Bill 3395

                    Current Status

Bill Number:               3395
Ratification Number:       487
Act Number                 442
Introducing Body:          House
Subject:                   Commissioner may order rate
                           reduction

(A442, R487, H3395)

AN ACT TO AMEND SECTION 38-73-1100, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE DETERMINATION OF EXCESSIVE OR UNREASONABLE RATES BY THE CHIEF INSURANCE COMMISSIONER, SO AS TO AUTHORIZE HIM TO ORDER A REFUND OF PREMIUMS WHERE A DETERMINATION THAT EXCESSIVE OR UNREASONABLE PROFITS HAVE BEEN REALIZED; AND TO REPEAL SECTION 38-73-465 RELATING TO THE AUTHORITY OF THE CHIEF INSURANCE COMMISSIONER TO ORDER RATES OF INDIVIDUAL INSURERS TO BE REVISED AND EXCESSIVE BENEFITS REBATED UNDER CERTAIN CONDITIONS.

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

Commissioner may order rate reduction

SECTION 1. Section 38-73-1100 of the 1976 Code, as added by Act 155 of 1987, is amended to read:

"Section 38-73-1100. If at any time it appears to the Commissioner that rates charged for property, casualty, surety, marine, title, or allied lines of insurance in this State are excessive or unreasonable, in that the results of the business of the insurer in this State during the three years immediately preceding the year in which the investigation is made, as indicated by the insurer's annual statements and any supplements to them, show an aggregate operating profit in excess of a reasonable amount, then the Commissioner may order a general reduction in rates which will reduce the operating profit to a reasonable amount. Any reduction ordered by the Commissioner must be applied to the class or classes of risks as the insurer or rating bureau may elect., an they may not be compelled to reduce rates on classes which have not produced a reasonable operating profit for the three-year period. In addition to ordering a general reduction in rates, the Commissioner may also order a pro rata refund of any excessive or unreasonable profits found to have been realized by the insurer, together with interest. The Commissioner shall determine the rate of interest which must be two percent above the average prime rate for the three-year period. Any refund which is ordered must be equitably apportioned among the policyholders entitled to it, and may be given either in the form of a cash refund or as a credit toward future premiums or a combination of these two methods. In determining the question of a reasonable operating profit under this section, the Commissioner as a protection to policyholders shall give proper and reasonable consideration to conflagration liabilities, both within and without this State."

Repeal

SECTION 2. Section 38-73-465 of the 1976 Code is repealed.

Time effective

SECTION 3. This act takes effect upon approval by the Governor.