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Bill Number: 593 Ratification Number: 235 Act Number 166 Introducing Body: Senate Subject: Declaration of purpose for the regulation of automobile insurance in South Carolina
(A166, R235, S593)
AN ACT TO AMEND SECTION 38-37-110, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE DECLARATION OF PURPOSE FOR THE REGULATION OF AUTOMOBILE INSURANCE IN SOUTH CAROLINA, SO AS TO FURTHER PROVIDE FOR THIS DECLARATION OF PURPOSE; TO DIRECT THE CHIEF INSURANCE COMMISSIONER TO REVIEW THE CURRENT SYSTEM OF CLASSIFYING AND RATING YOUTHFUL OPERATORS FOR AUTOMOBILE INSURANCE, AND TO PROMULGATE REGULATIONS MAKING NECESSARY CHANGES THERETO NOT LATER THAN FEBRUARY 1, 1988; TO AMEND SECTION 38-37-930, RELATING TO AFFILIATED INSURERS, SO AS TO REVISE THE PROVISIONS OF THE SECTION TO ESTABLISH THOSE CONDITIONS UNDER WHICH APPLICANTS OR POLICYHOLDERS QUALIFY FOR THE BASE RATE OR THE HIGHER OBJECTIVE STANDARDS RATE AND TO REGULATE WHAT RATES MAY BE UTILIZED BY MEMBER COMPANIES OF AN AFFILIATED GROUP OF AUTOMOBILE INSURERS; TO AMEND SECTION 56-11-140, RELATING TO COVERAGE LIMITATIONS, SO AS TO DELETE CERTAIN REFERENCES TO COLLISION AND COMPREHENSIVE COVERAGES; TO AMEND ARTICLE 5, CHAPTER 37 OF TITLE 38, RELATING TO RISK CLASSIFICATION PLANS AND REQUIRED INSURANCE, BY ADDING SECTION 38-37-315 SO AS TO PROVIDE THAT NO INSURER IS REQUIRED TO WRITE INSURANCE FOR ANY APPLICANT WHO DOES NOT HAVE A VALID SOUTH CAROLINA DRIVER'S LICENSE AND TO PROVIDE EXCEPTIONS; TO AMEND ARTICLE 9, CHAPTER 37 OF TITLE 38, RELATING TO THE SOUTH CAROLINA REINSURANCE FACILITY, BY ADDING SECTIONS 38-37-785, 38-37-795, 38-37-800, AND 38-37-810 SO AS TO REQUIRE EVERY AUTOMOBILE INSURER AND RATING ORGANIZATION TO FILE WITH THE CHIEF INSURANCE COMMISSIONER PRIOR TO OCTOBER 1, 1987, A BASE RATE AND AN OBJECTIVE STANDARDS RATE, AND TO PROVIDE THAT THOSE RATES ARE EFFECTIVE JULY 1, 1988, UNDER CERTAIN CONDITIONS; TO PROVIDE FOR A FACILITY RECOUPMENT
CHARGE ON CERTAIN BASE RATES, PROVIDE THE FORMULA FOR ITS ANNUAL CALCULATION, AND PROVIDE FOR THE CLASSIFICATION AND USE OF RECOUPMENT CHARGES; TO AMEND ARTICLE 11, CHAPTER 37 OF TITLE 38, RELATING TO UNLAWFUL ACTS FOR PURPOSES OF AUTOMOBILE INSURANCE, BY ADDING SECTION 38-37-935 SO AS TO PROVIDE FOR THE WRITING OF COLLISION AND COMPREHENSIVE COVERAGE, DEDUCTIBLE AMOUNTS, CIRCUMSTANCES WHERE AN INSURER MAY REFUSE TO WRITE SUCH COVERAGE, TERMS OF SALE, AND CESSION TO THE REINSURANCE FACILITY; TO REQUIRE THE CHIEF INSURANCE COMMISSIONER TO PROMULGATE REGULATIONS WHICH REQUIRE EACH INSURER LICENSED TO WRITE PROPERTY AND CASUALTY INSURANCE IN THIS STATE, TO SUBMIT CERTAIN INFORMATION AND SUPPLEMENTAL REPORTS RELATING TO ITS WRITINGS IN THIS STATE AND THE UNITED STATES; TO PROVIDE FOR, AMONG OTHER THINGS, THE FORM, COVERAGE, AND CONTENTS OF THE SUPPLEMENTAL REPORT; TO REQUIRE THE CHIEF INSURANCE COMMISSIONER ANNUALLY TO COMPILE AND REVIEW ALL THESE REPORTS SUBMITTED; TO PROVIDE THAT THE INFORMATION SUBMITTED MUST BE PUBLISHED AND MADE AVAILABLE TO INTERESTED INSUREDS OR CITIZENS, AND TO PROVIDE CIVIL PENALTIES FOR INSURERS WHO FAIL TO COMPLY WITH THE PROVISIONS PERTAINING TO THESE REPORTS; TO PROVIDE THAT, WHEN DEALING WITH THE AGENTS OF A COMPANY WHO ARE LICENSED TO SELL AUTOMOBILE INSURANCE, THE COMPANY MAY NOT USE ANY OF THE BUSINESS PLACED IN THE FACILITY IN DETERMINING THE PROFITABILITY OF THAT AGENT'S BUSINESS AND THAT THE COMPANY SHALL NOT ASK ANY AGENT NOT TO WRITE ANY KIND OF AUTOMOBILE BUSINESS OR HOLD THE FACILITY BUSINESS AGAINST ANY AGENT IN ANY MANNER WHICH COULD BE CONSTRUED AS BEING DETRIMENTAL TO THE AGENT; TO AMEND SECTION 56-11-190, RELATING TO REGISTRATION OF MOTOR VEHICLES AND THE MAINTENANCE OF REQUIRED SECURITY, SO AS TO FURTHER PROVIDE FOR THE INFORMATION FURNISHED TO THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION REGARDING THIS SECURITY; TO AMEND SECTION 56-11-250, RELATING TO AGREEMENTS