Bill 3695

                    Current Status

Bill Number:               3695
Ratification Number:       227
Act Number                 148
Introducing Body:          House
Subject:                   "Automobile Insurance Reform Act of
                           1989"

(A148, R227, H3695)

AN ACT TO AMEND SECTION 56-9-330, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE FURNISHING OF ABSTRACTS OF MOTOR VEHICLE OPERATING RECORDS, SO AS TO CHANGE THE REQUIRED FEE AND REQUIRE THE FURNISHING OF A MONTHLY LISTING BY MAGNETIC OR OTHER ELECTRONIC MEDIA OF ALL DRIVER'S LICENSE NUMBERS THAT HAD DRIVING VIOLATIONS POSTED ON THEIR RECORDS DURING THE PREVIOUS MONTH; TO AMEND SECTION 38-73-735, RELATING TO INSURANCE AND PLANS FOR CREDITS AND DISCOUNTS, SO AS TO REFER TO RISK AND TERRITORIAL CLASSIFICATION PLANS "APPROVED", AS WELL AS PROMULGATED, UNDER SECTION 38-73-730, AND PROVIDE THAT IF AN INSURANCE CREDIT OR DISCOUNT PLAN IS GIVEN TO AN INSURED, THE POLICY MAY BE CEDED TO THE REINSURANCE FACILITY IN ACCORDANCE WITH THE FACILITY'S PLAN OF OPERATION; TO AMEND SECTION 56-10-240, AS AMENDED, RELATING TO THE REQUIREMENT THAT UPON LOSS OF INSURANCE THE INSURED OBTAIN NEW INSURANCE OR SURRENDER REGISTRATION AND PLATES, SO AS TO, AMONG OTHER THINGS, PROVIDE FOR NOTICE BY MAGNETIC OR ELECTRONIC MEDIA IN A MANNER CONSIDERED SATISFACTORY TO THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION, PROVIDE FOR DELIVERY UNDER BULK CERTIFIED MAIL, RETURN RECEIPT REQUESTED, RATHER THAN CERTIFICATE OF MAILING, PROVIDE FOR A REINSTATEMENT FEE OF TWO HUNDRED DOLLARS, RATHER THAN ONE HUNDRED DOLLARS, FOR THE FIRST REFUSAL UNDER THIS SECTION, PROVIDE A FEE OF THREE HUNDRED DOLLARS FOR EACH SUBSEQUENT REFUSAL, AND PROVIDE A NOMINAL REINSTATEMENT FEE FOR A PERSON WHO VOLUNTARILY SURRENDERS HIS LICENSE PLATES AND REGISTRATION CERTIFICATE BEFORE THEIR SUSPENSION; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-161 SO AS TO PROVIDE THAT NO UNINSURED OR UNDERINSURED MOTORIST COVERAGE NEED BE PROVIDED BY AN EXCESS OR UMBRELLA POLICY OF INSURANCE; TO AMEND SECTION 38-73-10, RELATING TO THE DECLARATION OF THE PURPOSE AND THE CONSTRUCTION OF CHAPTER 73 OF TITLE 38 ON PROPERTY, CASUALTY, INLAND MARINE, AND SURETY RATES AND RATE-MAKING ORGANIZATIONS, SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE AND VEST IN THE CHIEF INSURANCE COMMISSIONER, RATHER THAN THE STATE RATING AND STATISTICAL DIVISION, THE AUTHORITY TO PROMULGATE THE RISK CLASSIFICATION AND TERRITORIAL PLANS, RATHER THAN THE "RISK AND TERRITORIAL CLASSIFICATION PLAN OR PLANS" TO BE USED BY ALL INSURERS OF AUTOMOBILE INSURANCE IN THIS STATE; TO AMEND SECTION 38-73-40, RELATING TO THE RECORDING AND REPORTING OF LOSS AND EXPENSE EXPERIENCE UNDER THE INSURANCE LAWS, SO AS TO ALLOW, RATHER THAN REQUIRE, THE CHIEF INSURANCE COMMISSIONER TO PROMULGATE STATISTICAL PLANS, AND DELETE REFERENCES TO REGULATIONS UNDER THIS SECTION; TO AMEND SECTION 38-73-720, RELATING TO THE STATE RATING AND STATISTICAL DIVISION AND THE POWER TO ESTABLISH RISK AND TERRITORIAL CLASSIFICATIONS, SO AS TO, AMONG OTHER THINGS, EMPOWER THE CHIEF INSURANCE COMMISSIONER, RATHER THAN THE DIVISION, TO FIX RISK CLASSIFICATIONS AND TERRITORIES, AND REQUIRE THE COMMISSIONER, BEFORE THE BEGINNING OF THE 1990 SESSION OF THE GENERAL ASSEMBLY, TO PROMULGATE BY REGULATION A CLASSIFICATION PLAN FOR AUTOMOBILE INSURANCE FOR THE ESTABLISHMENT OF RATES AND PREMIUMS; TO AMEND SECTION 38-73-750, RELATING TO THE FILING OF PLANS BY INSURERS, THE PROVISION THAT CERTAIN PLANS MAY NOT BE FILED OR APPROVED, AND THE DISAPPROVAL OF PLANS BY THE CHIEF INSURANCE COMMISSIONER, SO AS TO REFER TO CLASSIFICATION OF RISKS PROMULGATED BY THE COMMISSIONER RATHER THAN THE STATE RATING AND STATISTICAL DIVISION; TO AMEND SECTION 38-73-760, RELATING TO UNIFORM STATISTICAL PLANS UNDER THE INSURANCE LAWS, SO AS TO DELETE CERTAIN LANGUAGE, DELETE A REFERENCE TO THE STATE RATING AND STATISTICAL DIVISION AND REFER TO THE CHIEF INSURANCE COMMISSIONER INSTEAD, AND PROVIDE THAT 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; TO AMEND SECTION 38-73-770, RELATING TO THE REQUIREMENT THAT A CLASSIFICATION PLAN MUST BE STRUCTURED TO PRODUCE FAIR RATES, SO AS TO DELETE CERTAIN LANGUAGE, AND REFER TO CLASSIFICATION PLANS PROMULGATED BY THE CHIEF INSURANCE COMMISSIONER RATHER THAN THE STATE RATING AND STATISTICAL DIVISION; TO AMEND SECTION 38-77-112, AS AMENDED, RELATING TO THE REQUIREMENT THAT AN APPLICANT FOR AUTOMOBILE INSURANCE OR A POLICYHOLDER MUST HAVE A DRIVER'S LICENSE AND EXCEPTIONS, SO AS TO MAKE PROVISION FOR A SPECIAL RESTRICTED DRIVER'S LICENSE; TO AMEND SECTION 38-77-580, AS AMENDED, RELATING TO THE GOVERNING BOARD OF THE SOUTH CAROLINA REINSURANCE FACILITY, SO AS TO INCREASE THE MEMBERSHIP OF THE BOARD, INCLUDING THE ADDITION OF CERTAIN EX OFFICIO MEMBERS, AND DISQUALIFY CERTAIN PERSONS FOR APPOINTMENT TO THE BOARD TO REPRESENT CONSUMERS; TO AMEND SECTION 38-77-920, RELATING TO AUTOMOBILE INSURANCE, THE PROHIBITION UPON INSURERS AND