H 4464 Session 109 (1991-1992)
H 4464 General Bill, By R. Smith
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Article 6
to Chapter 77, Title 38 so as to establish a Joint Underwriting Association
for Automobile Insurance; to amend the 1976 Code by adding Article 5 to
Chapter 10, Title 56 so as to provide for the registration and licensing of
uninsured motor vehicles; to amend Section 38-57-130, relating to
misrepresentations, special inducements, and rebates prohibited in insurance
contracts, so as to delete the prohibition on rebates or certain other
inducements; to amend Section 38-73-457, relating to filing information on
base rates, so as to revise the requirements for filing and include provisions
for preferred rates, standard rates, and substandard rates; to amend Section
38-73-735, as amended, relating to plans for credits or discounts to
automobile insureds, so as to delete the provisions authorizing the plans to
be ceded to the Reinsurance Facility; to amend Section 38-73-750, as amended,
relating to the requirement that automobile insurers file plans for allocating
expenses and profit, so as to delete the references to the Reinsurance
Facility; to amend Section 38-73-760, as amended, relating to uniform
statistical plans for the automobile insurance business, so as to delete the
reference to the Reinsurance Facility; to amend Section 38-77-30, as amended,
relating to definitions pertaining to automobile insurance, so as to delete
the definition of Reinsurance Facility; to amend Section 38-77-112, as
amended, relating to the requirement for an applicant and policy holder to
have a driver's license, so as to delete references to repealed Code Sections;
to amend Section 38-77-285, as amended, relating to the requirement that all
automobile insurance coverages for an insured's automobile must be in one
policy, so as to provide for the requirement to apply to individual passenger
automobiles instead of vehicles ceded to the Reinsurance Facility; to amend
Section 38-77-920, as amended, relating to the prohibition on an insurer's and
agent's refusal to accept insurance, so as to delete provisions requiring
risks to be accepted by an insurer; to amend Section 56-9-350, relating to the
verification of insurance coverage following certain accidents, so as to
revise the requirements for verification; to amend Section 56-10-10, relating
to security on registered vehicles, so as to limit its application to certain
drivers; to amend Section 56-10-220, relating to the insurance requirement for
a vehicle sought to be registered so as to provide for application of the
Section to persons required to provide security on a vehicle; to amend Section
56-10-240, relating to the requirements upon loss of insurance, so as to
provide for application of the Section to vehicles for which security is
required and delete the provision referencing the objective standards test; to
amend Section 56-10-270, relating to the operation of uninsured motor
vehicles, so as to provide for the Section to apply to violations of Chapter
10, Title 56; to amend Article 3, Chapter 39, Title 59, relating to mandatory
driver education and training programs, so as to provide for students issued a
beginner's permit or special restricted license to complete the program before
they receive a driver's license, provide for the State Board of Education to
establish minimum guidelines, and provide for additional funds to implement
and maintain the programs; to repeal Section 38-73-455, relating to automobile
insurance rates, Section 38-73-460, relating to the effect on rates of gains
and losses by the Facility, Sections 38-73-1420 and 38-73-1425, relating to
the Reinsurance Facility, Section 38-77-10, relating to the purposes of the
automobile insurance provisions, Sections 38-77-110, 38-77-111, 38-77-115,
38-77-145, and 38-77-280, relating to the mandate to write automobile
insurance policies, and Sections 38-77-930, 38-77-940, 38-77-950, and
38-77-960 and Article 5, Chapter 77, Title 38, relating to the Reinsurance
Facility; and to provide for the facility to end operation.
02/26/92 House Introduced and read first time HJ-21
02/26/92 House Referred to Committee on Labor, Commerce and
Industry HJ-23
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976,
BY ADDING ARTICLE 6 TO CHAPTER 77, TITLE 38 SO AS TO
ESTABLISH A JOINT UNDERWRITING ASSOCIATION FOR
AUTOMOBILE INSURANCE; TO AMEND THE 1976 CODE BY
ADDING ARTICLE 5 TO CHAPTER 10, TITLE 56 SO AS TO
PROVIDE FOR THE REGISTRATION AND LICENSING OF
UNINSURED MOTOR VEHICLES; TO AMEND SECTION
38-57-130, RELATING TO MISREPRESENTATIONS, SPECIAL
INDUCEMENTS, AND REBATES PROHIBITED IN INSURANCE
CONTRACTS, SO AS TO DELETE THE PROHIBITION ON
REBATES OR CERTAIN OTHER INDUCEMENTS; TO AMEND
SECTION 38-73-457, RELATING TO FILING INFORMATION ON
BASE RATES, SO AS TO REVISE THE REQUIREMENTS FOR
FILING AND INCLUDE PROVISIONS FOR PREFERRED RATES,
STANDARD RATES, AND SUBSTANDARD RATES; TO AMEND
SECTION 38-73-735, AS AMENDED, RELATING TO PLANS FOR
CREDITS OR DISCOUNTS TO AUTOMOBILE INSUREDS, SO AS
TO DELETE THE PROVISIONS AUTHORIZING THE PLANS TO
BE CEDED TO THE REINSURANCE FACILITY; TO AMEND
SECTION 38-73-750, AS AMENDED, RELATING TO THE
REQUIREMENT THAT AUTOMOBILE INSURERS FILE PLANS
FOR ALLOCATING EXPENSES AND PROFIT, SO AS TO DELETE
THE REFERENCES TO THE REINSURANCE FACILITY; TO
AMEND SECTION 38-73-760, AS AMENDED, RELATING TO
UNIFORM STATISTICAL PLANS FOR THE AUTOMOBILE