TO EXCLUDE DESIGNATED NATURAL PERSONS FROM COVERAGE, SO AS TO MAKE CERTAIN PROVISIONS THEREIN MANDATORY BETWEEN THE INSURER AND ANY NAMED INSURED; TO AMEND SECTION 56-9-810, RELATING TO DEFINITIONS FOR PURPOSES OF THE FINANCIAL RESPONSIBILITY ACT, SO AS TO PROVIDE FOR THE DEFINITION OF AN "UNDERINSURED MOTOR VEHICLE"; TO AMEND SECTION 56-9-831, RELATING TO ADDITIONAL UNINSURED MOTORIST COVERAGE, SO AS TO DELETE RESTRICTIONS ON ADDING COVERAGE ON OTHER VEHICLES AND TO PROVIDE THAT BENEFITS PAID PURSUANT TO THIS SECTION ARE NOT SUBJECT TO SUBROGATION AND ASSIGNMENT; TO AMEND SECTION 38-37-950, RELATING TO UNREASONABLE USE OF THE REINSURANCE FACILITY BY INSURERS, SO AS TO REVISE CERTAIN PROVISIONS WHICH ESTABLISH A PRIMA FACIE CASE OF UNREASONABLE USE; TO AMEND CHAPTER 1 OF TITLE 38, RELATING TO INSURANCE, BY ADDING SECTION 38-1-140 SO AS TO PROVIDE THAT THE CHIEF INSURANCE COMMISSIONER MAY ORDER RATES OF INDIVIDUAL INSURERS TO BE REVISED AND EXCESSIVE BENEFITS REBATED UNDER CERTAIN CONDITIONS; TO AMEND SECTION 56-9-850, RELATING TO CONDITIONS TO SUE OR RECOVER UNDER THE UNINSURED MOTORIST PROVISION, SO AS TO FURTHER PROVIDE FOR THESE CONDITIONS; TO AMEND ARTICLE 5, CHAPTER 37 OF TITLE 38, RELATING TO RISK CLASSIFICATION PLANS AND REQUIRED INSURANCE, BY ADDING SECTION 38-37-325 SO AS TO PERMIT THE CHIEF INSURANCE COMMISSIONER TO PROMULGATE PLANS TO AFFORD CREDITS OR DISCOUNTS TO CERTAIN AUTOMOBILE INSUREDS; TO AMEND SECTION 56-11-110, RELATING TO MINIMUM MEDICAL, HOSPITAL, AND DISABILITY BENEFITS, PROOF OF LOSS OF INCOME AND SUBROGATION OR ASSIGNMENT OF BENEFITS UNDER THE AUTOMOBILE REPARATION REFORM ACT OF 1974, SO AS TO PERMIT ASSIGNMENTS TO HOSPITALS, PHYSICIANS, OR OTHER MEDICAL PROVIDERS BUT THAT NO SUCH PROVIDER MAY REQUIRE THE ASSIGNMENT AS A CONDITION OF TREATMENT; TO AMEND SECTION 38-37-150, RELATING TO THE SURVEY BY THE CHIEF INSURANCE COMMISSIONER TO ASCERTAIN THE STATE OF MARKETING OUTLETS WITH RESPECT TO AUTOMOBILE INSURANCE AND THE REQUIREMENTS FOR QUALIFICATION AS A DESIGNATED AGENT, SO AS TO CHANGE THESE REQUIREMENTS FOR QUALIFYING AS A DESIGNATED AGENT; TO PROVIDE THAT THE GOVERNING BODY OF THE REINSURANCE FACILITY MAY FOR A PERIOD OF THREE YEARS DESIGNATE CERTAIN APPLICANTS TO WRITE PROPERTY AND CASUALTY INSURANCE; TO AMEND ARTICLE 1, CHAPTER 9, TITLE 38, RELATING TO THE CONDUCT OF INSURANCE BUSINESS BY ADDING SECTION 38-9-375 SO AS TO REQUIRE PROPERTY OR CASUALTY INSURANCE COMPANIES TRANSACTING BUSINESS IN THIS STATE TO MAINTAIN AT LEAST ONE RESIDENT ADJUSTER FOR THE PURPOSE OF INVESTIGATION AND SETTLEMENT OF CLAIMS, AND TO PROVIDE THAT FAILURE TO SO MAINTAIN THIS ADJUSTER IS GROUNDS FOR REVOCATION OF THE COMPANY'S AUTHORIZATION TO DO BUSINESS IN THIS STATE; TO AMEND SECTION 38-37-940, RELATING TO THE REGULATION OF AUTOMOBILE INSURANCE, THE AVOIDANCE OF CERTAIN CLASSES OR TYPES OF RISK, EXCEPTIONS, AND CANCELING AN AGENT'S REPRESENTATION, SO AS TO MAKE IT AN ACT OF UNLAWFUL DISCRIMINATION AND UNFAIR COMPETITION FOR AN INSURER TO DO CERTAIN ADDITIONAL ACTS, TO INCREASE THE PERIOD OF REVOCATION OR SUSPENSION OF THE INSURER'S CERTIFICATE OF AUTHORITY AS A PENALTY FOR THESE AND CERTAIN OTHER UNLAWFUL, WILFUL ACTS, FROM SIX TO TWELVE MONTHS, AND TO PROHIBIT INSURERS FROM USING BUSINESS PLACED IN THE REINSURANCE FACILITY WHEN DETERMINING QUALITY BONUS; TO AMEND ARTICLE 7, CHAPTER 9 OF TITLE 38, RELATING TO CANCELLATION AND NONRENEWAL OF PROPERTY AND CASUALTY INSURANCE, BY ADDING SECTION 38-9-890 SO AS TO PROVIDE THAT NO INSURER MAY NONRENEW A POLICY OF HOMEOWNERS INSURANCE BECAUSE THE INSURED HAS FILED A CLAIM WITH THAT INSURER FOR DAMAGES RESULTING FROM AN ACT OF GOD; AND TO AMEND ARTICLE 5, CHAPTER 37 OF TITLE 38, RELATING TO RISK CLASSIFICATION PLANS AND REQUIRED INSURANCE, BY ADDING SECTION 38-37-315 SO AS TO REQUIRE AUTHORIZED AGENTS FOR CERTAIN INSURERS TO PLACE SIGNS IN THEIR OFFICE OR PLACE OF BUSINESS CONTAINING CERTAIN SPECIFIED LANGUAGE.
