Current Status Introducing Body:House Bill Number:3831 Primary Sponsor:Richardson Committee Number:26 Type of Legislation:GB Subject:Property, casualty, inland marine insurance Residing Body:House Current Committee:Labor, Commerce and Industry Computer Document Number:BBM/10393JM.93 Introduced Date:19930401 Last History Body:House Last History Date:19930401 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Richardson Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
____ ______ ____________ ______________________________ ___ ____________
3831 House 19930401 Introduced, read first time, 26
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND SECTION 38-73-10, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PROPERTY, CASUALTY, AND INLAND MARINE INSURANCE, SURETY RATES, RATE-MAKING ORGANIZATIONS, AND THE DECLARATION OF THE PURPOSE AND THE CONSTRUCTION OF CHAPTER 73 OF TITLE 38, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS AND PROVIDE THAT ONE OF THE PURPOSES OF THE CHAPTER IS TO ENCOURAGE REASONABLE COMPETITION SO AS TO PROVIDE RATES THAT ARE RESPONSIVE TO COMPETITIVE MARKET CONDITIONS BY ALLOWING INSURANCE COMPANIES TO USE THEIR OWN RATES AND CLASSIFICATION PLANS AND TO ALLOW AFFILIATE COMPANIES TO DO THE SAME; 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 CHIEF INSURANCE COMMISSIONER, SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT, IN CONSIDERING ANY RATE FILING OR IN REVIEWING ANY RATE IN EFFECT FOR AUTOMOBILE INSURANCE, THE COMMISSIONER SHALL REVIEW THE RATE EXPERIENCE, AND MAKE ANY DETERMINATION WHETHER RATES OR PREMIUMS MEET THE REQUIREMENTS OF THIS SECTION IN ACCORDANCE WITH GENERALLY-ACCEPTED AND REASONABLE ACTUARIAL TECHNIQUES, INCLUDING CONSIDERATION OF CERTAIN SPECIFIED FACTORS; TO AMEND SECTION 38-73-457, RELATING TO FILING INFORMATION ON BASE INSURANCE RATES AND THE EFFECTIVE DATE OF RATES, SO AS TO DELETE THE EXISTING PROVISIONS OF THE SECTION, AND PROVIDE, AMONG OTHER THINGS, THAT THE CONSUMER ADVOCATE, UPON REQUEST TO THE CHIEF INSURANCE COMMISSIONER, MUST BE PROVIDED BY THE LATTER WITH A COPY OF ANY RATE FILED WITH THE COMMISSIONER ALONG WITH ANY SUPPORTING MATERIALS, DOCUMENTS, OR STUDIES UTILIZED TO SUPPORT THE FILED RATE; TO AMEND SECTION 38-73-460, RELATING TO THE EFFECT OF GAINS AND LOSSES INCURRED BY MEMBERS OF THE SOUTH CAROLINA REINSURANCE FACILITY ON AUTOMOBILE INSURANCE RATES, SO AS TO PROVIDE FOR THE MAKING OF RATES, RATHER THAN THE MAKING AND APPROVAL OF RATES; TO AMEND SECTION 38-73-520, RELATING TO REQUIRED INSURANCE RATE FILINGS, SO AS TO PROVIDE THAT EVERY FILING SHALL STATE THE EFFECTIVE DATE THEREOF, RATHER THAN THE PROPOSED EFFECTIVE DATE THEREOF, AND SHALL INDICATE THE CHARACTER AND EXTENT OF THE COVERAGE CONTEMPLATED AND MUST BE FILED NOT LATER THAN FIFTEEN DAYS AFTER THE EFFECTIVE DATE; TO AMEND SECTION 38-73-730, RELATING TO INSURANCE, STATE RATING AND STATISTICAL DIVISION, RISK CLASSIFICATION PLANS, DISTINCTION IN VIOLATION OF PLAN, AND ESTABLISHMENT OF PLANS, SO AS TO DELETE PROVISIONS AND LANGUAGE, AND PROVIDE THAT NO RISK CLASSIFICATION PLAN OR AUTOMOBILE INSURANCE CREDIT OR DISCOUNT PLAN MAY BE USED UNLESS THE CRITERIA USED FOR CLASSIFYING RISKS ARE OBJECTIVE, CLEAR, AND UNEQUIVOCAL AND BASED UPON FACTUALLY OR STATISTICALLY SUPPORTED DATA OR PROBABLE VARIATION IN LOSSES OR EXPENSES; TO AMEND SECTION 38-73-750, AS AMENDED, RELATING TO THE REQUIREMENT THAT CERTAIN INSURANCE PLANS MUST BE FILED BY INSURERS AND THAT CERTAIN PLANS MAY NOT BE FILED OR APPROVED AND THE DISAPPROVAL OF PLANS BY THE CHIEF INSURANCE COMMISSIONER, SO AS TO DELETE THE REQUIREMENT THAT AUTOMOBILE INSURERS FILE WITH THE STATE RATING AND STATISTICAL DIVISION THEIR PLANS OR SYSTEMS FOR ALLOCATING EXPENSES AND PROFIT AS RESPECTS THE VARIOUS KINDS OR TYPES OF AUTOMOBILE INSURANCE RISKS AND THE CLASSES OF RISKS THEREUNDER AND THE PROVISION THAT NO PLAN OR SYSTEM MAY BE FILED WHICH IS INCONSISTENT WITH THE CLASSIFICATION OF RISKS PROMULGATED BY THE COMMISSIONER; TO AMEND SECTION 38-73-760, AS AMENDED, RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND UNIFORM STATISTICAL PLANS, SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN PROVISIONS, ALLOW, RATHER THAN REQUIRE, THE CHIEF INSURANCE COMMISSIONER, THROUGH THE DIVISION, TO 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; TO AMEND SECTION 38-73-950, RELATING TO INSURANCE RATES, RATE-MAKING, AND RATE-FILING GENERALLY AND THE PROVISION THAT ADDITIONAL INFORMATION MAY BE REQUIRED, SO AS TO DELETE LANGUAGE REGARDING THE WAITING PERIOD; TO AMEND SECTION 38-73-1020, RELATING TO DISAPPROVAL OF A RATE-FILING AFTER THE APPLICABLE REVIEW PERIOD, SO AS TO DELETE LANGUAGE REGARDING THE APPLICABLE REVIEW PERIOD PROVIDED FOR IN SECTIONS 38-73-990 TO 38-73-1010; TO AMEND SECTION 38-73-1350, AS AMENDED, RELATING TO RATING ORGANIZATIONS AND COOPERATION, SO AS TO DELETE A REFERENCE TO SECTION 38-73-1420 AND THE PROVISION THAT ALL PROPERTY/CASUALTY FILINGS ARE SUBJECT TO PRIOR APPROVAL BY THE CHIEF INSURANCE COMMISSIONER; TO AMEND SECTION 38-73-1370, RELATING TO THE PROVISION THAT RATING ORGANIZATIONS ARE NOT PERMITTED TO FILE CERTAIN RATE INCREASES, FILING PURE LOSS COMPONENT OF RATE OR PREMIUM, AND USE OF APPROVED PURE LOSS COMPONENT BY MEMBERS OR SUBSCRIBERS, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE THAT NOTHING IN THIS SECTION SHALL BE CONSTRUED TO PREVENT A RATING ORGANIZATION FROM FILING A RATE INCREASE FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGE ON BEHALF OF THE REINSURANCE FACILITY; TO AMEND SECTION 38-73-1380, AS AMENDED, RELATING TO THE REQUIREMENT OF THE APPROVAL OF A FINAL INSURANCE RATE OR PREMIUM CHARGE, COMPUTATION OF SAME, AND APPROVAL OF EXPENSE COMPONENT FILED INDEPENDENTLY, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, INCLUDING, CERTAIN REFERENCES TO APPROVAL AND THE PROVISION THAT AFTER JUNE 30, 1989, NO MEMBER OR SUBSCRIBER OF A RATING ORGANIZATION MAY UTILIZE A RATE OR PREMIUM CHARGE FOR ANY PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGE UNLESS AND UNTIL THE FINAL RATE OR PREMIUM CHARGE HAS BEEN FILED AND APPROVED BY THE CHIEF INSURANCE COMMISSIONER; TO AMEND SECTION 38-73-1400, RELATING TO THE DEFINITION OF PURE LOSS COMPONENT, EXPENSE COMPONENT, AND FINAL INSURANCE RATE OR PREMIUM CHARGE, SO AS TO CHANGE THE DEFINITION OF "FINAL RATE OR PREMIUM CHARGE"; TO AMEND SECTION 38-73-1410, RELATING TO THE PROVISION THAT REFILING OF FINAL RATES OR PREMIUM CHARGES PREVIOUSLY APPROVED IS NOT REQUIRED, SO AS TO DELETE THE EXISTING PROVISIONS OF THE CODE SECTION, AND PROVIDE THAT, AFTER JUNE 30, 1993, UPON THE EFFECTIVE DATE OF THIS SECTION, NOTHING IN THE SECTION SHALL BE CONSTRUED TO REQUIRE A RATING