AGENTS FROM REFUSING ACCEPTANCE OF INSURANCE, PROPERTY RIGHTS OF CERTAIN AGENTS, AND THE RESTRICTION ON MAILINGS TO CERTAIN AREAS, SO AS TO DELETE CERTAIN LANGUAGE AND TO PREFACE THE SECTION WITH THE LANGUAGE "EXCEPT AS IS SPECIFICALLY PROVIDED FOR OTHERWISE BY LAW"; TO AMEND SECTION 37-6-604, RELATING TO FUNCTIONS AND DUTIES OF THE DIVISION OF CONSUMER ADVOCACY, SO AS TO PROVIDE REFERENCE TO FEDERAL REGULATORY AGENCIES; TO AMEND SECTION 37-6-605, RELATING TO THE DIVISION OF CONSUMER ADVOCACY AND ACCESS TO RECORDS OF STATE AGENCIES AND TO BUSINESSES ENGAGED IN PROCEEDINGS BEFORE THE PUBLIC SERVICE COMMISSION, SO AS TO, AMONG OTHER THINGS, GIVE THE CONSUMER ADVOCATE REASONABLE ACCESS TO CONFIDENTIAL RECORDS AND INFORMATION, AND GIVE THE DEPARTMENT OF INSURANCE AND ADVOCATE ACCESS TO RECORDS, INFORMATION, AND DATA OF THE INSURANCE COMPANIES AS WELL AS ALL OF THEIR SISTER AFFILIATES, SUBSIDIARIES, AND PARENT COMPANIES; TO AMEND SECTION 38-77-110, RELATING TO THE REQUIREMENT THAT INSURERS MUST WRITE AND RENEW POLICIES, SO AS TO PROVIDE THAT THEY ARE NOT REQUIRED TO WRITE INSURANCE COVERAGE OVER CERTAIN LIMITS NOR MAY THEY DISCRIMINATE; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-341 SO AS TO DEFINE UNFAIR TRADE PRACTICES IN THE OPERATION OF AUTOMOBILE INSURANCE BUSINESSES; TO AMEND SECTION 56-10-40, RELATING TO NOTIFICATION OF LAPSED OR TERMINATED LIABILITY INSURANCE OR APPROVED SECURITY, SO AS TO DEFINE THE CIRCUMSTANCES WHICH REQUIRE NOTIFICATION TO THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION AND TO PROVIDE THAT THE NOTICES MUST BE IN WRITING OR MAGNETIC MEDIA; TO AMEND SECTION 56-10-280, RELATING TO REQUIRED LENGTH OF TIME FOR WHICH AN AUTOMOBILE LIABILITY INSURANCE POLICY MAY BE ISSUED, SO AS TO DEFINE THE CIRCUMSTANCES UNDER WHICH A POLICY MAY BE CANCELED WITHIN THE FIRST SIXTY DAYS OF ITS ISSUANCE AND TO PROVIDE FOR THE COLLECTION OF A PENALTY AGAINST A PERSON WHOSE INSURANCE IS CANCELED FOR NONPAYMENT OF PREMIUMS; TO AMEND SECTION 38-77-160, RELATING TO ADDITIONAL UNINSURED MOTORIST COVERAGE AND TO UNDERINSURED MOTORIST COVERAGE, SO AS TO PROVIDE REQUIREMENTS TO BE MET IN AN ACTION BROUGHT UNDER UNDERINSURED MOTORIST INSURANCE PROVISIONS AND TO PROVIDE THAT NO UNDERINSURED MOTORIST POLICY MAY REQUIRE THE INSURER'S CONSENT TO SETTLEMENT WITH THE AT-FAULT PARTY IN SUCH AN ACTION; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-350 SO AS TO REQUIRE THE USE OF A FORM BY INSURERS OFFERING OPTIONAL COVERAGES TO APPLICANTS FOR AUTOMOBILE INSURANCE AND TO PRESCRIBE THE PROVISIONS TO BE INCLUDED IN THE FORM; TO AMEND SECTION 38-55-170, RELATING TO PRESENTING FALSE CLAIMS FOR PAYMENT TO INSURERS, SO AS TO PROVIDE THAT THE CRIME IS A FELONY INSTEAD OF A MISDEMEANOR; TO AMEND SECTION 16-11-125, RELATING TO THE CRIME OF MAKING FALSE CLAIMS TO OBTAIN PAYMENT FOR FIRE OR EXPLOSION LOSSES FROM INSURERS, SO AS TO PROVIDE THAT IT IS A FELONY INSTEAD OF A MISDEMEANOR; TO AMEND SECTION 16-11-130, RELATING TO THE CRIME OF BURNING PERSONAL PROPERTY TO DEFRAUD AN INSURER, SO AS TO PROVIDE THAT IT IS A FELONY INSTEAD OF A MISDEMEANOR; TO PROVIDE THAT THE CRIMES IN SECTIONS 16-11-125, 16-11-130, AND 38-55-170 AND SECTION 32 OF THIS ACT ARE ADDED TO THE LIST OF CRIMES CLASSIFIED AS FELONIES IN SECTION 16-1-10; TO AMEND SECTION 23-41-30, RELATING TO RELEASE OF INFORMATION BY AN INSURANCE COMPANY, SO AS TO PROVIDE THAT WHEN AN INSURANCE COMPANY DENIES PAYMENT OF CLAIM TO AN INSURED FOR ARSON, MISREPRESENTATION, OR OTHER SIMILAR CLAIM OR DEFENSE, THE INSURER SHALL NOTIFY IN ALL CASES THE CHIEF INSURANCE COMMISSIONER; TO AMEND SECTION 56-1-80, RELATING TO APPLICATION FOR LICENSE OR PERMIT, SO AS TO PROVIDE THAT PERSONS OBTAINING A SOUTH CAROLINA DRIVER'S LICENSE FOR THE FIRST TIME MUST BE FURNISHED AND MUST COMPLETE A WRITTEN REQUEST FORM TO VERIFY LIABILITY INSURANCE COVERAGE; TO PROVIDE THAT THE CHIEF INSURANCE COMMISSIONER SHALL PUBLISH, AT LEAST ANNUALLY, A REPRESENTATIVE SAMPLE OF THE PRIVATE PASSENGER PREMIUMS OF AT LEAST TWENTY INSURANCE COMPANIES HAVING THE LARGEST MARKET SHARE IN EACH TERRITORY TO FACILITATE PRICE COMPARISONS BY PERSONS SEEKING NEW COVERAGE; TO AMEND ARTICLE 9, CHAPTER 73, TITLE 38 BY ADDING SECTION 38-73-915 SO AS TO PROVIDE THAT THE INSURANCE COMMISSIONER IN REVIEWING RATE FILINGS MAY TAKE INTO CONSIDERATION RECENT LEGISLATION AND COURT DECISIONS WHICH AFFECT INSURANCE RATES AND MAY ORDER AN INSURER OR RATING ORGANIZATION TO REDUCE OR INCREASE THE CURRENT RATE LEVELS AS A RESULT OF THE LEGISLATION OR COURT DECISION; TO PROVIDE THAT NO RATE FILING FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE MAY INCLUDE OR BE BASED UPON ACTUAL OR PROJECTED LOSS OR EXPENSE DATA WHICH INCLUDES PAYMENTS MADE ON POLICIES IN EXCESS OF THE POLICY LIMITS OR MADE AS A RESULT OF TORTIOUS BREACH OF DUTY; TO PROHIBIT AUTOMOBILE INSURERS OR REPRESENTATIVES FROM WILFULLY INCLUDING IN PRIVATE PASSENGER INSURANCE RATE FILINGS EXPENSES OR LOSSES GENERATED BY ANOTHER LINE OF INSURANCE, GENERAL EXPENSES, OR