Be it enacted by the General Assembly of the State of South Carolina:
Declaration of purpose revised
SECTION 1. Subsection (1) of Section 38-37-110 of the 1976 Code is amended to read:
"(1) To provide that every such automobile insurance risk which is insurable on the basis of the criteria established herein is entitled to automobile insurance from the automobile insurance insurer of the applicant's choice on the basis of the same rates, policy forms, claims service, and other services provided by the insurer to all other applicants or insureds falling within the classification of risk and territory under the applicable risk and territorial classification plan promulgated by the Commissioner with the approval of the Commission; provided, that all these applicants or insureds have satisfied the same objective standards as established in Sections 38-37-930 and 38-37-935;".
Review of youthful operators
SECTION 2. The General Assembly directs the Chief Insurance Commissioner to review the current system of classifying and rating youthful male and youthful female operators for automobile insurance under Section 38-37-320 of the 1976 Code. Not later than February 1, 1988, the Commissioner shall by regulation promulgate any changes in the system he considers necessary fairly and equitably to classify and rate such operators for insurance purposes and to promote safe driving performance. The Chief Insurance Commissioner shall by regulation establish revised driver risk classifications that accurately reflect losses in each category of risk.
Automobile insurance rates
SECTION 3. Section 38-37-930 of the 1976 Code is amended to read:
"Section 38-37-930. An automobile insurer shall offer two different rates for automobile insurance, a base rate as defined in Section 38-37-785 and an objective standards rate which is twenty-five percent above the base rate. Both of these rates are subject to all surcharges or discounts, if any, applicable under any approved merit rating plan, credit or discount plan promulgated or approved by the Commissioner.
Applicants, or a current policyholder, seeking automobile insurance with an insurer must be written at the base rate, unless one of the conditions or factors in items (1) through (8) of subsection (A) is present.
(A) The named insured or any operator who is not excluded in accordance with Section 56-11-250 and who resides in the same household or customarily operates an automobile insured under the same policy, individually:
(1) has obtained a policy of automobile insurance or continuation thereof through material misrepresentation within the preceding thirty-six months; or
(2) has had convictions for driving violations on three or more separate occasions within the thirty-six months immediately preceding the effective date of coverage as reflected by the motor vehicle record of each insured driver as maintained by the Department of Highways and Public Transportation; or
(3) has had two or more 'chargeable' accidents within the thirty-six months immediately preceding the effective date of coverage. A 'chargeable' accident is defined as one resulting in bodily injury to any person in excess of three hundred dollars per person, death, or damage to the property of the insured or other person in excess of seven hundred fifty dollars. Accidents occurring under the circumstances enumerated below are not considered chargeable.
(a) The automobile was lawfully parked. An automobile rolling from a parked position is not considered as lawfully parked but is considered as operated by the last operator.
(b) The applicant or other operator or owner was reimbursed by or on behalf of a person responsible for the accident or has a judgment against this person.
(c) The automobile of an applicant or other operator was struck in the rear by another vehicle and the applicant or other operator has not been convicted of a moving traffic violation in connection with the accident.
(d) The operator of the other automobile involved in the accident was convicted of a moving traffic violation and the applicant or other operator was not convicted of a moving traffic violation in connection therewith.
(e) An automobile operated by the applicant or other operator is damaged as a result of contact with a 'hit and run' driver, if the applicant or other operator so reports the accident to the proper authority within twenty-four hours or, if the person is injured, as soon as the person is physically able to do so.
(f) Accidents involving damage by contact with animals or fowl.
(g) Accidents involving physical damage, limited to and caused by flying gravel, missiles, or falling objects.
(h) Accidents occurring as a result of the operation of any automobile in response to an emergency if the operator at the time of the accident was responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or any law enforcement agency. This exception does not include an accident occurring after the emergency situation ceases or after the private passenger motor vehicle ceases to be used in response to the emergency; or
(4) has had one 'chargeable' accident and two convictions for driving violations, all occurring on separate occasions, within the thirty-six months immediately preceding the effective date of coverage as reflected by the motor vehicle record of each insured driver as maintained by the Department of Highways and Public Transportation; or
(5) has been convicted of or forfeited bail during the thirty-six months immediately preceding the effective date of coverage for operating a motor vehicle while in an intoxicated condition or while under the influence of drugs; or
(6) has been convicted or forfeited bail during the thirty-six months immediately preceding the effective date for:
(a) any felony involving the use of a motor vehicle,
(b) criminal negligence resulting in death, homicide, or assault arising out of the operation of a motor vehicle,
(c) leaving the scene of an accident without stopping to report,
(d) theft or unlawful taking of a motor vehicle,
(e) operating during a period of revocation or suspension of registration or license,
(f) knowingly permitting an unlicensed person to drive,
(g) reckless driving,
(h) the making of material false statements in the application for licenses or registration,
(i) impersonating an applicant for license or registration or procuring a license or registration through impersonation, whether for himself or another,
(j) filing of a false or fraudulent claim or knowingly aiding or abetting another in the presentation of such a claim,
(k) failure to stop a motor vehicle when signaled by means of a siren or flashing light by a law enforcement vehicle; or
(7) has for thirty or more days immediately preceding the effective date of coverage, owned or operated the automobile to be insured (or if newly acquired, the automobile it replaces) without liability coverage in violation of the laws of this State; or
(8) has used the insured automobile as follows or if the insured automobile is:
(a) used in carrying passengers for hire or compensation, except that the use of an automobile for a car pool must not be considered use of an automobile for hire or compensation,
(b) used in the business of transportation of flammables or explosives,
(c) used in illegal operation, or
(d) no longer principally used and garaged within the State, but not to include students who are operating a motor vehicle registered in this State while attending an institution located in another state.