INSURANCE BUSINESS, SO AS TO DELETE THE REFERENCE TO
THE REINSURANCE FACILITY; TO AMEND SECTION 38-77-30,
AS AMENDED, RELATING TO DEFINITIONS PERTAINING TO
AUTOMOBILE INSURANCE, SO AS TO DELETE THE
DEFINITION OF REINSURANCE FACILITY; TO AMEND
SECTION 38-77-112, AS AMENDED, RELATING TO THE
REQUIREMENT FOR AN APPLICANT AND POLICYHOLDER TO
HAVE A DRIVER'S LICENSE, SO AS TO DELETE REFERENCES
TO REPEALED CODE SECTIONS; TO AMEND SECTION
38-77-285, AS AMENDED, RELATING TO THE REQUIREMENT
THAT ALL AUTOMOBILE INSURANCE COVERAGES FOR AN
INSURED'S AUTOMOBILE MUST BE IN ONE POLICY, SO AS TO
PROVIDE FOR THE REQUIREMENT TO APPLY TO INDIVIDUAL
PASSENGER AUTOMOBILES INSTEAD OF VEHICLES CEDED
TO THE REINSURANCE FACILITY; TO AMEND SECTION
38-77-920, AS AMENDED, RELATING TO THE PROHIBITION ON
AN INSURER'S AND AGENT'S REFUSAL TO ACCEPT
INSURANCE, SO AS TO DELETE PROVISIONS REQUIRING
RISKS TO BE ACCEPTED BY AN INSURER; TO AMEND
SECTION 56-9-350, RELATING TO THE VERIFICATION OF
INSURANCE COVERAGE FOLLOWING CERTAIN ACCIDENTS,
SO AS TO REVISE THE REQUIREMENTS FOR VERIFICATION;
TO AMEND SECTION 56-10-10, RELATING TO SECURITY ON
REGISTERED VEHICLES, SO AS TO LIMIT ITS APPLICATION TO
CERTAIN DRIVERS; TO AMEND SECTION 56-10-220, RELATING
TO THE INSURANCE REQUIREMENT FOR A VEHICLE SOUGHT
TO BE REGISTERED, SO AS TO PROVIDE FOR APPLICATION OF
THE SECTION TO PERSONS REQUIRED TO PROVIDE SECURITY
ON A VEHICLE; TO AMEND SECTION 56-10-240, RELATING TO
THE REQUIREMENTS UPON LOSS OF INSURANCE, SO AS TO
PROVIDE FOR APPLICATION OF THE SECTION TO VEHICLES
FOR WHICH SECURITY IS REQUIRED AND DELETE THE
PROVISION REFERENCING THE OBJECTIVE STANDARDS
TEST; TO AMEND SECTION 56-10-270, RELATING TO THE
OPERATION OF UNINSURED VEHICLES, SO AS TO PROVIDE
FOR THE SECTION TO APPLY TO VIOLATIONS OF CHAPTER 10,
TITLE 56; TO AMEND ARTICLE 3, CHAPTER 39, TITLE 59,
RELATING TO MANDATORY DRIVER EDUCATION AND
TRAINING PROGRAMS, SO AS TO PROVIDE FOR STUDENTS
ISSUED A BEGINNER'S PERMIT OR SPECIAL RESTRICTED
LICENSE TO COMPLETE THE PROGRAM BEFORE THEY
RECEIVE A DRIVER'S LICENSE, PROVIDE FOR THE STATE
BOARD OF EDUCATION TO ESTABLISH MINIMUM
GUIDELINES, AND PROVIDE FOR ADDITIONAL FUNDS TO
IMPLEMENT AND MAINTAIN THE PROGRAMS; TO REPEAL
SECTION 38-73-455, RELATING TO AUTOMOBILE INSURANCE
RATES, SECTION 38-73-460, RELATING TO THE EFFECT ON
RATES OF GAINS AND LOSSES BY THE FACILITY, SECTIONS
38-73-1420 AND 38-73-1425, RELATING TO THE REINSURANCE
FACILITY, SECTION 38-77-10, RELATING TO THE PURPOSES OF
THE AUTOMOBILE INSURANCE PROVISIONS, SECTIONS
38-77-110, 38-77-111, 38-77-115, 38-77-145, AND 38-77-280,
RELATING TO THE MANDATE TO WRITE AUTOMOBILE
INSURANCE POLICIES, AND SECTIONS 38-77-930, 38-77-940,
38-77-950, AND 38-77-960 AND ARTICLE 5, CHAPTER 77, TITLE
38, RELATING TO THE REINSURANCE FACILITY; AND TO
PROVIDE FOR THE FACILITY TO END OPERATION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 77, Title 38 of the 1976 Code is amended by
adding:
"Article 6
Automobile Joint Underwriting Association
Section 38-77-600. As used in this article:
(1) `Association' means the automobile joint underwriting
association established pursuant to this article.
(2) `Automobile liability insurance' means automobile bodily
injury and property damage liability insurance.
(3) `Net direct premiums' means gross direct premiums written on
automobile liability insurance policies, as computed by the Chief
Insurance Commissioner, less return premiums or the unused or
unabsorbed portions of premium deposits.
Section 38-77-605. (A) A joint underwriting association is
created consisting of all insurers authorized to write within this State, on
a direct basis, automobile liability insurance. Every insurer is and must
remain a member of the association as a condition of its authority to
continue to transact this type of insurance business in this State.
(B) The purpose of the association is to provide automobile liability
insurance on a self-supporting basis.
(C) The association is activated when the Insurance Commission
finds and declares the existence of an emergency because of the
unavailability of automobile liability insurance or the unavailability of
the insurance on a reasonable basis through normal channels.
Section 38-77-610. The association, on behalf of its members, may:
(1) issue or cause to be issued policies of insurance to applicants
not exceeding the limits of liability set forth in Section 38-77-140;
(2) underwrite automobile liability insurance and adjust and pay
related losses or appoint service companies to perform those functions;
(3) cede and assume reinsurance.
Section 38-77-615. (A) Subject to a declaration by the
commission as specified in Section 38-77-605(C) the commissioner shall
promulgate a plan of operation consistent with this article. The plan of
operation is operative no later than thirty days after the declaration of an
emergency by the commission.
(B) The plan of operation must provide for economic, fair, and
nondiscriminatory administration and for the prompt and efficient
provision of automobile liability insurance and may contain other
provisions including, but not limited to, preliminary assessment of all
members for initial expenses necessary to commence operations,
establishment of necessary facilities, management of the association,
assessment of the members to defray losses and expenses, commission
arrangements, reasonable and objective underwriting standards,
acceptance and cession of reinsurance, and appointment of servicing
carriers.