ORGANIZATION OR ITS MEMBERS OR SUBSCRIBERS OR ANY INSURER TO IMMEDIATELY REFILE FINAL RATES, PREMIUM CHARGES, OR CLASSIFICATION PLANS PREVIOUSLY APPROVED BY THE CHIEF INSURANCE COMMISSIONER FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE COVERAGES AND THAT INSURERS ARE AUTHORIZED TO CONTINUE TO USE AUTOMOBILE INSURANCE RATES, PREMIUM CHARGES, AND CLASSIFICATION PLANS APPROVED BEFORE THE EFFECTIVE DATE OF THIS SECTION; TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-1600 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT BY JANUARY 1, 1994, AND ANNUALLY THEREAFTER, THE BOARD OF GOVERNORS OF THE REINSURANCE FACILITY SHALL FILE WITH THE CHIEF INSURANCE COMMISSIONER EVERY MANUAL OF CLASSIFICATIONS, RULES, AND RATES, EVERY RATING PLAN, POLICY FORMS, AND EVERY MODIFICATION OF ANY OTHER FOREGOING WHICH IT PROPOSES TO USE FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE PROVIDED BY THE FACILITY AND THAT EVERY SUCH FILING SHALL INDICATE THE CHARACTER AND EXTENT OF THE COVERAGE CONTEMPLATED AND SHALL BE ACCOMPANIED BY THE INFORMATION UPON WHICH THE BOARD SUPPORTS THE FILING; TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-1620 SO AS TO PROVIDE THAT THE BOARD OF GOVERNORS OF THE REINSURANCE FACILITY SHALL PROVIDE RATES AND RULES FOR THE WRITING OF CERTAIN SPECIFIED PRIVATE PASSENGER COVERAGES, LIMITS, AND DEDUCTIBLES, THAT THE BOARD IS EMPOWERED, WITH THE APPROVAL OF THE CHIEF INSURANCE COMMISSIONER, TO EXPAND THE COVERAGE OFFERINGS UPON THE PETITION OF FIFTY PERCENT OF THE MEMBERS OF THE FACILITY, AND THAT ANY COVERAGE WRITTEN PURSUANT TO THIS SECTION BY ANY INSURER MUST BE CEDED; TO AMEND SECTION 38-77-10, RELATING TO THE DECLARATION OF THE PURPOSES OF CHAPTER 77 OF TITLE 38 ON AUTOMOBILE INSURANCE, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, INCLUDING THE STATED PURPOSE TO PROVIDE MEDICAL, SURGICAL, FUNERAL, AND DISABILITY INSURANCE BENEFITS WITHOUT REGARD TO FAULT TO BE OFFERED UNDER AUTOMOBILE INSURANCE POLICIES THAT PROVIDE BODILY INJURY AND PROPERTY DAMAGE LIABILITY INSURANCE, OR OTHER SECURITY, FOR MOTOR VEHICLES REGISTERED IN THIS STATE; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS FOR PURPOSES OF CHAPTER 77 OF TITLE 38 ON AUTOMOBILE INSURANCE, SO AS TO REDEFINE "RENEWAL" AND "TO RENEW"; TO AMEND SECTION 38-77-110, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE AND THE REQUIREMENT UPON INSURERS TO INSURE AND EXCEPTIONS, SO AS TO DELETE THE EXISTING PROVISIONS OF THE SECTION, AND PROVIDE THAT NO INSURER MAY REFUSE TO WRITE A POLICY, COVERAGE, OR ENDORSEMENT OF AUTOMOBILE INSURANCE BECAUSE OF THE RACE, COLOR, CREED, NATIONAL ORIGIN, OR ANCESTRY OF ANYONE WHO SEEKS TO BECOME INSURED; TO AMEND SECTION 38-77-115, RELATING TO AUTOMOBILE INSURANCE AND THE SIGNS REQUIRED IN AN INSURANCE AGENT'S PLACE OF BUSINESS, SO AS TO DELETE CERTAIN LANGUAGE, AND REFERENCE THE REASONS SPECIFIED IN SECTION 38-77-110; TO AMEND SECTION 38-77-120, RELATING TO AUTOMOBILE INSURANCE AND THE REQUIREMENTS FOR NOTICE OF CANCELLATION OF OR REFUSAL TO RENEW A POLICY, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT A NOTICE OF CANCELLATION BY AN INSURER OF A POLICY IS EFFECTIVE ONLY IF THE CANCELLATION IS FOR ONE OR MORE OF CERTAIN ENUMERATED REASONS; TO AMEND SECTION 38-77-280, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE AND COLLISION AND COMPREHENSIVE COVERAGE, SO AS TO DELETE THE EXISTING PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT IT IS AN UNFAIR TRADE PRACTICE, AS DESCRIBED IN SECTIONS 38-57-30 AND 38-57-40, FOR AN INSURER OR AN AGENT TO SELL COLLISION INSURANCE, COMPREHENSIVE COVERAGE, OR FIRE, THEFT, AND COMBINED ADDITIONAL COVERAGES UNLESS THE INSURED IS NOTIFIED AT THE TIME OF APPLICATION OF THE SAVINGS WHICH MAY BE REALIZED IF THE APPLICANT OR THE INSURED SELECTS A HIGHER DEDUCTIBLE; TO AMEND SECTION 38-77-510, AS AMENDED, RELATING TO THE SOUTH CAROLINA REINSURANCE FACILITY, SO AS TO GIVE THE INSURANCE AGENT THE ABILITY TO REQUIRE THE FACILITY TO REINSURE THE RISK COVERED UNDER ANY POLICY OF INSURANCE; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-515 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT "AN INDICATED CESSION" IS A POLICY THAT AN INSURER CEDES TO THE REINSURANCE FACILITY AT THE DIRECTION OF THE AGENT WHO PRODUCES THE APPLICATION WHICH LEADS TO THE POLICY'S ISSUANCE AND THAT, IN ORDER TO SECURE THE PLACEMENT OF A RISK IN THE FACILITY, AN AGENT MUST APPEND AN "INDICATED CESSION FORM" TO THE APPLICATION; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-596 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT, NOTWITHSTANDING SECTION 38-77-590, UPON NOTIFICATION TO THE GOVERNING BOARD OF THE REINSURANCE FACILITY, DESIGNATED PRODUCERS MAY CONTRACT WITH A VOLUNTARY MARKET OUTLET FOR ANY TYPE OF AUTOMOBILE INSURANCE CEDEABLE TO THE FACILITY AND THAT, UPON THE EFFECTIVE DATE OF SUCH A CONTRACT, THE DESIGNATED PRODUCER MAY NO LONGER WRITE NEW BUSINESS WITH A DESIGNATED CARRIER; TO AMEND SECTION 38-77-600, AS AMENDED, RELATING TO THE REINSURANCE FACILITY RECOUPMENT CHARGE, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT THE RATE OR PREMIUM CHARGED BY INSURERS OF PRIVATE PASSENGER AUTOMOBILE INSURANCE MUST INCLUDE A FACILITY RECOUPMENT CHARGE, WHICH MUST BE ADDED TO THE APPROPRIATE PREMIUM RATE FILED IN ACCORDANCE WITH SECTION 38-73-520, RATHER THAN "THE APPROPRIATE BASE RATE OR OBJECTIVE STANDARDS RATE PRESCRIBED IN SECTIONS 38-73-455 AND 38-73-457"; TO AMEND SECTION 38-77-620, AS AMENDED, RELATING TO THE INCLUSION OF RECOUPMENT CHARGES IN AUTOMOBILE INSURANCE RATES, SO AS TO, AMONG OTHER THINGS, DELETE REFERENCE TO THE "APPROVED BASE RATE AND OBJECTIVE STANDARDS RATE", PROVIDE REFERENCE TO "THE PREMIUM RATE", AND PROVIDE THAT THE PREMIUM RATE CHARGED BY INSURERS MAY CHANGE IN ACCORDANCE WITH SECTION 38-73-520; TO AMEND SECTION 38-77-910, RELATING TO AUTOMOBILE INSURANCE AND UNLAWFUL DISTINCTIONS BETWEEN POLICYHOLDERS OR APPLICANTS, SO AS TO ELIMINATE "RATES" FROM THE LIST OF PROHIBITED BASES OF UNLAWFUL DISTINCTIONS, AND PROVIDE FOR RATING PLANS FOR THE CLASSIFICATION OF RISKS AND TERRITORIES "USED BY THE INSURER" RATHER THAN "PROMULGATED BY THE CHIEF INSURANCE COMMISSIONER"; TO AMEND SECTION 38-77-920, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE PROVISION THAT INSURERS AND AGENTS MAY NOT REFUSE ACCEPTANCE OF INSURANCE, PROPERTY RIGHTS OF CERTAIN AGENTS, AND THE RESTRICTION OF MAILINGS TO CERTAIN AREAS, SO AS TO DELETE CERTAIN PROVISIONS, INCLUDING THE PROVISION THAT NO AGENT WHO REPRESENTS MORE THAN ONE INSURER OF AUTOMOBILE INSURANCE MAY REFUSE TO ACCEPT IN BEHALF OF AN INSURER REPRESENTED BY HIM AUTOMOBILE INSURANCE FOR AN INSURABLE RISK WHERE THE APPLICANT