(B) In the event that one or more of the conditions or factors prescribed in items (1) through (8) of subsection (A) exist, the motor vehicle customarily operated by that individual must be written at the objective standards rate.
(C) Member companies of an affiliated group of automobile insurers may not utilize different filed rates for automobile insurance. For the purpose of this section, an affiliated group of automobile insurers includes any group of automobile insurers under common ownership, management, or control. Those automobile insurers designated pursuant to Section 38-37-150(A), for automobile insurance risks written by them through producers designated by the Facility governing board pursuant to that same section, shall utilize the rates or premium charges by coverage filed and authorized for use by the rating organization licensed by the Commissioner pursuant to Article 9, Chapter 43 of this title, which has the largest number of members or subscribers for automobile insurance rates. However, those automobile insurers designated pursuant to Section 38-37-150(A) are not required to use those same rates or premium charges described in the preceding sentence for risks written by them through their duly authorized agents not appointed pursuant to Section 38-37-150.
(D) An automobile insurance policy may be endorsed at any time during the policy period to reflect the correct rate or premium applicable by reason of the factors or conditions described in subsection (A) which existed prior to the commencement of the policy period in which the endorsement is made, regardless of whether the factors or conditions were known or disclosed to the insurer at the commencement of the policy period. However, no policy may be endorsed during a policy period to reflect factors or conditions occurring during that policy period. A policy may be endorsed during a policy period to recognize the addition or deletion of an operator or vehicle.
(E) For purposes of determining the applicable rates to be charged an insured, an automobile insurer shall obtain and review an applicant's motor vehicle record."
SECTION 4. Section 56-11-140 of the 1976 Code is amended to read:
"Section 56-11-140. (a) Nothing in this article is considered to affect or limit the provisions of Article 7 of Chapter 9 and every such policy of liability insurance that is issued, renewed, sold, or delivered in this State must provide the minimum liability and uninsured motorist coverage specified therein.
(b) Nothing contained in this article or in Article 7 of Chapter 9 prevents an insurer from issuing, selling, or delivering such a policy of insurance providing liability coverage in excess of the requirements of Article 7 of Chapter 9. Nothing in this article may be construed to prohibit an insurer from providing Christian Science or any licensed healing art care, and treatment and such Christian Science or any licensed healing art care and treatment constitutes economic loss."
Driver's license required
SECTION 5. Article 5, Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-315. Notwithstanding Sections 38-37-310, 38-37-920, and 38-37-935, no automobile insurer is required to write coverage for automobile insurance as defined in Section 38-37-10 for any applicant or existing policyholder who does not at the time of application or renewal possess a valid South Carolina motor vehicle 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 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."
Rates filed and effective date of rates
SECTION 6. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-785. Notwithstanding Sections 38-43-610 and 38-43-910, 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 38-37-710. 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 38-37-780. 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 38-37-780, 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 38-37-800, 38-37-930, or 38-37-935, 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 38-37-800 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.
The Consumer Advocate, upon request to the Commissioner, must be provided by him with a copy of any 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 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 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 7. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-795. The rate or premium charged by insurers of private passenger automobile insurance must include a Facility recoupment charge, which must be added to the appropriate base rate or objective standards
rate prescribed in Sections 38-37-785 and 38-37-930. The operating losses of the Facility for a twelve-month period must be recouped in the subsequent twelve-month period.
(1) Prior to December first of each year, the governing board of the Facility shall calculate the recoupment amount, by coverage, by dividing the net Facility operating loss, adjusted to reflect industry average expenses and the time value of money, by coverage, for the preceding Facility accounting year, by the total number of earned car years, in South Carolina, by coverage, for the same period of time. This dollar amount represents R in the formula, P0X + 2P1X + 3P2X + 4P3X + 5P4X = R. In this formula to be utilized in determining the Facility recoupment charge:
(a) P0 is the percentage of risks which have zero surcharge points under the Uniform Merit Rating Plan promulgated by the Commissioner;
(b) P1 is the percentage of risks which have one surcharge point under the Uniform Merit Rating Plan;
(c) P2 is the percentage of risks which are subject to a surcharge of two points under the Uniform Merit Rating Plan;
(d) P3 is the percentage of risks which are subject to a surcharge of three to eight points under the Uniform Merit Rating Plan;
(e) P4 is the percentage of risks subject to a surcharge of nine or more points under the Uniform Merit Rating Plan;
(f) X is the dollar amount by coverage, to be charged all risks having zero surcharge points under the Uniform Merit Rating Plan promulgated by the Commissioner. This dollar amount, by coverage, is the Facility recoupment charge to be added to the base rate or objective standards rate prescribed in Sections 38-37-785 and 38-37-930 for all risks which have zero surcharge points.
(2) The Facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which have one surcharge point under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of two.
(3) The Facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of two points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of three.
(4) The Facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of three to eight points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of four.
(5) The Facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which are subject to a surcharge of nine or more points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of five.
(6) In determining the number of surcharge points a risk has for the purposes of this section, no surcharge points assigned under the Uniform Merit Rating Plan because the principal operator of the automobile has not been licensed in any state for at least one year immediately preceding the writing of the risk or as a result of a failure of any motor vehicle equipment requirement may be considered."
Filing of recoupment charges
SECTION 8. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-800. Before December second of each year, the governing board of the Facility shall file the Facility recoupment charges calculated pursuant to Section 38-37-795 with the Commissioner. The Commissioner shall then hold a public hearing subject to the provisions of the Administrative Procedures Act to determine if the Facility recoupment charges were calculated in accordance with the provisions of Section 38-37-795. The Facility recoupment charges must be approved if it is determined that they were properly calculated. If it is determined that the Facility recoupment charges were improperly calculated, the Commissioner shall then establish the appropriate charges. The provisions of the Administrative Procedures Act apply to any court appeal brought thereunder and the charges 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."