(C) The plan of operation must provide that profit achieved by the
association must be added to the reserves of the association or returned
to the policyholders as a dividend, but profit must not be paid over to or
received by an insurer either in currency or other benefit.
(D) Amendments to the plan of operation may be made by the
directors of the association with the approval of the commissioner or
must be made at the direction of the commissioner after proper notice
and public hearing.
Section 38-77-620. (A) Upon the activation of the plan of
operation, a licensed driver in this State may apply to the association for
coverage. The application must be made on behalf of the applicant by
a licensed agent or broker authorized in writing by the applicant.
(B) If the association determines that the applicant meets the
underwriting standards of the association as set forth in the approved
plan of operation and there is no unpaid, uncontested premium due from
the applicant for prior insurance of the same kind, the association, upon
receipt of the premium or a portion of it as prescribed by the plan of
operation, shall cause to be issued a policy of automobile liability
insurance for six months.
(C) The rates, rating plans, rating rules, rating classifications,
territories, and policy forms applicable to insurance written by the
association and related statistical and experience data are subject to this
article and the provisions of Chapter 73 of Title 38 which are not
inconsistent with this article.
Section 38-77-625. The commissioner shall obtain complete
statistical data in respect to automobile liability losses and reparation
costs as well as all other costs or expenses which underlie or are related
to automobile liability insurance. The commissioner shall promulgate
a statistical plan he considers necessary to gather data referable to loss
and loss adjustment expense experience and other expense experience.
When the statistical plan is promulgated all members of the association
shall adopt and use it. The commissioner may require from a person
obtaining insurance through the association loss, claim, or expense data.
Section 38-77-630. In structuring rates for automobile liability
insurance and determining the profit or loss of the association in respect
to the insurance, consideration must be given by the commissioner to all
investment income so that investment income is a part of the
rate-making and setting process.
Section 38-77-635. Within a time the commissioner directs the
association shall submit for his approval an initial filing, in proper form,
of policy forms, classifications, rates, rating plans, and rating rules
applicable to automobile liability insurance to be written by the
association. If the commissioner disapproves the initial filing, in whole
or in part, the association shall amend the filing, in whole or in part, in
accordance with the direction of the commissioner. If the commissioner
is unable to approve the filing or amended filing within the time
specified, he shall promulgate the policy forms, classifications, rates,
rating plans, and rules to be used by the association in making rates for
and writing the insurance.
Section 38-77-640. (A) Policy forms and rate structure must be
on an occurrence basis and coverage provided by the association only on
that basis.
(B) The policy may not contain a limitation in relation to the
existing law in tort as provided by the statute of limitations of this State.
(C) The policy form may not require as a condition precedent to
settlement or compromise of a claim the consent or acquiescence of the
insured. However, settlement or compromise is not considered an
admission of fault or wrongdoing by the insured. (D) The premium
rate charged for coverage must be at rates established on an actuarially
sound basis, including consideration of trends in the frequency and
severity of losses, and must be calculated to be self-supporting.
Section 38-77-645. The association may provide a rate increase or
assessment subject to the commissioner's approval.
Section 38-77-650. A deficit sustained by the association in any year
must be funded, pursuant to the plan of operation and the rating plan
then in effect, by a rate increase applicable prospectively.
Section 38-77-655. (A) After the initial year of operation, rates,
rating plans, rating rules, and provisions for funding a deficit through
policyholder assessment or premium rate increase must be based upon
the association's loss and expense experience and investment income,
with other information based upon this experience and income the
commissioner considers appropriate. The resultant premium rates must
be on an actuarially sound basis and must be calculated to be
self-supporting.
(B) If sufficient funds are not available for the sound financial
operation of the association, pending funding for a deficit as provided
in Section 38-77-650, all members on a temporary basis shall contribute
to the financial requirements of the association in the manner provided
for in Section 38-77-660. The contribution must be reimbursed to the
members following deficit funding as provided in Section 38-77-650.
Section 38-77-660. All insurers which are members of the
association shall participate in its writings, expenses, and losses in the
proportion that the net direct premiums of each member, excluding that
portion of premiums attributable to the operation of the association,
written during the preceding calendar year bear to the aggregate net
direct premiums written in this State by all members of the association.
Each insurer's participation in the association must be determined
annually on the basis of the net direct premiums written during the
preceding calendar year, as reported in the annual statements and other
reports filed by the insurer with the commissioner. The assessment of
a member insurer, after hearing, may be ordered deferred in whole or in
part upon application by the insurer if, in the opinion of the
commissioner, payment of the assessment may render the insurer
insolvent or in danger of insolvency or otherwise may leave the insurer
in a condition that further transaction of the insurer's business may be
hazardous to its policyholders, creditors, members, subscribers,
stockholders, or the public. If payment of an assessment against a
member insurer is deferred by order of the commissioner in whole or in
part, the amount by which the assessment is deferred must be assessed
against other member insurers in the same manner as provided in this
section. In the order of deferral or in subsequent orders as may be
necessary, the commissioner shall prescribe a plan by which the
assessment deferred must be repaid to the association by the impaired
insurer with interest at the six-month treasury bill rate adjusted
semiannually. Profits, dividends, or other funds of the association to
which the insurer otherwise is entitled must not be distributed to the
impaired insurer but must be applied toward repayment of an assessment
until the obligation has been satisfied. The association shall distribute
the repayments, including interest on them, to the other member insurers
on the basis on which assessments were made.
Section 38-77-665. Every member of the association is bound by the
approved plan of operation of the association and the rules of the board
of directors of the association.
Section 38-77-670. (A) If the authority of an insurer to transact
automobile liability insurance in this State terminates for any reason, its
obligations as a member of the association continue until all its
obligations are fulfilled and the commissioner has so found and certified
to the board of directors.