OVERHEAD APPLICABLE TO ALL LINES UNLESS THE INSURER HAS ALLOCATED PROPERLY THE EXPENSES OR LOSSES AMONG ALL ITS LINES OF INSURANCE AND PROHIBIT INSURERS FROM ADOPTING DIFFERENT METHODS OF TREATING EXPENSES OR LOSSES FOR RATE FILINGS IN SOUTH CAROLINA FROM METHODS USED IN OTHER STATES FOR SIMILAR LINES OF INSURANCE, TO PROVIDE THAT THE CHIEF INSURANCE COMMISSIONER SHALL CONDUCT EITHER AN EXAMINATION OF THE BOOKS, RECORDS, AND ACCOUNTS OF INSURERS WHICH WRITE MORE THAN ONE PERCENT OF THE PRIVATE PASSENGER MARKET IN SOUTH CAROLINA OR REQUEST AN AFFIDAVIT FROM THE INSURERS' CONTROLLER, ACCOUNTANT, OR ACTUARY TO ENSURE THAT THE COMPANIES' EXPENSES ARE BEING ALLOCATED AND TREATED PROPERLY, AND CONDUCT SURVEYS OF PRIVATE PASSENGER ACQUISITION COSTS IN THIS STATE VERSUS SIMILAR STATES IN WHICH THE COMPANIES DO BUSINESS, AND TO PROVIDE PENALTIES FOR VIOLATIONS; TO AMEND SECTION 38-77-920, RELATING TO RESTRICTION OF INSURERS AND AGENTS TO REFUSE ACCEPTANCE OF INSURANCE, CERTAIN AGENTS' PROPERTY RIGHTS, AND RESTRICTIONS OF MAILINGS TO CERTAIN AREAS, SO AS TO PROVIDE AN EXCEPTION TO THE RESTRICTION OR REFUSAL OF AUTOMOBILE INSURANCE PURSUANT TO THE PROVISIONS OF SECTION 38-77-110; TO PROVIDE THAT THERE IS NO PERSONAL INJURY PROTECTION COVERAGE MANDATED UNDER THE AUTOMOBILE INSURANCE LAWS OF THE STATE, PROVIDE THAT IF AN INSURER SELLS NO-FAULT INSURANCE COVERAGE WHICH PROVIDES PERSONAL INJURY PROTECTION, MEDICAL PAYMENT COVERAGE, OR ECONOMIC LOSS COVERAGE, THE COVERAGE MUST NOT BE ASSIGNED OR SUBROGATED AND IS NOT SUBJECT TO A SET-OFF, AND REQUIRE THE DELETION OF REFERENCES TO PERSONAL INJURY PROTECTION; TO AMEND SECTION 38-73-465(B), RELATING TO THE DETERMINATION THAT AN INSURANCE RATE IS UNFAIRLY DISCRIMINATORY, EXCESSIVE, OR UNREASONABLE, SO AS TO REQUIRE THE INSURANCE DEPARTMENT TO INCLUDE CONSIDERATION OF EXPENSES, PROVIDE FOR THE MAXIMUM ALLOWABLE EXPENSE LEVEL FOR EACH RESPECTIVE CATEGORY, AND ALLOW THE CHIEF INSURANCE COMMISSIONER TO EXTEND CERTAIN PROVISIONS OF THIS SECTION TO OTHER LINES OF PROPERTY AND CASUALTY INSURANCE, BY ORDER, AFTER PUBLIC HEARING, WHEN THE DETERMINATION IS MADE THAT TO DO SO IS IN THE PUBLIC INTEREST; TO REQUIRE THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO ASSESS, IN ADDITION TO OTHER FINES AND PENALTIES IMPOSED BY LAW, A PER DIEM FINE WHENEVER THE DEPARTMENT DETERMINES THERE WAS A LAPSE IN REQUIRED INSURANCE COVERAGE, PROVIDE EXCEPTIONS, PROVIDE FOR THE MAXIMUM AMOUNT OF THE FINE FOR A FIRST OFFENSE, AND PROVIDE FOR THE USE OF THE FINE; TO AMEND SECTION 56-3-1350, RELATING TO THE RETURN OF SUSPENDED, CANCELED, OR REVOKED MOTOR VEHICLE REGISTRATION CARDS AND LICENSE PLATES, SO AS TO REQUIRE THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO FURNISH A PERSON RETURNING A DOCUMENT WITH A RECEIPT INDICATING THE DATE OF SURRENDER; TO REENACT WITH CHANGES, SECTION 38-73-465 OF THE 1976 CODE (REPEALED IN 1988), SO AS TO PROVIDE FOR THE CONSIDERATION OF INSURANCE RATE FILINGS, THE REVIEW OF RATES IN EFFECT FOR AUTOMOBILE INSURANCE, THE REVIEW OF RATE EXPERIENCE, AND ACTION TO BE TAKEN WHEN AN INSURER HAS REALIZED AN UNFAIRLY DISCRIMINATORY, EXCESSIVE, OR UNREASONABLE PROFIT; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-360 SO AS TO PROVIDE THAT A PERSON WHO IS GUILTY OF A VIOLATION, FOR A FIRST OFFENSE, OF SECTION 56-5-5310 FOR NOT HAVING A TAILLIGHT IN GOOD WORKING ORDER OR A PERSON WHO IS GUILTY OF A VIOLATION, FOR A FIRST OFFENSE, OF SECTION 56-5-1520 FOR DRIVING TOO FAST FOR CONDITIONS MAY NOT HAVE HIS AUTOMOBILE INSURANCE PREMIUMS INCREASED AS A RESULT OF THAT VIOLATION, PROVIDE THAT A PERSON VIOLATING SECTION 56-5-5310, FOR A FIRST OFFENSE, HAS TEN DAYS TO REPAIR THE TAILLIGHT, AND PROVIDE FOR PUNISHMENT AS PROVIDED BY LAW IF THIS PERSON IS FOUND IN VIOLATION OF SECTION 56-5-5310 AFTER THE TEN-DAY PERIOD; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-625 SO AS TO PROVIDE THAT IF AN INSURED IS INVOLVED IN A MOTOR VEHICLE ACCIDENT WHERE HE IS NOT THE AT-FAULT DRIVER, HIS FACILITY RECOUPMENT CHARGE MAY NOT BE INCREASED BECAUSE OF THIS OCCURRENCE; TO AMEND SECTION 38-73-1350, RELATING TO COOPERATION AMONG RATING ORGANIZATIONS OR AMONG RATING ORGANIZATIONS AND INSURERS IN RATE MAKING OR IN CERTAIN OTHER MATTERS, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT NOTWITHSTANDING CERTAIN PROVISIONS OF LAW, AFTER PUBLIC HEARING THE CHIEF INSURANCE COMMISSIONER MAY PROHIBIT COOPERATION AMONG OR WITHIN PROPERTY/CASUALTY RATING OR ADVISORY ORGANIZATIONS BY INSURERS OR AMONG OR WITHIN THESE RATING OR ADVISORY ORGANIZATIONS AND INSURERS IN RATE MAKING OR IN OTHER MATTERS, AND PROVIDE AN EXCEPTION; TO AMEND THE 1976 CODE BY ADDING SECTIONS 38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410, 38-73-1420, AND 38-73-1430 SO AS TO PROVIDE FOR RATING ORGANIZATIONS, RATES, RATE INCREASES, PREMIUM CHARGES, UTILIZATION OF A RATE OR PREMIUM CHARGE, "PURE LOSS COMPONENT", "EXPENSE COMPONENT", "FINAL RATE OR PREMIUM CHARGE", AND AUTHORITY TO THE CHIEF INSURANCE COMMISSIONER