South Carolina General Assembly
112th Session, 1997-1998

Bill 254


                    Current Status

Bill Number:                    254
Ratification Number:            260
Act Number:                     154
Type of Legislation:            General Bill GB
Introducing Body:               Senate
Introduced Date:                19970123
Primary Sponsor:                Banking and Insurance Committee
                                SBI 02
All Sponsors:                   Banking and Insurance
                                Committee
Drafted Document Number:        res1241.ees
Date Bill Passed both Bodies:   19970617
Date of Last Amendment:         19970617
Governor's Action:              S
Date of Governor's Action:      19970702
Subject:                        Uninsured Motorist Fund,
                                Insurance, Motor vehicle, assigned risk
                                plan, Joint Underwriting for private,
                                commerce auto

History


Body    Date      Action Description                       Com     Leg Involved
______  ________  _______________________________________  _______ ____________

------  19970728  Act No. A154
------  19970702  Signed by Governor
------  19970618  Ratified R260
Senate  19970617  Ordered enrolled for ratification
House   19970617  Free Conference Committee Report         99 HFCC
                  adopted
House   19970605  Free Conference Powers granted,          99 HFCC Cato
                  appointed Reps. to Committee of                  Kirsh
                  Free Conference                                  Seithel
Senate  19970605  Free Conference Committee Report         89 SFCC
                  adopted
Senate  19970605  Free Conference Powers granted,          89 SFCC McConnell
                  appointed Senators to Committee                  Courtney
                  of Free Conference                               Passailaigue
Senate  19970522  Conference powers granted,               88 SCC  McConnell
                  appointed Senators to Committee                  Courtney
                  of Conference                                    Passailaigue
House   19970522  Conference powers granted,               98 HCC  Cato
                  appointed Reps. to Committee of                  Kirsh
                  Conference                                       Seithel
House   19970522  Insists upon amendment
Senate  19970522  Non-concurrence in House amendment
House   19970522  Amended, read third time,
                  returned to Senate with amendment
House   19970521  Amended, read second time
House   19970520  Amended, debate interrupted
                  by adjournment
House   19970514  Debate adjourned until
                  Thursday, 19970515
House   19970506  Committee report: majority               26 HLCI
                  favorable, with amendment,
                  minority unfavorable
House   19970218  Introduced, read first time,             26 HLCI
                  referred to Committee
Senate  19970212  Amended, read third time,
                  Sent to House
Senate  19970205  Read second time, ordered to
                  third reading with notice of
                  general amendments, carrying
                  over all amendments to third
                  reading
Senate  19970204  Debate interrupted by adjournment
Senate  19970129  Debate adjourned
Senate  19970123  Introduced, read first time,
                  placed on Calendar without reference


View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A154, R260, S254)

