South Carolina General Assembly
115th Session, 2003-2004

Download This Bill in Microsoft Word format

A290, R390, S686

STATUS INFORMATION

General Bill
Sponsors: Senators Thomas and Alexander
Document Path: l:\council\bills\dka\3473dw03.doc

Introduced in the Senate on May 7, 2003
Introduced in the House on April 29, 2004
Last Amended on May 26, 2004
Passed by the General Assembly on June 2, 2004
Governor's Action: July 29, 2004, Signed

Summary: Property and Casualty Insurance Personal Lines Modernization Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
    5/7/2003  Senate  Introduced and read first time SJ-5
    5/7/2003  Senate  Referred to Committee on Banking and Insurance SJ-5
   1/29/2004  Senate  Committee report: Favorable with amendment Banking and 
                        Insurance SJ-10
   1/30/2004          Scrivener's error corrected
   4/20/2004  Senate  Amended SJ-19
   4/20/2004  Senate  Read second time SJ-19
   4/20/2004  Senate  Ordered to third reading with notice of amendments SJ-19
   4/22/2004          Scrivener's error corrected
   4/28/2004  Senate  Amended SJ-50
   4/28/2004  Senate  Read third time and sent to House SJ-50
   4/28/2004          Scrivener's error corrected
   4/29/2004  House   Introduced and read first time HJ-6
   4/29/2004  House   Referred to Committee on Labor, Commerce and Industry 
                        HJ-6
   5/19/2004  House   Committee report: Favorable with amendment Labor, 
                        Commerce and Industry HJ-4
   5/25/2004          Scrivener's error corrected
   5/25/2004  House   Debate adjourned until Wednesday, May 26, 2004 HJ-37
   5/26/2004  House   Amended HJ-24
   5/26/2004  House   Read second time HJ-43
   5/27/2004  House   Read third time and returned to Senate with amendments
   5/27/2004          Scrivener's error corrected
    6/2/2004  Senate  Concurred in House amendment and enrolled SJ-43
    6/3/2004          Ratified R 390
   7/29/2004          Signed By Governor
    8/5/2004          Copies available
    8/5/2004          Effective date See Act for Effective Date
   8/16/2004          Act No. 290

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

5/7/2003
1/29/2004
1/30/2004
4/20/2004
4/22/2004
4/28/2004
4/28/2004-A
5/19/2004
5/25/2004
5/26/2004
5/27/2004


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

(A290, R390, S686)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 2 TO CHAPTER 73, TITLE 38 SO AS TO ENACT THE "PROPERTY AND CASUALTY INSURANCE PERSONAL LINES MODERNIZATION ACT", SO AS TO CHANGE THE RATE APPROVAL PROCESS REGARDING PROPERTY AND CASUALTY INSURANCE FILINGS, TO AUTHORIZE THE CONSUMER ADVOCATE TO HAVE ACCESS TO CERTAIN FILINGS, INCLUDING A RESPONSE BY THE DEPARTMENT OF CONSUMER ADVOCATE TO THE DEPARTMENT OF INSURANCE CONTAINING ITS OPINION ON THE FILING, AND MAY APPEAL THE DECISION OF THE DEPARTMENT TO THE ADMINISTRATIVE LAW JUDGE DIVISION, AND TO REQUIRE THE DIRECTOR OF THE DEPARTMENT TO UTILIZE OR DEVELOP A CONSUMER INFORMATION SYSTEM TO DISSEMINATE CERTAIN INFORMATION TO PURCHASERS OF HOMEOWNER'S, PRIVATE PASSENGER NONFLEET AUTOMOBILE, OR PROPERTY INSURANCE FOR PERSONAL, FAMILY, OR HOUSEHOLD NEEDS; BY ADDING ARTICLE 13 TO CHAPTER 75, TITLE 38 SO AS TO PROVIDE REGULATION OF PROPERTY INSURANCE, CANCELLATION AND NONRENEWALS, TO ENSURE THAT RATES ARE NOT EXCESSIVE, INADEQUATE, OR UNFAIRLY DISCRIMINATORY, TO AUTHORIZE THE REGULATION OF COOPERATIVE ACTION AMONG INSURERS IN RATEMAKING, TO AUTHORIZE THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO EVALUATE NATURAL HAZARD CATASTROPHE MODELS THAT ARE USED FOR RATE FILINGS; TO AMEND SECTION 38-1-20, AS AMENDED, RELATING TO DEFINITIONS USED IN TITLE 38 PERTAINING TO INSURANCE, SO AS TO ADD THE DEFINITIONS OF "INSURANCE-SUPPORT ORGANIZATION" AND "MODELING ORGANIZATION"; TO AMEND SECTION 38-73-910, RELATING TO CONDITIONS UNDER WHICH INSURANCE PREMIUMS MAY BE RAISED, SO AS TO DELETE FIRE, ALLIED LINES, AND HOMEOWNER'S INSURANCE FROM THIS REQUIREMENT, AND TO DELETE A PROVISION AUTHORIZING A PRIVATE INSURER TO UNDERWRITE CERTAIN ESSENTIAL PROPERTY INSURANCE AND TO FILE FOR RATE INCREASE UNDER CERTAIN CIRCUMSTANCES; AND BY ADDING SECTIONS 38-73-325 AND 38-73-425 SO AS TO PROVIDE THAT THE ABSENCE OF CREDIT INFORMATION FOR FIRE AND ALLIED LINES AND INLAND MARINE INSURANCE AND AUTOMOBILE INSURANCE MAY BE USED BY AN INSURER FOR UNDERWRITING PURPOSES IF THE INSURER PRESENTS INFORMATION SATISFACTORY TO THE DIRECTOR THAT THE ABSENCE IS RELATED TO THE RISK.