TO EXTEND THE PROVISIONS OF CERTAIN CODE SECTIONS TO OTHER LINES OF PROPERTY AND CASUALTY INSURANCE BY ORDER AFTER PUBLIC HEARING WHEN THE DETERMINATION IS MADE THAT TO DO SO IS IN THE PUBLIC INTEREST; TO AMEND SECTION 38-77-590, RELATING TO DESIGNATED PRODUCERS OF THE SOUTH CAROLINA REINSURANCE FACILITY, SO AS TO PROVIDE THAT A DESIGNATED CARRIER WHO FAILS A CLAIMS AUDIT SHALL HAVE NO NEW DESIGNATED PRODUCER ASSIGNMENTS UNTIL IT PASSES A REAUDIT AND TO PROVIDE FOR THE DISQUALIFICATION OF THIS CARRIER FOR FAILING MULTIPLE AUDITS; TO AMEND SECTION 38-77-950, RELATING TO THE UNREASONABLE OR EXCESSIVE USE OF THE REINSURANCE FACILITY BY INSURERS, SO AS TO FURTHER PROVIDE FOR WHAT CONSTITUTES EXCESSIVE OR UNREASONABLE USE AND TO PROVIDE THAT UPON THE WRITTEN REQUEST OF THE POLICYHOLDER, ALL INSURANCE COMPANIES DOING BUSINESS IN THIS STATE SHALL GIVE WRITTEN NOTICE TO THE POLICYHOLDER INFORMING HIM WHETHER OR NOT HE AND ANY DRIVER UNDER THE POLICY IS IN THE FACILITY; TO AMEND SECTION 38-77-600, RELATING TO THE REINSURANCE FACILITY RECOUPMENT CHARGE, SO AS TO REVISE THE MANNER IN WHICH THIS CHARGE IS COMPUTED AND THE APPLICABILITY OF THIS RECOUPMENT CHARGE TO VARIOUS POLICIES AND COVERAGES; TO AMEND SECTION 38-77-620, RELATING TO THE INCLUSION OF RECOUPMENT CHARGES IN RATES, SO AS TO REVISE THE MANNER IN WHICH THE RECOUPMENT CHARGE IS INCLUDED IN RATES FOR CERTAIN RISKS; TO AMEND SECTION 38-73-465, RELATING TO THE REVIEW AND REVISION OF AUTOMOBILE INSURANCE RATES, SO AS TO REQUIRE AUTOMOBILE INSURANCE RATES TO BE DECREASED BY FIVE PERCENT AFTER SEPTEMBER 30, 1989, UPON THE ELIMINATION OF A SPECIFIED AMOUNT OF THE FACILITY RECOUPMENT CHARGE AND TO PROVIDE FOR SUBSEQUENT RATE ADJUSTMENTS UNDER CERTAIN CONDITIONS; TO AMEND CHAPTER 5, TITLE 56, RELATING TO TRAFFIC REGULATIONS BY ADDING ARTICLE 48 SO AS TO REQUIRE OCCUPANTS OF MOTOR VEHICLES TO WEAR PROPERLY FASTENED SAFETY BELTS, TO PROVIDE EXCEPTIONS AND TO PROVIDE PENALTIES FOR VIOLATIONS; TO REQUIRE THE SCHOOL BUS TRANSPORTATION STUDY COMMITTEE TO STUDY THE FEASIBILITY OF INSTALLING SAFETY BELTS IN SCHOOL BUSES; TO PERMIT THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO CONTRACT WITH LOCAL LAW ENFORCEMENT AGENCIES TO CONFISCATE LICENSE PLATES ON UNINSURED AUTOMOBILES; TO AMEND SECTION 38-77-280, RELATING TO COLLISION AND COMPREHENSIVE COVERAGE, SO AS TO REVISE THE REQUIRED DEDUCTIBLES, TO REQUIRE ALL POLICIES THAT ARE CEDED TO THE REINSURANCE FACILITY TO HAVE A TWO HUNDRED FIFTY DOLLAR DEDUCTIBLE ON COMPREHENSIVE AND COLLISION COVERAGE, AND TO EXCLUDE SAFETY GLASS FROM THE DEDUCTIBLE; TO AMEND SECTION 38-59-40, RELATING TO LIABILITY FOR ATTORNEYS' FEES WHERE THE INSURER HAS REFUSED TO PAY CLAIM, SO AS TO DELETE THE CEILING ON FEES WHICH MAY BE AWARDED AND TO EXTEND THE PROVISIONS OF THE SECTION TO CASES FILED IN OR REMOVED TO FEDERAL COURTS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-111, SO AS TO PROVIDE THAT AN INSURER MAY CEDE COVERAGES OF AN AUTOMOBILE LIABILITY INSURANCE POLICY THAT IT IS MANDATED TO WRITE TO THE FACILITY AND MAY NOT CEDE COVERAGES UNDER A NONMANDATED POLICY AND TO REQUIRE ALL COVERAGES UNDER A MANDATED POLICY TO BE CEDED IF ANY COVERAGE UNDER THE POLICY IS CEDED; TO AMEND SECTION 38-77-30(14), AS AMENDED, RELATING TO DEFINITIONS FOR PURPOSES OF AUTOMOBILE INSURANCE, SO AS TO REDEFINE "UNDERINSURED MOTOR VEHICLE" AS A VEHICLE THAT AT THE TIME OF THE ACCIDENT THE INSURANCE COVERAGE OR BOND ON THE VEHICLE IS LESS THAN THE AMOUNT OF THE INSUREDS' DAMAGES; TO AMEND SECTION 38-77-170, RELATING TO THE REQUIREMENTS TO RECOVER UNDER THE UNINSURED MOTORIST PROVISIONS WHEN THE AT-FAULT PARTY IS UNKNOWN, SO AS TO REQUIRE A WITNESS TO THE ACCIDENT TO SIGN AN AFFIDAVIT ATTESTING TO THE TRUTH OF THE FACTS ABOUT THE ACCIDENT AND TO PROVIDE FOR A WARNING STATEMENT TO BE DISPLAYED ON THE AFFIDAVIT; TO AMEND SECTION 38-39-70(a)(2), RELATING TO PREMIUM SERVICE AGREEMENT, SO AS TO DELETE THE REQUIREMENT THAT SUCH AGREEMENTS MUST BE NOTARIZED; TO AMEND SECTION 38-77-630, RELATING TO POLICIES CEDED TO THE REINSURANCE FACILITY, SO AS TO PROVIDE THAT A POLICY MAY BE CEDED ONLY BY THE APPROPRIATE INFORMATION AT THE POINT OF SALE AND PROVIDE THAT A COPY OF THE APPLICANT'S DRIVER'S LICENSE MUST BE KEPT WITH THE APPLICATION; TO REPEAL SECTION 38-73-470, RELATING TO THE ONE DOLLAR OF YEARLY PREMIUM FOR UNINSURED MOTORIST COVERAGE TRANSFERRED TO THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION TO ENFORCE MOTOR VEHICLE INSURANCE REQUIREMENTS; TO REPEAL SECTIONS 38-77-240, 38-77-250, 38-77-260(b) AND (c), 38-77-290, 38-77-300, AND 38-77-310, RELATING TO MEDICAL, HOSPITAL, AND DISABILITY BENEFITS; INSURANCE POLICY APPLICATIONS; RECOVERY UNDER ONE POLICY; BENEFITS PAYABLE FOR INJURIES TO OCCUPANTS AND PEDESTRIANS, EFFECTS OF WORKERS' COMPENSATION BENEFITS AND THE RIGHT TO SUE; PAYMENTS OF BENEFITS AND LIMITATIONS; PERSON EXCLUDED FROM BENEFITS AND BENEFITS WITH RESPECT TO MOTOR VEHICLES; AND GENERAL RELEASES, CLAIMS, AND RIGHT TO REIMBURSEMENTS.