AN ACT TO AMEND SECTION 56-9-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT AND DEFINITIONS, SO AS TO PROVIDE A DEFINITION FOR "UNINSURED MOTORIST FUND"; TO AMEND CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE REGISTRATION AND FINANCIAL SECURITY, BY ADDING ARTICLE 5 SO AS TO PROVIDE FOR THE ESTABLISHMENT OF AN UNINSURED MOTORIST FUND; TO AMEND SECTION 38-73-470, AS AMENDED, RELATING TO DISPOSITION OF THE UNINSURED MOTORIST PREMIUM, SO AS TO PROVIDE THAT ONE DOLLAR OF THIS YEARLY PREMIUM MUST BE PLACED ON DEPOSIT WITH THE STATE TREASURER IN THE "UNINSURED ENFORCEMENT FUND", PROVIDE FOR THE INTEREST EARNED THEREON, AND PROVIDE THAT THERE IS NO REQUIREMENT FOR AN INSURER OR AN AGENT TO OFFER UNDERINSURED MOTORIST COVERAGE AT LIMITS LESS THAN THE STATUTORILY REQUIRED BODILY INJURY OR PROPERTY DAMAGE LIMITS; TO AMEND SECTION 38-73-910, AS AMENDED, RELATING TO PROPERTY, CASUALTY, AND INLAND MARINE INSURANCE, RATES, RATE MAKING, AND RATE FILING, AND NOTICE OF A HEARING BEFORE GRANTING A RATE INCREASE, SO AS TO DELETE AUTOMOBILE INSURANCE FROM THE LIST OF THE TYPES OF INSURANCE TO WHICH THIS SECTION APPLIES, AND ADD PROVISIONS WHICH PROVIDE, AMONG OTHER THINGS, THAT, WITH CERTAIN STATED EXCEPTIONS, OVERALL AVERAGE RATE LEVEL INCREASES OR DECREASES, FOR ALL COVERAGES COMBINED, OF SEVEN PERCENT ABOVE OR BELOW THE INSURER'S RATES IN EFFECT MAY TAKE EFFECT WITHOUT PRIOR APPROVAL ON A FILE AND USE BASIS, WITH RESPECT TO RATES FOR AUTOMOBILE INSURANCE POLICIES; TO AMEND THE 1976 CODE BY ADDING SECTION 38-73-736 SO AS TO PROVIDE THAT ANY SCHEDULE OF RATES, RATE CLASSIFICATIONS, OR RATE PLANS FOR AUTOMOBILE INSURANCE AS DEFINED IN SECTION 38-77-30 FILED WITH THE DEPARTMENT OF INSURANCE MUST PROVIDE FOR AN APPROPRIATE REDUCTION IN PREMIUMS FOR PERSONS WHO ARE FIFTY-FIVE YEARS OF AGE AND OLDER AND WHO QUALIFY UNDER SECTION 38-73-737; TO AMEND SECTION 38-77-10, AS AMENDED, RELATING TO THE AUTOMOBILE INSURANCE LAWS AND DECLARATION OF PURPOSE, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT THE PURPOSE OF CHAPTER 77 OF TITLE 38 IS TO PROVIDE FOR A RESIDUAL MARKET MECHANISM KNOWN AS THE ASSOCIATED AUTOMOBILE INSURERS PLAN FOR EVERY PERSON WHO IS LEGALLY ENTITLED TO AUTOMOBILE INSURANCE BUT HAS NOT BEEN ABLE TO OBTAIN A LIABILITY POLICY TO BE ABLE TO APPLY TO THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO HAVE SUCH PERSON'S RISK ASSIGNED TO AN INSURANCE CARRIER LICENSED TO WRITE AND WRITING MOTOR VEHICLE LIABILITY INSURANCE IN SOUTH CAROLINA WHO SHALL ISSUE A LIABILITY POLICY MEETING AT LEAST THE MINIMUM REQUIREMENTS FOR ESTABLISHING FINANCIAL RESPONSIBILITY; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE AND DEFINITIONS, SO AS TO, AMONG OTHER THINGS, PROVIDE A DEFINITION FOR CANCELLATION OR "TO CANCEL", "FACILITY PHYSICAL DAMAGE RATE", "INSTITUTIONAL SOURCE", AND "INSURANCE-SUPPORT ORGANIZATION", CHANGE CERTAIN EXISTING DEFINITIONS, AND DELETE CERTAIN DEFINITIONS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-596 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THE GOVERNING BOARD OF THE SOUTH CAROLINA REINSURANCE FACILITY ANNUALLY SHALL DEVELOP AND FILE PRIVATE PASSENGER AUTOMOBILE LOSS COMPONENTS AND EXPENSE COMPONENTS WHICH INCLUDE PROVISIONS FOR PROFITS AND CONTINGENCIES WHICH WOULD COMBINE FOR THE FINAL RATE FOR AUTOMOBILE INSURANCE COVERAGES BASED ON THE TOTAL EXPERIENCE OF ALL RISKS CEDED TO THE FACILITY WHICH ARE ACTUARIALLY SOUND AND SUPPORTED BY STATISTICAL EVIDENCE, THAT THE FACILITIES' BOARD SHALL CONTRACT WITH INDEPENDENT ACTUARIAL SERVICES TO DEVELOP THE LOSS COMPONENT, THAT DUE CONSIDERATION MUST BE GIVEN TO ACTUAL LOSS EXPERIENCE WITHIN THE FACILITY FOR THE MOST RECENT THREE-YEAR PERIOD FOR WHICH SUCH INFORMATION IS AVAILABLE, AND THAT FACILITY RATE INCREASES ON OR AFTER MARCH 1, 1999, MUST BE CAPPED AT AN OVERALL TEN PERCENT INCREASE EACH YEAR, BUT THAT THIS CAP DOES NOT APPLY ON AN INDIVIDUAL INSURED BASIS; TO AMEND SECTION 38-77-112, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE AND THE REQUIREMENT THAT AN APPLICANT OR POLICYHOLDER MUST HAVE A DRIVER'S LICENSE AND EXCEPTIONS, SO AS TO DELETE CERTAIN LANGUAGE, PROVIDE, AMONG OTHER THINGS, THAT NO AUTOMOBILE INSURER IS REQUIRED TO WRITE COVERAGE FOR AUTOMOBILE INSURANCE FOR ANY APPLICANT OR EXISTING POLICYHOLDER, AND REQUIRE AN INSURER OR AGENT TO RETAIN FOR THREE YEARS THE DRIVER'S LICENSE NUMBERS FOR ALL PERSONS WHO HAVE SUBMITTED AN APPLICATION FOR INSURANCE BUT WHO WERE REFUSED COVERAGE AND TO FURNISH THIS INFORMATION UPON THE REQUEST OF THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE; TO AMEND SECTION 38-77-120, AS AMENDED, RELATING TO REQUIREMENTS FOR NOTICE OF CANCELLATION OF, OR REFUSAL TO RENEW, A POLICY OF AUTOMOBILE INSURANCE, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THIS NOTICE MUST PROVIDE FOR THE NOTIFICATION REQUIRED BY SECTION 38-77-390(b) AND MUST INFORM THE INSURED THAT HE CAN REQUEST IN WRITING WITHIN FIFTEEN DAYS OF THE RECEIPT OF NOTICE THAT THE DIRECTOR OF THE DEPARTMENT OF INSURANCE REVIEW THE ACTION OF THE INSURER; TO AMEND THE 1976 CODE BY ADDING SECTIONS 38-77-121, 38-77-122, 38-77-123, 38-77-124, 38-77-126, 38-77-141, 38-77-142, 38-77-143, 38-77-151, 38-77-154, AND 38-77-155 SO AS, WITH RESPECT TO AUTOMOBILE INSURANCE, TO PROVIDE, AMONG OTHER THINGS, THAT THE INSURER MAY CANCEL AT ANY TIME IN THE FIRST NINETY DAYS DURING WHICH THE POLICY IS IN EFFECT SUBJECT TO SECTION 38-77-122, THAT NO INSURER OR AGENT SHALL REFUSE TO ISSUE A POLICY BECAUSE OF AGE, SEX, LOCATION OF RESIDENCE IN SOUTH CAROLINA, RACE, COLOR, CREED, NATIONAL ORIGIN, ANCESTRY, MARITAL STATUS, OR INCOME LEVEL, THAT, NOTWITHSTANDING SECTIONS 38-77-122 AND 38-77-123, AN INSURER MAY REFUSE TO ISSUE OR RENEW A POLICY ON THE BASIS OF LOCATION OF RESIDENCE WHERE THE INSURER HAS FILED WITH THE DIRECTOR A TERRITORIAL PLAN SETTING FORTH THE PRECISE GEOGRAPHIC AREAS OF THE STATE IN WHICH IT WILL ISSUE OR RENEW POLICIES, THAT INSURERS MUST DISCLOSE TO THE INSURED WHETHER THE RATE LEVEL IS HIGHER THAN THE LOWEST RATE LEVEL TIER FOR THAT INSURER OR THE GROUP TO WHICH THE INSURER IS A MEMBER, AND THAT ALL FUNDS COLLECTED BY THE DIRECTOR OF THE DEPARTMENT OF PUBLIC SAFETY UNDER CHAPTER 10 OF TITLE 56 MUST BE PLACED ON DEPOSIT WITH THE STATE TREASURER AND HELD IN A SPECIAL FUND TO BE KNOWN AS THE "UNINSURED MOTORISTS FUND" TO BE DISBURSED AS PROVIDED BY LAW; TO AMEND SECTION 38-77-140, RELATING TO BODILY INJURY AND PROPERTY DAMAGE LIMITS OF COVERAGE FOR AUTOMOBILE INSURANCE, SO AS TO RAISE THE MINIMUM AMOUNT OF COVERAGE FOR INJURY TO OR DESTRUCTION OF PROPERTY OF OTHERS IN ANY ONE ACCIDENT FROM FIVE THOUSAND TO TEN THOUSAND DOLLARS; TO AMEND SECTION 38-77-150, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE UNINSURED MOTORIST PROVISION, AND DEFENSE OF AN ACTION BY THE INSURER, SO AS TO RAISE THE MINIMUM COVERAGE AMOUNT FOR PROPERTY DAMAGE FROM FIVE THOUSAND TO TEN THOUSAND DOLLARS, AND PROVIDE THAT BENEFITS PAID PURSUANT TO THIS SECTION ARE SUBJECT TO SUBROGATION AND ASSIGNMENT IF AN UNINSURED MOTORIST HAS SELECTED THE OPTION TO BE UNINSURED BY PAYING THE FEE PURSUANT TO SECTION 56-10-510; TO AMEND SECTION 38-77-280, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE AND COLLISION AND COMPREHENSIVE COVERAGES, SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE AND PROVISIONS, INCLUDING THE PROVISION THAT NO POLICY OF INSURANCE WHICH PROVIDES AUTOMOBILE PHYSICAL DAMAGE COVERAGE ONLY MAY BE CEDED TO THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-350, AS AMENDED, RELATING TO THE FORM TO BE USED WHEN OPTIONAL AUTOMOBILE INSURANCE COVERAGES ARE OFFERED, SO AS TO DELETE CERTAIN PROVISIONS, INCLUDING THE PROVISION THAT A POLICY OF INSURANCE OFFERED OR ISSUED BY A NEW SERVICING CARRIER FOR THE REINSURANCE FACILITY TO REPLACE A POLICY PREVIOUSLY ISSUED BY A FORMER SERVICING CARRIER AND CONTAINING THE SAME COVERAGE LIMITS AS THE FORMER POLICY CONSTITUTES A VALID REPLACEMENT POLICY THAT DOES NOT REQUIRE THE NEW SERVICING CARRIER OR AGENT TO MAKE A NEW OFFER OF COVERAGE OR TO OBTAIN A NEW APPLICATION FROM THE INSURED; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-370 SO AS, WITH RESPECT TO AUTOMOBILE INSURANCE, TO PROVIDE, AMONG OTHER THINGS, THAT IF AN INDIVIDUAL, AFTER PROPER IDENTIFICATION, SUBMITS A WRITTEN REQUEST TO AN INSURANCE-SUPPORT ORGANIZATION FOR ACCESS TO RECORDED PERSONAL INFORMATION ABOUT THE INDIVIDUAL THAT IS REASONABLY DESCRIBED BY THE INDIVIDUAL AND REASONABLY ABLE TO BE LOCATED AND RETRIEVED BY THE INSURANCE-SUPPORT ORGANIZATION, THEN THE INSURANCE-SUPPORT ORGANIZATION, WITHIN THIRTY BUSINESS DAYS FROM THE DATE THE REQUEST IS RECEIVED, UNDERTAKE CERTAIN ACTIONS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-390 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT IN THE EVENT OF CANCELLATION OR NONRENEWAL, INCLUDING THOSE THAT INVOLVE POLICIES REFERRED TO IN SECTION 38-77-120, THE INSURER OR AGENT RESPONSIBLE FOR THE CANCELLATION OR NONRENEWAL SHALL GIVE CERTAIN WRITTEN NOTICE IN A FORM APPROVED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE; TO AMEND SECTION 38-77-530, AS AMENDED, RELATING TO THE PLAN OF OPERATION OF THE REINSURANCE FACILITY, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THE PLAN OF OPERATION MUST COMMENCE RECOUPMENT OF FACILITY ASSESSMENTS BY WAY OF A SURCHARGE ON LIABILITY INSURANCE COVERAGE ON PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE BUSINESS ISSUED BY A MEMBER OR THROUGH THE FACILITY, THAT THE SURCHARGE MUST BE A PERCENTAGE OF THE PREMIUM ADOPTED BY THE FACILITY BOARD BUT THAT FOR THE PERIOD BEGINNING MARCH 1, 1999, AND ENDING FEBRUARY 28, 2002, THE AMOUNT OF THE PERCENTAGE OF PREMIUM SURCHARGE FOR THE RECOUPMENT OF FACILITY ASSESSMENTS ADOPTED BY THE BOARD CANNOT EXCEED TEN PERCENT OF THE LIABILITY INSURANCE COVERAGE PREMIUM PER INSURED MOTOR VEHICLE OR RISK ANNUALLY FOR ALL INSUREDS OR POLICYHOLDERS, THAT SERVICING CARRIER CONTRACTS FOR BUSINESS WRITTEN BY DESIGNATED PRODUCERS MAY, AT THE CARRIER'S OPTION, BE EXTENDED TO MARCH 1, 2002, UPON THE SAME TERMS AND CONDITIONS AS THEIR CURRENT CONTRACTS, AND THAT THE FACILITY SHALL CONVERT TO THE PERCENTAGE-OF-PREMIUM BASIS OF RECOUPMENT BY MARCH 1, 1999; TO AMEND SECTION 38-77-590, AS AMENDED, RELATING TO THE REINSURANCE FACILITY AND DESIGNATED PRODUCERS, SO AS TO DELETE CERTAIN PROVISIONS, AND PROVIDE THAT A PRODUCER DESIGNATED UNDER THIS SECTION MAY NOT WRITE NEW PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE INSURANCE BUSINESS TO BE PLACED IN THE FACILITY AFTER MARCH 1, 1999, AND THAT A POLICY WITH AN EFFECTIVE DATE AFTER MARCH 1, 2002, SHALL NOT BE ACCEPTED BY THE FACILITY; TO AMEND SECTION 38-77-595, RELATING TO THE REINSURANCE FACILITY AND THE CONDITIONS FOR DESIGNATION AS A FACILITY PRODUCER FOR AN OTHERWISE INELIGIBLE APPLICANT, SO AS TO PROVIDE THAT A PRODUCER DESIGNATED UNDER THIS SECTION MAY NOT WRITE NEW PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE INSURANCE BUSINESS TO BE PLACED IN THE FACILITY AFTER MARCH 1, 1999, AND THAT A POLICY WITH AN EFFECTIVE DATE AFTER MARCH 1, 2002, SHALL NOT BE ACCEPTED BY THE FACILITY; TO AMEND TITLE 38, RELATING TO INSURANCE, BY ADDING CHAPTER 91 SO AS TO PROVIDE FOR A JOINT UNDERWRITING ASSOCIATION FOR PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE INSURANCE; TO PROVIDE THAT THE RESIDUAL AUTOMOBILE INSURANCE MARKET MECHANISM FOR THE STATE OF SOUTH CAROLINA SHALL CONVERT FROM A JOINT UNDERWRITING ASSOCIATION TO AN ASSIGNED RISK PLAN, PROVIDE FOR THE TRANSITION, AND PROVIDE THAT THE JOINT UNDERWRITING ASSOCIATION SHALL NOT ACCEPT ANY INSURANCE BUSINESS AFTER FEBRUARY 28, 2003, AND THAT THE ASSIGNED RISK PLAN MUST ACCEPT BUSINESS BEGINNING ON MARCH 1, 2003, AND CONTINUING THEREAFTER; TO AMEND CHAPTER 77, TITLE 38, RELATING TO AUTOMOBILE INSURANCE, BY ADDING ARTICLE 8 SO AS TO PROVIDE THAT, BEGINNING ON MARCH 1, 2003, AND CONTINUING THEREAFTER, THE DIRECTOR OF THE DEPARTMENT OF INSURANCE MAY PROMULGATE REASONABLE STANDARDS FOR THE ASSIGNMENT OF RISKS TO INSURANCE CARRIERS AND SERVICING CARRIERS, PROVIDE THAT AN ASSIGNED RISK PLAN, KNOWN AS THE ASSOCIATED AUTOMOBILE INSURERS PLAN, MUST BE ESTABLISHED BY MARCH 1, 2003, PROVIDE THAT MORE THAN ONE ASSIGNED RISK PLAN MAY BE ESTABLISHED, AND PROVIDE FOR RELATED MATTERS, INCLUDING AN ASSIGNED RISK POOL; TO AMEND CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE REGISTRATION AND FINANCIAL SECURITY, BY ADDING SECTION 56-10-225 SO AS TO PROVIDE THAT A PERSON WHOSE APPLICATION FOR REGISTRATION AND LICENSING OF A MOTOR VEHICLE HAS BEEN APPROVED MUST MAINTAIN IN THE MOTOR VEHICLE AT ALL TIMES PROOF THAT THE MOTOR VEHICLE IS AN INSURED VEHICLE IN CONFORMITY WITH THE LAWS OF THIS STATE, PROVIDE THAT THE VEHICLE OWNER MUST MAINTAIN PROOF OF FINANCIAL RESPONSIBILITY IN THE VEHICLE AT ALL TIMES AND THAT IT MUST BE DISPLAYED UPON DEMAND OF A POLICE OFFICER OR ANY OTHER PERSON DULY AUTHORIZED BY LAW, PROVIDE FOR A MISDEMEANOR OFFENSE AND A PENALTY, AND PROVIDE FOR RELATED AND INCIDENTAL MATTERS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-395 SO AS TO PROVIDE THAT THERE IS NO LIABILITY ON THE PART OF, AND NO CAUSE OF ACTION MAY ARISE AGAINST, THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEES, ANY INSURER, OR THE AUTHORIZED REPRESENTATIVES, AGENTS, AND EMPLOYEES OF EITHER OR ANY FIRM, PERSON, OR CORPORATION FURNISHING TO THE INSURER INFORMATION AS TO REASONS FOR CANCELLATION OR REFUSAL TO WRITE OR RENEW ANY POLICY OF AUTOMOBILE INSURANCE, FOR ANY STATEMENT MADE BY ANY OF THEM IN COMPLYING WITH APPLICABLE LAWS, OR FOR THE PROVIDING OF ANY OF THIS OR RELATED, INFORMATION, UNLESS THE PERSON ASSERTING THE CAUSE OF ACTION ESTABLISHES THAT THE PERSON AGAINST WHOM THE CAUSE OF ACTION IS ASSERTED WAS MOTIVATED BY EXPRESS MALICE OR GROSS NEGLIGENCE; TO AMEND THE 1976 CODE BY ADDING SECTION 38-5-200 SO AS TO PROVIDE THAT AN INSURER, ITS AGENT, OR AN INSURANCE BROKER DOING BUSINESS IN THIS STATE MAY NOT REQUIRE A PERSON TO USE A PARTICULAR INSURANCE PREMIUM FINANCE COMPANY OR OTHER INSTALLMENT PLAN FOR WHICH A FINANCE CHARGE OR OTHER FEE HAS BEEN OR WILL BE IMPOSED AND MAY NOT REFUSE TO ISSUE A POLICY OF INSURANCE SOLELY BECAUSE THE PREMIUMS FOR THE POLICY HAVE BEEN ADVANCED BY A PREMIUM FINANCE COMPANY LICENSED IN SOUTH CAROLINA, AND PROVIDE THAT AN INSURER OR ITS AGENT DOING BUSINESS IN THIS STATE SHALL NOT REDUCE A COMMISSION OR INTIMIDATE OR RETALIATE AGAINST A PRODUCER, AGENT, BROKER, OR INSURED WHO USES PREMIUM FINANCING BY DENYING THE PRODUCER, AGENT, BROKER, OR INSURED THE SAME RIGHTS ACCORDED PRODUCERS, AGENTS, BROKERS, OR INSUREDS WHO PAY PREMIUMS IN A DIFFERENT MANNER; TO AMEND SECTION 38-43-200, AS AMENDED, RELATING TO INSURANCE AGENTS AND AGENCIES AND SPLITTING COMMISSIONS WITH UNLICENSED PERSONS, SO AS TO PROVIDE THAT NOTHING IN THIS SECTION MAY BE CONSTRUED TO PROHIBIT ANY LICENSED INSURANCE AGENT FROM REBATING ANY PORTION OF HIS COMMISSION COLLECTED ON AUTOMOBILE INSURANCE PREMIUMS TO THE INSURED UPON THAT AUTOMOBILE INSURANCE POLICY; TO AMEND SECTION 38-55-50, AS AMENDED, RELATING TO CONDUCT OF INSURANCE BUSINESS AND THE PROHIBITION AGAINST DISCRIMINATION, SO AS TO PROVIDE THAT THIS SECTION DOES NOT PROHIBIT THE REBATING OF ANY COMMISSION TO THE INSURED ON AN AUTOMOBILE INSURANCE POLICY COLLECTED BY OR ON BEHALF OF A LICENSED INSURANCE AGENT; TO PROVIDE THAT, BEGINNING ON MARCH 1, 2000, THE DIRECTOR OF THE DEPARTMENT OF INSURANCE SHALL REVIEW ANNUALLY THE IMPACT OF THE REPEAL OF THE ANTI-REBATE STATUTES CONCERNING THE SALE OF AUTOMOBILE INSURANCE IN SOUTH CAROLINA AND MAKE ANNUAL REPORTS TO THE GENERAL ASSEMBLY, PROVIDE FOR A FINAL REPORT WITH EXCEPTIONS THERETO, PROVIDE FOR THE PROMULGATION OF REGULATIONS, AND PROVIDE FOR RELATED AND INCIDENTAL MATTERS; TO PROVIDE THAT IF A PROVISION OF THIS ACT OR ITS APPLICATION TO A PERSON OR CIRCUMSTANCE IS HELD UNCONSTITUTIONAL OR OTHERWISE INVALID, THE REMAINDER OF THIS ACT AND THE APPLICATION OF THAT PROVISION TO OTHER PERSONS OR CIRCUMSTANCES ARE NOT AFFECTED, AND PROVIDE THAT IT MUST BE CONCLUSIVELY PRESUMED THAT THE GENERAL ASSEMBLY WOULD HAVE ENACTED THE REMAINDER OF THIS ACT WITHOUT THE INVALID OR UNCONSTITUTIONAL PROVISION; TO PROVIDE THAT, BEGINNING MARCH 1, 1999, INSURERS MAY NONRENEW A POLICY OF AUTOMOBILE INSURANCE THAT THEY HAVE CURRENTLY CEDED TO THE REINSURANCE FACILITY, PROVIDE THAT THIS DOES NOT APPLY TO BUSINESS WRITTEN THROUGH THE DESIGNATED PRODUCERS, PROVIDE THAT INSURERS MAY NO LONGER CEDE TO THE FACILITY AFTER OCTOBER 1, 1999, PROVIDE THAT INSURERS ARE NOT REQUIRED TO CEDE TO THE FACILITY AFTER MARCH 1, 1999, AND THAT BUSINESS CEDED AFTER MARCH 1, 1999, MUST BE RENEWAL BUSINESS TO THE FACILITY, PROVIDE THAT ALL RENEWAL BUSINESS CEDED AFTER MARCH 1, 1999, MUST BE CEDED AT THE RATE LEVEL APPROVED FOR THE REINSURANCE FACILITY AFTER COMBINING ITS EXPENSE COMPONENT WITH THE LOSS COMPONENT REFERRED TO IN SECTION 38-77-596; TO REPEAL ARTICLE 5, CHAPTER 77, TITLE 38, RELATING TO THE REINSURANCE FACILITY AND DESIGNATED PRODUCERS, EFFECTIVE JANUARY 1, 2006; TO REPEAL, EFFECTIVE MARCH 1, 1999, SECTIONS 38-73-450, RELATING TO THE REQUIREMENT OF FAIRNESS IN AUTOMOBILE INSURANCE RATES ON PREMIUM CHARGES, BURDEN ON INSURER TO PROVE FAIRNESS, AND FACTORS TO BE CONSIDERED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, 38-73-455, RELATING TO AUTOMOBILE INSURANCE RATES, 38-73-457, RELATING TO AUTOMOBILE INSURANCE, THE FILING OF INFORMATION ON BASE RATES, AND EFFECTIVE DATE OF SUCH RATES, 38-73-460, RELATING TO AUTOMOBILE INSURANCE AND THE EFFECT OF GAINS AND LOSSES INCURRED BY MEMBERS ON RATES, 38-73-465, RELATING TO AUTOMOBILE INSURANCE, UNFAIRLY DISCRIMINATORY, EXCESSIVE, OR UNREASONABLE PROFITS AND RATES, REVIEW OF RATES, AND RATE EXPERIENCE, 38-73-720, RELATING TO AUTOMOBILE INSURANCE AND THE ESTABLISHMENT OF RISK AND TERRITORIAL CLASSIFICATIONS, 38-73-730, RELATING TO AUTOMOBILE INSURANCE RISK CLASSIFICATION PLANS, DISTINCTIONS IN VIOLATION OF PLANS, AND ESTABLISHMENT OF PLANS, 38-73-731, RELATING TO THE REQUIREMENT THAT WHEN A PERSON IN YOUTHFUL DRIVER CLASSIFICATION REACHES AGE TWENTY-FIVE DURING AN AUTOMOBILE INSURANCE POLICY PERIOD HE MUST BE REMOVED FROM THAT CLASSIFICATION, BE RECLASSIFIED, AND BE REFUNDED ANY EXCESS PREMIUM HE PAID, 38-73-735, RELATING TO AUTOMOBILE INSURANCE AND PLAN FOR CREDITS AND DISCOUNTS, 38-73-750, RELATING TO AUTOMOBILE INSURANCE, PLANS WHICH MUST BE FILED BY INSURERS, THE PROVISION THAT CERTAIN PLANS MAY NOT BE FILED OR APPROVED, AND DISAPPROVAL OF PLANS BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE, 38-73-760, RELATING TO AUTOMOBILE INSURANCE AND UNIFORM STATISTICAL PLANS, 38-73-770, RELATING TO THE REQUIREMENT THAT EVERY CLASSIFICATION PLAN FOR AUTOMOBILE INSURANCE RATES PROMULGATED BY THE DEPARTMENT OF INSURANCE MUST BE STRUCTURAL SO AS TO PRODUCE RATES OR PREMIUM CHARGES WHICH ARE ADEQUATE, NOT EXCESSIVE, AND NOT UNFAIRLY DISCRIMINATORY, 38-73-775, RELATING TO THE ANNUAL FILING OF THE PHYSICAL DAMAGE LOSS COMPONENT BY THE REINSURANCE FACILITY, 38-77-110, RELATING TO AUTOMOBILE INSURANCE, THE "MANDATE TO WRITE", THE REQUIREMENT UPON INSURERS TO INSURE, AND EXCEPTIONS, 38-77-111, RELATING TO AUTOMOBILE INSURANCE POLICIES WHICH MAY BE CEDED TO THE REINSURANCE FACILITY, 38-77-115, RELATING TO THE SIGNS REQUIRED TO BE POSTED IN AN AUTOMOBILE INSURANCE AGENT'S PLACE OF BUSINESS, 38-77-145, RELATING TO AUTOMOBILE INSURANCE AND THE PROVISION THAT PERSONAL INJURY PROTECTION COVERAGE IS NOT MANDATED AND THE DELETION OF REFERENCES TO PERSONAL INJURY PROTECTION COVERAGE, 38-77-285, RELATING TO THE REQUIREMENT THAT ALL AUTOMOBILE COVERAGES MUST BE IN ONE POLICY, 38-77-360, RELATING TO THE PROHIBITION AGAINST INCREASES IN AUTOMOBILE INSURANCE PREMIUMS FOLLOWING CERTAIN FIRST OFFENSE VIOLATIONS, 38-77-600, RELATING TO THE REINSURANCE FACILITY RECOUPMENT CHARGE, 38-77-605, RELATING TO THE REQUIREMENT THAT EVERY PREMIUM NOTICE OR BILL FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE MUST DISPLAY PROMINENTLY THE REINSURANCE FACILITY RECOUPMENT CHARGE BY COVERAGE AND THE TOTAL FACILITY RECOUPMENT CHARGE FOR THAT POLICY OR BINDER, 38-77-610, RELATING TO THE FILING OF RECOUPMENT CHARGES, 38-77-620, RELATING TO THE PROVISION THAT THE REINSURANCE FACILITY RECOUPMENT CHARGES APPROVED OR ESTABLISHED PURSUANT TO SECTION 38-77-610 MUST BE ADDED TO THE APPROVED BASE RATE AND OBJECTIVE STANDARDS RATE IN EFFECT FOR EACH AUTOMOBILE INSURER, AND 38-77-625, RELATING TO THE PROVISION IF AN INSURED IS INVOLVED IN A MOTOR VEHICLE ACCIDENT WHERE HE IS NOT THE AT-FAULT DRIVER, HIS REINSURANCE FACILITY RECOUPMENT CHARGE MAY NOT BE INCREASED BY HIS INSURER BECAUSE OF THIS OCCURRENCE, AND ARTICLE 9, CHAPTER 77, TITLE 38, RELATING TO AUTOMOBILE INSURANCE AND UNLAWFUL ACTS; AND TO PROVIDE THAT NONRENEWAL NOTICES MAY BE SENT PRIOR TO MARCH 1, 1999, FOR AUTOMOBILE INSURANCE POLICIES RENEWING ON OR AFTER MARCH 1, 1999.