FOR INSURANCE DESIGNATES BY NAME OR DESCRIPTION THE INSURER OF HIS CHOICE; TO AMEND SECTION 38-77-950, AS AMENDED, RELATING TO UNREASONABLE OR EXCESSIVE USE OF THE REINSURANCE FACILITY BY AN INSURER AND NOTICE TO A POLICYHOLDER THAT HIS POLICY IS IN THE FACILITY, SO AS TO, AMONG OTHER THINGS, DELETE THE REQUIREMENT THAT INSURERS SHALL GIVE WRITTEN NOTICE TO THE POLICYHOLDER OF A RISK CEDED TO THE FACILITY WHICH DOES NOT QUALIFY FOR THE SAFE DRIVER DISCOUNT IN SECTION 38-73-760; TO AMEND SECTION 38-77-960, RELATING TO AUTOMOBILE INSURANCE AGENT'S BUSINESS, SO AS TO DELETE THE PROVISION THAT AN INSURANCE COMPANY SHALL NOT ASK ANY AGENT NOT TO WRITE ANY KIND OF AUTOMOBILE BUSINESS OR HOLD THE REINSURANCE FACILITY BUSINESS AGAINST ANY AGENT IN ANY MANNER WHICH COULD BE CONSTRUED AS BEING DETRIMENTAL TO THE AGENT; TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-725 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THE CHIEF INSURANCE COMMISSIONER MAY, THROUGH ORDER, FIX, ESTABLISH, AND PROMULGATE A FAIR AND REASONABLE MERIT RATING PLAN FOR AUTOMOBILE INSURANCE RISKS IN ACCORDANCE WITH THE CRITERIA AND STANDARDS MENTIONED IN SECTION 38-73-730 AND CONSISTENT WITH THE PURPOSES OF CHAPTERS 73 AND 77 OF TITLE 38 AND THAT, AT LEAST BI-ANNUALLY, THE COMMISSIONER SHALL REVIEW THE SOUTH CAROLINA MERIT RATING PLAN FOR AUTOMOBILE INSURANCE AND ISSUE A REPORT TO THE GENERAL ASSEMBLY STATING HIS CONCLUSION THAT THE PLAN COMPLIES WITH CERTAIN STATUTORY PROVISIONS OR STATING ANY RECOMMENDED CHANGES SO THAT THE PLAN DOES COMPLY WITH THE STATUTORY PROVISIONS; TO REPEAL ITEM (12) OF SECTION 38-77-30, RELATING TO THE DEFINITION OF "SPECIALIZED INSURER" FOR PURPOSES OF THE AUTOMOBILE INSURANCE LAW; TO REPEAL SECTIONS 38-73-455, RELATING TO AUTOMOBILE INSURANCE RATES, 38-73-465, RELATING TO INSURANCE, CASUALTY AND SURETY RATES, UNFAIRLY DISCRIMINATORY, EXCESSIVE OR UNREASONABLE PROFITS AND RATES, REVIEW OF RATES, AND RATE EXPERIENCE, 38-73-720, RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND THE POWER TO ESTABLISH RISK AND TERRITORIAL CLASSIFICATIONS, 38-73-735, RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND PLAN FOR CREDITS AND DISCOUNTS, 38-73-770, RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND THE REQUIREMENT THAT CLASSIFICATION PLANS MUST BE STRUCTURED TO PRODUCE FAIR RATES, 38-73-910, RELATING TO NOTICE OF HEARING AS A PREREQUISITE TO THE GRANTING OF AN INSURANCE RATE INCREASE AND EXCEPTIONS, 38-73-920, RELATING TO THE PROVISION THAT NO INSURANCE MAY BE ISSUED IN THE STATE EXCEPT ON RATES WHICH ARE FILED, 38-73-960, RELATING TO THE EFFECTIVE DATE OF FILING OF INSURANCE RATES, SECTION 38-73-990, RELATING TO THE DISAPPROVAL OF INSURANCE RATE FILINGS, 38-73-1420, RELATING TO THE REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE REINSURANCE FACILITY FILE AN EXPENSE COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES, AND USE OF THE COMPONENT AFTER APPROVAL, 38-73-1425, RELATING TO THE FINAL RATE OR PREMIUM CHARGE FOR A PRIVATE PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO THE REINSURANCE FACILITY, 38-77-111, RELATING TO AUTOMOBILE INSURANCE POLICIES WHICH MAY BE CEDED TO THE REINSURANCE FACILITY, 38-77-112, RELATING TO THE PROVISION THAT AN APPLICANT FOR OR POLICYHOLDER OF AUTOMOBILE INSURANCE IS REQUIRED TO HAVE A DRIVER'S LICENSE AND EXCEPTIONS, AND 38-77-940, RELATING TO AUTOMOBILE INSURANCE, AVOIDING CERTAIN CLASSES OR TYPES OF RISKS, EXCEPTIONS, AND CANCELING AN AGENT'S REPRESENTATION; AND TO PROVIDE A SEVERABILITY PROVISION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-73-10 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-73-10. (a) The purposes of this chapter are to:
(1) promote the public welfare by regulating insurance rates to the end that they may not be excessive, inadequate, or unfairly discriminatory and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter;
(2) empower the commissioner to fix, establish, and promulgate any uniform statistical plan necessary or appropriate to obtain all automobile insurance loss and loss adjustment expense experience, other expense experience, and all other appropriate statistical and financial data from insurers, rating organizations, and advisory organizations engaged in an automobile insurance business in this State to the end that the commissioner shall promulgate the risk classification and territorial plans to be used by all insurers of automobile insurance in this State and in order that the commissioner may test the risk and territorial differentials previously established against the most recently available loss experience;
(3) provide that investment income accruing to automobile insurers is taken into consideration in the approval of rates or premium charges and in the determination of any net loss incurred by the South Carolina Reinsurance Facility and to make provision for the securing by the Department of all necessary or appropriate financial data for purposes of ascertaining and determining the investment income and the profits from realized and unrealized capital gains of each automobile insurer doing business in this State.;
(4) encourage reasonable competition so as to provide rates that are responsive to competitive market conditions by allowing companies to use their own rates and classification plans and to allow affiliate companies to use their own rates and classification plans.
Nothing in this chapter is intended to prohibit or discourage reasonable competition.
(b) This chapter must be liberally interpreted to carry into effect the purposes of this chapter."
SECTION 2. Section 38-73-450 of the 1976 Code is amended to read:
"Section 38-73-450. (a) Every final rate or premium charge proposed to be used by an automobile insurer may not be used unless it has first been filed with and approved by the Commissioner as being must be adequate, not excessive, and not unfairly discriminatory. In connection with any hearing, action, suit, proceeding, or judicial review respecting the approval or disapproval of these rates or premium charges, the burden of persuasion falls upon the affected insurer or insurers to establish that the challenged rates or premium charges are adequate, not excessive, and not unfairly discriminatory.
(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 unearned premium and loss reserves as well as profits from investment income. 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 on every line of automobile insurance during the previous year and shall also file records showing profits or losses from such investment income, which records shall include 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.