Whereas, it is the purpose and intent of the General Assembly in enacting this legislation to reduce insurance losses, including those of the Reinsurance Facility, and, consequently, the cost of mandatory automobile insurance. Now, therefore,

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

Citation of act

SECTION 1. This act may be cited as the "Automobile Insurance Reform Act of 1989".

Fee changed; monthly listing of license numbers, violations

SECTION 2. Section 56-9-330(1) of the 1976 Code is amended to read:

"(1) The department, upon request, and the payment of a fee of two dollars shall furnish any person a certified abstract of the operating record of any person subject to the provisions of this chapter, which abstract must also fully designate the motor vehicles, if any, registered in the name of that person, and, if there is no record of any conviction of that person for violating any laws relating to the operation of a motor vehicle or of any injury or damage caused by that person, the department shall so certify. The department, upon request and the payment of a reasonable fee, shall furnish a monthly listing by magnetic or other electronic media of all driver's license numbers that had driving violations posted on their records during the previous month. These abstracts are not admissible as evidence in any action for damages or criminal proceedings arising out of motor vehicle accidents."

Risk, territorial classification plans, promulgated or approved, language added; cession allowed

SECTION 3. Section 38-73-735 of the 1976 Code is 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."

Notice by magnetic or electronic media; type of mailing; fine changed; new fine; etc.

SECTION 4. Section 56-10-240 of the 1976 Code, as last amended by Act 671 of 1988, is further amended to read:

"Section 56-10-240. If, during the period for which it is licensed, a motor vehicle 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 insurance or security occurs within three months of issuance provided that this subsection 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, 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 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.