(B) If a member insurer merges into or consolidates with another
insurer authorized to transact insurance in this State or another insurer
authorized to transact insurance in this State has reinsured the insurer's
entire general liability business in this State, the insurer and its successor
or assuming reinsurer are liable for the insurer's obligations to the
association.
(C) Unsatisfied net liability of an insolvent member of the
association must be assumed by and apportioned among the remaining
members in the same manner in which assessments or gain and loss are
apportioned, and the association shall acquire and has all rights and
remedies allowed by law in behalf of the remaining members against the
estate or funds of the insolvent insurer for funds due the association.
Section 38-77-675. The joint underwriting association is governed
by a board of seven directors. One must be appointed by the Governor
to represent the general public, and four must be appointed by the
commissioner to represent member insurers. One director must be
appointed by the Chairman of the Labor, Commerce and Industry
Committee of the House of Representatives, and one director must be
appointed by the Chairman of the Banking and Insurance Committee of
the Senate, both to represent the general public. The approved plan of
operation of the association may make provision for combining insurers
under common ownership or management into groups for voting,
assessment, and all other purposes and may provide that not more than
one of the officers or employees of the group may serve as a director at
any one time. The commissioner shall appoint the chairman of the board
of directors, and he must preside at all meetings of the board.
Section 38-77-680. An applicant for insurance through the
association, a person insured pursuant to this article, or his
representative, or an insurer adversely affected or claiming to be
adversely affected, by a ruling, an action, or a decision by or on behalf
of the association may appeal to the commission within thirty days after
the ruling, action, or decision.
Section 38-77-685. (A) The association shall file in the office of
the commissioner annually by March first a statement containing
information with respect to its transactions, condition, operations, and
affairs during the preceding year. The statement must contain
information prescribed by the commissioner and must be in the form he
directs.
(B) The commissioner, at a reasonable time, may require the
association to furnish additional information concerning its transactions,
condition, or a matter connected with it considered to be material and of
assistance in evaluating the scope, operations, and experience of the
association.
Section 38-77-690. Each application for coverage in the association
must include, in boldfaced type, immediately preceding the applicant's
signature, the following: THIS INSURANCE IS BEING AFFORDED
THROUGH THE AUTOMOBILE JOINT UNDERWRITING
ASSOCIATION AND NOT THROUGH THE PRIVATE MARKET.
PLEASE BE ADVISED THAT COVERAGE WITH A PRIVATE
INSURER MAY BE AVAILABLE FROM ANOTHER AGENT AT A
LOWER COST. AGENT AND COMPANY LISTINGS ARE
AVAILABLE IN THE LOCAL YELLOW PAGES.
Section 38-77-695. The commissioner shall make an examination
into the financial condition and affairs of the association at least
annually and shall file a report on the examination with the commission,
the Governor, and the General Assembly. The expenses of the
examination must be paid by the association."
SECTION 2. Chapter 10, Title 56 of the 1976 Code is amended by
adding:
"Article 5
Registration and Licensing of
Uninsured Motor Vehicles
Section 56-10-510. As used in this chapter:
(1) `Conviction' also includes the entry of a plea of guilty or nolo
contendere and the forfeiture of bail or collateral deposited to secure a
defendant's appearance.
(2) `Insured motor vehicle' is a motor vehicle as to which one or
more of the following apply:
(a) There is bodily injury liability insurance and property damage
liability insurance in the amounts specified in Section 38-77-140 issued
by an insurer authorized to do business in this State.
(b) A bond has been given or cash or securities delivered in
lieu of the insurance.
(c) The owner qualifies as a self-insurer in accordance with
Section 56-9-60.
(3) `Uninsured motor vehicle' is a motor vehicle required to be
registered as to which one or more of the following apply:
(a) There is no bodily injury liability insurance and property
damage liability insurance.
(b) No bond has been given or cash or securities delivered in
lieu of bond.
(c) The owner does not qualify as a self-insurer.
Section 56-10-520. In addition to other fees prescribed by law a
person registering and licensing an uninsured motor vehicle, as defined
in Section 56-10-510, in this State shall pay four hundred dollars upon
registering and licensing the vehicle. Credit for payment made on a
motor vehicle subsequently transferred during the same licensing year
must be applied to a motor vehicle registered by the uninsured motorist
during the same licensing year.
Section 56-10-530. The South Carolina Department of Highways
and Public Transportation may require a person applying for licensing
and registration of a motor vehicle to certify under the penalties in
Section 56-10-610 whether or not each motor vehicle is an insured
motor vehicle, as defined in Section 56-10-510, or the department in its
discretion may require a person to:
(a) produce as evidence of financial responsibility a certificate on a
form prescribed by the Department of Insurance or self-insurance
complying with the requirements of Section 56-9-60;
(b) give bond or deliver the cash or securities provided in
Sections 56-9-570 and 56-9-580; or
(c) pay the fee prescribed in Section 56-10-520.
Section 56-10-540. Upon the termination of insurance by
cancellation or failure to renew, notice of the termination must be filed
by the insurer with the department not later than five days following the
effective date of the termination.
Section 56-10-550. The department, upon receipt of the notice of
termination provided in Section 56-10-540, shall revoke the certificate
of registration and license plates of the motor vehicle with respect to
which the policy was in force unless the owner gives evidence that the
vehicle is an insured vehicle in the manner provided in Section
56-10-530 or pays the fee provided in Section 56-10-520.
Section 56-10-560. Funds collected by the department under this
chapter must be deposited with the State Treasurer and credited to a
special fund to be allocated by the General Assembly in the annual state
appropriations act for driver education, training, and safety.
Section 56-10-570. The Chief Insurance Commissioner may
promulgate regulations necessary to implement this chapter.
Section 56-10-580. A person who knowingly makes a false
certificate as to whether a motor vehicle is an insured motor vehicle or
gives to the department false evidence that a motor vehicle sought to be
registered is insured is guilty of a misdemeanor and, upon conviction,
must be fined not less than five hundred dollars or imprisoned ninety
days. The department shall deny, for six months, registration of a motor
vehicle for which a false certificate or false evidence is presented to the
effect that the vehicle is insured and shall revoke and may not reissue for
six months the driver's license of a person making a false certificate or
offering false evidence as specified in this section.