Inclusion of recoupment charges in rates
SECTION 9. Article 9, Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-810. The Facility recoupment charges approved or established pursuant to Section 38-37-800 must be added to the approved base rate and objective standards rate in effect for each automobile insurer. The combined rate or premium charge is effective on July first of each year and the recoupment charges must remain constant until July first of the following year. The base rate and objective standards rate may change in accordance with Section 38-37-785 and the other applicable requirements of this title pertaining to the approval of rates or premium charges. Facility recoupment charges must be considered in accordance with the following:
(1) Any recoupment charge paid by policyholders must be considered premium for the purpose of calculating premium taxes and commissions and is subject to normal policy cancellation procedures.
(2) Any net operating gains resulting from the operation of the Facility must be retained by the Facility, and the gains and any investment income derived from the gains must be used to offset future operating losses.
(3) The total funds recouped by all insurers less commission and premium tax expenses and time value of money considerations must be paid to the Reinsurance Facility in accordance with the plan of operation. The governing board shall redistribute the funds to the insurers based upon each insurer's share of the Reinsurance Facility losses. Recoupment must be used solely for the purpose of recovering past Facility operating deficits. The plan of operation must provide that the amount ultimately received by an individual company is not more than the company's share of the Reinsurance Facility losses, plus the time value of money.
(4) In the making and approval of rates for small commercial automobile risks, as defined in Section 38-37-10, consideration must be given to the net gains or losses incurred by insurers as a result of participation in the operating results and expenses, respectively, of the Facility."
Collision and comprehensive coverage
SECTION 10. Article 11, Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-935. (A) Except as provided in subsection (B), all automobile insurers, including those insurance companies writing private passenger physical damage coverages only, shall make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to any insured or qualified applicant who requests such coverage.
Collision coverage must have a mandatory deductible of fifty dollars, but an insured or qualified applicant, at his option may select an additional deductible in appropriate increments up to one thousand dollars.
Comprehensive coverage or fire, theft, and combined additional coverages may not be subject to any mandatory deductible, but an insured, at his option, may select a deductible of from fifty to one thousand dollars in appropriate increments. It is an unfair trade practice, as described in Sections 38-55-30 and 38-55-40, for an insurer or an agent to sell collision insurance with a fifty dollar deductible or comprehensive coverage or fire, theft, and combined additional coverages without a deductible unless the insured is notified at the time of application of the savings which may be realized if the applicant or the insured selects a higher deductible. This notice is required only at the time of the initial sale and must be in a form approved by the Chief Insurance Commissioner.
(B) Notwithstanding subsection (A) and Sections 38-37-310 and 38-37-920, automobile insurers may refuse to write automobile physical damage insurance coverage, including automobile comprehensive physical damage, collision, fire, theft, and combined additional coverage, for any applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or any other operator not excluded in accordance with Section 56-11-250 and who resides in the same household, where one or more of the conditions or factors prescribed in Section 38-37-930 exist. In addition, automobile insurers may refuse to write physical damage insurance coverage to any applicant or existing policyholder, on renewal, who has collected benefits provided under any automobile insurance physical damage coverage during the thirty-six months immediately preceding the effective date of coverage, for two or more total fire losses or two or more total theft losses.
(C) Notwithstanding Section 38-37-310, automobile physical damage coverage in an automobile insurance policy may be canceled at any time during the policy period by reason of the factors or conditions described in Section 38-37-930(A) which existed prior to the commencement of the policy period and which were not disclosed to the insurer at the commencement of the policy period.
(D) No policy of insurance which provides automobile physical damage coverage only may be ceded to the Facility.
(E) Insurers of automobile insurance may charge a rate for physical damage insurance coverages different than those provided for in Section 38-37-785 if the rates are filed and approved by the Chief Insurance Commissioner. Any applicant or existing policyholder, to be charged this different rate, must be denied the coverage pursuant to subsection (B) at the rate provided in Section 38-37-785. No policy of automobile insurance which includes physical damage insurance coverages offered to an applicant or existing policyholder pursuant to this paragraph may be ceded to the Facility."
Loss and expense experience
SECTION 11. The Chief Insurance Commissioner shall promulgate regulations which shall require each insurer licensed to write property or casualty insurance in the State to record and report its loss and expense experience and other data as may be necessary to determine whether rates are not excessive, inadequate, or unfairly discriminating. The Commissioner may designate one or more rate service organizations or advisory organizations to gather and compile this experience and data. In addition, each insurer licensed to write property and casualty insurance in this State, as a supplement to its annual statement, must submit a report on a form furnished by the Commissioner showing the insurer's direct writings in this State and the United States and also the information required by Sections 12 and 13 of this act.
The Commissioner may adopt data disclosure requirements developed by the National Association of Insurance Commissioners, and if adopted, shall be deemed to be in full compliance with Sections 11 through 17 of this act.
Supplemental report required
SECTION 12. The supplemental report required by Section 11 must include, but is not limited to, the following types of insurance written by the insurer:
(a) political subdivision liability insurance reported separately in the following categories:
(2) school districts;
(3) other political subdivisions;
(b) public official liability insurance;
(c) dram shop liability insurance;
(d) day care center liability insurance;
(e) labor, fraternal, or religious organizations liability insurance;
(f) errors and omissions liability insurance;
(g) officers and directors liability insurance reported separately as follows:
(1) nonprofit entities;
(2) for-profit entities;
(h) products liability insurance;
(i) medical malpractice insurance;
(j) attorney malpractice insurance;
(k) architects and engineers malpractice insurance; and
(l) motor vehicle insurance reported separately for commercial and private passenger vehicles as follows:
(1) motor vehicle liability insurance first-party benefits;
(2) motor vehicle bodily injury liability insurance;
(3) motor vehicle property liability insurance;
(4) uninsured motorist insurance; and
(5) underinsured motorist insurance.