If the vehicle owner unlawfully refuses to surrender the suspended items as required in this article, the department through its designated agents or by request to a county or municipal law enforcement agency may take possession of the suspended license plates and registration certificate and may not reissue the registration until proper proof of liability insurance coverage is provided and until the owner has paid a reinstatement fee of two hundred dollars for the first refusal under this section, and three hundred dollars for each subsequent refusal. A person who voluntarily surrenders his license plates and registration certificate before their suspension shall only be charged a reinstatement fee of five dollars.

A person wilfully failing to return his motor vehicle license plates and registration certificates as required in this section is guilty of a misdemeanor and, upon conviction, must be punished as follows:

(1) for a first offense, fined not less than one hundred dollars nor more than two hundred dollars or imprisoned for thirty days;

(2) for a second offense, fined two hundred dollars or imprisoned for thirty days, or both;

(3) for a third and subsequent offense, imprisoned for not less than forty-five days nor more than six months.

Only convictions which occurred within ten years including and immediately preceding the date of the last conviction constitute prior convictions within the meaning of this section."

No uninsured, underinsured coverage, excess or umbrella policy

SECTION 5. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by adding:

"Section 38-77-161. No uninsured or underinsured motorist coverage need be provided in this State by any excess or umbrella policy of insurance."

References changed; language deleted; etc.

SECTION 6. Section 38-73-10(a)(2) of the 1976 Code is amended to read:

"(2) empower the commissioner to fix, establish, and promulgate any uniform statistical plan necessary or appropriate to obtain all automobile insurance loss and loss adjustment expense experience, other expense experience, and all other appropriate statistical and financial data from insurers, rating organizations, and advisory organizations engaged in an automobile insurance business in this State to the end that the commissioner shall promulgate the risk classification and territorial plans to be used by all insurers of automobile insurance in this State and in order that the commissioner may test the risk and territorial differentials previously established against the most recently available loss experience;".

Promulgation of statistical plans allowed, not required; deletion of language

SECTION 7. Section 38-73-40 of the 1976 Code is amended to read:

"Section 38-73-40. The commissioner may promulgate statistical plans, reasonably adapted to each of the rating systems on file with him, which may be modified from time to time and which must be used thereafter by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid him in determining whether rating systems comply with the standards set forth in Sections 38-73-330 and 38-73-430, as the case may be. The plans may also provide for the recording and reporting of expense experience items which are specially applicable to this State and are not susceptible of determination by a prorating of countrywide expense experience. In promulgating these plans, the commissioner shall give due consideration to the rating systems on file with him and, in order that such plans may be as uniform as is practicable among the several states, to the form of the plans used for rating systems in other states. The commissioner may designate one or more rating organizations or other agencies to assist him in gathering the experience and making compilations thereof. These compilations must be made available, subject to plans promulgated by the commissioner, to insurers and rating organizations."

Promulgation of risk classifications and territories by Chief Insurance Commissioner; classification plan before 1990 session; etc.

SECTION 8. Section 38-73-720 of the 1976 Code is amended to read:

"Section 38-73-720. The commissioner may, through order, fix, establish, and promulgate fair and reasonable risk classifications and territories for automobile insurance risks in accordance with the criteria and standards mentioned in Section 38-73-730 and consistent with the purposes of this chapter and Chapter 77 of this title.

Before the beginning of the 1990 Session of the General Assembly, the commissioner shall promulgate by regulation a classification plan for automobile insurance for the establishment of rates and premiums. The classification plan when utilized by insurers of automobile insurance must be introduced actuarially on-balance so that no increase in income level is produced by the filed classification plans. Decreases for income levels are encouraged. The classification plan must be consistent with the classification plans approved for use on a countrywide basis by the rating organization having the largest number of members or subscribers in South Carolina. In addition, the commissioner shall not permit within the revised risk classification plan a distinction in bodily injury liability premiums charged or property damage liability premiums charged because of the type of private passenger automobile insured."

Deletion of reference to State Rating and Statistical Division; "Chief Insurance Commissioner" inserted

SECTION 9. Section 38-73-750 of the 1976 Code is amended to read:

"Section 38-73-750. 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 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."

Language deleted; deletion of reference to State Rating and Statistical Division; "Chief Insurance Commissioner" inserted; minimum safe driver discounts

SECTION 10. Section 38-73-760 of the 1976 Code is 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 statistical plan for automobile insurance in this State, the same must be adopted and used by every automobile insurer in this State 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 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 fixing, establishing, and promulgating of risk and territorial classification plans for automobile insurance; determining the pure loss rate level indications for automobile insurance in South Carolina 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, 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; 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; determining the amount, validity, and propriety of surcharges and discounts referable to any 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; determining the propriety or validity of any 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 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 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 not be delegated, except that the commissioner may, as the result of competitive bidding, 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 be delegated other than to the State Rating and Statistical Division.

(d) Any 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 surcharge (including loss of safe driver discount) that may be applicable to the policy as a result of any 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. The amount of the applicable safe driver discount also must be shown."

Language deleted; deletion of reference to State Rating and Statistical Division; "Chief Insurance Commissioner" inserted

SECTION 11. Section 38-73-770 of the 1976 Code is amended to read:

"Section 38-73-770. Every classification plan promulgated by the commissioner must be so structured as to produce rates or premium charges which are adequate, not excessive, and not unfairly discriminatory."

Special restricted driver's license

SECTION 12. Section 38-77-112 of the 1976 Code, as last amended by Act 399 of 1988, 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 applicant or existing policyholder who does not at the time of application or renewal 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 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."