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

Property and Casualty Insurance Personal Lines Modernization Act

SECTION    1.    Chapter 73, Title 38 of the 1976 Code is amended by adding:

"Article 2

Property and Casualty Insurance Personal Lines Modernization Act

Section 38-73-210.    This article is known as the Property and Casualty Insurance Personal Lines Modernization Act and applies only to personal lines insurance.

Section 38-73-220.    (A)    Except as provided in subsection (B), overall average rate-level increases or decreases, for all coverages combined, of seven percent above or below the insurer's rates then in effect may take effect without prior approval on a file and use basis with respect to rates for fire, allied lines, and homeowner's insurance policies. The seven percent cap does not apply on an individual insured basis.

(B)    Notwithstanding any other provisions of this article, for any policies governed by this section, filings that produce rate-level changes within the limitation specified in subsection (A) become effective without prior approval. No more than two rate increases within the limitation specified in subsection (A) may be implemented during any twelve-month period and the second rate-increase filing in the twelve-month period is subject to prior approval.

(C)    A rate increase or decrease falling within the limitation in subsection (B) may become effective not less than thirty days after the date of the filing with the director. The filing is considered to meet the requirements of this article. If the director finds that this filing is not in compliance with this article, he shall issue a written order specifying in detail the provisions with which the insurer has not complied and state a reasonable period in which the filing is considered no longer effective. An 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 is on a prospective basis only and does not affect any contract issued or made before the effective date of the order.

(D)    Rate filings falling outside the limitation specified in subsection (B) are subject to the prior approval of the director. The director shall approve or disapprove these filings in accordance with the provisions of Sections 38-73-960 and 38-73-990.

Section 38-73-230.    (A)    The director may declare a line of insurance competitive by providing public notice on the department website and in major newspapers in South Carolina of the intention of declaring a market competitive in sixty days. A separate notice must be sent to the Consumer Advocate. A report that provides the support for that declaration must be available upon request and posted on the department's website. A party may send a request to the department requesting a public hearing before the Administrative Law Judge Division. If a public hearing is requested, the department shall cooperate in establishing a hearing.

(B)    The following factors must be considered by the director for purposes of determining if a reasonable degree of competition exists in a particular line of insurance:

(1)    the number of insurers or groups of affiliated insurers providing coverage in the market;

(2)    measures of market concentration and changes of market concentration over time;

(3)    ease of entry and the existence of financial or economic barriers that could prevent new firms from entering the market;

(4)    the extent to which any insurer or group of affiliated insurers controls all or a portion of the market;

(5)    whether the total number of companies writing the line of insurance in this State is sufficient to provide multiple options;

(6)    the availability of insurance coverage to consumers in the markets by specific geographic area, by line of insurance, and by class of risk; and

(7)    the opportunities available to consumers in the market to acquire pricing and other consumer information.

Each factor must indicate a competitive market in order for a determination that there is a competitive market to be made.

(C)    The director shall monitor the degree and continued existence of competition in this State on an on-going basis. The director may utilize existing relevant information, analytical systems, and other sources, or rely on a combination of them. Activities may be conducted internally within the insurance department, in cooperation with other state insurance departments, through outside contractors, or in any other appropriate manner.