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

Uninsured motorist fund defined

SECTION 1. Section 56-9-20 of the 1976 Code, as last amended by Act 459 of 1996, is further amended by adding the following appropriately-numbered item:

"( ) 'Uninsured Motorist Fund' means a fund established for fees collected by the director of the Department of Public Safety from registration of uninsured vehicles."

Uninsured motorist fund established

SECTION 2. Chapter 10 of Title 56 of the 1976 Code is amended by adding:

"Article 5

Establishment of Uninsured Motorist Fund

Section 56-10-510. In addition to any other fees prescribed by law, every person registering an uninsured motor vehicle, as defined in Section 56-9-20, at the time of registering or reregistering the uninsured vehicle, shall pay a fee of five hundred and fifty dollars. Notwithstanding any other provision of law, fifty dollars of the uninsured motor vehicle fee is nonrefundable and is directed to be paid to the South Carolina Reinsurance Facility for the recoupment of assessments or losses of the South Carolina Reinsurance Facility pursuant to Section 56-10-554 until otherwise ordered by the director of the Department of Insurance. However, if the uninsured motor vehicle is being registered for a period of less than a full year, the uninsured motor vehicle fee exclusive of any nonrefundable portion must be prorated to conform to the registration period. This uninsured motor vehicle fee shall be increased annually based upon and in relation to the average rate level increases for private passenger automobile insurance coverages by insurers in this State. The director of the Department of Insurance, by annual order, will set this exact fee. The application for registering an uninsured vehicle must have the following statements printed on or attached to the first page of the form, boldface, twelve point type: 'THIS $550 FEE IS NOT AN INSURANCE PREMIUM AND YOU ARE NOT PURCHASING ANY INSURANCE BY PAYING THIS FEE. THIS $550 UNINSURED MOTORIST FEE IS FOR THE PRIVILEGE TO DRIVE AND OPERATE AN UNINSURED MOTOR VEHICLE ON THE SOUTH CAROLINA ROADS.' This uninsured motorist notice required by this section must also be given to the person registering an uninsured motor vehicle. The director shall prescribe the exact format of this notice by regulation and shall adjust the amount of this fee annually as part of the order by the director of the Department of Insurance adjusting the uninsured motorist fee in relation to the average rate level increases for private passenger automobile insurance coverages by insurers in this State. Every person applying for registration of a motor vehicle and declaring it to be an insured motor vehicle, under the penalties set forth in Section 56-10-520, shall execute and furnish to the director his certificate that the motor vehicle is an insured motor vehicle as defined by the laws of this State, or that the director has issued to its owner, in accordance with Section 56-9-60, a certificate of self-insurance applicable to the vehicle sought to be registered. The director, or his designee, may require any registered owner of a motor vehicle declared to be insured or any applicant for registration of a motor vehicle to be an insured to submit a certificate of insurance on a form prescribed by the director. The director must forward the certificate of insurance or bond to the insurance company or surety company, whichever is applicable, for verification as to whether the policy or bond named in the certificate is currently in force. At that time, and not later than thirty days following receipt of the certificate of insurance, the insurance company or surety company must cause to be filed with the director a written notice if the policy or bond was not applicable as to the named insured. The director must prescribe the manner in which the written notice must be made. The refusal or neglect of any owner within thirty days to submit the certificate of insurance when required by the director or his designee or the notification by the insurance company or surety company that the policy or bond named in the certificate of insurance is not in effect, must require the director to suspend any driver's license and all registration certificates and license plates issued to the owner of the motor vehicle until the person:

(1) has paid to the director of the Department of Public Safety a fee of three hundred dollars to be disposed of as provided for in Sections 56-10-550 and 56-10-552 with respect to the motor vehicle determined to be uninsured; and

(2) furnishes proof of financial responsibility for the future in the manner prescribed in Section 56-10-10, et seq. of this chapter. An order of suspension required by this section is not effective until the director has offered the person an opportunity for an administrative hearing to show cause why the order should not be enforced. Notice of the opportunity for an administrative hearing may be included in the order of suspension. When three years have elapsed from the effective date of the suspension required in this section, the director may relieve the person of the requirement of furnishing proof of future financial responsibility. If the director determines that the fee applicable to the registration of an uninsured motor vehicle has been paid on the vehicle in question on or before the date that the insurance certificate was requested, no suspension action must be taken. The director shall suspend the driver's license and all registration certificates and license plates of any person on receiving a record of his conviction of a violation of any provisions of Section 56-10-520, but the director shall dispense with the suspension when the person is convicted for a violation of Section 56-10-520 and the department's records show conclusively that the motor vehicle was insured or that the fee applicable to the registration of an uninsured motor vehicle has been paid by the owner before the date and time of the alleged offense.

Section 56-10-520. A person who owns an uninsured motor vehicle:

(1) licensed in the State; or

(2) subject to registration in the State;

who operates or permits the operation of that motor vehicle without first having paid to the director the uninsured motor vehicle fee required by Section 56-10-510, to be disposed of as provided by Section 56-10-550, shall be guilty of a misdemeanor.

A person who is the operator of such an uninsured motor vehicle and not the titled owner, who knows that the required fee has not been paid to the director, shall be guilty of a misdemeanor.

The director or his designee, having reason to believe that a motor vehicle is being operated or has been operated on any specified date, may require the owner of such motor vehicle to submit the certificate of insurance provided for by Section 56-10-510. The refusal or neglect of the owner who has not, before the date of operation, paid the uninsured motor vehicle fee required by Section 56-10-510 as to such motor vehicle, to furnish such certificate must be prima facie evidence that the motor vehicle was an uninsured motor vehicle at the time of such operation. A person who presents or causes to be presented to the director a false certificate that a motor vehicle is an insured motor vehicle or false evidence that a motor vehicle sought to be registered is an insured motor vehicle, is guilty of a misdemeanor.

However, the foregoing portions of this section must not be applicable if it is established that the owner had good cause to believe and did believe that such motor vehicle was an insured motor vehicle, in which event the provisions of Section 56-10-245 must be applicable.

Abstracts of records of conviction, as defined in this title, of any violation of any of the provisions of this section must be forwarded to the director as prescribed by Section 56-9-330. The director shall suspend the driver's license and all registration certificates and license plates of any titled owner of an uninsured motor vehicle upon receiving a record of his conviction of a violation of any provisions of this section, and he shall not thereafter reissue the driver's license and the registration certificates and license plates issued in the name of such person until such person pays the fee applicable to the registration of an uninsured motor vehicle as prescribed in Section 56-10-510 and furnishes proof of future financial responsibility as prescribed by this section. Notice of such suspension shall be made in the form provided for in Section 56-1-465. However, when three years have elapsed from the date of the suspension herein required, the director may relieve such person of the requirement of furnishing proof of future financial responsibility. When such suspension results from a conviction for presenting or causing to be presented to the director a false certificate as to whether a motor vehicle is an insured motor vehicle or false evidence that any motor vehicle sought to be registered is insured, then the director shall not thereafter reissue the driver's license and the registration certificates and license plates issued in the name of such person so convicted for a period of one hundred eighty days from the date of such order of suspension, and only then when all other provisions of law have been complied with by such person. The director shall suspend the driver's license of any person who is the operator but not the titled owner of a motor vehicle upon receiving a record of his conviction of a violation of any provisions of this section, and he shall not thereafter reissue the driver's license until thirty days from the date of such order of suspension.

Section 56-10-530. When it appears to the director from the records of his office that an uninsured motor vehicle as defined in Section 56-9-20, subject to registration in the State, is involved in a reportable accident in the State resulting in death, injury, or property damage with respect to which motor vehicle the owner thereof has not paid the uninsured motor vehicle fee as prescribed in Section 56-10-510, the director shall, in addition to enforcing the applicable provisions of Section 56-10-10, et seq. of this chapter, suspend such owner's driver's license and all of his license plates and registration certificates until such person has complied with those provisions of law and has paid to the director of the Department of Public Safety a reinstatement fee as provided by Section 56-10-510, to be disposed of as provided by Section 56-10-550, with respect to the motor vehicle involved in the accident and furnishes proof of future financial responsibility in the manner prescribed in Section 56-9-350, et seq. However, no order of suspension required by this section must become effective until the director has offered the person an opportunity for an administrative hearing to show cause why the order should not be enforced. Notice of the opportunity for an administrative hearing may be included in the order of suspension. Notice of such suspension shall be made in the form provided for in Section 56-1-465. However, when three years have elapsed from the effective date of the suspension herein required, the director may relieve such person of the requirement of furnishing proof of future financial responsibility. The presentation by a person subject to the provisions of this section of a certificate of insurance, executed by an agent or representative of an insurance company qualified to do business in this State, showing that on the date and at the time of the accident the vehicle was an insured motor vehicle as herein defined or, presentation by such person of evidence that the additional fee applicable to the registration of an uninsured motor vehicle had been paid to the department before the date and time of the accident, is sufficient bar to the suspension provided for in this section.

Section 56-10-535. The director, upon receiving notice at the time of application or at any time during participation in the fund that a titled owner of a motor vehicle has been convicted of one of the following violations: disobedience of any official traffic device; failure to stop for law enforcement officer when signaled; disobedience to any officer directing traffic; failure to stop for a school bus; leaving the scene of an accident where injury to a person or damage to property results; theft or unlawful taking of a vehicle; racing on public highways; driving under the influence of intoxicating liquor or narcotic drugs or where injury to a person of over six hundred dollars per person or damage to property of the insured or other person of over one thousand dollars results; reckless driving where injury to a person of over six hundred dollars per person or damage to property of the insured or other person of over one thousand dollars results, homicide or assault arising out of the operation of a motor vehicle; any felony involving the use of a motor vehicle; the transporting of illegal whiskey or unlawful drugs or other controlled or narcotic substances; reckless homicide; wilful making of false statements in the application for license or registration; impersonating an applicant for license or registration or procuring a license or registration through impersonation whether for himself or another; any three or more moving traffic convictions; any two or more accidents for which the owner is responsible and where injury to a person of over six hundred dollars per person or damage to property of the insured or other persons of over one thousand dollars results, or if any household driver has been licensed for less than three years; then the director shall require the owner to furnish proof of financial responsibility in the manner prescribed by the director.

However, when three years have elapsed from the effective date of any conviction for the above offenses, the director may relieve such person of the requirement of furnishing proof of future financial responsibility.

Section 56-10-540. Whenever any proof of financial responsibility filed by any person as required by this chapter no longer fulfills the purpose for which required, the director shall require other proof of financial responsibility as required by this chapter and shall suspend such person's driver's license, registration, certificates, and license plates and decals pending the furnishing of proof in a manner prescribed by the director. Notice of such suspension shall be made in the form provided for in Section 56-1-465.

A person whose driver's license or registration certificates, or license plates and decals have been suspended as provided in this chapter and have not been reinstated shall immediately return every such license, registration certificate, and set of license plates and decals held by him to the director. A person failing to comply with this requirement shall be guilty of a traffic infraction and, upon conviction, shall be punished as provided in Section 56-9-310, et seq.

Section 56-10-550. Except as provided in Sections 56-10-552 and 56-10-554, funds collected by the director of the Department of Public Safety under the provisions of this chapter must be placed on deposit with the State Treasurer and held in a special fund to be known as the 'Uninsured Motorists Fund' to be disbursed as provided by law. The director of the Department of Insurance as provided in Sections 38-77-151 and 38-77-154 may expend monies from such funds for the administration of Title 38.

Section 56-10-551. When any insurance policy certified under this chapter is canceled or terminated, the insurer shall report the fact to the director within fifteen days after the cancellation on a form prescribed by the director.

Section 56-10-552. (A) All funds collected as provided in Section 38-73-470 must be directed to the director of the Department of Public Safety for the establishment and maintenance of a special fund, to be known as the 'Uninsured Enforcement Fund', to be used by the Department of Public Safety for the purpose of enforcement and administration of Article 3, Chapter 10, Title 56.

(B) Fifty percent of the reinstatement fee as provided by Section 56-10-510(1) must be transferred by the Department of Public Safety and recorded to the Uninsured Enforcement Fund to be used by the Department of Public Safety as provided by subsection (A) of this section. The remaining fifty percent of the reinstatement fee as provided by Section 56-10-510 must be retained in the Uninsured Motorist Fund to be used as provided in Sections 56-10-550, 38-77-151, and 38-77-154.

Section 56-10-553. (A) The Department of Public Safety must collect data and maintain statistics on the total number of vehicles registered in the State as of June thirtieth of each year, the number of motorists who voluntarily paid the five hundred and fifty dollar fee at the time of registration during the fiscal year, the number of motorists who paid the penalty fee after being detected by the Department of Public Safety as being uninsured during the fiscal year, the number of certificates of insurance filed during the fiscal year, the net revenue collections for these fees by the fiscal year, the net funds available in the Uninsured Motorist Fund, and the net funds received from the Department of Insurance from the uninsured motorist fee during the fiscal year.

(B) The Department of Public Safety must implement programs designed to ensure full compliance with the financial responsibility laws. These programs must include random sampling of licensed drivers with moving violations requesting proof of insurance. Other programs may be added.

(C) The Department of Public Safety must on a daily basis select a computerized random sample of five hundred of the registered vehicles in the State and mail to each owner a written request form to be completed by him and his insurance company or the agent issuing the policy to verify liability insurance coverage. The form must be in a manner prescribed by regulation of the department. The completed and verified form must be returned by the owner to the department within fifteen days from the date he receives it. Failure to return the form verified in the proper manner is prima facie evidence that the vehicle is uninsured, and vehicles determined to be uninsured under this section are subject to the provisions of state law dealing with uninsured vehicles.

(D) The Department of Public Safety must provide an annual report to the General Assembly containing the information required in subsections (A) and (B) of this section.

Section 56-10-554. As provided in Section 56-10-510, fifty dollars of the uninsured motor vehicle fee paid per vehicle is nonrefundable and must be used to recoup assessments or losses of the South Carolina Reinsurance Facility. Upon collection by the director of the Department of Public Safety from any person registering an uninsured vehicle, this money must be placed by the director of the Department of Public Safety on deposit with the State Treasurer to be held in a special account called the 'Recoupment Fund', payable on a quarterly basis, to provide for the recoupment of facility assessments or losses. Upon final recoupment of facility losses as the South Carolina Reinsurance Facility ceases to exist, the director of the Department of Insurance shall by order (1) set the uninsured motor vehicle fee which does not include the fifty dollars dedicated for the recoupment of facility assessments or losses; (2) inform the director of the Department of Public Safety that the facility assessments or losses have been recouped and when the Department of Public Safety must cease collection from every person registering an uninsured motor vehicle, as well as transmittal to the State Treasurer, of this fifty dollar portion; and (3) direct the State Treasurer to transfer any used portion of the 'Recoupment Fund' to the 'Unininsured Motorist Fund'. The director of the Department of Public Safety must cease collection of this fifty dollars as part of the uninsured motor vehicle fee which has been dedicated for the recoupment of facility assessments or losses as provided in the order issued by the director of the Department of Insurance."

Premium for uninsured motorist coverage; interest; etc.

SECTION 3. Section 38-73-470 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:

"Section 38-73-470. One dollar of the yearly premium for uninsured motorist coverage is directed to be paid to the South Carolina Department of Public Safety to be placed on deposit with the State Treasurer in the 'Uninsured Enforcement Fund', payable on a quarterly basis, to provide for the costs of enforcing and administering the provisions of Article 3, Chapter 10, Title 56. Interest earned by the 'Uninsured Fund' must be retained by that fund. There is no requirement for an insurer or an agent to offer underinsured motorist coverage at limits less than the statutorily required bodily injury or property damage limits."