Data in supplemental report
SECTION 13. The supplemental report must include the following data both as to this State and the United States for the previous year ending on December thirty-first:
(a) direct premiums written,
(b) direct premiums earned,
(c) net investment income, including net realized capital gains and losses, using appropriate estimates where necessary,
(d) incurred claims, developed as the sum of the following (the report shall include data for each of the following categories used to develop the sum of incurred claims):
(1) dollar amount of claims closed with payment, plus
(2) dollar amount of payments on claims still open, plus
(3) reserves for reported claims at the end of the current year, minus
(4) reserves for reported claims at the end of the previous year, plus
(5) reserves for incurred but not reported claims at the end of the current year, minus
(6) reserves for incurred but not reported claims at the end of the previous year, plus
(7) loss adjustment expenses for claims closed, plus
(8) reserves for loss adjustment expense at the end of the current year, minus
(e) actual incurred expenses allocated separately to loss adjustment, commissions, other acquisition costs, advertising, general office expenses, taxes, licenses and fees, and all other expenses;
(f) net underwriting gain or loss;
(g) net operation gain or loss, including net investment income;
(h) the number and dollar amount of claims closed with payment, by year incurred and the amount reserved for them;
(i) the number of claims closed without payment and the dollar amount reserved for those claims;
(j) federal income tax recoverable; and
(k) any other information requested by the Commissioner.
Supplemental report contents
SECTION 14. For the first year only in which the insurer is required to file this report, the data required by items (a) through (g) of Section 13 shall include the previous calendar year and each of the preceding two calendar years.
Review of supplemental reports
SECTION 15. It is the duty of the Commissioner to annually compile and review all such reports submitted by insurers pursuant to this act to determine the appropriateness of premium rates for property and casualty insurance in this State. The commission's findings and filings must be published, provided to the General Assembly, and made available to any interested insured or citizen. If the Commissioner finds at any time that any rate is excessive, inadequate, or unfairly discriminating, he shall issue an order withdrawing its approval. The order shall specify reasons for withdrawal of approval and must be furnished to each affected insurer and rating organization and is effective in not less than sixty days from its issuance unless an affected insurer meets the burden of showing that the rate is in fact fair and appropriate.
Filing of required information
SECTION 16. Each insurance company shall file all of the information required under Sections 11 through 17 of this act with the Commissioner as a prerequisite to obtaining permission to write coverage, to continue to do business, or to file for rate increases.
Penalty for failure to comply
SECTION 17. Each insurer who fails to comply with the terms of Sections 11 through 17 of this act shall pay a civil penalty of a fine of twenty thousand dollars and thereafter a fine of one thousand dollars daily until the named sections of the act are complied with.
Automobile insurance agent's business
SECTION 18. When dealing with the agents of the company, who are licensed to sell automobile insurance, the company may not use any of the business placed in the Facility in determining the profitability of that agent's business. Further, the company shall not ask any agent not to write any kind of automobile business or hold the Facility business against any agent in any manner which could be construed as being detrimental to the agent.
Security information required
SECTION 19. Section 56-11-190 of the 1976 Code is amended to read:
"Section 56-11-190. Every owner of a motor vehicle required to be registered in this State shall maintain the security required by Section 56-11-200 with respect to each such 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 20. The first sentence of Section 56-11-250 of the 1976 Code is amended to read:
"Notwithstanding the definition of 'insured' in Article 7 of Chapter 9, the insurer and any named insured must, by the terms of a written amendatory endorsement, the form of which has been approved by the Chief Insurance Commissioner, agree that coverage under such a policy of liability insurance shall not apply while the motor vehicle is being operated by a natural person designated by name."
Underinsured motor vehicle definition
SECTION 21. Section 56-9-810 of the 1976 Code is amended by adding:
"(5) 'Underinsured motor vehicle' means a motor vehicle as to which there is bodily injury liability insurance or a bond applicable at the time of the accident in an amount of at least that specified in Section 56-9-820 and the amount of the insurance or bond:
(a) is less than the limit for underinsured motorist coverage under the insured's policy; or
(b) has been reduced by payments to persons, other than an insured, injured in the accident to an amount less than the limit for underinsured motorist coverage under the insured's policy."
Coverage restrictions deleted and benefits not subject to subrogation and assignment
SECTION 22. Section 56-9-831 of the 1976 Code, as added by Act 569 of 1978, is amended to read:
"Section 56-9-831. Automobile insurance carriers shall offer, at the option of the insured, uninsured motorist coverage up to the limits of the insured's liability coverage in addition to the mandatory coverage prescribed by Section 56-9-830. Such carriers shall also offer, at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage to provide coverage in the event that damages are sustained in excess of the liability limits carried by an at fault insured or underinsured motorist. If, however, an insured or named insured is protected by uninsured or underinsured motorist coverage in excess of the basic limits, the policy shall provide that the insured or named insured is protected only to the extent of the coverage he has on the vehicle involved in the accident. If none of the insured's or named insured's vehicles is involved in the accident, coverage is available only to the extent of coverage on any one of the vehicles with the excess or underinsured coverage. Benefits paid pursuant to this section are not subject to subrogation and assignment."
Unreasonable use of Facility
SECTION 23. The second paragraph of Section 38-37-950 of the 1976 Code is amended to read:
"A prima facie case of excessive or unreasonable utilization shall be established upon a showing that an automobile insurance insurer or a group of such insurers under the same management has ceded or is about to cede more than forty percent of total direct written premiums on South Carolina automobile insurance as reported in the most recently filed annual statement(s) of such insurer or group."