(D)    An affected person or organization may make a written request to the director or his designee to initiate a hearing to determine whether a particular line of insurance continues to be competitive. The request for hearing must specify the grounds to be relied upon by the applicant. Within thirty days after the receipt of the request, the director or his designee shall transmit the request for hearing to the Administrative Law Judge Division.

Section 38-73-240.    (A)    In a line of insurance declared competitive, each insurer shall file with the director all rates, supplementary rate information, and supporting information for competitive markets at least thirty days before the proposed effective date. The director or his designee may give written notice, within thirty days of the receipt of the filing, that additional time is needed, not to exceed thirty days from the date of the notice, to consider the filing. Upon written application of the insurer, the director or his designee may authorize rates to be effective before the expiration of the waiting period or an extension of it. A filing is considered to meet the requirements of this article and to become effective unless disapproved pursuant to this section by the director or his designee before the expiration of the waiting period or an extension of it. Residual market mechanisms or advisory organizations may file residual market rates.

(B)    The filing is considered in compliance with the filing provisions of this section unless the director or his designee informs the insurer within ten days after receipt of the filing as to what supplementary rate information or supporting information is required to complete the filing.

(C)    An insurer may file its rates by either filing its final rates or by filing a multiplier and, if applicable, an expense-constant adjustment to be applied to prospective loss costs that have been filed by an advisory organization on behalf of the insurer as permitted by this chapter.

(D)    All rates, supplementary rate information, and any supporting information filed pursuant to this article is open to public inspection after the filing becomes effective.

(E)    With respect to applications for rate increases for fire, allied lines, and homeowner's insurance that exceed the seven percent cap as provided for in Section 38-73-260(A) and if an applicant insurer had earned premiums in this State in the previous calendar year of more than ten million dollars for the line or type of insurance for which the rate increase is sought, the director or his designee shall provide a copy of the filing to the Consumer Advocate or, in the alternative, shall direct the insurer to provide a copy simultaneously to the Consumer Advocate. Within ten business days of the receipt of the filing, the Consumer Advocate may request from the insurer additional information. A copy of the request must be served on the director or his designee. Within ten business days of the receipt of the information sought, the Consumer Advocate shall inform the insurer and the director if, in his opinion, the filing is not in compliance with this article and specify in detail the reason for his opinion. If the filing is accepted by the director and becomes effective, the Consumer Advocate, upon good cause shown, may request a hearing before the Administrative Law Judge Division. An order of the administrative law judge issued pursuant to the provisions of this section is on a prospective basis only and does not affect any contract issued or made before the effective date of the order.

Section 38-73-250.    (A)    If the director or his designee determines that competition does not exist in a line of insurance and issues a ruling to that effect pursuant to Section 38-73-230, the rates applicable to insurance sold in that market must be regulated pursuant to Section 38-73-260. The director may simply declare a line of insurance noncompetitive and release a report providing the support for that decision. The decision may be appealed to the Administrative Law Judge Division. The market is considered not competitive during the appeal process.

(B)    A rate filing in effect at the time the director or his designee determines that competition does not exist pursuant to Section 38-73-230 must be considered to be in compliance with the laws of this State unless disapproved pursuant to the procedures and rating standards contained in Section 38-73-260 applicable to noncompetitive markets.

(C)    An insurer having a rate filing in effect at the time the director determines that competition does not exist pursuant to Section 38-73-240 may be required to furnish supporting information within thirty days of a written request by the director or his designee.

Section 38-73-260.    (A)    Except as provided in subsection (B), overall average rate-level increases or decreases, for all coverages combined, of seven percent above or below the insurer's rates then in effect may take effect without prior approval on a file and use basis with respect to rates for fire, allied lines, and homeowner's insurance policies. The seven percent cap does not apply on an individual insured basis.

(B)    Notwithstanding another provision of this article, for any policies governed by this section, filings that produce rate-level changes within the limitation specified in subsection (A) become effective without prior approval. No more than two rate increases within the limitation specified in subsection (A) may be implemented during a twelve-month period and the second rate increase filing in the twelve-month period is subject to prior approval.

(C)    A rate increase or decrease falling within the limitation in subsection (B) may become effective not less than thirty days after the date of the filing with the director. The filing is considered to meet the requirements of this article. If the director finds that this filing is not in compliance with this article, he shall issue a written order specifying in detail the provisions with which the insurer has not complied and state a reasonable period in which the filing is considered no longer effective. An 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 is on a prospective basis only and does not affect a contract issued or made before the effective date of the order.