(c) In considering any rate filing or in reviewing any rate in effect for automobile insurance, the commissioner shall review the rate experience and make any determination whether rates or premiums meet the requirements of this section in accordance with generally accepted and reasonable actuarial techniques, including consideration of the following factors:
1. past and prospective loss experience within and without this State;
2. past and prospective expenses;
3. the degree of competition among insurers for the risk insured;
4. investment income;
5. reasonableness of the judgement reflected in the filing;
6. a reasonable margin for underwriting profits;
7. a provision for contingencies; and
8. all other relevant factors."
SECTION 3. Section 38-73-457 of the 1976 Code is amended to read:
"Section 38-73-457. Notwithstanding Sections 38-73-920 and 38-73-1210, every automobile insurer and rating organization shall, prior to October 1, 1987, file with the Commissioner a base rate, which is defined as a rate by coverage calculated solely upon the experience generated by the risk for each class and territory retained by the insurer in its voluntary book of business and which must not include experience generated by risks ceded or assumed from the Reinsurance Facility established under Section 38-73-1030. An objective standards rate by coverage must also be filed which is twenty-five percent above the base rate previously described for each class and territory. The base rate must be calculated by removing from the rate or premium charge, then in effect for the automobile insurer, that portion of the rate or premium charge attributable to the net gain or loss of the insurer as a result of participation in the operating results of the Facility as required by Section 38-77-760. In determining the base rate and objective standards rate, by coverage, the Commissioner, in order that no extra premium revenue is generated by this section, shall require that the insurer's average rate, by coverage, on October 1, 1987, (computed as a weighted average of the base rate and objective standards rate, by coverage, as determined by the Commissioner), not exceed the insurer's average rate, by coverage, prior to October 1, 1987, as determined by the Commissioner. The provisions of the Administrative Procedures Act apply to any court appeal of a base rate or objective standards rate brought thereunder. The base rate or objective standards rate approved by the Commissioner may be put into effect under bond in a similar manner that a public utility may put a proposed rate increase into effect under bond as provided by law. No insurer may file a base rate for any class or territory which is higher than the rate or premium charge, exclusive of that portion required by Section 38-73-460, approved by the Commissioner for use on October 1, 1987. As a result of this section, no insured may receive an increase in rates for other than an increase in coverage or due to the provisions of Section 38-77-280, 38-77-610, or 38-73-455, unless the insurer files additional rates in accordance with this title.
The base rate and objective standards rate filed by each insurer of automobile insurance are effective if they meet the requirements of this section, on or after July 1, 1988, for all eligible applicants and upon the renewal date, on or after July 1, 1988, for all eligible existing policyholders. If the base rate and objective standards rate filed by an automobile insurer do not meet the requirements of this section, the Commissioner shall suspend the authority of that insurer to write automobile insurance until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the Facility recoupment charge approved or established pursuant to Section 38-77-610 may be approved for an insurer of automobile insurance unless that rate or premium charge is calculated in accordance with this section and meets the other applicable requirements of this title pertaining to the approval of rates or premium charges.
The Consumer Advocate, upon request to the Commissioner, must be provided by him with a copy of any base rate filed with the Commissioner along with any supporting materials, documents, or studies utilized to support the filed base rate. In addition, every automobile insurer and rating organization shall promptly respond to requests for information and data requested by the Consumer Advocate relating to the filed base rate. The Consumer Advocate must be afforded an opportunity for a hearing before the Commissioner on any filed base rate before it takes effect that he believes does not meet the requirements of this section. Final decisions of the Commissioner regarding this hearing are subject to the provisions of the State Administrative Procedures Act.
The Consumer Advocate, upon request to the commissioner, must be provided by him with a copy of any rate filed with the commissioner along with any supporting materials, documents, or studies utilized to support the filed rate. In addition, every automobile insurer and rating organization shall promptly respond to requests for information and data requested by the Consumer Advocate which is necessary for review of the filed rate. The Consumer Advocate must be afforded an opportunity for a hearing before the commissioner on any filed rate that he believes does not meet the requirements of this chapter. Final decisions of the commissioner regarding this hearing are subject to the provisions of the Administrative Procedures Act and Section 38-73-1020. Nothing in this section shall be construed to allow the Consumer Advocate an opportunity for a hearing on any rate filed for use by the South Carolina Reinsurance Facility under Section 38-73-1600 and approved by the commissioner."
SECTION 4. Section 38-73-460 of the 1976 Code is amended to read:
"Section 38-73-460. In the making and approval of rates for automobile insurance, consideration must be given to the net gains or losses incurred by insurers as a result of participation in the operating results and expenses, respectively, of the South Carolina Reinsurance Facility."
SECTION 5. Section 38-73-520 of the 1976 Code is amended to read:
"Section 38-73-520. Every insurer shall file with the commissioner every manual of classifications, rules, and rates, every rating plan, and every modification of any of the foregoing which it proposes to use. Every filing shall state the proposed effective date thereof and shall indicate the character and extent of the coverage contemplated and must be filed not later than fifteen days after the effective date."
SECTION 6. Section 38-73-730 of the 1976 Code is amended to read:
"Section 38-73-730. No distinctions are permitted nor may be made between policyholders or applicants for automobile insurance as respects coverages, policy terms, rates, premium payment arrangements, claim services, or other services provided by the insurer directly or through its agents or employees except as the distinctions are relevant to and reflected in insurers' rating classifications under risk and territorial classification plans promulgated by the Commissioner. No risk classification plan or automobile insurance credit or discount plan may be promulgated used unless the criteria used for classifying risks are objective, clear, and unequivocal and based upon factually or statistically supported data or probable variation in losses or expenses, nor unless the classifications in the rating plan are calculated to render possible the compilation of credible statistical data both for purposes of determining premiums and losses and for comparing the relative relationships between the loss or expense experience or both of the respective classes. The legislative intent is to make it possible for the Commissioner to determine the total profit or loss and expense operating results of the entire line of automobile insurance and each component thereof and of each automobile insurer transacting insurance within the line and each component and to make price comparisons between the rates and premium charges of the various insurers. It is further the policy of this chapter to render possible the evaluation by the Commissioner of the performance of the total insurance market and to enable him thereby to assist automobile insurance consumers in making appropriate consumer decisions."
SECTION 7. 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 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 8. 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 may 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 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 statistical plan for automobile insurance in this State, the same must be adopted allow for reporting on a unit transaction or summary basis at each insurer's or organization's discretion, and be used by every automobile insurer in this State, 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 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 risk and territorial classification plans for automobile insurance; determining the pure loss rate level indications for automobile insurance in South Carolina 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, 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; 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; determining the amount, validity, and propriety of surcharges and discounts referable to any 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; determining the propriety or validity of any 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 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 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 not be delegated, except that the commissioner may, as the result of competitive bidding, 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 be delegated other than to the State Rating and Statistical Division.
(d) Any 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 surcharge (including loss of safe driver discount) that may be applicable to the policy as a result of any 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. The amount of the applicable safe driver discount also must be shown."
SECTION 9. Section 38-73-950 of the 1976 Code is amended to read:
"Section 38-73-950. When a filing is not accompanied by the information upon which the insurer supports the filing and the commissioner does not have sufficient information to determine whether the filing meets the requirements of this chapter, he shall require the insurer to furnish the information upon which it supports the filing, and in this event the waiting period commences as of the date the information is furnished."
SECTION 10. Section 38-73-1020 of the 1976 Code is amended to read:
"Section 38-73-1020. If at any time after the applicable review period provided for in Sections 38-73-990 to 38-73-1010 the commissioner finds that a filing does not meet the requirements of this chapter, he shall, after a hearing held upon not less than thirty days' written notice to every insurer and rating organization which made the filing, specifying the matters to be considered at the hearing, issue an order specifying in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. Copies of the order must be sent to every insurer and rating organization which made the filing. The order does not affect any contract or policy made or issued prior to the expiration of the period set forth in the order."
SECTION 11. Section 38-73-1350 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-73-1350. Notwithstanding the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410, 38-73-1420, and 38-73-1430, after public hearing the Chief Insurance Commissioner may prohibit cooperation among or within property/casualty rating or advisory organizations by insurers or among or within these rating or advisory organizations and insurers in rate making or in other matters within the scope of this chapter, except to the extent that these organizations may compile and disseminate only historic loss data with no mathematical trending or analytical methodologies, upon a finding by the commissioner that the anti-competitive effects of this cooperation outweigh practical constraints of prohibitions. All property/casualty filings are subject to prior approval by the Chief Insurance Commissioner. The provisions of Title 1, Chapter 23 (Administrative Procedures Act) apply to all property/casualty rate filings."
