to, the fixing, establishing, and promulgating of:
(1) risk and territorial classification plans for automobile insurance;
(2) determining the pure loss rate level indications for automobile insurance in South Carolina this State based upon all South Carolina loss experience and assisting in the translating of this information into usable form for insurance consumers in terms of the final rates or premium charges of each insurer of automobile insurance,;
(3) determining the reasonability of loss adjustment expenses, other expenses, and profit factors applied by insurers to their pure loss components in arriving at their final rates or premium charges for automobile insurance both for purposes of ensuring that the final rates or premium charges are adequate, not excessive, and not unfairly discriminatory and for ensuring that improper and undue burdens are not imposed upon the South Carolina Reinsurance Facility by way of excessive ceding commissions to ceding insurers;
(4) determining the amount, validity, and propriety of class and territorial differentials applied to the general pure loss rate levels and testing not less than annually the appropriateness of the existing differentials in the light of the most recent available loss experience data;
(5) determining the amount, validity, and propriety of surcharges and discounts referable to any a uniform merit rating plan or system which may have been promulgated by the commissioner or which may be under consideration for promulgation, the appropriateness of the surcharges and discounts in the light of the most recent available loss experience data;
(6) determining the propriety or validity of any a plan for the classification of risks which may be in effect or under consideration based upon the propensities of motor vehicles or classes or types of motor vehicles or their equipment to shield occupants from death or serious injury as a result of crash or based upon the relative invulnerability of the motor vehicles or classes or types of motor vehicles to extensive damage as a result of crash or their repairability at modest expense; or
(7) obtaining data relevant to studies being made or to be made by the State Rating and Statistical Division in connection with any of the foregoing the provisions of this subsection or in connection with means and methods for providing appropriate rates for insurance consumers or fostering and encouraging competition among insurers.
(C) The functions and responsibilities of the State Rating and Statistical Division acting as statistical agent for automobile insurers may must not be delegated, except that the commissioner may, as the result of competitive bidding, may make an agreement with some suitable person, firm, corporation, or other organization for the gathering, compilation, recordation, or computerization of the statistical data. However, these functions are always subject to the supervision, direction, and control of the commissioner and the examination and oversight of insurers in respect to their obligations to furnish statistical data to him remain the direct responsibility of the commissioner and may never must not be delegated other than to the State Rating and Statistical Division.
(D) Any A merit rating plan or system promulgated by the commissioner pursuant to the authority contained in subsection (B) likewise extends to and includes automobile collision insurance. However, nothing contained in this subsection (d) requires that the same percentage or dollar amounts for discounts or surcharges apply to collision coverage nor does it require that surcharges already assessed in respect to the liability coverages of the policy again be assessed in respect to the collision coverage afforded by the same policy.
(E) The commissioner shall require all insurers transacting automobile insurance business in this State to assess surcharges and grant safe driver discounts of no less than twenty percent.
(F) All policies of automobile insurance issued in South Carolina must show on the initial policy or on an attachment to the initial policy and on all premium invoices or attached to all premium invoices, in a form to be approved by the commissioner, the amount of any a surcharge, (including loss of safe driver discount) that may be, applicable to the policy as a result of any a merit rating plan or system promulgated by the commissioner. Also to be included, presented in a fashion that is readily understandable, is The reason for the applicable surcharge or the loss of safe driver discount must be included and presented in a readily understandable fashion. The amount of the applicable safe driver discount also must be shown."
SECTION 10. Section 38-77-30 of the 1976 Code, as last amended by Act 443 of 1992, is further amended by deleting item (5) which reads:
"(5) `Facility' means the unincorporated, nonprofit, legal entity created by this chapter to reinsure policies of automobile insurance known as the South Carolina Reinsurance Facility."
SECTION 11. Section 38-77-285 of the 1976 Code, as last amended by Act 146 of 1991, is further amended to read:
"Section 38-77-285. All automobile insurance coverages written by an insurer for an insured's automobile must be written in the same policy except that all automobile insurance policies in effect on the effective date of this section may continue in force until the expiration date of the policy. This section applies only to insurance policies covering vehicles eligible to be ceded to the Reinsurance Facility individual passenger automobiles."
SECTION 12. (A) Nothing in this act may be construed to eliminate the mandate imposed on automobile insurers doing business in this State to write insurance for all (Article 3, Chapter 77, Title 38 of the 1976 Code) or for self-insured plans approved by the Chief Insurance Commissioner to comply with the financial responsibility statutes of this State.
(B) Nothing in this act may be construed to eliminate compulsory insurance for all drivers and compliance with the financial responsibility statutes of this State.
SECTION 13. Upon the effective date of this act the Chief Insurance Commissioner shall approve a ten percent reduction in rate or premium charges used by automobile insurers.
SECTION 14. Sections 38-73-1420, 38-73-1425, 38-77-920, 38-77-940, 38-77-950, and 38-77-960, and Article 5, Chapter 77, Title 38 of the 1976 Code are repealed.
SECTION 15. Except as otherwise specifically provided, this act takes effect July 1, 1994, except the Reinsurance Facility may operate until July 1, 1996.