No requirement of hearing and approval for automobile insurance rate increase; etc.

SECTION 4. Section 38-73-910 of the 1976 Code, as last amended by Acts 300, 360, and 378 of 1996, is further amended to read:

"Section 38-73-910. (A) No increase in the premium rates may be granted for workers' compensation, fire, allied lines, and homeowners' insurance, nor for any other line or type of insurance with respect to which the director or his designee has, by order, made a finding that (a) legal or other compulsion upon the part of the insured to purchase the insurance interferes with competition, or (b) under prevailing circumstances there does not exist substantial competition, unless notice is given in all newspapers of general, statewide circulation at least thirty days in advance of the insurer's proposed effective date of the increase in premium rates. The notice shall state the amount of increase, the type and line of coverage, and the proposed effective date and shall allow any insured or affected party to request within fifteen days a public hearing upon the propriety of the rate increase request before the Administrative Law Judge Division. A copy of the notice must be sent to the Consumer Advocate.

However, the requirements of public notices and public hearings in this section do not apply to applications for rate increases when the applicant insurer had earned premiums in this State in the previous calendar year of less than two million dollars for the line or type of insurance for which the rate increase is sought or, if the rate increase is sought by a rating organization, the earned premiums in this State for all members and subscribers of the organization for whom an increase is sought were less than two million dollars for the previous calendar year for the line or type of insurance for which the rate increase is sought. The two million dollars must be increased by a factor equal to the increase in the consumer price index, all items, every three years.

However, a private insurer licensed to underwrite essential property insurance as defined by Section 38-75-310(1), notwithstanding any limitations included within this title, may file and use, pursuant to the provisions of Section 38-73-1095, any rates which result in insurance premium rates of ninety percent, or less, of the insurance premium rates then approved for the South Carolina Wind and Hail Underwriting Association for use within the coastal area of South Carolina as defined by Section 38-75-310(5).

(B) Except as provided in subsection (C) of this section, overall average rate level increases or decreases, for all coverages combined, of seven percent above or below the insurer's rates in effect may take effect without prior approval on a file and use basis with respect to rates for automobile insurance policies. The seven percent cap does not apply on an individual insured basis.

(C) Notwithstanding any other provisions of this chapter, for any policies governed by this section, filings that produce rate level changes within the limitation specified in subsection (B) of this section becomes effective without prior approval; provided, however, that (1) no more than one rate increase within the limitation specified in subsection (B) of this section may be implemented during any twelve-month period and (2) no rate increase within the limitation specified in subsection (B) of this section may be implemented until the onset of the new policy period and unless the insurer, at least thirty days in advance of the end of the policy period, mails or delivers to the named insured, at the address shown in the policy, a written notice of its intention to change the rate. The overall statewide rate change implemented under this section must be stated in the notice.

A rate increase or decrease falling within the limitation specified in subsection (B) of this section may become effective not less than thirty days after the date of the filing with the director. Any such filing is deemed to meet the requirements of this chapter. The director may find that such a filing is not in compliance with this chapter. In the event of such a finding, the director shall issue a written order specifying in detail the provisions with which the insurer has not complied and state a reasonable period thereafter in which the filing shall be deemed no longer effective. Any order by the director pursuant to this section that is issued more than thirty days from the date on which the director received the rate filing shall be on a prospective basis only and shall not affect any contract issued or made prior to the effective date of the order.

Rate filings falling outside the limitation specified in subsection (B) of this section will be subject to the prior approval of the director. The director shall approve or disapprove such filings in accordance with the provisions of Section 38-73-960 and 38-73-990.

(D) Individual automobile insurance companies and member companies of an affiliated group of automobile insurers may utilize different filed rates for automobile insurance coverages in accordance with rating plans filed with and approved by the director. These rating plans may provide for different rates, rating tiers, and rating plans among affiliated companies. For the purpose of this section, an affiliated group of automobile insurers includes a group of automobile insurers under common ownership, management, or control.

(E) The director of the Department of Insurance or his designee shall promulgate regulations implementing the provisions of this section.

(F) On or before March 31, 2004, the director of the Department of Insurance or his designee shall report to the General Assembly on the effectiveness of flexible rating for automobile insurance policies. The report which may not include data regarding a specific insurer or insurer group, except data that is public record, must analyze the impact of flexible rating on:

(1) the extent and nature of competition;

(2) size and significance of coverage;

(3) level and range or rates and rate changes among insurers;

(4) extent of consumer complaints to the Department of Insurance;

(5) volume of cancellations and nonrenewals;

(6) changes in the number of policies by territory and by class, including age and sex, in each territory; and

(7) the number of new insured, nonrenewed insured and business written by each insurer."

Premium reductions for persons fifty-five years of age and older

SECTION 5. The 1976 Code is amended by adding:

"Section 38-73-736. Any schedule of rates, rate classifications, or rating plans for automobile insurance as defined in Section 38-77-30 filed with the Department of Insurance must provide for an appropriate reduction in premium charges for those insured persons who are fifty-five years of age and older and who qualify as provided in Section 38-73-737."

Associated automobile insurers plan; etc.

SECTION 6. Section 38-77-10 of the 1976 Code, as last amended by Act 326 of 1996, is further 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 to provide:

(1) that every automobile insurance risk which is insurable on the basis of the criteria established in this chapter is entitled to automobile insurance;

(2) for a residual market mechanism, known as the Associated Auto Insurers Plan, for every person who is legally entitled to automobile insurance but has not been able to obtain a motor vehicle liability policy to apply to the director of the Department of Insurance to have his risk assigned to an insurance carrier licensed to write and writing motor vehicle liability insurance in the State who shall issue a motor vehicle liability policy which will meet at least the minimum requirements for establishing financial responsibility in this chapter;

(3) prohibitions and penalties in respect to unfairly discriminatory or unfairly competitive practices having as their purpose or effect evasion of the coverages as provided in this chapter; and

(4) 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."

Definitions changed, deleted, added

SECTION 7. Section 38-77-30 of the 1976 Code, as last amended by Act 326 of 1996, is further amended to read:

"Section 38-77-30. As used in this chapter, unless the context requires otherwise:

(1) 'Automobile insurance' means automobile bodily injury and property damage liability insurance, including medical payments and uninsured motorist coverage, and automobile physical damage insurance such as automobile comprehensive physical damage, collision, fire, theft, combined additional coverage, and similar automobile physical damage insurance and economic loss benefits as provided by this chapter written or offered by automobile insurers. An automobile insurance policy includes a motor vehicle liability policy as defined in item (7) of Section 56-9-20 and any nonowner automobile insurance policy which covers an individual private passenger automobile not owned by the insured, a family member of the insured, or a resident of the same household as the insured.

(2) 'Automobile insurer' means an insurer licensed to do business in South Carolina and authorized to issue automobile insurance policies.

(3) 'Bodily injury' includes death resulting therefrom.

(3.5) 'Cancellation' or 'to cancel' means a termination of a policy during the policy period.

(4) 'Damages' includes both actual and punitive damages.

(4.5) 'Facility physical damage rate' means the final rate or premium charge for physical damage coverage which must be established by adding the physical damage loss component developed under Section 38-77-596 to the expense component developed under Section 38-77-596.

(5.2) 'Facility physical damage rate' means the final rate or premium charge for physical damage coverage which must be established by adding the physical damage loss component developed under Section 38-73-780 to the expense component developed under Section 38-73-1420.

(5.5)(a)'Individual private passenger automobile' means the following types of motor vehicles owned by or leased under a long-term contract by an individual or individuals:

(i) motor vehicles of the private passenger type or station wagon type;

(ii) panel trucks, delivery sedans, vehicles with a pickup body, vans, or similar motor vehicles designed for use on streets and highways and so licensed;

(iii) motor homes, so long as the motor vehicles described in (ii) and (iii) are not used in the occupation, profession, or business of the insured other than farming and ranching; and

(iv) motorcycles.

(b) A motor vehicle is not considered 'owned by or leased under a long-term contract by an individual or individuals' if the motor vehicle is owned by a partnership or corporation, unless the motor vehicle is owned by a farm family copartnership or a farm family corporation and is garaged principally on a farm or ranch.

(c) A motor vehicle is not considered 'used in the occupation, profession, or business of the insured', because it is used in the course of driving to and from work.

(d) Individual private passenger automobile does not include:

(i) motor vehicles that are used for public or livery conveyance or rented to others without a driver;

(ii) fire department vehicles, police vehicles, ambulances, and rescue squad vehicles which are publicly owned;

(iii) motor-driven cycles, motor scooters, and mopeds;

(iv) dune buggies, all-terrain vehicles, go carts, and snowmobiles;

(v) golf carts; and

(vi) small commercial risks.

(6) 'Institutional source' means any person or governmental entity that provides information about an individual to an agent, insurer, or insurance-support organization other than:

(a) an agent;

(b) the individual who is the subject of the information; or

(c) a natural person acting in a personal capacity rather than in a business or professional capacity.

(7) 'Insured' means the named insured and, while resident of the same household, the spouse of any named insured and relatives of either, while in a motor vehicle or otherwise, and any person who uses with the consent, expressed or implied, of the named insured the motor vehicle to which the policy applies and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above.

(8) 'Insurance-support organization' means any person who regularly engages, in whole or in part, in the practice of assembling or collecting information about natural persons for the primary purpose of providing the information to an insurer or agent for insurance transactions, including (i) the furnishing of consumer reports or investigative consumer reports to an insurer or agent for use in connection with an insurance transaction or (ii) the collection of personal information from insurers, agents, or other insurance-support organizations for the purpose of detecting or preventing fraud, material misrepresentation, or material nondisclosure in connection with insurance underwriting or insurance claim activity. However, the following persons shall not be considered insurance-support organizations for purposes of this chapter: agents, governmental institutions, insurers, rating organizations, medical care institutions, and medical professionals.

(9) 'Motor vehicle' means every self-propelled vehicle which is designed for use upon a highway, including trailers and semitrailers designed for use with these vehicles but excepting traction engines, road rollers, farm trailers, tractor cranes, power shovels and well-drillers, and every vehicle which is propelled by electric power obtained from overhead wires but not operated upon rails. For purposes of this chapter, the term automobile has the same meaning as motor vehicle.

(10) 'Nonpayment of premium' means failure of the named insured to pay when due any of his obligations in connection with the payment of premiums on a policy, or any installment of the premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit, or failure to maintain membership in an organization if membership is a condition precedent to insurance coverage.

(10.5) 'Policy of automobile insurance' or 'policy' means a policy or contract for bodily injury or property damage liability insurance issued or delivered in this State covering liability arising from the ownership, maintenance, or use of any motor vehicle, insuring as the named insured one individual or husband and wife who are residents of the same household, and under which the insured vehicle designated in the policy is either:

(a) a motor vehicle of a private passenger, station wagon, or motorcycle type that is not used commercially, rented to others, or used as a public or livery conveyance where the terms 'public or livery conveyance' do not include car pools, or

(b) any other four-wheel motor vehicle which is not used in the occupation, profession, or business, other than farming, of the insured, or as a public or livery conveyance, or rented to others. The term 'policy of automobile insurance' or 'policy' does not include:

(i) any policy issued through the Associated Auto Insurers Plan,

(ii) any policy covering the operation of a garage, sales agency, repair shop, service station, or public parking place,

(iii) any policy providing insurance on an excess basis such as an umbrella policy, or

(iv) any other contract providing insurance to the named insured even though the contract may incidentally provide insurance on motor vehicles.

(11) 'Quota share reinsurance' means that form of reinsurance in which the reinsurer assumes a fixed percentage of the insured risk.

(12) '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, 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.

(13) 'Small commercial risk' means:

(a) Garage risks including nonmotor vehicle insurance when written in combination with automobile liability coverage.

(b) Ambulance risks.

(c) Commercial risks which have a manufacturer's gross vehicular weight less than twenty thousand pounds and are not required to have a mandatory filing by a governmental authority other than an SR-22.

(d) Church buses used by a church to transport adults or children to and from services and in activities incidental to church functions, so long as a mandatory filing by any governmental authority other than an SR-22 is not required.

(e) Privately-owned school buses used to carry school children and students, their parents or guardians, members of the faculty, school board members, nurses, doctors, and dentists, as well as guests in connection with any school activity and operations incidental thereto, including games, outings, and similar road trips, so long as a mandatory filing by any governmental authority other than an SR-22 is not required.

'Small commercial risk' does not include pulpwood trucks or dump trucks.

(14) 'Uninsured motor vehicle' means a motor vehicle as to which:

(a) there is not bodily injury liability insurance and property damage liability insurance both at least in the amounts specified in Section 38-77-140, or

(b) there is nominally that insurance, but the insurer writing the same successfully denies coverage thereunder, or

(c) there was that insurance, but the insurer who wrote the same is declared insolvent, or is in delinquency proceedings, suspension, or receivership, or is proven unable fully to respond to a judgment, and

(d) there is no bond or deposit of cash or securities in lieu of the bodily injury and property damage liability insurance.

(e) the owner of the motor vehicle has not qualified as a self-insurer in accordance with the applicable provisions of law.

A motor vehicle is considered uninsured if the owner or operator is unknown. However, recovery under the uninsured motorist provision is subject to the conditions set forth in this chapter.

Any motor vehicle owned by the State or any of its political subdivisions is considered an uninsured motor vehicle when the vehicle is operated by a person without proper authorization.

(15) 'Underinsured motor vehicle' means a motor vehicle as to which there is bodily injury liability insurance or a bond applicable at the time of the accident in an amount of at least that specified in Section 38-77-140 and the amount of the insurance or bond is less than the amount of the insureds' damages."

Reinsurance facility; loss, expense components; facility rate increases capped, exceptions, etc.

SECTION 8. The 1976 Code is amended by adding:

"Section 38-77-596. (A) The governing board of the South Carolina Reinsurance Facility annually shall develop and file private passenger automobile loss components and expense components which include provisions for profits and contingencies, which would combine for the final rate for automobile insurance coverages based on the total experience of all risks ceded to the facility which are actuarially sound and supported by statistical evidence. The governing board shall contract with independent actuarial services to develop the loss component. Due consideration must be given to actual loss experience within the facility for the most recent three-year period for which such information is available.

(B) The loss component developed under this section is applicable to the risk and territorial classification plan adopted by the facility. Nothing in this section precludes the governing board of the facility from filing for approval, or the director of the Department of Insurance from requiring the governing board to file for approval, variations in loss components and rates which are based upon differences in risk characteristics including, but not limited to, difference in driving records.

(C) The governing board of the facility annually shall review the private passenger automobile loss components to determine if they are actuarially sound and supported by the statistical evidence. If rate changes are required, the governing board shall submit appropriate filings for approval with the director. Facility rate increases on or after March 1, 1999, must be capped at an overall ten percent increase each year. This cap does not apply on an individual insured basis. These rate filings are subject to public hearing pursuant to applicable provisions of the Administrative Procedures Act."

Requirement to write insurance deleted; etc.

SECTION 9. Section 38-77-112 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-77-112. Notwithstanding Section 38-77-280, no automobile insurer is required to write coverage for automobile insurance as defined in Section 38-77-30 for any applicant or existing policyholder. An insurer or an agent shall retain, for a period of three years, the driver's license numbers for all persons who have submitted an application for insurance but who were refused coverage and shall furnish such information upon the request of the director of the Department of Insurance or his designee. This section does not apply to an individual who is handicapped and who owns a vehicle in this State but who does not have a valid driver's license. If an automobile is principally garaged and operated in this State, the owner of the vehicle can be offered coverage thereon regardless of whether or not he possesses a valid South Carolina driver's license if he designates to the insurer who the principal operator of the vehicle will be and this person has a valid South Carolina driver's license or otherwise meets the requirements of this section. This requirement does not apply to personnel of the Armed Forces of the United States on active duty and officially stationed in this State who possess a valid motor vehicle driver's license issued by another state or territory of the United States or the District of Columbia. This requirement is waived ninety days for individuals who move into South Carolina with the intent of making South Carolina their place of residence if they possess a valid driver's license issued by another state or territory of the United States or the District of Columbia."

Notice of cancellation; etc.