Revision and rebate of rates
SECTION 24. Chapter 1 of Title 38 of the 1976 Code is amended by adding:
"Section 38-1-140. (A) In considering any rate filing or in reviewing any rate in effect for automobile insurance, or upon complaint or petition by the Consumer Advocate, or any other interested party, the Chief Insurance Commissioner if the petition for review is granted shall review the previous three years experience with the rate being reviewed, or as much of the period as is available. If the insurer has realized an unfairly discriminatory, excessive, or unreasonable profit, in the opinion of the Commissioner, the Commissioner shall order the same removed and require that the individual rate maker, bureau, or insurer to promulgate a rate which is not unfairly discriminatory, excessive, or unreasonable profit, in the opinion of the Commissioner, the commissioner shall order the same removed and require that the individual rate maker, bureau, or insurer to promulgate a rate which is not unfairly discriminatory, excessive, or unreasonable and order a pro rata rebate of any unfairly discriminatory, excessive, or unreasonable amount charged together with interest at the rate of twelve percent per annum either in the form of a cash refund or as a credit toward the future premiums. The commissioner shall rescind the order of rebate only upon a showing that compliance would cause an insolvency.
(B) In making the determination that a rate is unfairly discriminatory, excessive, or unreasonable, the Insurance Department shall, in accordance with generally accepted and reasonable actuarial techniques, include consideration of the following factors:
1. past and prospective loss experience within and without this State;
2. past and prospective expenses;
3. the degree of competition among insurers for the risk insured;
4. investment income reasonably expected by the insurer, consistent with the insurer's investment practices, from investable premiums anticipated in the filing, plus any other expected income from currently invested assets representing the amount expected on unearned premium reserves and loss reserves. The department may promulgate rules utilizing reasonable techniques of actuarial science and economics to specify the manner in which insurers shall calculate investment income attributable to such classes of insurance written in this State and the manner in which such investment income shall be used in the calculation of insurance rates. Such manner shall contemplate allowances for an underwriting profit factor and full consideration of investment income which produce a reasonable rate of return; however, investment income from invested surplus shall be considered;
5. the reasonableness of the judgment reflected in the filing;
6. dividends, savings, or unabsorbed premium deposits allowed or returned to South Carolina policyholders, members, or subscribers;
7. the adequacy of loss reserves;
8. the cost of reinsurance;
9. trend factors, including trends in actual losses per insured unit for the insurer making the filing;
10. a reasonable margin for underwriting profit and contingencies;
11. other relevant factors which impact upon the frequency or severity of claims or upon expenses.
(C) After consideration of the rate factors provided in paragraph (B) a rate may be found by the department to be excessive, unreasonable, or unfairly discriminatory based upon the following standards:
1. Rates shall be deemed excessive if they are likely to produce a profit from South Carolina business that is unreasonably high in relation to the risk involved in the class of business or if expenses are unreasonably high in relation to services rendered.
2. Rates shall be deemed excessive if, among other things, the rate structure established by a stock insurance company provides for replenishment of surpluses from premiums, when the replenishment is attributable to investment losses.
3. Rates shall be deemed inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.
4. A rate shall be deemed inadequate as to the premium charged to a risk or group of risks if discounts or credits are allowed which exceed a reasonable reflection of expense savings and reasonably expected loss experience from the risk or group of risks.
5. A rate shall be deemed unfairly discriminatory as a risk or group of risks if the application of premium discounts, credits, or surcharges among such risks does not bear a reasonable relationship to the expected loss and expense experience among the various risks.
(D) In reviewing a rate filing, the department may require the insurer to provide at the insurer's expense all information necessary to evaluate the condition of the company and the reasonableness of the filing according to the criteria enumerated in this section."
Conditions for suit revised
SECTION 25. Section 56-9-850 of the 1976 Code is amended to read:
"Section 56-9-850. If the owner or operator of any motor vehicle which causes bodily injury or property damage to the insured is unknown, there is no right of action or recovery under the uninsured motorist provision, unless:
(1) the insured or someone in his behalf has reported the accident to some appropriate police authority within a reasonable time, under all the circumstances, after its occurrence;
(2) the injury or damage was caused by physical contact with the unknown vehicle, or the accident must have been witnessed by someone other than the owner or operator of the insured vehicle;
(3) the insured was not negligent in failing to determine the identity of the other vehicle and the driver of the other vehicle at the time of the accident."
Plan for credits and discounts
SECTION 26. Article 5 of Chapter 37 of Title 38 of the 1976 Code is amended by adding:
"Section 38-37-325. In addition to risk and territorial classification plans promulgated under Section 38-37-320, 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 not be ceded to the Reinsurance Facility."
Assignment of benefits to medical providers
SECTION 27. Section 56-11-110 of the 1976 Code is amended to read:
"Section 56-11-110. Except as otherwise provided in this article, no policy or contract, hereinafter referred to as a policy, of liability insurance as defined in Article 7 of Chapter 9 or other security as provided for in Section 56-11-210 may be issued, delivered, sold, or renewed in this State after October 1, 1978, unless such policy at the option of the insured also affords either the minimum medical, hospital, disability, and loss of income benefits or the minimum medical and hospital benefits, excluding disability and loss of income benefits, set forth herein. The insured's option shall include that of rejecting either or both of the foregoing described benefit coverages. The benefits or their equivalent shall cover the named insured and members of his family residing in his household, except such persons as may be specifically excluded in accordance with law, injured in any motor vehicle accident, including an accident involving an uninsured motor vehicle or a motor vehicle whose identity cannot be ascertained, other persons injured while occupying the insured motor vehicle as a guest or passenger or while using it with the express or implied permission of the named insured, except such persons as may be specifically excluded in accordance with law, and pedestrians injured in an accident in which the insured motor vehicle is involved. The minimum medical, hospital, and disability benefits if the insured exercises the option to receive such benefits shall include up to an amount of one thousand dollars per person for payment of all reasonable expenses arising from the accident and sustained within three years from the date thereof for necessary medical, surgical, chiropractic, X-ray, and dental services, including prosthetic devices, and necessary ambulance, hospital, professional nursing, and funeral services; and in the case of an income producer who exercises the option to receive such benefit payment of benefits for loss of income as the result of the accident; and where the person injured in the accident was not an income or wage producer at the time of the accident, payments of benefits must be made in reimbursement of necessary and reasonable expenses, incurred for essential services ordinarily performed by the injured person for care and maintenance of the family or family household. The insurer providing loss of income benefits may require, as a condition of receiving such benefits, that the injured person furnish the insurer reasonable medical proof of his injury causing loss of income. No benefit payable pursuant to this section is subject to subrogation or assignment except that assignments may be made to hospitals, physicians, or other medical providers, provided, however, that no medical provider may require assignment as a condition of treatment."
