Bill 89

                    Current Status

Bill Number:               89
Ratification Number:       219
Act Number:                145
Introducing Body:          Senate
Subject:                        Insufficient automobile insurance
                           marketing outlets

(A145, R219, S89)

AN ACT TO AMEND SECTION 38-37-150, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE DESIGNATION OF PRODUCERS TO SERVICE INSUFFICIENT AUTOMOBILE INSURANCE MARKETING OUTLETS, SO AS TO PROVIDE FOR THE PRODUCERS PREVIOUSLY DESIGNATED TO CONTINUE TO SERVE WITH ANY COMMISSION RATE CHANGE SUBJECT TO COMMISSION APPROVAL, TO PROVIDE THE QUALIFICATIONS WHICH A PRODUCER SHALL MEET TO BE ELIGIBLE FOR DESIGNATION, TO PROVIDE FOR A PRODUCER TO FURNISH A BOND PRIOR TO DESIGNATION, TO PROVIDE FOR DESIGNATED PRODUCERS TO BE ASSIGNED SPECIFIC LOCATIONS, TO PROVIDE THAT WHEN A DESIGNATION IS TRANSFERRED TO A RELATIVE OF A PRODUCER THE DUTIES MAY BE PERFORMED BY THE PRODUCER'S EMPLOYEES OR AGENCY, TO PROVIDE THE CIRCUMSTANCES UNDER WHICH A PRODUCER'S DESIGNATION IS TERMINATED AND THE PRODUCER'S LICENSES REVOKED, AND TO REQUIRE THE GOVERNING BOARD OF ANY INSURANCE FACILITY TO DETERMINE WITHIN THIRTY DAYS AFTER THIS ACT'S EFFECTIVE DATE THE LOCATIONS ASSIGNED TO DESIGNATED PRODUCERS.

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

Commissioner to survey areas

SECTION 1. Section 38-37-150 of the 1976 Code is amended to read:

"Section 38-37-150. (A) Not more than six months after July 9, 1974, or at an earlier time as the commissioner considers necessary by reason of complaints regarding want of access to automobile insurance in particular areas or want of outlets for producers, the commissioner 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 commissioner 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 commissioner 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 shall 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 commissioner 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 commission.

(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 was prior to October 1, 1974, and has been continually since that date 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 private passenger automobile insurance business, the net premiums on which exceeded one hundred thousand dollars during the twelve months preceding 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 breach of agency agreement or other related, improper, or unethical conduct, including but not limited to the systematic solicitation by the applicant of residual or high-risk automobile insurance business or deliberate acquisition by the applicant of a relatively large amount of residual or high-risk automobile insurance business through purchase, merger, relocation, or other means; 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) Prior to designation as a producer, the applicant shall furnish at his expense a bond in an amount 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 commissioner the locations assigned by him to those producers whom the commissioner has designated. Designated producers may not open or maintain any other locations without the written authorization of the governing board. The governing board shall terminate the designation, and the commissioner 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 commissioner 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) Neither a designated producer, nor any employee of a designated producer or the producer's corporate agency, nor any partner or shareholder in any related insurance agency, related premium service company, or related other business, may have 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. The governing board shall terminate the designation of any producer, and the commissioner shall revoke the licenses of the producer and of any other insurance agent and premium service company knowingly involved in any connection which exists more than thirty days after the effective date of this section. Upon termination, the producer's expirations on designated business become the property of the facility."

Locations to be determined

SECTION 2. Within not more than thirty days after the effective date of this act, the governing board is required to determine the locations assigned by the commissioner to designated producers, as provided in subsection (E) of Section 38-37-150 of the 1976 Code, as amended in Section 1 of this act.

Time effective

SECTION 3. This act shall take effect upon approval by the Governor.