SECTION 10. Section 38-77-120(a) of the 1976 Code, as last amended by Section 806 of Act 181 of 1993, is further amended to read:

"(a) No cancellation or refusal to renew by an insurer of a policy of automobile insurance is effective unless the insurer delivers or mails to the named insured at the address shown in the policy a written notice of the cancellation or refusal to renew. This notice:

(1) must be approved as to form by the director or his designee before use;

(2) must state the date not less than fifteen days after the date of the mailing or delivering on which the cancellation or refusal to renew becomes effective;

(3) must state the specific reason of the insurer for cancellation or refusal to renew and provide for the notification required by subsection (B) of Section 38-77-390. However, those notification requirements must not apply when the policy is being canceled or not renewed for the reason set forth in Section 38-77-123(B),

(4) must inform the insured of his right to request in writing within fifteen days of the receipt of notice that the director review the action of the insurer. The notice of cancellation or refusal to renew must contain the following statement to inform the insured of such right:

'IMPORTANT NOTICE

Within fifteen days of receiving this notice, you or your attorney may request in writing that the director review this action to determine whether the insurer has complied with South Carolina laws in canceling or nonrenewing your policy. If this insurer has failed to comply with the cancellation or nonrenewal laws, the director may require that your policy be reinstated. However, the director is prohibited from making underwriting judgments. If this insurer has complied with the cancellation or nonrenewal laws, the director does not have the authority to overturn this action.'

(5) must inform the insured of the possible availability of other insurance which may be obtained through his agent, through another insurer, or through the Associated Auto Insurers Plan. It must also state that the Department of Insurance has available an automobile insurance buyer's guide regarding automobile insurance shopping and availability, and provide applicable mailing addresses and telephone numbers, including a toll-free number, if available, for contacting the Department of Insurance.

Nothing in this subsection prohibits any insurer or agent from including in the notice of cancellation or refusal to renew, any additional disclosure statements required by state or federal laws, or any additional information relating to the availability of other insurance. The insurer must disclose in writing whether the insured is ceded to the facility."

Code sections added; uninsured motorist fund; etc.

SECTION 11. The 1976 Code is amended by adding:

"Section 38-77-121. (A) Any application for the original issuance of a policy of insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle as defined in Section 38-77-30 must have the following statement printed on or attached to the first page of the application form, in boldface type: 'THE INSURER CAN CANCEL THIS POLICY FOR WHICH YOU ARE APPLYING WITHOUT CAUSE DURING THE FIRST 90 DAYS. THAT IS THE INSURER'S CHOICE. AFTER THE FIRST 90 DAYS, THE INSURER CAN ONLY CANCEL THIS POLICY FOR REASONS STATED IN THE POLICY.'

(B) Any application for the original issuance of a policy of insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle defined in Section 38-77-30 that requires the insured to disclose information as to any previous cancellation or refusal to renew must also permit the insured to offer or provide a full explanation of the reason for the cancellation or refusal to renew.

(C) The notice required by this section must accompany the initial declarations page in the event the applicant is not provided a written copy at the time of the application and the coverage has been bound by the insurer.

(D) The insurer may cancel without cause at any time in the first ninety days during which the policy is in effect subject to Section 38-77-122.

This section does not apply to the renewal of any policy of insurance.

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

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

(B) In determining the premium rates to be charged for an automobile insurance policy as defined in Section 38-77-30, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. Nor may an insurer, agent, or broker refuse to write or renew an automobile insurance policy as defined in Section 38-77-30 based upon age, sex, race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director. Any insurer or agent who violates this section shall be subject to the penalties as provided in Section 38-2-10. If the director of the Department of Insurance or his designee finds that an insurer or agent is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. Provided, however, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer or agent to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.

Section 38-77-123. (A)(1) No insurer shall refuse to renew an automobile insurance policy because of any one or more of the following factors:

(a) age;

(b) sex;

(c) location of residence in this State;

(d) race;

(e) color;

(f) creed;

(g) national origin;

(h) ancestry;

(i) marital status;

(j) income level.

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

(a) lawful occupation, including the military service;

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

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

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

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

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

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

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

(3) Nothing contained in subsection (A)(1)(f), (g), and (h) of this subsection prohibits an insurer from refusing to renew a policy where a claim is false or fraudulent. Nothing in this section prohibits an insurer from setting rates in accordance with relevant actuarial data except that no insurer may set rates based in whole or in part on race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director.

(B) No insurer shall cancel a policy except for one or more of the following reasons:

(1) The named insured or any other operator who either resides in the same household or customarily operates a motor vehicle insured under the policy has had his driver's license suspended or revoked during the policy period or, if the policy is a renewal, during its policy period or the ninety days immediately preceding the last anniversary of the effective date.

(2) The named insured fails to pay the premium for the policy or any installment of the premium, whether payable to the insurer or its agent either, directly or indirectly under any premium finance plan or extension of credit.

(C) There shall be no liability on the part of and no cause of action of any nature shall arise against the director or his designees; any insurer, its authorized representatives, its agents, or its employees; or any person furnishing to the insurer information as to reasons for cancellation or refusal to renew, for any statement made by any of them in complying with this section or for providing information pertaining to the cancellation or refusal to renew. For the purposes of this section, no insurer shall be required to furnish a notice of cancellation or refusal to renew to anyone other than the named insured, any person designated by the named insured, any other person to whom such notice is required to be given by the terms of the policy and the director.

(D) Within fifteen days of receipt of the notice of cancellation or refusal to renew, any insured or his attorney shall be entitled to request in writing to the director that he review the action of the insurer in canceling or refusing to renew the policy of the insured. Upon receipt of the request, the director shall promptly begin a review to determine whether the insurer's cancellation or refusal to renew complies with the requirements of this section and of Section 38-77-120 if the notice was sent by mail. The policy must remain in full force and effect during the pendency of the review by the director except where the cancellation or refusal to renew is for the reason set forth in subitem (2) of subsection (B) of this section, in which case the policy terminates as of the effective date stated in the notice. Where the director finds from the review that the cancellation or refusal to renew has not complied with the requirements of this section or of Section 38-77-120, he shall immediately notify the insurer, the insured, and any other person to whom such notice was required to be given by the terms of the policy that the cancellation or refusal to renew is not effective. Nothing in this section authorizes the director to substitute his judgment as to underwriting for that of the insurer.

(E) Each insurer shall maintain for at least three years, records of cancellation and refusal to renew and copies of every notice or statement referred to in Section 38-77-120 of this section that it sends to any of its insureds.

(F) The provisions of this section do not apply to any insurer that limits the issuance of policies of motor vehicle liability insurance to one class or group of persons engaged in any one particular profession, trade, occupation, or business. Nothing in this section requires an insurer to renew a policy of automobile insurance if the insured does not conform to the occupational or membership requirements of an insurer who limits its writings to an occupation or membership of an organization. No insurer is required to renew a policy if the insured becomes a nonresident of South Carolina.

(G) Any insurer who violates this section shall be subject to the penalties as provided in Section 38-2-10. If the director of the Department of Insurance or his designee finds that an insurer, agent, or broker is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. Provided, however, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer, agent, or broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.

Section 38-77-124. (A) Notwithstanding the provisions of Sections 38-77-122 and 38-77-123, an insurer may refuse to issue or renew an automobile insurance policy as defined in Section 38-77-30 on the basis of location of residence where the insurer has filed with the director a territorial plan setting forth the precise geographic areas of the state in which it will issue or renew policies. This territorial plan may not limit issuances or renewals to areas at any level smaller than a county, except that an insurer may include in its territorial plan an area smaller than a county which is contiguous to a whole county contained within the territorial plan provided, that the inclusion in the territorial plan of any such area at a level smaller than a county does not have the effect of excluding populations based upon any factors set out in Section 38-77-122(A) or Section 38-77-123(A)(1). The director must reject any territorial plan which violates the provisions of this section.

(B) No insurer or agent shall refuse to issue or fail to renew a policy of motor vehicle liability insurance solely because of the age of the motor vehicle to be insured, provided the motor vehicle is licensed.

Section 38-77-126. Insurers must disclose to the insured if the rate level is higher than the lowest rate level tier for that insurer or the group to which the insurer is a member. The insurer must provide in writing the reason for the higher tier.

Section 38-77-141. No new policy or original premium notice of insurance covering liability arising out of the ownership, maintenance, or use of a motor vehicle may be issued or delivered unless it contains the following statement printed in boldface type, or unless the statement is attached to the front of or is enclosed with the policy or premium notice:

'IMPORTANT NOTICE

IN ADDITION TO THE INSURANCE COVERAGE REQUIRED BY LAW TO PROTECT YOU AGAINST A LOSS CAUSED BY AN UNINSURED MOTORIST, IF YOU HAVE PURCHASED LIABILITY INSURANCE COVERAGE THAT IS HIGHER THAN THAT REQUIRED BY LAW TO PROTECT YOU AGAINST LIABILITY ARISING OUT OF THE OWNERSHIP, MAINTENANCE, OR USE OF THE MOTOR VEHICLES COVERED BY THIS POLICY, AND YOU HAVE NOT ALREADY PURCHASED UNINSURED MOTORIST INSURANCE COVERAGE EQUAL TO YOUR LIABILITY INSURANCE COVERAGE:

(1) YOUR UNINSURED AND UNDERINSURED MOTORIST INSURANCE COVERAGE HAS INCREASED TO THE LIMITS OF YOUR LIABILITY COVERAGE AND THIS INCREASE WILL COST YOU AN EXTRA PREMIUM CHARGE; AND

(2) YOUR TOTAL PREMIUM CHARGE FOR YOUR MOTOR VEHICLE INSURANCE COVERAGE WILL INCREASE IF YOU DO NOT NOTIFY YOUR AGENT OR INSURER OF YOUR DESIRE TO REDUCE COVERAGE WITHIN TWENTY DAYS OF THE MAILING OF THE POLICY OR THE PREMIUM NOTICE, AS THE CASE MAY BE;

(3) IF THIS IS A NEW POLICY AND YOU HAVE ALREADY SIGNED A WRITTEN REJECTION OF SUCH HIGHER LIMITS IN CONNECTION WITH IT, PARAGRAPHS (1) AND (2) OF THIS NOTICE DO NOT APPLY.'

After twenty days, the insurer is relieved of the obligation imposed by this subsection to attach or imprint the foregoing statement to any subsequently delivered renewal policy, extension certificate, other written statement of coverage continuance, or to any subsequently mailed premium notice.

Section 38-77-142. (A) No policy or contract of bodily injury or property damage liability insurance covering liability arising from the ownership, maintenance, or use of a motor vehicle may be issued or delivered in this State to the owner of the vehicle or may be issued or delivered by an insurer licensed in this State upon a motor vehicle that is principally garaged, docked, or used in this State unless the policy contains a provision insuring the named insured and any other person using or responsible for the use of the motor vehicle with the expressed or implied consent of the named insured against liability for death or injury sustained or loss or damage incurred within the coverage of the policy or contract as a result of negligence in the operation or use of the vehicle by the named insured or by any such person. Each policy or contract of liability insurance, or endorsement to the policy or contract, insuring private passenger automobiles principally garaged, docked, or used in this State, that has as the named insured an individual or husband and wife who are residents of the same household and that includes, with respect to any liability insurance provided by the policy, contract, or endorsement for use of a nonowner automobile a provision requiring permission or consent of the owner of the automobile for the insurance to apply.

(B) No policy or contract of bodily injury or property damage liability insurance relating to the ownership, maintenance, or use of a motor vehicle may be issued or delivered in this State to the owner of a vehicle or may be issued or delivered by an insurer licensed in this State upon a motor vehicle principally garaged or used in this State without an endorsement or provision insuring the named insured, and any other person using or responsible for the use of the motor vehicle with the expressed or implied consent of the named insured, against liability for death or injury sustained, or loss or damage incurred within the coverage of the policy or contract as a result of negligence in the operation or use of the motor vehicle by the named insured or by any other person. If an insurer has actual notice of a motion for judgment or complaint having been served on an insured, the mere failure of the insured to turn the motion or complaint over to the insurer may not be a defense to the insurer, nor void the endorsement or provision, nor in any way relieve the insurer of its obligations to the insured, provided the insured otherwise cooperates and in no way prejudices the insurer.

Where the insurer has elected to provide a defense to its insured under such circumstances and files responsive pleadings in the name of its insured, the insured is not subject to sanctions for failure to comply with discovery pursuant to the South Carolina Rules of Civil Procedure unless it can be shown that the suit papers actually reached the insured, and that the insurer has failed after exercising due diligence to locate its insured, and as long as the insurer provides such information in response to discovery as it can without the assistance of the insured.

(C) Any endorsement, provision, or rider attached to or included in any policy of insurance which purports or seeks to limit or reduce the coverage afforded by the provisions required by this section is void.

Section 38-77-143. A policy or contract of insurance relating to the maintenance, selling, repairing, servicing, storing, or parking of motor vehicles shall be primary.

Section 38-77-151. All funds collected by the director of the Department of Public Safety under the provisions of Chapter 10 of Title 56 must be placed on deposit with the State Treasurer and held in a special fund to be known as the 'Uninsured Motorists Fund' to be disbursed as provided by law. Interest earned by the 'Uninsured Motorists Fund' must be retained by that fund. The director of the Department of Insurance, as provided in Sections 38-77-154 and 38-77-155, may expend such funds for the administration of this chapter; provided, however, that the Department of Insurance shall retain ten percent of the Uninsured Motorists Fund to be used by the Department of Insurance to enforce the provisions of Title 38 including Sections 38-77-112, 38-77-122, and 38-77-123, to publish for consumers an automobile insurance buyer's guide, a brochure comparing automobile insurance premiums, and to provide for a public awareness campaign.

Section 38-77-154. The Uninsured Motorists Fund shall be under the supervision and control of the Department of Insurance. Payments from the Uninsured Motorists Fund shall be made on warrants of the Comptroller General issued on vouchers signed by a person designated by the director. The purpose of the Uninsured Motorists Fund is to reduce the cost of the insurance required by Section 38-77-150 and to protect and educate consumers as provided by Section 38-77-151.

Section 38-77-155. The director shall distribute monies annually from the Uninsured Motorists Fund among the several insurers writing motor vehicle bodily injury and property damage liability insurance on motor vehicles registered in this State. Monies must be distributed in the proportion that each insurer's premium income for the basic uninsured motorists limits coverage bears to the total premium income for basic uninsured motorists limits coverage written in this State during the preceding year. Premium income must be gross premiums less cancellation and return premiums for coverage required by Section 38-77-150. Only insurers that maintain records satisfactory to the director shall receive any payment from the Uninsured Motorists Fund. Records must be considered satisfactory if they adequately disclose the loss experience for the coverage."

Minimum property damage coverage limit raised

SECTION 12. Section 38-77-140 of the 1976 Code is amended to read:

"Section 38-77-140. No automobile insurance policy may be issued or delivered in this State to the owner of a motor vehicle or may be issued or delivered by an insurer licensed in this State upon any motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the persons defined as insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles within the United States or Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle, as follows: fifteen thousand dollars because of bodily injury to one person in any one accident and, subject to the limit for one person, thirty thousand dollars because of bodily injury to two or more persons in any one accident, and ten thousand dollars because of injury to or destruction of property of others in any one accident. Nothing in this article prevents an insurer from issuing, selling, or delivering a policy providing liability coverage in excess of these requirements."

Minimum property damage coverage limit raised; etc.

SECTION 13. Section 38-77-150 of the 1976 Code, as last amended by Section 807 of Act 181 of 1993, is further amended to read:

"Section 38-77-150. (A) No automobile insurance policy or contract may be issued or delivered unless it contains a provision by endorsement or otherwise, herein referred to as the uninsured motorist provision, undertaking to pay the insured all sums which he is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within limits which may be no less than the requirements of Section 38-77-140. The uninsured motorist provision must also provide for no less than ten thousand dollars' coverage for injury to or destruction of the property of the insured in any one accident but may provide an exclusion of the first two hundred dollars of the loss or damage. The director or his designee may prescribe the form to be used in providing uninsured motorist coverage and when prescribed and promulgated no other form may be used.

(B) No action may be brought under the uninsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the uninsured motorist provision. The insurer has the right to appear and defend in the name of the uninsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record.

(C) Benefits paid pursuant to this section are subject to subrogation and assignment if an uninsured motorist has selected the option to be uninsured by paying the fee pursuant to Section 56-10-510."

Provisions deleted; etc.