SECTION 12. Section 38-73-1370 of the 1976 Code, as added by Act 148 of 1989, is amended to read:
"Section 38-73-1370. After June 30, 1989, no rating organization may file a rate increase with the commissioner for any previously approved final rate or premium charge for any private passenger automobile insurance coverage. A rating organization may file the pure loss component of the rate or premium charge for any private passenger automobile insurance coverage, by class and territory, for the approval of the commissioner. After a public hearing, the commissioner may approve the pure loss component of the rate or premium charge for use by the members or subscribers of the rating organization. No member or subscriber may use the approved pure loss component of the rate or premium charge unless and until the expense component of the rate or premium charge has also been filed with and approved by the commissioner pursuant to Section 38-73-1380.
Nothing in this section shall be construed to prevent a rating organization from filing a rate increase for private passenger automobile insurance coverage on behalf of the South Carolina Reinsurance Facility pursuant to Section 38-73-1600."
SECTION 13. Section 38-73-1380 of the 1976 Code, as added by Act 148 of 1989 and last amended by Act 129 of 1991, is further amended to read:
"Section 38-73-1380. After June 30, 1989, no member or subscriber of a rating organization may utilize a rate or premium charge for any private passenger automobile insurance coverage unless and until the final rate or premium charge has been filed and approved by the commissioner. After the effective date of this section, the final rate or premium charge is the pure loss component filed and approved by a rating organization on behalf of its members or subscribers added to the expense component of the rate or premium charge, filed with and approved by the commissioner, by each member or subscriber of a rating organization independently.
No expense component filed by a member or subscriber of a rating organization may be approved by the commissioner unless it has been the subject of a public hearing, if that member's or subscriber's total written private passenger automobile insurance premium during the previous calendar year equaled or exceeded one percent of the total written private passenger automobile insurance premium in this State during the previous calendar year.
For other lines of insurance the requirements of this section are not activated unless the members' or subscribers' total written premium during the previous calendar year equaled or exceeded three percent of the total written insurance premium for that specific line of insurance in this State during the previous calendar year."
SECTION 14. Section 38-73-1400 of the 1976 Code, as added by Act 148 of 1989, is amended to read:
"Section 38-73-1400. (1) After June 30, 1989, the `pure loss component' of the final rate or premium charge for private passenger automobile insurance is that portion of the final rate or premium charge applicable to calendar/accident year incurred losses (the sum of paid losses plus loss reserves including incurred but not reported loss reserves) and loss adjustment expense (those expenses directly related to the payment of claims) in this State, trended to include both the past and prospective loss experience. If the insurer writes one percent or more of the written premium for automobile insurance during the previous calendar year, that insurer must file its own trending methodology as independently derived.
(2) The `expense component' of the final rate or premium charge for private passenger automobile insurance is that portion of the final rate or premium charge applicable to production costs (including commissions and other acquisition expenses), underwriting costs, administrative costs (including the actual costs of taxes, licenses, and fees), and profit margin in this State.
(3) The `final rate or premium charge' is the approved pure loss component added to the approved expense component. In the determination of whether the pure loss component should be approved disapproved and in the determination of whether the expense component should be approved disapproved, neither may be inadequate, excessive, nor unfairly discriminatory and the commissioner shall take into account investment income from unearned premium and loss reserves, surplus, and realized capital gains."
SECTION 15. Section 38-73-1410 of the 1976 Code, as added by Act 148 of 1989, is amended to read:
"Section 38-73-1410. After June 30, 1989, upon the effective date of this section, nothing herein should be construed to require a rating organization or its members or subscribers to immediately refile final rates or premium charges previously approved by the commissioner for private passenger automobile insurance coverages. Members or subscribers of a rating organization are authorized to continue to use automobile insurance rates or premium charges, approved before the effective date of this section, or decreases from those rates or premium charges filed by the rating organization and, subsequently, approved after the effective date of this section.
After June 30, 1993, upon the effective date of this section, nothing herein shall be construed to require a rating organization or its members or subscribers or any insurer to immediately refile final rates, premium charges, or classification plans previously approved by the commissioner for private passenger automobile insurance coverages. Insurers are authorized to continue to use automobile insurance rates, premium charges, and classification plans approved before the effective date of this section."
SECTION 16. The 1976 Code is amended by adding:
"Section 38-73-1600. (A) By January 1, 1994, and annually thereafter, the Board of Governors of the South Carolina Reinsurance Facility shall file with the commissioner every manual of classifications, rules, and rates, every rating plan, policy forms, and every modification of any of the foregoing which it proposes to use for private passenger automobile insurance provided by the facility. Every such filing shall indicate the character and extent of the coverage contemplated and shall be accompanied by the information upon which the board supports the filing. The rates filed by the board shall be effective on July first immediately following.
(B) The board may satisfy its obligation to make such filings by authorizing the commissioner to accept on its behalf the filing made by a licensed rating organization.
(C) Any filing made pursuant to this section shall be approved by the commissioner unless the commissioner finds that such filing does not meet the requirements of Section 38-73-10 and 38-73-450. Unless there is any conflict between the rate levels prescribed in this section and the provision of another section, this section prevails. As soon as reasonably possible after the filing has been made, the commissioner shall in writing approve or disapprove the same, except that any filing shall be deemed approved unless disapproved within thirty days.
(D) In the event that the commissioner disapproves a filing, the commissioner shall specify in what respect such filing does not meet the requirements of law. In any administrative proceeding under this chapter, the board or the rating organization shall carry the burden of proof to show that the rate is not excessive, inadequate, or unfairly discriminatory.
(E) If at any time the commissioner finds that a filing so approved no longer meets the requirements of this chapter, the commissioner may, after a hearing conducted in accordance with the provisions of Section 38-73-1020, issue an order withdrawing approval thereof. The order shall specify in what respects the commissioners finds such filing no longer meets the requirements of this chapter and shall be effective not less than sixty days after its issuance.
(F) Any person or organization aggrieved by the action of the commissioner with respect to any filing may, within fifteen days after such action, make written request to the commissioner for a hearing thereon. Upon receipt of a timely request, the commissioner shall hear such aggrieved party within thirty days after receipt of such request in accordance with the provisions of the Administrative Procedures Act (Title 1, Chapter 23). If, after hearing, the commissioner finds that a rate or rate change is excessive, inadequate, or unfairly discriminatory, the commissioner shall issue an order disapproving such rate or rate change to be effective not sooner than sixty days after the date of the order. However, for purposes of this section rates are not to be considered excessive, inadequate, or unfairly discriminatory if they meet the target rates described in subsection (H).
(G) No insurer shall make or issue a ceded contract or policy except in accordance with filings which have been approved for the facility as provided in this chapter.
(H) (1) For the year beginning July 1, 1994, the facility rates shall be established at a level such that the sum of the pure loss component and the expense component do not exceed the anticipated final rate or premium charge by more than twenty-eight percent.
(2) For the year beginning July 1, 1995, the facility rates shall be established at a level such that the sum of the pure loss component and the expense component do not exceed the anticipated final rate or premium charge by more than twenty-one percent.
(3) For the year beginning July 1, 1996, the facility rates shall be established at a level such that the sum of the pure loss component and the expense component do not exceed the anticipated final rate or premium charge by more than fourteen percent.
(4) For the year beginning July 1, 1997, the facility rates shall be established at a level such that the sum of the pure loss component and the expense component do not exceed the anticipated final rate or premium charge by more than seven percent.
(5) For the year beginning July 1, 1998, and for subsequent years, the facility rates shall be established at a level such that the sum of the pure loss component and the expense component provide for a reasonable rate of return. Due consideration shall be given to the investment earnings on unearned premium and loss reserves, and realized capital gains."
SECTION 17. The 1976 Code is amended by adding:
"Section 37-73-1620. (A) The Board of Governors shall provide rates and rules for the writing of the following private passenger coverages, limits, and deductibles:
(1) bodily injury liability up to and including limits of $250,000/$500,000;
(2) property damage liability up to and including a limit of $100,000;
(3) uninsured motorists coverage and underinsured motorists coverage as set forth in Sections 38-77-150 and 38-77-160;
(4) collision coverage, comprehensive coverage, and fire, theft, and combined additional coverage on an actual cash value basis. Deductibles of $250, $500, and $1,000 shall be available. This deductible may not apply to loss of auto safety glass;
(5) such ancillary coverage as the board shall deem appropriate. Ancillary coverage is coverage that is attendant to, or an extension of, the foregoing coverage. This includes coverage such as nonowned liability coverage;
(6) any coverage that is required by law.