Section 56-10-590. This article is cumulative to other provisions in
this title."
SECTION 3. Section 38-57-130 of the 1976 Code is amended to
read:
"Section 38-57-130. (1) No person may:
(1) make, issue, circulate, or cause to be made, issued,
or circulated any an estimate, an illustration,
or a circular statement misrepresenting the terms of any
a policy issued or to be issued, the benefits or advantages
promised thereby by the policy, or the dividends or
share of the surplus to be received thereon. on the
policy;
(2) No person may make any a false or
misleading statement as to the dividends or share of surplus previously
paid on similar policies.
(3) No person may pay, allow, or give or offer to pay, allow, or
give, directly or indirectly, as inducement to the purchase or the renewal
of an insurance contract, any rebate of premiums payable on the
contract, any special favor or advantage in any benefits payable thereon,
or any valuable consideration or inducement that is not specified in the
contract."
SECTION 4. Section 38-73-457 of the 1976 Code is amended to
read:
"Section 38-73-457. Notwithstanding Sections 38-73-920
and 38-73-1210, every automobile insurer and rating organization shall,
prior to October 1, 1987, file with the Commissioner a base rate, which
is defined as a rate by coverage calculated solely upon the experience
generated by the risk for each class and territory retained by the insurer
in its voluntary book of business and which must not include experience
generated by risks ceded or assumed from the Reinsurance Facility
established under Section 38-73-1030. An objective standards rate by
coverage must also be filed which is twenty-five percent above the base
rate previously described for each class and territory. The base rate must
be calculated by removing from the rate or premium charge, then in
effect for the automobile insurer, that portion of the rate or premium
charge attributable to the net gain or loss of the insurer as a result of
participation in the operating results of the Facility as required by
Section 38-77-760. In determining the base rate and objective standards
rate, by coverage, the Commissioner, in order that no extra premium
revenue is generated by this section, shall require that the insurer's
average rate, by coverage, on October 1, 1987, (computed as a weighted
average of the base rate and objective standards rate, by coverage, as
determined by the Commissioner), not exceed the insurer's average rate,
by coverage, prior to October 1, 1987, as determined by the
Commissioner. The provisions of the Administrative Procedures Act
apply to any court appeal of a base rate or objective standards rate
brought thereunder. The base rate or objective standards rate approved
by the Commissioner may be put into effect under bond in a similar
manner that a public utility may put a proposed rate increase into effect
under bond as provided by law. No insurer may file a base rate for any
class or territory which is higher than the rate or premium charge,
exclusive of that portion required by Section 38-73-460, approved by the
Commissioner for use on October 1, 1987. As a result of this section,
no insured may receive an increase in rates for other than an increase in
coverage or due to the provisions of Section 38-77-280, 38-77-610, or
38-73-455, unless the insurer files additional rates in accordance with
this title.
The base rate and objective standards rate filed by each insurer of
automobile insurance are effective if they meet the requirements of this
section, on or after July 1, 1988, for all eligible applicants and upon the
renewal date, on or after July 1, 1988, for all eligible existing
policyholders. If the base rate and objective standards rate filed by an
automobile insurer do not meet the requirements of this section, the
Commissioner shall suspend the authority of that insurer to write
automobile insurance until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the
Facility recoupment charge approved or established pursuant to Section
38-77-610 may be approved for an insurer of automobile insurance
unless that rate or premium charge is calculated in accordance with this
section and meets the other applicable requirements of this title
pertaining to the approval of rates or premium charges.
(A) Not later than ninety days after the effective date of this
section, as amended, every automobile insurer and rating organization
shall file with the commissioner revised rates for automobile insurance
policies written by the insurer in this State. Each insurer and rating
organization shall file a:
(1) `preferred rate' by driver classification and territory which
is a rate less than the `standard rate';
(2) `standard rate' which must be the approved rate by driver
classification and territory on July 1, 1992, for a risk qualifying for the
safe driver discount, including the safe driver discount;
(3) `substandard rate' by driver classification and territory
which is a rate more than the `standard rate' but less than the rate by
driver classification and territory for the Automobile Joint Underwriting
Association.
(B) The commissioner shall approve the rates filed pursuant to
subsection (A) if the rates meet the requirements of the section, and the
rates are effective for all policies of automobile insurance issued or
renewed after December 31, 1992.
(C) Automobile insurers may place an automobile insurance risk
at any of the three rate levels without restriction. However, the Uniform
Merit Rating Plan must continue to apply to all risks written by the
insurer.
The consumer advocate, upon request to the commissioner, must be
provided by him with a copy of any a base rate
filed with the commissioner along with any supporting materials,
documents, or studies utilized to support the filed base rate. In
addition, every automobile insurer and rating organization
shall promptly shall respond to requests for information
and data requested by the consumer advocate relating to the filed base
rate. The consumer advocate must be afforded an opportunity for a
hearing before the commissioner on any a filed base rate
before it takes effect that he believes does not meet the requirements of
this section. Final decisions of the commissioner regarding this hearing
are subject to the provisions of the State Administrative
Procedures Act."
SECTION 5. Section 38-73-735 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-73-735. In addition to risk and territorial
classification plans promulgated or approved under Section 38-73-730,
the commissioner may promulgate plans to afford credits or discounts
to automobile insureds, or he may approve the credit or discount plans
filed with him by insurers of automobile insurance. No automobile
insurance credit or discount plan may be promulgated or approved by
the commissioner unless:
(1) The criteria for determining eligibility for credits or discounts
under the plan are objective, clear, and unequivocal;.
(2) The criteria are based upon factually or statistically supported
data; and.
(3) The credits or discounts provided under the plan will be
afforded by the insurer on a nondiscriminatory basis to all insureds who
are eligible therefor. If an insurance credit or discount plan
is given to an insured pursuant to this section, the policy may be ceded
to the Reinsurance Facility in accordance with the facility's plan of
operation."