SECTION 14. Section 38-77-280 of the 1976 Code, as last amended by Act 326 of 1996, is further amended to read:

"Section 38-77-280. (A) Any automobile insurer may, at its own election, make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage at such rates and under such rules as have been approved by the director. Automobile insurers contracted pursuant to Section 38-77-590 for risks written by them through producers assigned by the facility governing board pursuant to that section may make available collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage. Notwithstanding Section 38-77-590(g), a designated producer may have one or more voluntary outlets for automobile physical damage.

(B) Any automobile physical damage insurance coverage deductible or policy deductible does not apply to automobile safety glass.

(C) Notwithstanding Section 38-77-111, automobile physical damage insurance coverage may be ceded to the facility. However, automobile physical damage coverages ceded to the facility by an insurer or servicing carrier must be at the facility physical damage rate as defined in Section 38-77-30.

(D) In determining the premium rates to be charged on physical damage coverage or single interest collision coverage, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. Nor may an insurer, agent, or broker refuse to write or renew physical damage insurance coverage or single interest collision coverage based upon race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director. If the director of the Department of Insurance or the director's designee finds that an insurer, agent, or broker is participating in a pattern of unfair discrimination, the director or the director's designee may impose a fine of up to two hundred thousand dollars. The director or the director's designee at any time may examine an insurer, agent, or broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker."

Provisions deleted

SECTION 15. Section 38-77-350(C) of the 1976 Code, as last amended by Act 496 of 1994, is further amended to read:

"(C) An automobile insurer is not required to make a new offer of coverage on any automobile insurance policy which renews, extends, changes, supersedes, or replaces an existing policy."

Obligations of insurance-support organizations; cancellation and nonrenewal, certain insurer or agent duties

SECTION 16. The 1976 Code is amended by adding:

"Section 38-77-370. (A) If an individual, after proper identification, submits a written request to an insurance-support organization for access to recorded personal information about the individual that is reasonably described by the individual and reasonably able to be located and retrieved by the insurance-support organization, the insurance-support organization, within thirty business days from the date the request is received shall:

(1) inform the individual of the nature and substance of the recorded personal information in writing, by telephone, or by other oral communication, whichever the insurance-support organization prefers;

(2) permit the individual to see and obtain a copy of the recorded personal information pertaining to him or to obtain a copy of the recorded personal information by mail, whichever the individual prefers, unless the recorded personal information is in coded form, in which case an accurate translation in plain language must be provided in writing;

(3) disclose to the individual the identity, if recorded, of those persons to whom the insurance-support organization has disclosed the personal information within two years before the request, and if the identity is not recorded, the names of those insurance-support organizations or other persons to whom the information is disclosed normally; and

(4) provide the individual with a summary of the procedures by which he may request correction, amendment, or deletion of recorded personal information.

(B) Any personal information provided pursuant to subsection (A) of this section must identify the source of the information if it is an institutional source.

(C) Medical record information supplied by a medical care institution or medical professional and requested under subsection (A) of this section, together with the identity of the medical professional or medical care institution that provided the information, must be supplied either directly to the individual or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, whichever the insurer, agent, or insurance-support organization prefers. If it elects to disclose the information to a medical professional designated by the individual, the insurer, agent, or insurance-support organization shall notify the individual, at the time of the disclosure, that it has provided the information to the medical professional.

(D) Except for personal information provided under this section, an insurer, agent, or insurance-support organization may charge a reasonable fee to cover the costs incurred in providing a copy of recorded personal information to individuals.

(E) The obligations imposed by this section upon an insurer or agent may be satisfied by another insurer or agent authorized to act on its behalf. With respect to the copying and disclosure of recorded personal information pursuant to a request under subsection (A) of this section, an insurer, agent, or insurance-support organization may make arrangements with an insurance-support organization or a consumer reporting agency to copy and disclose recorded personal information on its behalf.

(F) The rights granted to individuals in this section must extend to all natural persons to the extent information about them is collected and maintained by an insurer, agent, or insurance-support organization in connection with an insurance transaction. The rights granted to all natural persons by this subsection must not extend to information about them that relates to and is collected in connection with or in reasonable anticipation of a claim or civil or criminal proceeding involving them.

(G) For purposes of this section, 'insurance-support organization' does not include 'consumer reporting agency'.

Section 38-77-390. (A) In the event of a cancellation or nonrenewal, including those that involve policies referred to in Section 38-77-120, the insurer or agent responsible for the cancellation or nonrenewal shall give a written notice in a form approved by the director that:

(1) either provides the applicant, policyholder, or individual proposed for coverage with the specific reason or reasons for the cancellation or nonrenewal in writing or advises the person that upon written request he may receive the specific reason or reasons in writing; and

(2) provides the applicant, policyholder, or individual proposed for coverage with a summary of the rights established under subsection (B) of this section and Section 38-77-380.

(B) Upon receipt of a written request within ninety business days from the date of the mailing of notice or other communication of a cancellation or nonrenewal to an applicant, policyholder, or individual proposed for coverage, the insurer or agent shall furnish to the person within twenty-one business days from the date of receipt of the written request:

(1) the specific reason or reasons for the cancellation or nonrenewal in writing, if that information was not furnished initially in writing pursuant to subsection (A)(1);

(2) the specific items of personal and privileged information that support those reasons; however:

(a) the insurer or agent shall not be required to furnish specific items of privileged information if it has a reasonable suspicion, based upon specific information available for review by the director, that the applicant, policyholder, or individual proposed for coverage has engaged in criminal activity, fraud, material misrepresentation, or material nondisclosure; and

(b) specific items of medical-record information supplied by a medical-care institution or medical professional must be disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, whichever the insurer or agent prefers; and

(3) the names and addresses of the institutional sources that supplied the specific items of information given pursuant to subsection (B)(2) of this section. However, the identity of any medical professional or medical-care institution must be disclosed either directly to the individual or to the designated medical professional, whichever the insurer or agent prefers.

(C) The obligations imposed by this section upon an insurer or agent may be satisfied by another insurer or agent authorized to act on its behalf. However, the insurer or agent making the cancellation or nonrenewal shall remain responsible for compliance with the obligations imposed by this section.

(D) When a cancellation or nonrenewal results solely from an insured's oral request or inquiry, the explanation of reasons and summary of rights required by subsection (A) of this section may be given orally."

Reinsurance facility; changes

SECTION 17. Section 38-77-530 of the 1976 Code, as last amended by Section 818 of Act 181 of 1993, is further amended to read:

"Section 38-77-530. The plan of operation of the facility is subject to the approval of the director or his designee which may be granted only if the plan provides for equitable apportionment of the operating expenses and profits or losses among the members. The plan may, if the director or his designee considers it feasible and equitable, make provision for separate apportionments between private passenger automobile insurance business and commercial automobile insurance business or, alternatively or in addition to that division, the plan may make provision for separate apportionments between automobile liability insurance business, including medical payments and uninsured motorist insurance, and automobile physical damage insurance business. Any such apportionments must give consideration to a comparison between the writings or car-year exposures of each insurer of automobile insurance and the total writings or car-year exposures of all automobile insurers or, in the case of any separate apportionments approved by the director or his designee, a comparison between the writings or car-year exposures of each insurer within the applicable category of automobile insurance and the writings or car-year exposures of all insurers within that category.

In connection with his approval of the plan, the director or his designee may require that the plan make provision for such comparisons for a one-year period or for a longer period not to exceed five years and may provide for weighing the experience so as to attach a greater weight to the more recent experience.

In connection with the approval of the plan's provisions respecting equitable apportionment of the operating expenses or gains or losses of the facility, the director or his designee may require that the plan make provision for a comparison between each insurer's percentage of the aggregate written premiums or car-year exposures respecting automobile insurance or any such category thereof and the insurer's percentage of total cessions to the facility of such insurance or category thereof so as to provide that the insurer's portion of the operating expenses or gains or losses must be the average of the two percentages; or the director or his designee may approve or require any other similar or comparable provision for the apportionment of the expenses or gains or losses of the facility which relates insurers' shares to their respective utilization of the facility.

The plan of operation, provided that insurers writing liability and physical damage coverages, including nonowners coverage, in the State of South Carolina, must commence recoupment of facility assessments by way of a surcharge on liability insurance coverage on private passenger and commercial automobile business issued by a member or through the facility. Such surcharge must be a percentage of the premium adopted by the governing board of the facility; however, for the period beginning on March 1, 1999 and ending on February 28, 2002 the amount of the percentage of premium surcharge for the recoupment of facility assessments adopted by such board cannot exceed ten percent of the liability insurance coverage premium per insured motor vehicle or risk annually for all insureds or policyholders. Beginning on March 1, 2002 and continuing thereafter, every insured or policyholder who does not have any insurance merit rating points pursuant to the Uniform Merit Rating Plan in effect upon the effective date of this act must not be surcharged for the recoupment of any facility assessments or losses; therefore, a clean or nonpointed risk shall no longer pay any form of recoupment seeking to recoup facility losses. Any surcharge as provided above during the period of March 1, 1999 through February 28, 2002 must be displayed as a part of the applicable premium charge for liability insurance coverage. However, beginning on March 1, 2002 every insured or policyholder who does have insurance merit rating points pursuant to the Uniform Merit Rating Plan in effect upon the effective date of this act shall be surcharged for the recoupment of any facility assessments or losses; therefore, these pointed risks shall be the only persons in the State of South Carolina who shall pay any recoupment fee for facility losses or assessments remaining in the facility on March 1, 2002 or any losses accruing in the facility after March 1, 2002. Furthermore, the director of the Department of Insurance shall promulgate a plan by regulation to recoup any losses remaining in the facility on March 1, 2002 or any losses accruing after March 1, 2002 only from those insureds or policyholders having insurance merit rating points as provided above. This plan shall include, but is not limited to, a schedule of recoupment and method of surcharge method whether a fixed fee, a percentage basis, or otherwise consider appropriate by the director.

No insurer may include directly or indirectly in premiums any charges or surcharges for the recoupment of facility assessments or losses other than as authorized herein. If the director of the Department of Insurance, or his designee, determines that an insurer has violated this prohibition, the director or his designee may impose the penalties against the insurer as provided by law. Upon the final recoupment of facility losses when the South Carolina Reinsurance Facility ceases to exist, no insurance carrier offering automobile insurance coverage in the State shall include any surcharge for the recoupment of facility assessments or losses as any portion of the premium charged for automobile insurance coverage and these insurance carriers must remove this surcharge at the next policy renewal, thereby reducing automobile insurance premiums in the amount of the surcharge percentage of premium.

(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) The Reinsurance Facility shall convert to the percentage-of-premium basis of recoupment by March 1, 1999.

(5) Servicing carrier contracts for business written by designated producers may, at the carrier's option, be extended to March 1, 2002 upon the same terms and conditions as their current contracts."

New insurance business cannot be written by designated producer after March 1, 1999; etc.

SECTION 18. Section 38-77-590 of the 1976 Code, as last amended by Sections 821-825 of Act 181 of 1993, is further amended to read:

"Section 38-77-590. (a) Not more than six months after July 9, 1974, or at an earlier time as the director or his designee considers necessary by reason of complaints regarding want of access to automobile insurance in particular areas or want of outlets for producers, the director or his designee shall survey the various areas of the State to ascertain if sufficient marketing outlets exist in all areas or are available to all producers. Upon a finding by the director or his designee that insufficient marketing outlets exist in particular areas or that certain producers have been deprived of a market for risks previously serviced by them, the director or his designee may, after consultation with the facility, designate one or more insurers to service the areas through agents appointed by them or may designate the producers as the agents of any insurer. The arrangements must include provision for one hundred percent quota share reinsurance through the facility of any automobile insurance policy marketed through the arrangements, at the option of the insurer, and the reinsurance is not subject to the statutory provisions or regulations regarding excessive utilization of the facility.

(b) After the effective date of this section, those producers previously designated by the director or his designee may continue to serve in that capacity under the jurisdiction and control of the governing board of the facility, except that any change in the rate of commissions allowed designated producers is subject to the approval of the director or his designee.

(c) A producer may be designated by the governing board of the facility upon application for designation and is eligible for designation upon a finding by the governing board that the applicant meets the following qualifications:

(1) The applicant has been, for ten continuous years, a licensed resident property and casualty insurance agent and agency owner or principal with authority from one or more licensed insurers to write liability and physical damage insurance on private passenger automobiles;

(2) At the time of application the applicant is servicing and owns the renewals on private passenger and commercial automobile insurance business, the net premiums on which exceeded seventy-five thousand dollars of potential cedeable automobile insurance during any one of the previous five calendar years preceding the application;

(3) Neither the applicant, nor any employee of the applicant or the applicant's corporate agency, nor any partner or shareholder in any related insurance agency, related premium service company, or related other business, has any direct or indirect connection with any voluntary market outlet for the purpose of writing any type of automobile insurance in this State except for motorcycle insurance and types not cedeable to the facility;

(4) The applicant has not contributed to his termination as agent by any insurer because of any illegal breach of agency agreement or other related, improper, or unethical conduct; and

(5) The books, records, and accounts of the insurance business of the applicant have been audited at the expense of the applicant and found by the governing board to be indicative of a financially sound operation.

(d) Before designation as a producer, the applicant shall furnish at his expense a bond in an amount of not less than fifty thousand dollars for the faithful performance of the duties as a producer, executed by the applicant as principal and a corporate surety licensed to do business in this State as surety, and shall also have effective errors and omissions insurance by an insurer licensed to do business in this State, with the bond and errors and omissions insurance being subject to approval by the governing board.

(e) The governing board shall assign a specific location to each producer designated. The governing board shall determine from the director or his designee the locations assigned by him to those producers whom the director or his designee has designated. Designated producers may not open or maintain any other locations without the written authorization of the governing board; provided, however, that an applicant maintaining multiple offices on June 4, 1987, is entitled to maintain two locations as a designated agent which he owned and operated at that time and through which premiums in at least the amount of seventy-five thousand dollars were written. The governing board shall terminate the designation, and the director or his designee shall revoke all agents' licenses of any producer who does not comply with this requirement upon demand by the governing board. Upon termination, the producer's expirations on designated business become the property of the facility.

(f) The designation of a producer by the director or his designee or the governing board is transferable to a spouse, child, parent, brother, or sister of the producer upon the designated producer's retirement, incapacity, or death. The duties of a designated producer may be performed by one or more qualified employees of the producer or the producer's corporate agency.

(g) A designated carrier who fails a claims audit shall have no new designated producer assignments until the time it passes a re-audit within a reasonable time prescribed by the governing board. If this carrier fails two claims audits, including a re-audit, within any three-year period, that carrier is disqualified for renewal of its contract with the facility upon expiration of its existing contract.

A producer designated under this section may not write new private passenger and commercial automobile insurance business to be placed in the facility after March 1, 1999. A policy with an effective date after March 1, 2002 shall not be accepted by the facility."

Ineligible applicants for designated producer; no new business after certain time; etc.

SECTION 19. Section 38-77-595 of the 1976 Code, as added by Act 524 of 1990, is amended by adding:

"A producer designated under this section may not write new private passenger and commercial automobile insurance business to be placed in the facility after March 1, 1999. A policy with an effective date after March 1, 2002 shall not be accepted by the facility."

Joint underwriting association; assigned risk plan; transition; etc.

SECTION 20(A). Title 38 of the 1976 Code is amended by adding:

"CHAPTER 91

Joint Underwriting Association for

Private Passenger and Commerce Automobile Insurance

Section 38-91-10. (A) The purposes of this chapter are to:

(1) promote the public welfare by establishing a mechanism to provide automobile insurance to those required to have such insurance,

(2) provide controls over such mechanism in order to lower expenses and prevent abuses,

(3) provide for competitive bidding of servicing carriers,

(4) provide controls over the application process to prevent fraud and inaccuracies as well as other improper practices.

(B) The provisions of this chapter must cease to be of any force or effect after February 28, 2003. In other words, the joint underwriting association cannot accept any business after February 28, 2003. However, any policy currently issued by or written through the joint underwriting association, pursuant to this chapter, on February 28, 2003 shall continue to be a valid contract of insurance until the end of the policy period unless canceled by the insurer or insured. Furthermore, the director of the Department of Insurance may promulgate regulations which he deems necessary to implement this transition including, but not limited to, the termination of the joint underwriting association and its wind-up period.

Section 38-91-30. As used in this chapter:

(a) 'association' means the joint underwriting association established pursuant to the provisions of this act.