(D)    Rate filings falling outside the limitation specified in subsection (B) are subject to the prior approval of the director or his designee. The director or his designee shall approve or disapprove these filings pursuant to the provisions of Sections 38-73-960 and 38-73-990.

(E)    With respect to applications for rate increases for fire, allied lines, and homeowner's insurance that exceed the seven percent cap as provided in subsection (A) and if an applicant insurer had earned premiums in this State in the previous calendar year of more than ten million dollars for the line or type of insurance for which the rate increase is sought, the director or his designee shall provide a copy of the filing to the Consumer Advocate or, in the alternative, shall direct the insurer to provide a copy simultaneously to the Consumer Advocate. Within ten business days of the receipt of the filing, the Consumer Advocate may request from the insurer additional information. A copy of the request must be served on the director or his designee. Within ten business days of the receipt of the information sought, the Consumer Advocate shall inform the insurer and the director if, in his opinion, the filing is not in compliance with this article and specify in detail the reason for his opinion. If the filing is accepted by the director and becomes effective, the Consumer Advocate, upon good cause shown, may request a hearing before the Administrative Law Judge Division. An order of the administrative law judge issued pursuant to the provisions of this section is on a prospective basis only and does not affect any contract issued or made before the effective date of the order.

Section 38-73-270.    The director shall utilize, develop, or cause to be developed, a consumer information system which provides and disseminates price and other relevant information on a readily available basis to purchasers of homeowner's, private passenger nonfleet automobile, or property insurance for personal, family, or household needs. The director may utilize, develop, or cause to be developed, a consumer information system which provides and disseminates price and other relevant information on a readily available basis to purchasers of insurance for commercial risks and personal risks not otherwise specified. The activity may be conducted internally within the insurance department, in cooperation with other state insurance departments, through outside contractors, or in another appropriate manner. As necessary and appropriate, the director, insurers, advisory organizations, statistical agents, and other persons or organizations involved in conducting the business of insurance in this State, pursuant to the provisions of this article, shall cooperate in the development and utilization of a consumer information system."

Property insurance cancellation and nonrenewal

SECTION    2.    A.    Chapter 75, Title 38 of the 1976 Code is amended by adding:

"Article 13

Property Insurance Cancellation and Nonrenewal

Section 38-75-1110.    (A)    The purposes of this article are to:

(1)    promote the public welfare by regulating insurance rates to the end that they may not be excessive, inadequate, or unfairly discriminatory and to authorize and regulate cooperative action among insurers in ratemaking and in other matters within the scope of this chapter; and

(2)    empower the director or his designee to review and evaluate natural hazard catastrophe models that are used in rate filings.

(B)    Nothing in this chapter is intended to prohibit or discourage reasonable competition.

Section 38-75-1120.    (A)    The director or his designee shall issue a report by February 1, 2005, regarding cause of and potential solutions to coastal insurance issues.

(B)    The report must be provided to the Speaker of the House and the President of the Senate.

Section 38-75-1130.    (A)    This article applies only to property insurance on risks located in this State.

(B)    This article does not apply to automobile insurance nor to insurance against liability arising out of the ownership, maintenance, or use of motor vehicles. The director or his designee may exempt from this article various specialty lines of insurance.

Section 38-75-1140.    (A)    In recognition of the use of natural hazard catastrophe computer models and other recently developed or improved actuarial methodologies for projecting natural hazard losses, the director or his designee may make or cause to be made an evaluation of any natural hazard catastrophe model used in property rate filings in this State. Natural hazard catastrophe models are computer programs that estimate losses from potential natural hazard disasters, combining data on property exposures with information on natural hazards, such as storms or earthquakes, to generate estimates of potential losses.

(B)    If required to do so by the director, a modeling organization that prepares catastrophe models used by insurers in rate filings in this State shall submit an initial report to the director or his designee consisting of but not limited to:

(1)     a statement of its qualification as a modeling organization;

(2)     an outline of the background and experience of the staff of the modeling organization engaged in the development and preparation of the catastrophe models used by insurers in rate filings; and

(3)     one or more statements describing and attesting to the validity of the model for use in predicting losses associated with natural hazard catastrophes in this State. A separate statement must be made by an individual possessing expertise appropriate to the hazard being modeled in fields such as meteorology, engineering, building codes, geology, and actuarial science as they apply to natural hazard catastrophes faced by this State.