SECTION 6. Section 38-73-750 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 37-73-750. Automobile insurers shall file with the
State Rating and Statistical Division their plans or systems for allocating
expenses and profit as respects the various kinds or types and
classes of automobile insurance risks and the classes of risks
thereunder. However, no plan or system may be filed which is
inconsistent with the classification of risks promulgated by the
commissioner. No plan or system may be filed or approved if the
purpose or effect is to discriminate unfairly or unreasonably in respect
to the allocation of expenses or profit between classes of risks or if the
purpose or effect is to impose a burden or detriment upon the South
Carolina Reinsurance Facility or to secure to the insurer using the
plan or system an unfair or unreasonable competitive advantage to the
detriment of the South Carolina Reinsurance Facility or other
insurers. The commissioner after due notice and hearing, shall
disapprove and disallow the further use of an inconsistent,
discriminatory, burdensome, or competitively unfair plan or system for
the allocation of expenses and profit."
SECTION 7. Section 38-73-760 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-73-760. (A) The commissioner, through the
State Rating and Statistical Division, shall fix, establish, and promulgate
any uniform statistical plan that may be necessary or appropriate
for the gathering and compilation of statistical data from insurers, rating
organizations, or advisory organizations transacting or otherwise
engaged in the automobile insurance business in the State. In
promulgating any uniform statistical plan consideration may be given to
the extent reasonable or practicable to the rules and forms of the plans
used for rating systems in other states. Upon the promulgation of
any a statistical plan for automobile insurance in this
State, the same it must be adopted and used by every
automobile insurer in this State South Carolina, and
every automobile insurer shall constitute the State Rating and Statistical
Division its statistical agent for automobile insurance in this State.
(B) The statistical plan may be promulgated so as to provide for
any and all the statistical and financial data necessary
or appropriate to the implementation of the policy of this chapter or
Chapter 77 of this title or to yield statistical data reasonably and fairly
related to any of the purposes of this article, including,
but not limited to, the:
(1) fixing, establishing, and promulgating of
risk and territorial classification plans for automobile insurance;
(2) determining the pure loss rate level indications for
automobile insurance in South Carolina this State based
upon all South Carolina loss experience and assisting in the translating
of this information into usable form for insurance consumers in terms of
the final rates or premium charges of each insurer of automobile
insurance,;
(3) determining the reasonability of loss adjustment
expenses, other expenses, and profit factors applied by insurers
to their pure loss components in arriving at their final rates or premium
charges for automobile insurance both for purposes of
ensuring that the final rates or premium charges are adequate, not
excessive, and not unfairly discriminatory and for ensuring that
improper and undue burdens are not imposed upon the South Carolina
Reinsurance Facility by way of excessive ceding commissions to ceding
insurers;
(4) determining the amount, validity, and propriety of
class and territorial differentials applied to the general pure loss rate
levels and testing not less than annually the appropriateness of the
existing differentials in the light of the most recent available loss
experience data;
(5) determining the amount, validity, and propriety of
surcharges and discounts referable to any a uniform
merit rating plan or system which may have been promulgated by the
commissioner or which may be under consideration for promulgation,
the appropriateness of the surcharges and discounts in the light of the
most recent available loss experience data;
(6) determining the propriety or validity of any
a plan for the classification of risks which may be in effect or
under consideration based upon the propensities of motor vehicles or
classes or types of motor vehicles or their equipment to shield occupants
from death or serious injury as a result of crash or based upon the
relative invulnerability of the motor vehicles or classes or types of motor
vehicles to extensive damage as a result of crash or their repairability at
modest expense; or
(7) obtaining data relevant to studies being made or
to be made by the State Rating and Statistical Division in connection
with any of the foregoing the provisions of this
subsection or in connection with means and methods for providing
appropriate rates for insurance consumers or fostering and encouraging
competition among insurers.
(C) The functions and responsibilities of the State Rating and
Statistical Division acting as statistical agent for automobile insurers
may must not be delegated, except that the
commissioner may, as the result of competitive bidding,
may make an agreement with some suitable person, firm,
corporation, or other organization for the gathering, compilation,
recordation, or computerization of the statistical data. However, these
functions are always subject to the supervision, direction, and control of
the commissioner and the examination and oversight of insurers in
respect to their obligations to furnish statistical data to him remain the
direct responsibility of the commissioner and may never
must not be delegated other than to the State Rating and
Statistical Division.
(D) Any A merit rating plan or system promulgated
by the commissioner pursuant to the authority contained in
subsection (B) likewise extends to and includes automobile
collision insurance. However, nothing contained in this
subsection (d) requires that the same percentage or dollar
amounts for discounts or surcharges apply to collision coverage nor does
it require that surcharges already assessed in respect to the liability
coverages of the policy again be assessed in respect to the collision
coverage afforded by the same policy.
(E) The commissioner shall require all insurers transacting
automobile insurance business in this State to assess surcharges and
grant safe driver discounts of no less than twenty percent.
(F) All policies of automobile insurance issued in South Carolina
must show on the initial policy or on an attachment to the initial policy
and on all premium invoices or attached to all premium invoices, in a
form to be approved by the commissioner, the amount of
any a surcharge, (including loss of safe
driver discount) that may be, applicable to the policy as
a result of any a merit rating plan or system
promulgated by the commissioner. Also to be included, presented in
a fashion that is readily understandable, is The reason for the
applicable surcharge or the loss of safe driver discount must be
included and presented in a readily understandable fashion. The
amount of the applicable safe driver discount also must be shown."
SECTION 8. Section 38-77-30 of the 1976 Code, as last amended by
Act 148 of 1989, is further amended by deleting item (5) and
renumbering items to conform. Item (5) reads:
"(5) `Facility' means the unincorporated, nonprofit, legal
entity created by this chapter to reinsure policies of automobile
insurance known as the South Carolina Reinsurance Facility."