(B) The board is empowered, with the approval of the commissioner, to expand the coverage offerings upon the petition of fifty percent of the members of the South Carolina Reinsurance Facility.
(C) Any coverage written pursuant to this section by any insurer must be ceded."
SECTION 18. Section 38-77-10 of the 1976 Code is amended to read:
"Section 38-77-10. In order to effect a complete reform of automobile insurance and insurance practices in South Carolina, the purposes of this chapter are:
(1) To provide that every automobile insurance risk which is insurable on the basis of the criteria established in this chapter is entitled to automobile insurance from the automobile insurer of the applicant's choice on the basis of the same rates, policy forms, claims service, and other services provided by the insurer to all other applicants or insureds falling within the classification of risk and territory under the applicable risk and territorial classification plan promulgated by the Commissioner so long as all these applicants or insureds have satisfied the same objective standards as established in Sections 38-77-280 and 38-73-455;
(2) (1) To provide a Reinsurance Facility for automobile insurers in which all automobile insurers must participate to the end that the operating expenses and net profit or loss of the facility may be shared equitably by all the insurers transacting automobile insurance business in this State giving appropriate consideration to degrees of utilization of the facility by the several insurers of automobile insurance and to provide prohibitions or penalties in respect to excessive utilization of the Facility.
(3) (2) To provide prohibitions and penalties in respect to unfairly discriminatory or unfairly competitive practices having as their purpose or effect evasion of the statutory mandate of coverage provided in this chapter or imposing an undue or unfair burden upon other automobile insurers through excessive utilization of the Facility.
(4) To provide medical, surgical, funeral, and disability insurance benefits without regard to fault to be offered under automobile insurance policies that provide bodily injury and property damage liability insurance, or other security, for motor vehicles registered in this State."
SECTION 19. Section 38-77-30(10) of the 1976 Code is amended to read:
"(10) `Renewal' or `to renew' means the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer or that insurer's affiliate, the renewal policy to provide types and limits of coverage at least equal to those contained in the policy being superseded, or the issuance and delivery of a certificate or notice extending the terms of a policy beyond its policy period or term with types and limits of coverage at least equal to those contained in the policy being extended. However, any policy with a policy period or term of less than six months or any period with no fixed expiration date is considered as if written for successive policy periods or terms of six months."
SECTION 20. Section 38-77-110 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-77-110. (A) Automobile insurers other than insurers designated and approved as specialized insurers by the commissioner may not refuse to write or renew automobile insurance policies for individual private passenger automobiles or small commercial risks. These policies may not be cancelled except for reasons which had they existed or been known when the policy was written would have rendered the risk not an insurable risk. Every automobile insurance risk constitutes an insurable risk unless the operator's permit of the named insured has been revoked or suspended and is at the time of application for insurance so revoked or suspended. However, no insurer is required to write or renew automobile insurance on any risk if there exists a valid and enforceable outstanding judgment secured by an insurer, an agent, or licensed premium service company on account of automobile insurance premiums which the applicant or insured or any principal operator who is a member of the named insured's household has failed or refused to pay unless the applicant or insured pays in advance the entire premium for the full term of the policy sought to be issued or renewed or the annual premium, whichever is the lesser. An insurer is not precluded from effecting cancellation of an automobile insurance policy, either upon its own initiative or at the instance of an agent or licensed premium service company, because of the failure of any named insured or principal operator to pay when due any automobile insurance premium or any installment payment. However, notice of cancellation for nonpayment of premium notifies the person to whom the notice is addressed that the notice is void and ineffective if payment of the full amount of the premium or premium indebtedness, whichever is the greater, is made to the insurer, agent, or licensed premium service company named in the notice by the otherwise effective date of cancellation. This notice of cancellation is not considered ineffective for being conditional, ambiguous, or indefinite.
(B) Notwithstanding subsection (A) of this section, no insurer is required to write private passenger automobile insurance with higher limits of coverage than:
(1) two hundred fifty thousand dollars, for bodily injury liability to one person in one accident,
(2) subject to the limit for one person, five hundred thousand dollars because of bodily injury to two or more persons in one accident,
(3) fifty thousand dollars because of injury to or destruction of property of others in any one accident,
(4) five hundred thousand dollars combined single limits for either or both bodily injury and property damage, if any applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or any other operator not excluded in accordance with Section 38-77-340 and who resides in the same household, has one or more of the conditions or factors prescribed in Section 38-73-455(A) existing and if an insurer, at its option, writes such a policy, the policy may not be ceded to the Reinsurance Facility.
(C) With regard to any coverage not required to be written by an insurer under the mandate to write, no insurer may refuse to write such policy, coverage, or endorsement of automobile insurance because of the race, color, creed, national origin, or ancestry of anyone who seeks to become insured.
No insurer may refuse to write a policy, coverage, or endorsement of automobile insurance because of the race, color, creed, national origin, or ancestry of anyone who seeks to become insured."
SECTION 21. Section 38-77-115 of the 1976 Code is amended to read:
"Section 38-77-115. The authorized agents for every insurer covered by the provisions of Section 38-77-110 shall post in a conspicuous location in their office or place of business a sign containing language to be required by regulation of the Chief Insurance Commissioner that stipulates that insurer and agent may not refuse to write or renew that type of insurance, that tactics designed to avoid writing or renewing that type of insurance are not permissible including unreasonable delays in meeting with applicants, and that violations of the above should be reported to the commissioner for appropriate action for the reasons specified in Section 38-77-110."
SECTION 22. Section 38-77-120 of the 1976 Code is amended by adding:
"(c) A notice of cancellation by an insurer of an automobile insurance policy shall be effective only if such cancellation is for one or more of the following reasons:
(1) nonpayment of premium which is defined to mean, for the purposes of this chapter, the failure of the named insured to discharge when due any of his obligations in connection with the payment of premiums on a policy, or any installment of such premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit;
(2) the driver's license or motor vehicle registration of the named insured or of any other operator who either resides in the same household or customarily operates an automobile insured under the policy has been denied or has been under suspension or revocation during the policy period or the existence of one or more grounds for such denial, suspension, or revocation has become known;
(3) fraud, wilful misrepresentation, or concealment on the part of any insured in respect to any material fact or circumstance relating tot he issuance or continuance of the policy or relating to a loss; or
(4) violation of any terms or conditions of the policy.
However, a change or substitution in policy form shall not be deemed to be a cancellation within the intent of this section. Further, nothing in this section shall apply to nonrenewals. This subsection shall not apply to any policy or coverage which has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless it is a renewal policy.
(d) For each calendar year period, an insurer may issue notices of intention not to renew an automobile insurance policy in an amount not to exceed two percent of the total number of automobile insurance policies or automobiles insured, whichever is less, of the insurer, which are in force at the end of the previous calendar year in this State.
(e) If one company which is a member of a group of affiliated companies refuses to write, cancels, or refuses to renew a particular policy but, at the same time, offers to arrange insurance for the applicant or insured with another member of the same group, there has not been a refusal to write, a cancellation, or a refusal to renew by the first company. The movement of a policy from one company to another company of the same group, resulting in a different rate for the insured, may only occur after written notice of such action to the policyholder. The notice shall contain premiums for coverage with the new affiliate company.
(f) The provisions of this section shall have no applicability to a company exiting the market."
SECTION 23. Section 38-77-280 of the 1976 Code, as last amended by Act 113 of 1991, is further amended to read:
"Section 38-77-280. (A) Except as provided in subsection (B), all automobile insurers, including those insurance companies writing private passenger physical damage coverages only, shall make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage.
Collision coverage must have a mandatory deductible of two hundred fifty dollars, but an insured or qualified applicant, at his option, may select an additional deductible in appropriate increments up to one thousand dollars.
Comprehensive coverage or fire, theft, and combined additional coverages must have a mandatory deductible of two hundred fifty dollars, but an insured, at his option, may select an additional deductible in appropriate increments up to one thousand dollars. This deductible does not apply to auto safety glass. It is an unfair trade practice, as described in Sections 38-57-30 and 38-57-40, for an insurer or an agent to sell collision insurance, comprehensive coverage, or fire, theft, and combined additional coverages unless the insured is notified at the time of application of the savings which may be realized if the applicant or the insured selects a higher deductible. This notice is required only at the time of the initial sale and must be in a form approved by the Chief Insurance Commissioner. An insurer may offer insureds lower deductibles at the insurer's option.