Board membership increased; ex officio members; disqualified persons, exception

SECTION 13. The first paragraph of Section 38-77-580 of the 1976 Code, formerly known as Section 38-37-790 and as last amended by Act 163 of 1987, is further amended to read:

"The operations and affairs of the facility are under the direction and control of a governing board of twenty-one persons of whom four must be residents of South Carolina appointed by the Governor of South Carolina to represent consumers. The commissioner shall appoint eight persons to represent the insurance industry; in appointing these persons, the commissioner shall select two from a list of not less than five nominated by the American Insurance Association from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two from a list of not less than five persons nominated by the American Mutual Insurance Alliance from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two from a list of not less than five persons nominated by the National Association of Independent Insurers from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall select two persons, one of whom must be an officer or employee of a stock insurer licensed in South Carolina and not a member or subscriber of any of these organizations, and one of whom must be an officer or employee of a nonstock insurer licensed in South Carolina and not a member or subscriber of any of these organizations; however, of the eight persons appointed to represent the insurance industry, not less than five must be residents of South Carolina and those who are not residents of South Carolina must have job responsibilities that include the supervision over South Carolina operations; not less than two must be officers or employees of insurers licensed to transact automobile insurance in South Carolina and domiciled therein. The commissioner shall appoint four persons to represent producers, all of whom must be residents of South Carolina; he shall select two such persons from a list of not less than five nominated by the stock agents' association and two from a list of not less than five persons nominated by the mutual agents' association. The commissioner shall appoint two persons to represent the designated agents, one of whom must be an officer of a premium service finance company and the other of whom must be a designated agent and both of whom must be residents of South Carolina. In addition the Consumer Advocate, the Chairman of the Senate Banking and Insurance Committee, and the Chairman of the House of Representatives Labor, Commerce and Industry Committee or their designees are ex-officio members of the governing board of the Reinsurance Facility. No person who is associated with any business within the meaning of Section 8-13-20, which is either subject to regulation by the Department of Insurance or which provides goods or services to the facility for compensation, is eligible for appointment to the board to represent consumers, except that any person serving on the board representing consumers on the effective date of this provision who would otherwise be disqualified from serving based on this provision may continue to serve for the remainder of his current term."

Exception language added

SECTION 14. Section 38-77-920 of the 1976 Code is amended to read:

"Section 38-77-920. Except 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 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 examine an insurer's records at any time the commissioner considers it necessary to determine that the insurer is not so restricting or limiting its offerings."

Reference added to federal agencies

SECTION 15. Section 37-6-604 of the 1976 Code is amended to read:

"Section 37-6-604. The functions and duties of the Division of Consumer Advocacy are:

(1) To provide legal representation of the consumer interest before the state and federal regulatory agencies as hereinafter provided when those agencies undertake to fix rates or prices for consumer products or services or to enact regulations or establish policies related thereto.

(2) To monitor existing regulations, rate structures and policies of that agency of special interest to consumers and report to the public through the news media proposed changes therein under consideration and the effect of those changes on the lives of the citizens of the State.

(3) The annual report required of the Commission on Consumer Affairs must include a report on the activities of the Division of Consumer Advocacy.

(4) To evaluate and act upon requests from consumers concerning the matters set forth in (1) and (2) above, except that any proceedings initiated by the advocate must be brought on behalf of the public at large and not for individuals; initiation or continuation of any proceedings must be at the sole discretion of the consumer advocate."

Consumer Advocate, access to confidential records; Department of Insurance and Advocate, access to records of insurers; etc.

SECTION 16. Section 37-6-605 of the 1976 Code is amended to read:

"Section 37-6-605. In the performance of his assigned functions the advocate shall have reasonable access to records of all state agencies which are not classified by law as confidential and all state agencies shall cooperate with the advocate in the performance of his duties. In addition, the advocate shall have reasonable access to confidential records and information, provided he enters a proprietary agreement to insure their confidentiality. The South Carolina Department of Insurance and advocate also have access to records, information, and data of the insurance companies as well as all of their sister affiliates, subsidiaries, and parent companies. During the course of a rate making or other proceeding before the South Carolina Department of Insurance or the Public Service Commission, the Consumer Advocate, as a party of record, may request in writing, in addition to all other methods of discovery as provided by law for proceedings before the South Carolina Department of Insurance or the Public Service Commission, the issuance by the Chief Insurance Commissioner or the Executive Director of the Public Service Commission of an order compelling a witness or company to either produce or allow inspection of documentary evidence relevant to the matter before the South Carolina Department of Insurance or the Public Service Commission. If the executive director issues or refuses to issue the order, the aggrieved party may appeal to the full commission. The written request, in addition to showing a general relevance and reasonable scope of the evidence sought, must also specify with particularity the books, accounts, papers, records, or other materials of the business desired and the facts expected to be proved thereby. For good cause shown, in lieu of a written request, the request for such an order may be made orally upon the record to the presiding officer at the hearing. Any objections to the issuance of the order must be filed with the commission within three days of being notified of the written request for such order. Any objections so filed must list the specific grounds for objection. The commission shall rule on the objections within ten days or the objection is denied."

Insurers required to insure - exceptions

SECTION 17. Section 38-77-110 of the 1976 Code is amended to read:

"Section 38-77-110. (A) Automobile insurers other than insurers designated and approved as specialized insurers by the commissioner may not refuse to write or renew automobile insurance policies for individual private passenger automobiles or small commercial risks. These policies may not be canceled except for reasons which had they existed or been known when the policy was written would have rendered the risk not an insurable risk. Every automobile insurance risk constitutes an insurable risk unless the operator's permit of the named insured has been revoked or suspended and is at the time of application for insurance so revoked or suspended. However, no insurer is required to write or renew automobile insurance on any risk if there exists a valid and enforceable outstanding judgment secured by an insurer, an agent, or licensed premium service company on account of automobile insurance premiums which the applicant or insured or any principal operator who is a member of the named insured's household has failed or refused to pay unless the applicant or insured pays in advance the entire premium for the full term of the policy sought to be issued or renewed or the annual premium, whichever is the lesser. An insurer is not precluded from effecting cancellation of an automobile insurance policy, either upon its own initiative or at the instance of an agent or licensed premium service company, because of the failure of any named insured or principal operator to pay when due any automobile insurance premium or any installment payment. However, notice of cancellation for nonpayment of premium notifies the person to whom the notice is addressed that the notice is void and ineffective if payment of the full amount of the premium or premium indebtedness, whichever is the greater, is made to the insurer, agent, or licensed premium service company named in the notice by the otherwise effective date of cancellation. This notice of cancellation is not considered ineffective for being conditional, ambiguous, or indefinite.

(B) Notwithstanding subsection (A) of this section, no insurer is required to write private passenger automobile insurance with higher limits of coverage than:

(1) two hundred fifty thousand dollars, for bodily injury liability to one person in one accident,

(2) subject to the limit for one person, five hundred thousand dollars because of bodily injury to two or more persons in one accident,

(3) fifty thousand dollars because of injury to or destruction of property of others in any one accident,

(4) five hundred thousand dollars combined single limits for either or both bodily injury and property damage, if 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 38-77-340 and who resides in the same household, has one or more of the conditions or factors prescribed in Section 38-73-455(A) existing and if an insurer, at its option, writes such a policy, the policy may not be ceded to the Reinsurance Facility.