(C)    The modeling organization shall submit a supplemental report to the director or his designee following any substantially material revision of the model if the revision is used by insurers in determining rates for this State. The supplemental report must specify the changes made to the catastrophe model and contain one or more statements by experts attesting to the continuing validity of the model for use in predicting losses associated with natural hazard catastrophes in this State.

(D)    If the director or his designee determines the expert statements provided to be insufficient, he may reject the report.

(E)    In conducting his evaluation of a model, the director or his designee may rely on the report of an official of another state who has made such an evaluation pursuant to the laws of that state.

(F)    Proprietary or trade secret information that is submitted in a report, or is obtained, developed, or compiled in the course of any evaluation must be kept confidential by the director.

Section 38-75-1150.    An insurer shall provide a separate premium for fire coverage and for allied lines coverage on a policy that includes fire and allied lines coverages. This includes a homeowner's and a businessowner's policy.

Section 38-75-1160. (A)(1)    A cancellation or refusal to renew by an insurer of a policy of insurance covered in this article is not 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 must:

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

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

(c)    state the specific reason of the insurer for cancellation or refusal to renew and provide for the notification required by Section 38-75-1180(B);

(d)    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 in bold print to inform the insured of this 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.';

(e)    inform the insured of the possible availability of other insurance which may be obtained through his agent, or through another insurer; and

(f)    state that the Department of Insurance has available a buyer's guide regarding property 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.

(2)    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.

(B)    Subsection (A) does not apply if the:

(1)    insurer has manifested to the insured its willingness to renew by actually issuing or offering to the insured to issue a renewal policy, certificate, or other evidence of renewal, or has manifested this intention to the insured by another means;

(2)    named insured has demonstrated by some overt action to the insurer or its agent that he expressly intends that the policy be canceled or that it not be renewed.

Section 38-75-1170.    (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 reasonably is 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 in the regular course of business; 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)    Personal information provided pursuant to subsection (A) 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 pursuant to the provisions of subsection (A), 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 by 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 provided by subsection (A), 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 do 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 38-75-1180.    (A)    If there is a cancellation or nonrenewal of an insurance policy covered pursuant to the provisions of this article, 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 provided by subsection (B) and Section 38-75-1160.

(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 is not 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). 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 remains responsible for compliance with the obligations imposed by this section.

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

Section 38-75-1190.    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 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 to it, 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.

Section 38-75-1200.    (A)    An application for the original issuance of a policy of insurance covered in the article 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)    An application for the original issuance of a policy of insurance covered in this article that requires the insured to disclose information as to any previous cancellation or refusal to renew also must 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 if 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.

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

Section 38-75-1210.    (A)(1)    An insurer or agent may not refuse to issue an insurance policy as defined in this article because of any one or more of the following factors:

(a)    age;

(b)    sex;

(c)    race;

(d)    color;

(e)    creed;

(f)     national origin;

(g)    ancestry;

(h)    marital status; or

(i)        income level.

(2)    An insurer or agent may not refuse to issue an insurance policy defined in this article only because of any one of the following factors:

(a)    the previous refusal of property insurance by another insurer; or

(b)    lawful occupation, including the military service, of the person seeking the coverage.

(3)    Nothing in this section prohibits an insurer from limiting the issuance of insurance policies covered in this article only to persons engaging in or who have engaged in a particular profession or occupation, or who are members of a particular religious sect.

(4)    Nothing in this section prohibits an insurer from setting rates in accordance with relevant actuarial data.

(5)    Nothing in this section prohibits an insurer from refusing to issue policies of insurance due to the catastrophe exposure of wind.

(B)(1)    In determining the premium rates to be charged for an insurance policy covered in this article, it is unlawful to consider:

(a)    race;

(b)    color;

(c)    creed;

(d)    religion;

(e)    sex;

(f)     national origin;

(g)    ancestry;

(h)    economic status; or

(i)        income level.

(2)    An insurer, agent, or a broker may not refuse to write an insurance policy covered in this article based upon:

(a)    age;

(b)    sex;

(c)    race;

(d)    color;

(e)    creed;

(f)     religion;

(g)    national origin;

(h)    ancestry;

(i)        economic status; or

(j)     income level.

(3)    However, nothing in this subsection may preclude the use of a territorial plan approved by the director.

(C)    An insurer or agent who violates this section is 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. 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 a broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.