(B) Notwithstanding subsection (A) and Sections 38-77-110 and 38-77-920, automobile insurers may refuse to write automobile physical damage insurance coverage, including automobile comprehensive physical damage, collision, fire, theft, and combined additional coverage, for an applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or another operator not excluded in accordance with Section 38-77-340 and who resides in the same household, where one or more of the conditions or factors prescribed in Section 38-73-455 exist. In addition, automobile insurers may refuse to write physical damage insurance coverage to an applicant or existing policyholder, on renewal, who has collected benefits provided under automobile insurance physical damage coverage during the thirty-six months immediately preceding the effective date of coverage, for two or more total fire losses or two or more total theft losses. Automobile insurers may refuse to write for private passenger automobiles physical damage insurance coverage, including automobile comprehensive physical damage, collision, fire, theft, and combined additional coverage, for an applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or another operator not excluded in accordance with Section 38-77-340 and who resides in the same household, which does not qualify for the safe driver discount in Section 38-73-760(e).
(C) Notwithstanding Section 38-77-110, automobile physical damage coverage in an automobile insurance policy may be cancelled at any time during the policy period by reason of the factors or conditions described in Section 38-73-455(A) or Section 38-77-280(B) which existed before the commencement of the policy period and which were not disclosed to the insurer at the commencement of the policy period.
(D) No policy of insurance which provides automobile physical damage coverage only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for physical damage insurance coverages different than those provided for in Section 38-73-457 if the rates are filed and approved by the Chief Insurance Commissioner. Any applicant or existing policyholder, to be charged this different rate, must be denied the coverage pursuant to subsection (B) at the rate provided in Section 38-73-457.
(F) A carrier may not cede collision coverage, comprehensive coverage, or fire, theft, and combined additional coverages with a deductible of less than two hundred fifty dollars. An insured or qualified applicant may select an additional deductible in appropriate increments up to one thousand dollars. However, the mandatory deductible does not apply to safety glass.
It is an unfair trade practice, as described in Sections 38-57-30 and 38-57-40, for an insurer or an agent to sell collision insurance, comprehensive coverage, or fire, theft, and combined additional coverages unless the insured is notified at the time of application of the savings which may be realized if the applicant or the insured selects a higher deductible. This notice is required only at the time of the initial sale and must be n a form approved by the Chief Insurance Commissioner."
SECTION 24. Section 38-77-510 of the 1976 Code, as last amended by Act 150 of 1989, is further amended to read:
"Section 38-77-510. There is created a nonprofit, unincorporated legal entity known as the South Carolina Reinsurance Facility which is subject to regulations and orders promulgated by the commissioner which are not inconsistent with the purposes of this chapter.
The facility shall reinsure, at the option of the insurance agent or the ceding automobile insurer and subject to the provisions of this chapter, the risk covered under any policy of automobile insurance. However, these cessions must be confined to quota share reinsurance of either a one hundred percent quota share of the risk or to any other percentage of quota share reinsurance the commissioner may permit by regulations promulgated by him."
SECTION 25. A. The 1976 Code is amended by adding:
"Section 38-77-515. (a) `An indicated cession' is a policy that an insurer cedes to the South Carolina Reinsurance Facility at the direction of the insurance agent who produces the application which leads to the policy's issuance. In order to secure the placement of an automobile insurance risk in the South Carolina Reinsurance Facility, an agent must append an `indicated cession form' to the application. The indicated cession form used by the agent must be prescribed by the insurer who is to process the indicated cession and may be a separate application. Insurers shall file a sample copy of their indicated cession forms with the commissioner. Indicated cession forms shall state that the insurance agent wants the attached automobile insurance application to be processed by the insurer and ceded to the facility. If the indicated session form is a separate form from the insurance application, the agent shall sign and date the form and submit it with the application to the insurer.
(b) Only insurance agents with a voluntary market outlet for automobile insurance shall have the option to make an indicated cession.
(c) For the purposes of this section, insurance agents with a voluntary market outlet for automobile insurance shall be assigned, by the commissioner, to the insurer with whom the insurance agent has written the most automobile insurance applications in the year of assignment. Insurance agents who represent one insurer and its affiliates exclusively shall be assigned to the insurer whom they exclusively represent for purposes of making indicated cessions.
(d) Insurance agents may indicate that a risk be ceded to the facility if the agent knows, after completion of the automobile insurance application, that the risk is not eligible for any of the voluntary market outlets available to the agent based on the objective underwriting standards of all of the insurers in their voluntary market outlet. Insurance agents may not indicate that a risk be ceded to the facility because of the race, color, creed, national origin, or ancestry of anyone who seeks to become insured.
(e) The indicated cessions made by insurance agents shall not limit the ability of insurers to cede business to the facility in accordance with Section 38-77-510.
(f) All indicated cessions shall be written at the facility rate established pursuant to Section 38-73-1600.
(g) Nothing in this section shall be construed to allow an agent to be assigned to an insurer when the agent does not have an existing voluntary market relationship with the insurer.
(h) Nothing in this section shall be construed to limit the rights of any producer to apply for assignment as a designated producer under Section 38-77-590, nor shall anything in this section prohibit a designated producer from producing business through his existing facility marketing outlet.
(i) Policies that were ceded to the South Carolina Reinsurance Facility prior to July 1, 1994, shall be terminated and offered coverage in the South Carolina Reinsurance Facility on the first policy renewal date after July 1, 1994, and such initial termination and offer shall not be considered a notice of intention not to renew for purposes of Section 38-77-120(d). They are to be offered coverages available in the facility that are similar to those previously carried and at facility rates in effect at the time of the offer. Upon written acceptance of the offer, the risk must be written in the facility without the need for the risk to complete a new application."
B. Section 38-77-515 of the 1976 Code is effective July 1, 1994.
SECTION 26. The 1976 Code is amended by adding:
"Section 38-77-596. Notwithstanding Section 38-77-590, upon notification to the governing board, designated producers may contract with a voluntary market outlet for any type of automobile insurance cedeable to the facility. Upon the effective date of such a contract, the designated producer may no longer write new business with a designated carrier. The producer is permitted to retain all existing policies in the facility until such time as these policies lapse, cancel, nonrenew, or cease to remain in effect for any reason. For the purposes of this section, vehicles written as an addition to a multi-car policy in the facility do not constitute `new business'."
SECTION 27. Section 38-77-600 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-77-600. The rate or premium charged by insurers of private passenger automobile insurance must include a facility recoupment charge, which must be added to the appropriate base rate or objective standards rate prescribed in Sections 38-73-455 and 38-73-457 premium rate filed in accordance with Section 38-73-520. The operating losses of the facility for a twelve-month period must be recouped in the subsequent twelve-month period.
(1) Prior to December first of each year, the governing board of the facility shall calculate the recoupment amount, by coverage, by dividing the net facility operating loss, adjusted to reflect prudently incurred expenses, consistent with the provisions of Section 38-73-465, and the time value of money, by mandated coverage for the preceding facility accounting year, by the total number of earned car years in South Carolina, by coverage, for the same period of time. .386 multiplied by the recoupment is to be bourne by risks having zero surcharge points under the Uniform Merit Plan promulgated by the commissioner. The remainder of the recoupment (.614 multiplied by the recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(1)+I0X = R. In this formula to be utilized in determining the facility recoupment charge:
(a) P(1) is the percentage of risks which have one surcharge point under the Uniform Merit Rating Plan;
(b) P(2) is the percentage of risks which have two surcharge points under the Uniform Merit Rating Plan;
(c) P(3) is the percentage of risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan;
(d) P(4) is the percentage of risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan;
(e) P(5) is the percentage of risks subject to a surcharge of five points under the Uniform Merit Rating Plan;
(f) P(6) is the percentage of risks subject to a surcharge of six points under the Uniform Merit Rating Plan;
(g) P(7) is the percentage of risks subject to a surcharge of seven points under the Uniform Merit Rating Plan;
(h) P(8) is the percentage of risks subject to a surcharge of eight points under the Uniform Merit Rating Plan;
(i) P(9) is the percentage of risks subject to a surcharge of nine points under the Uniform Merit Rating Plan;
(j) P(I0) or more is the percentage of risks subject to a surcharge of ten or more points under the Uniform Merit Rating Plan;
(k) X is the dollar amount by coverage, to be charged all risks having one surcharge point under the Uniform Merit Rating Plan promulgated by the commissioner. This dollar amount, by coverage, is the facility recoupment charge to be added to the base rate or objective standards rate prescribed in Sections 38-73-455 and 38-73-457 premium rate, filed in accordance with Section 38-73-520; for all risks which have one surcharge point.