(b) 'automobile insurance' means direct insurance against injury or damage arising out of the ownership, operation, maintenance, or use of motor vehicles, or insurance against loss for damage to motor vehicles. Private passenger automobile insurance and commercial automobile insurance are two distinct kinds of automobile insurance.

(c) 'director' means the director of the Department of Insurance.

(d) 'plan of operation' means the plan of operation approved pursuant to the provisions of this act or ordered by the director.

(e) 'qualified applicant' means (1) a resident of this State who owns a motor vehicle registered in this State or has a valid driver's license or is required to file proof of financial responsibility in order to register his motor vehicle or obtain a driver's license, or (2) a nonresident of this State who owns a vehicle registered or principally garaged in this State; provided, however, that no one shall be a qualified applicant if he has any unpaid premium due for prior automobile insurance or if any person who usually drives the motor vehicle to be insured does not hold or is not eligible to obtain a driver's license under suspension.

(f) 'residual market mechanism' means a means of providing a market for insureds in South Carolina were the voluntary market is inadequate.

Section 38-91-110. (a) A joint underwriting association, hereinafter referred to as the 'Associated Auto Insurers Plan', is hereby created consisting of all insurers authorized to write and engaged in writing automobile insurance within this State. Each insurer shall be a member of the association and shall remain a member as a condition of its authority to continue to transact such insurance in this State.

(b) The purpose of the association shall be to guarantee that automobile insurance will be available to any qualified applicant who is unable to procure such insurance through ordinary methods while preserving to the public the benefits of competition among financially sound automobile insurers by encouraging maximum use of the normal private insurance system.

(c) Pursuant to the provisions of this act and its plan of operation, the association is empowered on behalf of its members:

(1) to issue automobile insurance policies to qualified applicants or to arrange for the issuance of such policies through members of the association;

(2) to establish procedures for the sharing among the members of profit or loss on association business and other costs, charges, expenses, liabilities, income, property and other assets of the association. The assessment of members for their appropriate shares may be based on the member's premium volume or exposure units for business other than association business or on a combination of such bases or on any other equitable basis with allowances for incentive programs for insurers to write in the voluntary market business written in the association. Allowances may be provided for existing debits and credits under any automobile insurance plans replaced or terminated as a result of this legislation;

(3) to reinsure association business;

(4) to establish the compensation to be paid to any licensed resident insurance agent or broker;

(5) to join, advise, assist, associate, cooperate and contract with its members and with such organizations, associations, insurers, governmental agencies, and others as may be necessary or proper to accomplish the purpose of the association;

(6) to sue and be sued in the name of the association. No judgment against the association shall create any direct liability in the individual participating members thereof;

(7) to do anything not specifically enumerated above or related thereto which is otherwise necessary or proper to accomplish the purpose of the association.

Section 38-91-130. (a) Within ninety days after the effective date of this act, the director or his designee shall call the first, or organizational meeting, of the association and seat an Advisory Board (hereinafter referred to as the board).

The initial board shall consist of three individuals who are licensed agents or brokers and four consumer representatives to be appointed by the director or his designee, five association members, the Consumer Advocate or his designee, the director of Public Safety or his designee, and one member from the Department of Insurance. The representative from the Department of Insurance will be a nonvoting board member. Association members will be chosen as follows:

One insurer which is a member of and selected by the American Insurance Association;

One insurer which is a member of and selected by the Alliance of American Insurers;

One insurer which is a member of and selected by the National Association of Independent Insurers;

One insurer which is not affiliated with the forgoing organizations and which is elected by such nonaffiliated insurers voting in person or by proxy;

One insurer which is a domestic appointed by the director regardless of affiliation.

The terms of office for the initial and subsequent members of the board shall be as provided in the plan of operation. Such plan shall provide for the appointment by the director of three individuals who are licensed as agents or brokers in this State. The board shall elect a chairperson who is not an insurer representative.

No more than one representative of a domestic insurer may serve on the board at any one time. No insurer may serve on the board if such insurer is a servicing carrier for the association or is a member of a group of insurers which has one insurer as a servicing carrier unless the carrier or group of carriers participates in the voluntary automobile market with a level at least twice the premium level for the Associated Auto Insurers Plan. If a servicing contract is awarded mid-term, then the affected representative must resign at the next board meeting.

(b) Within sixty days after the organizational meeting, the board shall file with the director or his designee for his approval, a proposed plan of operation, consistent with the provisions of this act, which shall provide for the prompt and efficient provision of automobile insurance to qualified applicants unable to procure such insurance through ordinary methods. Distinct and separate plans may be filed for private passenger automobile insurance and commercial automobile insurance. The plan(s) of operation shall provide for, among other matters, preliminary assessments of members for initial expenses to commence operations, establishment of necessary facilities, the operation of the association, assessments of members to defray losses and expenses, compensation to licensed agents or brokers, eligibility requirements, the coverages and amounts of insurance to be provided and premium payment plans. The plan(s) of operation must be approved by the department as evidenced by a returned copy stamped approved by the department. The plan(s) of operation must include a provision that all meetings of the board will be held in Columbia unless approval is given by the director. Approval must consist of request stamped approved by the department.

(c) If the director or his designee shall disapprove all or any part of the proposed plan of operation, he shall do so in writing, specifying in what respect the plan of operation fails to meet the requirements of this act. Unless the board takes other appropriate legal action to contest the disapproval, it shall within thirty days thereafter file for his review an appropriately revised plan of operation.

(d) If, after a hearing, the director or his designee finds that any activity or practice of insurers participating in the association or any other residual market mechanism is unfair, unreasonable, or otherwise inconsistent with the provisions of this title, the director or his designee must issue a written order specifying in what respects such activity or practice is unfair, unreasonable, or otherwise inconsistent with the provisions of this title and require the discontinuance of such activity or practice. The director or his designee may establish a residual market mechanism by written order if the director or his designee finds that the existing residual market mechanism is unfair, unreasonable, or inconsistent with the provisions of this chapter.

(e) Any revision of the proposed plan of operation or any subsequent amendments to an approved plan of operation shall be subject to the provisions in subsection (c) relating to the initial plan of operation.

(f) If no plan of operation is submitted to the director or his designee within sixty days after the organizational meeting, the director or his designee shall, after consulting with the representatives of the industry, prepare and promulgate a plan of operation in accordance with the requirements of this act which shall continue in force until superseded by a plan of operation effective in accordance with subsections (b) and (c).

Section 38-91-210. (a) Any qualified applicant shall, on or after the effective date of the plan of operation, be entitled to apply for coverage through the association. The application may be made on his behalf by any licensed resident agent or broker authorized by him. Every licensed resident agent or broker shall offer to place insurance through the association for any qualified applicant for whom he is unable to procure such insurance though the markets available to him. Coverage limits may be provided up to $250,000 per person and $500,000 per accident for bodily injury, $100,000 property damage or a combined single limit of $500,000 and fire, theft, comprehensive and collision coverage. In order to place the insurance of the applicant through the association, the agent or broker on the application must show (i) that the applicant has been refused automobile insurance coverage by at least one insurer, agent, or broker, and (ii) the reasons for refusal. The applicant must by his signature acknowledge this showing.

(b) The director of the Department of Insurance or his designee may review each application and provide such application to other qualified insurers. The director or his designee may assign the applicant to any qualified insurer other than the association willing to accept such coverage in the voluntary market. The agent who placed such applicant in the association for automobile insurance coverage shall not receive any commission from this insurance policy or applicant upon placement by the director or his designee of this applicant voluntary market; provided, however, any commission received or paid on the sale of this policy for such applicant must be refunded.

(c) If the director or his designee determines that any agent or broker has placed ten percent or more of his applications with the association and if the director or his designee further determines that the agent improperly assigned applicants insurable through regular underwriting in the voluntary market to the association, then the director or his designee shall assess any one of, a combination thereof, or all, of the following penalties against the agent or broker: (i) a fine up to five thousand dollars per violation; (ii) suspension of that agent's or broker's right to place coverages with the association, or his binding authority, for a specified period of time; or (iii) suspension or revocation of the agent's or broker's license to offer automobile insurance in the State. In his review of the agent's or broker's residual market business, the director or his designee may consider whether the insurer, agent, or broker is participating in a pattern of unfair discrimination as provided in Section 38-77-122 and Section 38-77-123.

(d) If the association determines that the applicant is a qualified applicant eligible under the plan of operation, then the association, upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall issue or cause to be issued a policy of automobile insurance and policy periods as are available under the plan of operation as may be requested.

If the director or his designee finds, after a hearing, with respect to any specified geographical area in the State, that a large number of persons are failing to gain the benefits of the association because they do not have the services of an agent or broker, the association shall provide service to assist the public in applying to the association for insurance.

(e) The association shall monitor applications submitted to the association in order to ascertain if applications are correct, complete, and reflect that actual risk of the insured. The association shall select a subcommittee of three board members who will review applications. The subcommittee may develop and enforce requirements on applications and if requirements are not met by agents submitting applications, shall suspend the ability of that agent to bind applications for thirty days as well as prescribe audit fees to be applied to applications from particular agents. In the event of three suspensions for a particular agent in any five-year period, the ability of that agent to bind applications shall be suspended for three years. In the event of four suspensions for agents in a particular agency in any five-year period, the ability of that agency to bind applications shall be suspended for three years. Appeals of the subcommittee shall be made to the full board and then the director or his designee.

The association shall monitor agents to ensure that insureds are not forced to purchase other insurance coverages in order for the agent to submit the application to the association. The association or the director of the Department of Insurance may require agents to disclose all policies written in conjunction with a policy through the association.

Section 38-91-220. (a) The classifications, rules, rating plans, and policy forms proposed for use for automobile insurance issued by or through the association may be made by the association or by any licensed rating organization and shall be filed with the director or his designee. Such filings may incorporate by reference any other material on file with the director.

(b) The classifications, rules, rates, rating plans, and policy forms proposed for use for automobile insurance issued by or through the association shall be subject to appropriate statutes concerning approval of filings including Section 38-73-910. The association and every member shall be required to use the classifications, rules, rates, rating plans, and policy forms so approved for automobile insurance issued by or through the association for business written through the association.

(c) The rates used for the Associated Auto Insurers Plan must be actuarially sound, self-supporting, and provide adequate premiums to pay losses and expenses associated with the Associated Auto Insurers Plan. Any deficits incurred by the plan should be recovered prospectively by rate changes for the Associated Auto Insurers Plan.

Section 38-91-230. (A) Effective March 1, 1999 the association shall file private passenger automobile loss components for automobile insurance coverages based on the total experience of all risks ceded to the South Carolina Reinsurance Facility which are actuarially sound and supported by statistical evidence. The association shall contract with independent actuarial services to develop such loss component. Due consideration must be given to actual loss experience within the reinsurance facility for the most recent three-year period for which such information is available. The loss component developed under this section is applicable to the risk and territorial classification plan adopted by the association.

(B) In the initial year of operation, the expense component used to develop the final rate or premium charge when combined with the loss component filed in subsection (A) shall be that expense component filed in accordance with Section 38-73-1420 by the governing board of the Reinsurance Facility.

(C) After the initial year of operation, rates, rating plans, and rating rules must be based upon the Underwriting Association's loss and expense experience and investment income. The resultant final rate or premium charges must be on an actuarially sound basis and must be calculated to be self-supporting.

Section 38-91-310. The board shall have all power to direct the operation of the association, except as may be specifically delegated to others or reserved to the members in the plan of operation and may delegate ministerial duties, hire a manager, and contract for goods and services from others.

Section 38-91-320. The association shall file in the office of the department annually, by March first, a statement which contains information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain such matters and information as are prescribed by the director or his designee and must be in the form he directs. The director or his designee may, at any reasonable time, require the association to furnish additional information with respect to its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation, and experience of the association.

Section 38-91-330. The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association.

Section 38-91-340. The servicing carriers for the association may be competitively bid as provided for in this subsection. Separate bidding processes may be done for private passenger and commercial automobile insurance. If the carriers are competitively bid, then the director or his designee must appoint a committee or committees of individuals as he considers qualified to establish standards and procedures for the consideration and evaluation of bids. The committee must include incentive and disincentive programs that encourage proper claims processing of policies and claims handling. Insurers, or other vendors in conjunction with a licensed insurer, may submit bids. The committee or committees must evaluate and award contracts pursuant to the final approval of the director or his designee. The director may require a bid fee to cover the expenses of implementing this section. A serving carrier may be an entity other than a licensed insurance carrier if that entity can prove to the satisfaction of the director that it has the experience and capability to perform the duties of a servicing carrier and if that entity has a licensed automobile insurance carrier to which a policyholder can be issued an automobile insurance policy.

Section 38-91-410. (a) Any applicant for an association policy, any person insured under such a policy, and any member of the association may request a hearing and ruling the board of the association on any alleged violation of the plan of operation or any alleged improper act or ruling of the association directly affecting it as to coverage or premium or in the case of a member directly affecting its assessment. Any member of the association may request a hearing and ruling on the application to him of the plan of operation. Any such member may request the board to act upon or to rule upon any proposed change in or addition to the plan of operation. The final action of the board in respect of any such proposed changes or additions shall be deemed a formal ruling for purposes of applying sections (b) and (c) below. The request for hearing must be made within thirty days after the date of the alleged violation or improper act or ruling. The hearing shall be held within thirty days after the receipt of the request. The hearing may be held by a panel appointed by the chairman of the advisory board consisting of not less than three members thereof, of which one must be a consumer representative, and the ruling of a majority of the panel shall be deemed to be the formal ruling of the board, unless the full board on its own motion shall modify or rescind the action of the panel.

(b) Any formal ruling by the board may be appealed to the director or his designee by filing notice of appeal with the association and director within thirty days after issuance of the ruling.

(c) The director, after a hearing if requested in the notice of appeal, shall issue an order approving the action or decision, disapproving the action or decision, or directing the board to reconsider the ruling.

(d) In any hearing held pursuant to this section by the board or the director or his designee, the board or the commissioner as the case may be, shall issue a ruling or order within thirty days after the close of the hearing.

(e) All rulings or orders of the director or his designee under this section shall be subject to appeal to circuit court.

Section 38-91-420. The director of the Department of Insurance shall promulgate regulations to implement the provisions of this chapter."

(B) Subsection (A) of this section takes effect beginning on March 1, 1999 and must cease to be of any force or effect after February 28, 2003. Beginning on March 1, 2003 and continuing thereafter, the provisions of Article 8, Chapter 77, Title 38 of the 1976 Code as added by Section 21 of this act take effect; thus, the residual market mechanism for the State of South Carolina shall convert from a joint underwriting association to an assigned risk plan as outlined herein. The director of the Department of Insurance is responsible for supervising, administering, and enforcing the transition of the residual market mechanism from the joint underwriting association, as provided in Chapter 91, Title 38 of the 1976 Code as added in Section 20 of this act, to the assigned risk plan, as provided in Article 8, Chapter 77, Title 38 of the 1976 Code as added by Section 21 of this act. The director of the Department of Insurance may by order, regulation, or both, direct the transition of the residual market mechanism so that the joint underwriting association cannot accept any business after February 28, 2003 and the assigned risk plan must accept business beginning on March 1, 2003 and continuing thereafter. Any policy currently issued by or written through the joint underwriting association, pursuant to Chapter 91, Title 38 of the 1976 Code as added in Section 20 of this act, on February 28, 2003 shall continue to be a valid contract of insurance until the end of the policy period unless canceled by the insurer or insured. Furthermore, the director of the Department of Insurance may promulgate regulations which he deems necessary to implement this transition including, but not limited to, the termination of the joint underwriting association and its wind-up period, and the establishment of the assigned risk plan and its start-up period.

Assignment of risks; associated automobile insurers plan; assigned risk pool; etc.

SECTION 21(A). Title 38, Chapter 77 of the 1976 Code is amended by adding:

"Article 8

Assignment of Risks

Section 38-77-810. Beginning on March 1, 2003 and continuing thereafter, the director may promulgate reasonable standards for the assignment of risks to insurance carriers and servicing carriers, and an assigned risk plan, hereinafter referred to as the Associated Auto Insurers Plan, must be established by March 1, 2003. More than one assigned risk plan may be established. The director may make reasonable regulations for the assignment of risks to insurance carriers. He shall establish rate classifications, rating schedules, rates, and regulations to be used by insurance carriers issuing assigned risk, policies of motor vehicle liability, physical damage, and underinsured and uninsured motorist insurance in accordance with this chapter as appear to it to be proper in the establishment of rate classifications, rating schedules, rates, and regulations, it shall be guided by the principles and practices which have been established under its statutory authority to regulate motor vehicle liability, physical damage, and medical payments insurance rates, and it may act in conformity with its statutory discretionary authority in such matters.