Section 38-75-1220.    (A)(1)    An insurer may not refuse to renew an insurance policy covered in this article because of any one or more of the following factors:

(a)    age;

(b)    sex;

(c)    race;

(d)    color;

(e)    creed;

(f)    national origin;

(g)    ancestry;

(h)    marital status; or

(i)        income level.

(2)    An insurer may not refuse to renew an insurance policy covered in this article only because of any one of the following factors:

(a)    lawful occupation, including the military service;

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

(c)    one or more claims that occurred more than thirty-six months immediately preceding the upcoming anniversary date; or

(d)    inquiries concerning coverage submitted to the insurer where no notice of claim was made.

(3)    Nothing contained in subsection (A)(1)(e), (f), and (g) 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, sex, national origin, ancestry, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director.

(4)    Nothing in this section prohibits an insurer from refusing to renew policies of insurance due to the catastrophe exposure of wind.

(B)    There is no liability on the part of and no cause of action of any nature shall arise against the director or his designees; an insurer, its authorized representatives, its agents, or its employees; or a 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, an insurer is not required to furnish a notice of cancellation or refusal to renew to anyone other than the named insured, a person designated by the named insured, or any other person to whom the notice is required to be given by the terms of the policy and the director.

(C)    Within fifteen days of receipt of the notice of cancellation or refusal to renew, an insured or his attorney is 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 promptly shall begin a review to determine whether the insurer's cancellation or refusal to renew complies with the requirements of this section. If the director finds from the review that the cancellation or refusal to renew has not complied with the requirements of this section, he immediately shall notify the insurer, the insured, and any other person to whom the 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.

(D)    Each insurer shall maintain for at least three years, records of cancellation and refusal to renew and copies of each notice or statement referred to in Section 38-75-1160 that it sends to any of its insureds.

(E)    The provisions of this section do not apply to an insurer that limits the issuance of insurance policies covered in this article 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 insurance covered in this article 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. An insurer is not required to renew a policy if the insured becomes a nonresident of South Carolina.

(F)    An insurer who violates this section is 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 a 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. 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 a broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.

Section 38-75-1230.    An insurer may not exclude wind and hail on a fire, allied lines, or homeowner's policy unless the property is in the area served by the South Carolina Wind and Hail Underwriting Association or the exclusion has been approved by the director or his designee.

Section 38-75-1240.    An insurer shall provide the director each year a listing of underwriting restrictions based upon geography and also provide notice of new changes to current underwriting restrictions. These restrictions do not require approval of the director or his designee and are not public information."

B.    This section takes effect six months after approval by the Governor.

Definitions

SECTION    3.    Section 38-1-20 of the 1976 Code, as last amended by Act 73 of 2003, is further amended by adding:

"(43)    'Insurance-support organization' means a 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 are not considered insurance-support organizations for purposes of this chapter: agents, governmental institutions, insurers, modeling organizations, consumer reporting agencies, medical care institutions, and medical professionals.

(44)    'Modeling organization' means a corporation, an unincorporated association, a partnership, or an individual, whether located within or outside this State, that prepares catastrophe models that are used by insurers in rate filings. Catastrophe models are computer programs that estimate losses from potential upcoming disasters. Catastrophe modeling combines data on property exposures with information on hazards, such as storms or earthquakes, to generate estimates of potential losses."

Property insurance references removed

SECTION    4.    Section 38-73-910(A) of the 1976 Code is amended to read:

"(A)    An increase in the premium rates may not be granted for workers' compensation 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 must state the amount of increase, the type and line of coverage, and the proposed effective date and must 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 modeling 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."

Credit information

SECTION    5.    Chapter 73, Title 38 of the 1976 Code is amended by adding:

"Section 38-73-325.    Absence of credit information may be used by an insurer for underwriting purposes only if the insurer presents information satisfactory to the director that the absence is related to the risk."

Credit information

SECTION    6.    Chapter 73, Title 38 of the 1976 Code is amended by adding:

"Section 38-73-425.    Absence of credit information may be used by an insurer for underwriting purposes only if the insurer presents information satisfactory to the director that the absence is related to the risk."

Severability

SECTION    7.    If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

Time effective

SECTION    8.    Except as otherwise specified, this act takes effect upon approval by the Governor.

Ratified the 3rd day of June, 2004.

Approved the 29th day of July, 2004.

__________

This web page was last updated on Monday, December 7, 2009 at 10:18 A.M.