(2) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which have one surcharge point under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of one.
(3) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which have two surcharge points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of two.
(4) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of three.
(5) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of four.
(6) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of five points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of five.
(7) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of six points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of six.
(8) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of seven points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of seven.
(9) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of eight points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of eight.
(10) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of nine points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of nine.
(11) The facility recoupment charge by coverage to be added to the base rate or objective standards rate premium rate for all risks which are subject to a surcharge of ten or more points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of ten.
(12) In determining the number of surcharge points a risk has for the purposes of this section, no surcharge points assigned under the Uniform Merit Rating Plan because the principal operator of the automobile has not been licensed in any state for at least one year immediately preceding the writing of the risk or as a result of a failure of any motor vehicle equipment requirement may be considered.
(13) This section applies to all private passenger automobile insurance policies issued or renewed after June 30, 1989. However, insurers unable to comply with the provisions of this section and renewal provisions required by law may comply with this section at any time after June 30, 1989, but in no event later than October 1, 1989."
SECTION 28. Section 38-77-620 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-77-620. The facility recoupment charges approved or established pursuant to Section 38-77-610 must be added to the approved base rate and objective standards rate premium rate in effect for each automobile insurer. The combined rate or premium charge is effective on July first of each year and the recoupment charges must remain constant until July first of the following year. The base rate and objective standards rate may change in accordance with Section 38-73-457 and the other applicable requirements of this title pertaining to the approval of rates or premium charges The premium rate charged by insurers may change in accordance with Section 38-73-520. Facility recoupment charges must be considered in accordance with:
(1) Any recoupment charge paid by policyholders must be considered premium for the purpose of calculating premium taxes and commissions and is subject to normal policy cancellation procedures.
(2) Any net operating gains resulting from the operation of the facility must be retained by the facility, and the gains and any investment income derived from the gains must be used to offset future operating losses.
(3) The total funds recouped by all insurers less commission and premium tax expenses and time value of money considerations must be paid to the Reinsurance facility in accordance with the plan of operation. The governing board shall redistribute the funds to the insurers based upon each insurer's share of the Reinsurance Facility losses. Recoupment must be used solely for the purpose of recovering past facility operating deficits. The plan of operation must provide that the amount ultimately received by an individual company is not more than the company's share of the Reinsurance Facility losses, plus the time value of money.
(4) In the making and approval of rates for small commercial automobile risks, as defined in Section 38-77-30, consideration must be given to the net gains or losses incurred by insurers as a result of participation in the operating results and actual, prudently incurred expenses, respectively, of the facility."
SECTION 29. Section 38-77-910 of the 1976 Code is amended to read:
"Section 38-77-910. It is an act of unlawful discrimination for an automobile insurer to make any distinction between automobile insurance policyholders or applicants for automobile insurance with respect to coverage, rates, claims, or other services except as the distinctions are provided for in the rating plans for the classification of risks and territories promulgated by the commissioner used by the insurer."
SECTION 30. Section 38-77-920 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:
"Section 38-77-920. Except as provided for in Section 38-77-110 and as is specifically provided for otherwise by law, no automobile insurer may refuse acceptance of automobile insurance for an insurable risk from any applicant nor require that certain classes or types of risks be placed through some particular agent or employee. This section is not intended to preclude any insurer from recognizing and giving effect to the property rights of agents in expirations or renewals.
No agent who represents more than one insurer of automobile insurance may refuse to accept in behalf of an insurer represented by him automobile insurance for an insurable risk where the applicant for insurance designates by name or description the insurer of his choice. If the applicant relies upon the skill and judgment of the agent to place the risk in any insurer represented by the agent, the agent may place the risk in the insurer which he considers appropriate. No insurer may agree, collude, or conspire with an agent or give, offer, or promise an agent anything of value to place any risk or any class or type of risk under such circumstances in another insurer. Every such agreement is utterly void and every act of collusion or conspiracy constitutes an act of unfair competition by both the insurer and agent which, if proved, must result in the suspension or revocation of the license of each for not less than one year, in addition to any other penalties or liabilities applicable.
No automobile insurer authorized to transact automobile insurance in this State which offers automobile insurance through the mails or uses the mails in transacting automobile insurance on insurable risks situate in this State may restrict its mailings or offerings to certain counties, areas, or zip-code territories of this State. The commissioner is directed to examine an insurer's records at any time the commissioner considers it necessary to determine that the insurer is not so restricting or limiting its offerings."
SECTION 31. Section 38-77-950 of the 1976 Code, as last amended by Act 113 of 1991, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the facility must not be excessively nor unreasonably utilized by automobile insurers for unfairly competitive purposes or for purposes of unfairly discriminating against certain classes or types of automobile insurance risks having the same or similar objective risk characteristics as other risks in the same class under the insurer's rating plan for the classification of risks promulgated by the department, nor for the purpose of discriminating against the risks or risks in certain rating territories. The commissioner shall prohibit unreasonable or excessive utilization of the facility.
A prima facie case of excessive or unreasonable utilization is established upon a showing that an automobile insurance insurer or a group of insurers under the same management has ceded or is about to cede more than thirty-five percent of total direct cedeable written premiums on South Carolina automobile insurance as reported in the most recently filed annual statement of the insurer or group.
Upon the written request of the policyholder, insurance companies doing business in this State shall give written notice to the policyholder informing him whether or not he and a driver under the policy is in the facility. Insurers shall give written notice to the policyholder of a risk ceded to the facility which does not qualify for the safe driver discount in Section 38-73-760(e)."
SECTION 32. Section 38-77-960 of the 1976 Code is amended to read:
"Section 38-77-960. When dealing with the agents of the company, who are licensed to sell automobile insurance, the company may not use any of the business placed in the facility in determining the profitability of that agent's business. Further, the company shall not ask any agent not to write any kind of automobile business or hold the Facility business against any agent in any manner which could be construed as being detrimental to the agent."
SECTION 33. The 1976 Code is amended by adding:
"Section 38-73-725. (a) The commissioner may, through order, fix, establish, and promulgate a fair and reasonable Merit Rating Plan for automobile insurance risks in accordance with the criteria and standards mentioned in Section 38-73-730 and consistent with the purposes of this chapter and Chapter 77 of this title.
(b) At least bi-annually, the commissioner shall review Regulation 69-13.1, the South Carolina Merit Rating Plan for automobile insurance, and issue a report to the General Assembly stating the commissioner's conclusion that the regulation complies with this article or stating any recommended changes, so that the regulation does comply with this article. The effective date of any change in Regulation 60-13 shall be set to provide insurers with adequate time to implement the changes in an orderly way.
The commissioner's review shall include, but not be limited to, the following:
(1) All surcharges for traffic violations shall be listed in Regulation 69-13.1 with the appropriate statutory citation and motor vehicle record code.
(2) All surcharges for accidents shall be based upon the fault of the operator. Payment of a claim exceeding seven hundred fifty dollars under a liability coverage is evidence of fault.
(3) The merit plan shall be reasonably simple to administer to avoid unnecessary expense to the insurers and to be easily understood by the public.
(4) The surcharges and discounts for accidents and violations shall reflect the expected cost of providing insurance to the risks that receive the surcharges and discounts.
(5) All requests to the commissioner for interpretations of the regulation shall be in written form. Any changes in interpretation of the regulation shall be communicated to all automobile insurers."
SECTION 34. Item (12) of Section 38-77-30 and Sections 38-73-455, 38-73-465, 38-73-720, 38-73-735, 38-73-770, 38-73-910, 38-73-920, 38-73-960, 38-73-990, 38-73-1420, 38-73-1425, 38-77-111, 38-77-112, and 38-77-940 of the 1976 Code are repealed.
SECTION 35. If any provision of this act or the application of any provision of this act to any person or circumstance is held to be unconstitutional or otherwise invalid, the remainder of this act and the application of such provision to other persons or circumstances are not affected thereby, and it is to be conclusively presumed that the Legislature would have enacted the remainder of this act without such invalid or unconstitutional provisions, except that if Section 38-73-1600 is found to be unconstitutional or otherwise invalid it is to be conclusively presumed that the Legislature would not have enacted the remainder of this act without such limitations and the entire act is invalid.
SECTION 36. Except as otherwise specifically provided herein, this act takes effect October 1, 1993.