SECTION 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 Sections 38-77-110,
38-77-920, and 38-77-280, No automobile insurer is required to
write coverage for automobile insurance as defined in Section 38-77-30
for any an applicant or existing policyholder who
does not, at the time of application or renewal, does
not possess a valid South Carolina motor vehicle or special
restricted driver's license. 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 principally in this State, the owner of the
vehicle must 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."
SECTION 10. Section 38-77-285 of the 1976 Code, as last
amended by Act 146 of 1991, is further amended to read:
"Section 38-77-285. All automobile insurance coverages
written by an insurer for an insured's automobile must be written in the
same policy except that all automobile insurance policies in
effect on the effective date of this section may continue in force until the
expiration date of the policy. This section applies only to insurance
policies covering vehicles eligible to be ceded to the Reinsurance
Facility individual passenger automobiles."
SECTION 11. Section 38-77-920 of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"Section 38-77-920. Except as provided for in Section
38-77-110 and as is specifically provided for otherwise by law, no
automobile insurer may refuse acceptance of automobile insurance for
an insurable risk from any applicant nor require that certain classes or
types of risks be placed through some particular agent or employee. This
section is not intended to preclude any insurer from recognizing and
giving effect to the property rights of agents in expirations or renewals.
No agent who represents more than one insurer of automobile insurance
may refuse to accept in behalf of an insurer represented by him
automobile insurance for an insurable risk where the applicant for
insurance designates by name or description the insurer of his choice. If
the applicant relies upon the skill and judgment of the agent to place the
risk in any insurer represented by the agent, the agent may place the risk
in the insurer which he considers appropriate. No insurer may agree,
collude, or conspire with an agent or give, offer, or promise an agent
anything of value to place any risk or any class or type of risk under
such circumstances in another insurer. Every such agreement is utterly
void and every act of collusion or conspiracy constitutes an act of unfair
competition by both the insurer and agent which, if proved, must result
in the suspension or revocation of the license of each for not less than
one year, in addition to any other penalties or liabilities applicable.
No automobile insurer authorized to transact automobile insurance
business in this State which offers automobile insurance
through the mails or uses the mails in transacting automobile insurance
on insurable risks situate in this State may restrict its mailings or
offerings to certain counties, areas, or zip-code territories of this State.
The commissioner is directed to shall examine an
insurer's records at any time when the commissioner
considers it necessary to determine that the insurer is not so
restricting or limiting its offerings."
SECTION 12. Section 56-9-350 of the 1976 Code is amended to
read:
"Section 56-9-350. The operator or owner of a motor vehicle
involved in an accident resulting in property damage of four hundred
dollars or more, or in bodily injury or death, must be furnished a
written request form at the time of the accident, or as soon after the
accident as possible, by the investigating officer for completion and
verification of liability insurance coverage, the form to be in a manner
prescribed by the Department.
The completed and verified form must be returned by the operator or
owner to the Department within fifteen days from the date the form was
delivered by the officer. Failure to return the form, verified in the proper
manner, is prima facie evidence that the vehicle was uninsured.
The operator or owner of a motor vehicle involved in an accident
resulting in property damage of four hundred dollars or more, or in
bodily injury or death, which was not investigated by a law enforcement
officer shall furnish to the Department a written report and verification
of liability insurance coverage, the proof to be in a manner prescribed by
the Department within fifteen days after the accident, shall
forward a written report of the accident to the department on a form
prescribed by the department. The report must contain information to
enable the department to determine whether the requirements for the
deposit of security under Section 56-9-351 are inapplicable by reason of
the existence of insurance or other exceptions specified in this title.
Failure to return the form in the proper verified manner is prima facie
evidence that the vehicle was not registered in compliance with this
title."
SECTION 13. Section 56-10-10 of the 1976 Code is amended to
read:
"Section 56-10-10. Every owner of a motor vehicle
required to be registered in this State shall maintain the security required
by Section 56-10-20 with respect to each such motor vehicle owned by
him throughout the period the registration is in effect. Security
in the amount required by Section 56-10-20 must be maintained on
every motor vehicle required to be registered in this State where the
owner or other operator not excluded in accordance with Section
38-77-340 and who resides in the same household does not qualify for
the safe driver discount authorized pursuant to Section 38-73-735. The
security must be maintained with respect to each motor vehicle owned
by him throughout the period the registration is in effect. No
certificate of registration may be issued or transferred to an owner by the
executive director unless the owner or prospective owner produces
satisfactory evidence that the security is in effect, including the
name of the owner's automobile liability insurer, the name of the agent,
the identification number of the insurance policy, and the effective dates
of the policy, except in cases where other security is
approved."
SECTION 14. Section 56-10-220 of the 1976 Code is amended to
read:
"Section 56-10-220. Every person required to provide
security on a motor vehicle as provided in Section 56-10-10
applying for registration for a motor vehicle shall at the time of
such registration and licensing shall declare the vehicle
to be an insured motor vehicle under the penalty set forth in Section
56-10-260 and shall execute and furnish to the department his certificate
that such the motor vehicle is an insured motor vehicle
and that he will maintain insurance thereon on it during
the registration period. The certificate must be in the form prescribed by
the department. The department may require any a
registered owner or any an applicant for registration and
licensing of a motor vehicle declared to be an insured motor vehicle to
submit a certificate of insurance executed by an authorized agent or
representative of an insurance company authorized to do business in this
State. Such The certificate also must
also be in a form prescribed by the department."
SECTION 15. The first paragraph of Section 56-10-240 of the
1976 Code is amended to read:
"If, during the period for which it is licensed, a motor vehicle
for which security is required as provided in Section 56-10-10
is or becomes an uninsured motor vehicle, then the vehicle
owner immediately shall obtain insurance on the vehicle or within five
days after the effective date of cancellation or expiration of his liability
insurance policy surrender the motor vehicle license plates and
registration certificates issued for the motor vehicle. If five working
days after the last day to pay an automobile liability insurance premium,
whether it is the premium due date or a grace period that is granted
customarily or contractually a motor vehicle is an uninsured motor
vehicle, the insurer shall give written notice, or notice by magnetic or
electronic media in a manner considered satisfactory to the department,
within ten days after the five-day period ends, in addition to that notice
previously given in accordance with law, by delivery under United
States Post Office bulk certified mail, return receipt requested, to the
department of the cancellation or refusal to renew under the
following circumstances:
(1) the lapse or termination of such the
insurance or security occurs within three months of issuance
provided that. This subsection
provision only applies to new policies, and not renewal
or replacement policies; or
(2) the lapse or termination occurs after three months for a resident
who fails one or more of the objective standards prescribed in Section
38-73-455. The department may, in its discretion,
may authorize insurers to utilize alternative methods of
providing notice of cancellation of or refusal to renew to the department.