Qualifications for designated agent revised
SECTION 28. Section 38-37-150(C) of the 1976 Code is amended to read:
"(C) A producer may be designated by the governing board of the Facility upon application for designation and is eligible for designation upon a finding by the governing board that the applicant meets the following qualifications:
(1) The applicant has been, for five continuous years, a licensed, resident property and casualty insurance agent and agency owner or principal with authority from one or more licensed insurers to write liability and physical damage insurance on private passenger automobiles;
(2) At the time of application the applicant is servicing and owns the renewals on private passenger and commercial automobile insurance business, the net premiums on which exceeded seventy-five thousand dollars of potential cedeable automobile insurance during any one of the previous five calendar years preceding the application;
(3) Neither the applicant, nor any employee of the applicant or the applicant's corporate agency, nor any partner or shareholder in any related insurance agency, related premium service company, or related other business, has
any direct or indirect connection with any voluntary market outlet for the purpose of writing any type of automobile insurance in this State except for motorcycle insurance and types not cedeable to the Facility;
(4) The applicant has not contributed to his termination as agent by any insurer because of any illegal breach of agency agreement or other related, improper, or unethical conduct; and
(5) The books, records, and accounts of the insurance business of the applicant have been audited at the expense of the applicant and found by the governing board to be indicative of a financially sound operation."
Designation of agents
SECTION 29. The governing body of the Facility may, for a period of three years beginning on the effective date of this act, designate an applicant who meets all other requirements but is prohibited from writing property and casualty insurance by an insurance company or had a broker agreement or contract with another agency that was licensed to write property and casualty insurance in this State.
Resident adjuster required
SECTION 30. Article 1, Chapter 9, Title 38 of the 1976 Code is amended by adding:
"Section 38-9-375. Every property or casualty insurance company transacting business in this State shall at all times maintain in the State at least one resident adjuster for the purpose of investigation and settlement of claims. The name, current address, and current telephone number of the adjuster so employed must be maintained on file with the Chief Insurance Commissioner by the company which information must be available to the public. Any change in the name, address, or telephone number of the adjuster must be reported to the Commissioner by the insurance company within thirty days.
Failure to maintain the adjuster on file as required herein is grounds for the Chief Insurance Commissioner to revoke the company's authorization to do business in this State."
Additional unlawful acts, penalties, and bonus computation
SECTION 31. Section 38-37-940 of the 1976 Code is amended to read:
"Section 38-37-940. No insurer of automobile insurance shall directly or indirectly by offer or promise of reward or imposition or threat of penalty or through any artifice or device whatsoever, confer any benefit upon any agent or impose any detriment upon any such agent for the purpose of avoiding any class or type of automobile insurance risk which the insurer considers it necessary to reinsure in the Facility; nor shall any offer or promise of reward or imposition or threat of penalty in connection with any other line or type of insurance be so tied to automobile insurance as to have a tendency to induce the agent to avoid any such class or type of automobile insurance risk; nor shall any insurer of automobile insurance provide to agents, directly or indirectly, orally or in writing, any listing of classes or types of automobile insurance risks which it considers necessary to reinsure in the Facility; nor shall any insurer of automobile insurance terminate its insurance business with any one agent over the writing of certain classes or types of automobile insurance risks without also pulling out of the entire State or terminating its similar insurance business with all other agents in the State at the same time for a period of time of at least 365 days, except that if the insurer reinstates the agent within thirty days of the determination that the termination was unlawful, then this provision shall not apply; nor shall any insurer of automobile insurance do anything unfair, or unfairly fail to do anything, which has the effect of, or which results in, causing any ceded insurance business to have a detrimental effect on any incentive bonuses paid by the insurer to agents. Any act in violation of this section constitutes an act of unlawful discrimination and unfair competition which, if wilful, shall result in the suspension or revocation of the insurer's certificate of authority for not less than twelve months. Any agreement made in violation of this section shall be void.
Nothing in this section may be considered to preclude or impair agreements between insurers and their agents or some of their agents to pay contingency commissions or a profit-sharing bonus based upon the quality of business; nor shall the insurers, in any manner, use that business placed in the Facility when determining the quality bonus; nor may it be considered to preclude an agreement between any agent and an insurer of automobile insurance to exclude from any profit-sharing or contingency arrangement automobile insurance business coming unsolicited to the agent and written by him solely because of the mandate of coverage provided in Articles 1 to 15 of this chapter.
No insurer of automobile insurance shall cancel its representation by an agent primarily because of the volume of automobile insurance placed with it by the agent on account of the statutory mandate of coverage nor because of the amount of the agent's automobile insurance business which the insurer has considered it necessary to reinsure in the Facility."
Nonrenewal of homeowners insurance
SECTION 32. Article 7, Chapter 9, Title 38 of the 1976 Code is amended by adding:
"Section 38-9-890. No insurer may nonrenew a policy of homeowners insurance because the insured has filed a claim with that insurer for damages resulting from an act of God."
Signs required in agent's place of business
SECTION 33. Article 5, Chapter 37, Title 38 of the 1976 Code is amended by adding:
"Section 38-37-315. The authorized agents for every insurer covered by the provisions of Section 38-37-310 shall post in a conspicuous location in their office or place of business a sign containing language to be required by regulation of the Chief Insurance Commissioner that stipulates that insurer and agent may not refuse to write or renew that type of insurance, that tactics designed to avoid writing or renewing that type of insurance are not permissible including unreasonable delays in meeting with applicants, and that violations of the above should be reported to the Commissioner for appropriate action."
SECTION 34. This act takes effect upon approval by the Governor, with the first reports required under Sections 11, 12, 13, 14, 15, 16, and 17 of this act to be filed on July 1, 1988, and on July first of each following year.