The servicing carriers for the Associated Auto Insurers Plan may be competitively bid as provided for in this section. If the Associated Auto Insurers Plan is competitively bid, then the director or his designee shall appoint a committee or committees of individuals as he considers qualified to establish standards and procedures for the consideration and evaluation of bids. Insurers or other vendors, in conjunction with a licensed automobile insurer, may submit bids. The committee or committees shall evaluate and award contracts pursuant to the bidding process established by the committee or committees, subject to the final approval of the director or his designee. The director may require a bid fee to cover the expenses of implementing this section.

The plan for the Associated Auto Insurers Plan must contain a provision for which licensed agents and/or brokers may be certified such as to bind insurance policies. The manager of the plan shall establish and maintain an electronic means to bind policies immediately. The electronic effective date procedure shall be available only to producers of record who are certified by the plan.

Section 38-77-820. Every person who has been unable to obtain a motor vehicle liability policy shall have the right to apply to the director to have his risk assigned to an insurance carrier licensed to write and writing motor vehicle liability insurance in the State and the insurance carrier, whether a stock or mutual company, reciprocal, or interinsurance exchange, or other type or form of insurance organization, as provided in this chapter shall issue a motor vehicle liability policy which will meet at least the minimum requirements for establishing financial responsibility as provided in this chapter, and in addition shall provide, at the option of the insured, reasonable motor vehicle physical damage and medical payments coverages, (both as defined in Chapter 77, Title 38) in the same policy. Every person who has otherwise obtained a motor vehicle liability insurance policy, or who has been afforded motor vehicle liability insurance under the laws of this State, but who was not afforded motor vehicle medical payments insurance or motor vehicle physical damage insurance in the same policy, or who was not afforded such coverages under the provisions of that section, shall have the right to apply to the director to have his risk assigned to an insurance carrier, as provided above, licensed to write and writing either or both coverages, and the insurance carrier shall issue a policy providing the coverage or coverages applied for.

Section 38-77-830. Insurance carriers may satisfy their Associated Auto Insurers Plan obligations by joining with other insurers to establish an Assigned Risk Pool whereby one or more insurers accepts the assignments of other insurers and in return, the other insurers agree to be responsible for any assessment necessary to pay losses associated with the servicing carrier's pool policies. These agreements are subject to approval by the director.

Section 38-77-840. The director may in its discretion, after reviewing all information pertaining to the applicant or policyholder available from its records, the records of the department, or from other sources:

(1) refuse to assign an application;

(2) approve the rejection of an application by an insurance carrier;

(3) approve the cancellation of a policy of motor vehicle liability, physical damage, and medical payments insurance by an insurance carrier; or

(4) refuse to approve the renewal or the reassignment of an expiring policy.

Section 38-77-841. The producer of each Associated Auto Insurers Plan must provide on a form promulgated by the director of the Department of Insurance the information as follows:

(1) the name of one other insurance agent and/or insurer representative who has rejected the applicant for automobile insurance;

(2) if the producer has at least one voluntary market for automobile insurance, the producer must provide the application to at least one voluntary market used by that producer and the application must be rejected;

(3) the reason why the applicant is submitting an application to the Associated Auto Insurers Plan. Such reason shall include data on traffic violations, accidents and/or reasons as to why the voluntary market has not provided coverage.

Section 38-77-845. (A) The director or his designee, or the plan manager, may review each application. Applications which are not complete or accurate, or both, shall be considered in violation of Section 38-57-30 and are subject to penalty. The department shall promulgate regulations to enforce this section. Penalties may include suspension of binding authority, fines up to five thousand dollars, and revocation of license.

(B) The director or his designee may review each application and provide such application to other qualified insurers upon request who may provide the insurance in the voluntary market at a rate less than the Associated Auto Insurers Plan rate. In such a case, the producer shall not receive commission on the sale of such policy.

(C) In his review of the agent's or broker's residual market business, the director or his designee may consider whether the insurer, agent, or broker is participating in a pattern of unfair discrimination as provided in Section 38-77-122 and Section 38-77-123.

Section 38-77-850. Any information filed with the director by an insurance carrier in connection with an assigned risk must be confidential and solely for the information of the director and its staff and must not be disclosed to any person, including an applicant, policyholder, and any other insurance carrier.

Section 38-77-860. (A) The director is not required to disclose to any person, including the applicant or policyholder, its reasons for:

(1) refusing to assign an application;

(2) approving the rejection of an application by an insurance carrier;

(3) approving the cancellation of a policy of motor vehicle liability, physical damage, and medical payments insurance by an insurance carrier; or

(4) refusing to approve the renewal or the reassignment of an expiring policy.

(B) The director or anyone acting for him is not held liable for any act or omission in connection with the administration of the duties imposed upon it by the provisions of this chapter, except upon proof of actual malfeasance.

Section 38-77-870. The provisions of this chapter relevant to assignment of risks must be available to nonresidents who are unable to obtain a policy of motor vehicle liability, physical damage, and medical payments insurance with respect only to motor vehicles registered and used in the State.

Section 38-77-880. Notwithstanding any other provision of law, the provisions of this chapter relating to assignment of risks must be available to carriers by motor vehicle who are required by law to carry public liability and property damage insurance for the protection of the public."

(B) Subsection (A) of this section takes effect beginning on March 1, 2003 and continuing thereafter; therefore, the residual market mechanism for the State of South Carolina shall convert from a joint underwriting association to an assigned risk plan as outlined herein. The director of the Department of Insurance is responsible for supervising, administering, and enforcing the transition of the residual market mechanism from the joint underwriting association, as provided in Chapter 91, Title 38 of the 1976 Code as added in Section 20 of this act, to the assigned risk plan, as provided in Article 8, Chapter 77, Title 38 of the 1976 Code as added by Section 21 of this act. The director of the Department of Insurance may by order, regulation, or both, direct the transition of the residual market mechanism so that the joint underwriting association cannot accept any business after February 28, 2003, and the assigned risk plan must accept business beginning on March 1, 2003, and continuing thereafter. Any policy currently issued by or written through the joint underwriting association, pursuant to Chapter 91, Title 38 of the 1976 Code as added in Section 20 of this act, on February 28, 2003 shall continue to be a valid contract of insurance until the end of the policy period unless canceled by the insurer or insured. Furthermore, the director of the Department of Insurance may promulgate regulations which he deems necessary to implement this transition including, but not limited to, the termination of the joint underwriting association and its wind-up period, and the establishment of the assigned risk plan and its start-up period.

Proof of insurance, financial responsibility in the vehicle; misdemeanor; penalty; etc.

SECTION 22. Chapter 10, Title 56 of the 1976 Code is amended by adding:

"Section 56-10-225. (A) A person whose application for registration and licensing of a motor vehicle has been approved by the department must maintain in the motor vehicle at all times proof that the motor vehicle is an insured vehicle in conformity with the laws of this State and Section 56-10-510.

(B) The owner of a motor vehicle must maintain proof of financial responsibility in the motor vehicle at all times and it must be displayed upon demand of a police officer or any other person duly authorized by law.

(C) A person who fails to maintain the proof in his motor vehicle as required by subsection (A) is guilty of a misdemeanor and, upon conviction, is subject to the same punishment as provided by law for failure of the person driving or in control of a motor vehicle to carry the vehicle registration card and to display the registration card upon demand. A person failing to maintain in his vehicle the proof required pursuant to subsection (A), within thirty days of being cited for such failure, shall provide proof of insurance or have his driver's license suspended until satisfactory proof is provided. Further, this proof must be provided every quarter for one year after being cited for driving without proof of liability insurance. Failure to provide this proof when required shall cause his driver's license to be suspended until satisfactory proof is provided.

(D) The penalties provided in subsection (C) are in addition to, and not in lieu of, any other penalty, of whatever nature, provided by law for failing to act as required in subsection (A)."

No liability, cause of action in certain situations; exceptions

SECTION 23. The 1976 Code is amended by adding:

"Section 38-77-395. There is no liability on the part of and no cause of action of any nature may arise against the director or his designees, any insurer, or the authorized representatives, agents, and employees of either or any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation or refusal to write or renew, for any statement made by any of them in complying with this article, or for the providing of information pertaining thereto, unless the person asserting the cause of action establishes that the person against whom the cause of action is asserted was motivated by express malice or gross negligence."

Use of a particular insurance premium finance company or other installment plan cannot be required; etc.

SECTION 24. The 1976 Code is amended by adding:

"Section 38-5-200. (A) An insurer, its agent, or an insurance broker doing business in this State may not require a person to use a particular insurance premium finance company or other installment plan for which a finance charge or other fee in connection with an installment payment has been or will be imposed.

(B) An insurer, its agent, or an insurance broker doing business in this State may not refuse to issue a policy of insurance solely because the premiums for the policy have been advanced by a premium finance company licensed in this State.

(C) An insurer or its agent doing business in this State shall not reduce commission or intimidate or retaliate against a producer, agent, broker, or insured who uses premium financing by denying the producer, agent, broker, or insured the same rights accorded producers, agents, brokers, or insureds who pay premiums in a different manner."

Insurance agents may rebate automobile insurance policy commissions for insureds

SECTION 25. Section 38-43-200 of the 1976 Code, as last amended by Section 1 of Act 465 of 1990, is amended to read:

"Section 38-43-200. (a) A licensed agent representing an insurer may not pay, directly or indirectly, any commission, brokerage, or other valuable consideration on account of any policy of insurance on any risk in this State to any nonresident or resident not duly licensed to act as agent or broker for the type of insurance involved.

(b) Notwithstanding the provisions of subsection (a), agents licensed under this title may write insurance at the request of other licensed agents or licensed brokers or licensed nonresident brokers and allow the licensed agents or licensed brokers or licensed nonresident brokers not exceeding one-half of the commissions which they receive on the business written.

(c) The limitations contained in subsection (b) with respect to the amount of commission which may be allowed other licensed agents or licensed brokers or licensed nonresident brokers do not apply where the insurance written is life insurance or accident and health insurance.

(d) This section does not prohibit the payment of a fee to a trade or professional association exempt from income tax under Section 501(c) of the Internal Revenue Code.

(e) Nothing in this section should be construed to prohibit any licensed insurance agent from rebating any portion of his commission collected on automobile insurance premiums to the insured upon that automobile insurance policy."

Rebating of insurance agent's commission to insured on automobile insurance policy allowed

SECTION 26. Section 38-55-50 of the 1976 Code, as last amended by Section 2 of Act 465 of 1990, is amended to read:

"Section 38-55-50. An insurer, its agent, or an insurance broker doing business in this State may not make or permit any discrimination in favor of individuals between insureds of the same class and risk involving the same hazards in the amount of the payment of premiums or rates charged for policies of insurance except as provided in Sections 38-57-140, 38-65-310, and 38-71-1110, in the dividends or other benefits payable, or in any other of the terms and conditions of the contracts it makes. An insurer, its agent, or an insurance broker may not make a contract of insurance or agreement as to a contract other than as plainly expressed in the policy issued. An insurer or its officer, agent, solicitor, or representative or an insurance broker may not pay, allow, or give or offer to pay, allow, or give, directly or indirectly, as inducement to the taking of insurance any rebate of premium payable on the policy, any special favor or advantage in the dividends or other benefits to accrue from the policy, any paid employment or contract for services of any kind, or any valuable consideration or inducement not specified in the policy contract of insurance, or give, sell, or purchase or offer to give, sell, or purchase, as inducement to the taking of insurance or in connection therewith, any stocks, bonds, or other securities of an insurer or other corporation, association, or partnership, any dividends or profits to accrue from them, or anything of value not specified in the policy.

This section does not prohibit the payment of a fee to a trade or professional association exempt from income tax under Section 501(c) of the Internal Revenue Code.

Further, this section does not prohibit the rebating of any commission to the insured on an automobile insurance policy collected by, or on behalf of, a licensed insurance agent."

Review and reports on impact of repeal of anti-rebate laws regarding sale of automobile insurance; etc.

SECTION 27. Beginning on March 1, 2000 the director of the Department of Insurance shall review annually the impact of the repeal of the anti-rebate statutes concerning the sale of automobile insurance in South Carolina pursuant to this act and shall report annually to the General Assembly his findings and recommendations, if any, along with the data and supporting information which the director utilized. In his review, the director shall evaluate the following, but is not limited to: the impact on automobile insurance premiums; any pattern of an insurance carrier, agent, broker, and others concerning the practice of rebating; any pattern of discrimination regarding the insured or policyholder, agent, broker, insurance carrier, or others; the impact on the automobile insurance industry, such as additional market entrants, number of insurance carriers, agents, or others who engage in this practice, or any change in the number of companies writing automobile insurance or of agents selling automobile insurance; and any complaints received by or made to the Department of Insurance concerning rebates in the sale of automobile insurance or regarding the repeal of the anti-rebate statutes concerning the sale of automobile insurance in South Carolina. The initial report by the director of the Department of Insurance shall be submitted to the General Assembly by May 1, 2000 and notwithstanding any other provision of law, the director shall begin collecting data, material, and any information needed for this initial report on March 1, 1999. All subsequent reports shall be submitted to the General Assembly no later than March first of each year. Notwithstanding any other provision of law, the director of the Department of Insurance shall make his final report on this matter to the General Assembly as provided herein on March 1, 2003 unless otherwise directed by the General Assembly; however, the director may at his discretion continue to submit a report to the General Assembly regarding this matter at any time after March 1, 2003 and shall continue to monitor the impact of the repeal of the anti-rebate statutes concerning the sale of automobile insurance in South Carolina pursuant to this act. The director may promulgate regulations in order to carry out the requirements of this section.

Severability clause

SECTION 28. If a provision of this act or its application to a person or circumstance is held to be unconstitutional or otherwise invalid, the remainder of this act and the application of that provision to other persons or circumstances are not affected, and it must be conclusively presumed that the General Assembly would have enacted the remainder of this act without the invalid or unconstitutional provision.

Insurers may nonrenew automobile insurance policies currently ceded to reinsurance facility; inapplicable to designated producers; end of all ceding by insurers; etc.

SECTION 29. Beginning March 1, 1999 insurers may nonrenew a policy that they have currently ceded to the South Carolina Reinsurance Facility. This provision does not apply to business written through the designated producers. Insurers may no longer cede to the facility after October 1, 1999. If a provision of this act or its application to a person or circumstance is held to be unconstitutional or otherwise invalid, the remainder of this act and the application of that provision to other persons or circumstances are not affected, and it must be conclusively presumed that the General Assembly would have enacted the remainder of this act without the invalid or unconstitutional provision. Insurers are not required to cede to the facility after March 1, 1999 and business ceded after March 1, 1999 must be renewal business to the facility. All renewal business ceded after March 1, 1999 must be ceded at the rate level approved for the reinsurance facility after combining its expense component with the loss component referenced in Section 38-77-596.

Repeal

SECTION 30. Article 5 of Chapter 77, Title 38 of the 1976 Code is repealed effective January 1, 2006.

Repeal

SECTION 31. Sections 38-73-450, 38-73-455, 38-73-457, 38-73-460, 38-73-465, 38-73-720, 38-73-730, 38-73-731, 38-73-735, 38-73-750, 38-73-760, 38-73-770, 38-73-775, 38-77-110, 38-77-111, 38-77-115, 38-77-145, 38-77-285, 38-77-360, 38-77-600, 38-77-605, 38-77-610, 38-77-620, and 38-77-625 and Article 9 of Chapter 77 of Title 38 of the 1976 Code are repealed.

Time effective; sending of certain nonrenewal notices

SECTION 32. The provisions of this act take effect as follows: (a) Sections 1 and 2 on February 1, 1999; (b) Sections 4 through 17 and Sections 19, 23, 25, 26, 27, 29, and 31 on March 1, 1999; and (c) Sections 3, 18, 20, 21, 22, 24, 28, and 30 upon approval by the Governor, except as may be otherwise specifically provided in any of those sections.

Nonrenewal notices may be sent before March 1, 1999, for policies renewing on or after March 1, 1999.

Approved the 2nd day of July, 1997.