The department may not reissue registration certificates and license
plates for that vehicle until satisfactory evidence has been filed by the
owner or by the insurer who gave the cancellation or refusal to renew
notice to the department that the vehicle is insured. Upon receiving
information to the effect that a policy is canceled or otherwise
terminated on a motor vehicle registered in South Carolina, the
department shall suspend the license plates and registration certificate
and shall initiate action as required within fifteen days of the notice of
cancellation to pick up the license plates and registration certificate. A
person who has had his license plates and registration certificate
suspended by the department, but who at the time of suspension
possesses liability insurance coverage sufficient to meet the financial
responsibility requirements as set forth in this chapter, has
the right to may appeal the suspension immediately to the
Chief Insurance Commissioner. If the commissioner determines that the
person has sufficient liability insurance coverage, he shall notify the
department, and the suspension is voided immediately. The department
shall give notice by first class mail of the cancellation or suspension of
registration privileges to the vehicle owner at his last known address.
However, when license plates are surrendered pursuant to this section,
they must be held at the department office in the county where the
person who surrenders the plates resides."
SECTION 16. Section 56-10-270 of the 1976 Code is amended to
read:
"Section 56-10-270. (A) Any A person
knowingly operating an uninsured motor vehicle subject to registration
in this State in violation of this chapter or any a
person knowingly allowing the operation of an uninsured motor vehicle
subject to registration in this State in violation of this chapter
is guilty of a misdemeanor and, upon conviction, must be fined not less
than one hundred dollars nor more than two hundred dollars or
imprisoned for thirty days and, upon conviction
of for a second offense, be fined two hundred
dollars or imprisoned for thirty days, or both, and, upon
conviction, for a third and subsequent offenses must be
offense, imprisoned for not less than forty-five days nor
more than six months. Only convictions which occurred within five
years including and immediately preceding the date of the last
conviction constitute prior convictions within the meaning of this
section. An uninsured motor vehicle includes an insured vehicle with
respect to which the operator has been excluded from coverage pursuant
to the provisions of Section 38-77-340.
(B) The department upon receipt of information to the effect that
any person has been convicted of violating subsection (A) of
this section shall suspend the driving privilege and all license plates
and registration certificates issued in the person's name for a period
of thirty days and may not reinstate that person's privileges until
proof of financial responsibility has been filed.
(C) Any A person whose license plates and
registration certificates which are suspended as provided in this
section, which are and not suspended for any
other another reason, may have them immediately
restored, if he files proof of financial responsibility with the
department."
SECTION 17. Article 3, Chapter 39, Title 59 of the 1976 Code is
amended to read:
"Article 3
Mandatory Driver Education and Training
Section 59-39-310. The governing board of any
a school district maintaining a secondary school which
includes any grades nine through twelve, inclusive, shall establish
driver education and training programs for students in high school
grades. Students who have been issued a beginner's permit as
provided in Section 56-1-50 or a special restricted license as provided
in Section 56-1-180 shall complete the program before receiving a
driver's license and provide certification of completion to licensing
officials of the South Carolina Department of Highways and Public
Transportation.
Section 59-39-320. The State Board of Education shall promulgate
rules and regulations for to establish guidelines for
driver education and training programs required in Section
59-39-310 establishment by local school districts of approved
driver education and training courses, and when duly promulgated shall
have full force and effect of law. Such regulations shall require
that credit for completion of a driver education training course shall not
be given unless the course shall have included The guidelines
must include, but are not limited to the requirements of not less than
thirty classroom hours of instruction in driver education, and not less
than six hours of actual behind-the-wheel driving.
Section 59-39-330. The rules and regulations of the State Board
of Education and Driver education and training course
shall programs must be under the supervision of a qualified
driver education teacher. Such rules and regulations shall include
instrumental standards, teacher qualifications, reimbursement procedure,
and other requirements which will further implement the purposes and
intent of this article.
Section 59-39-340. The State Board of Education shall allow
to each school district operating a driver education training
program an amount equal to thirty dollars per for
each pupil completing the standard prescribed course in the
its driver education and training program in that school
district during the preceding fiscal year in accordance with the
regulations set forth by the State Board of Education for instructing
pupils in driver education and training. Additional funds to
implement and maintain the programs required by this article are
available to school districts as determined by the General Assembly
pursuant to Section 56-10-560."
SECTION 18. Sections 38-73-455, 38-73-460, 38-73-1420,
38-73-1425, 38-77-10, 38-77-110, 38-77-111, 38-77-115, 38-77-145,
38-77-280, 38-77-930, 38-77-940, 38-77-950, and 38-77-960 and
Article 5, Chapter 77, Title 38 of the 1976 Code are repealed.
SECTION 19. The requirements in Section 59-39-310 of the 1976
Code, as amended in this act, for certain students to complete a driver
education and training program before receiving a driver's license
applies to students anticipating graduation from high school in 1995 and
after.
SECTION 20. Effective September 30, 1992, the Reinsurance
Facility may accept no further cessions of private passenger or small
commercial risks. The commissioner shall instruct the facility to begin
winding up operations upon approval of this act by the Governor and
shall develop a plan of operation necessary to effectuate this purpose.
A net result of operations of the facility resulting in an operating deficit
must be recouped as provided by law, regulation, and operating policies
of the facility before September 30, 1992. A net result of operations of
the facility resulting in an operating surplus must be distributed to the
Automobile Joint Underwriting Association.
SECTION 21. This act takes effect September 30, 1992.
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