(C) With regard to any coverage not required to be written by an insurer under the mandate to write, no insurer may refuse to write such policy, coverage, or endorsement of automobile insurance because of the race, color, creed, national origin, or ancestry of anyone who seeks to become insured."

Unfair trade practices

SECTION 18. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by adding:

"Section 38-77-341. It is an unfair trade practice as defined in Section 39-5-20 to:

(1) knowingly and wilfully make or cause to be made any false statement or representation of a material fact for use in an application for payment or for use in determining the right to payment under this chapter;

(2) submit or cause to be submitted bills or requests for payment containing charges for services rendered which are substantially in excess of the person's customary charges or in applicable cases substantially in excess of the person's costs for such services, unless there is good cause for the bills or requests containing the charges or costs;

(3) submit bills or requests for payment for work covered by insurance which are in excess of those submitted for similar work not covered by insurance;

(4) submit bills or requests for payment which are inflated for the purpose of relieving the insured of the obligation for making a payment for such goods and services as a result of a deductible or copayment clause; or

(5) charge for copies of medical records or other records provided more than fifty cents per page, except that a minimum charge of ten dollars for furnishing copies of these records is authorized to be charged by insurers or health care providers."

Notification of lapse or termination

SECTION 19. Section 56-10-40 of the 1976 Code is amended to read:

"Section 56-10-40. Every insurer writing automobile liability insurance in this State and every provider of other security approved and accepted by the Executive Director of the Department of Highways and Public Transportation in lieu of such insurance shall immediately notify the Executive Director of the Department of Highways and Public Transportation of the lapse or termination of any such insurance or security issued to or provided for a resident of this State in the following circumstances:

(1) the lapse or termination of such insurance or security occurs within three months of issuance provided that this subsection 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.

This notification must be in writing or magnetic media in a manner considered satisfactory to the department. Upon receipt of any such notice the Executive Director of the Department of Highways and Public Transportation shall make a reasonable effort to notify the person that his certificate of registration has been suspended and shall recover the certificate from such person and the motor vehicle registration plates from the vehicles concerned."

Insurance must be issued for six months or more - when may be canceled - penalty

SECTION 20. Section 56-10-280 of the 1976 Code is amended to read:

"Section 56-10-280. All contracts or policies of insurance issued to meet the financial responsibility requirements prescribed in this chapter must be issued for not less than six months. A contract or policy of insurance remains in full force and effect at least sixty days notwithstanding any power of attorney which may purport to give the attorney-in-fact the right to effect cancellation on behalf of the insured; however, a contract or policy may be canceled within the first sixty days only under the following circumstances:

(1) a check or bank draft tendered by the insured for payment of premium is returned unpaid for insufficient funds or other reason by the insured's financial institution; or

(2) the insured produces satisfactory proof from the Department of Highways and Public Transportation that he has sold or otherwise disposed of the insured vehicle or surrendered its tags and registration.

The provisions of this section do not prohibit refunds to the insured for cancellations after sixty days resulting from causes other than nonpayment of premium. Where an insurance company cancels a contract or policy pursuant to this section for nonpayment of premium under the circumstances described above which occurs within the first sixty days, the insurance company or agent is entitled to charge and collect a fifteen dollar penalty in addition to that otherwise provided by law, and the penalty charge is not a premium charge."

Actions under underinsured motorists provisions

SECTION 21. Section 38-77-160 of the 1976 Code is amended by adding:

"No action may be brought under the underinsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the underinsured motorist provision. The insurer has the right to appear and defend in the name of the underinsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record. In the event the automobile insurance insurer for the putative at-fault insured chooses to settle in part the claims against its insured by payment of its applicable liability limits on behalf of its insured, the underinsured motorist insurer may assume control of the defense of action for its own benefit. No underinsured motorist policy may contain a clause requiring the insurer's consent to settlement with the at-fault party."

Form to be used when optional coverages are offered

SECTION 22. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by adding:

"Section 38-77-350. (A) Not later than September 1, 1989, the Chief Insurance Commissioner shall approve a form which automobile insurers shall use in offering optional coverages required to be offered pursuant to law to applicants for automobile insurance policies. This form must be used by insurers for all new applicants after December 1, 1989. The form, at a minimum, must provide for each optional coverage required to be offered:

(1) a brief and concise explanation of the coverage,

(2) a list of available limits and the range of premiums for the limits,

(3) a space for the insured to mark whether the insured chooses to accept or reject the coverage and a space for the insured to select the limits of coverage he desires,

(4) a space for the insured to sign the form which acknowledges that he has been offered the optional coverages,

(5) the mailing address and telephone number of the Insurance Department which the applicant may contact if the applicant has any questions that the insurance agent is unable to answer.

(B) If this form is properly completed and executed by the named insured it is conclusively presumed that there was an informed, knowing selection of coverage and neither the insurance company nor any insurance agent has any liability to the named insured or any other insured under the policy for the insured's failure to purchase any optional coverage or higher limits.

(C) An automobile insurer is not required to make a new offer of coverage on any automobile insurance policy which renews, extends, changes, supercedes, or replaces an existing policy. However, the first renewal notices for existing policies after December 1, 1989, must include the form provided in subsection (A).

(D) Compliance with this section satisfies the insurer and agent's duty to explain and offer optional coverages and higher limits and no person, including, but not limited to, an insurer and insurance agent is liable in an action for damages on account of the selection or rejection made by the named insured.

(E) If the insured fails or refuses to return an executed offer form within thirty days to the insurer, the insurer shall add on uninsured motorist and underinsured motorist coverages with the same policy limits as the insured's liability limits.

False claims for payment - felony

SECTION 23. Section 38-55-170 of the 1976 Code is amended to read:

"Section 38-55-170. Any person who knowingly causes to be presented to an insurer transacting business in this State a false claim for payment, or who knowingly assists, solicits, or conspires with another to present a false claim for payment, is guilty of a felony and, upon conviction, must be imprisoned for not more than five years or fined not more than five thousand dollars, or both."

False claims to obtain insurance benefits for fire or explosion losses - felony

SECTION 24. Section 16-11-125 of the 1976 Code is amended to read:

"Section 16-11-125. Any person who wilfully and knowingly presents or causes to be presented a false or fraudulent claim, or any proof in support of such claim, for the payment of a fire loss or loss caused by an explosion, upon any contract of insurance or certificate of insurance which includes benefits for such a loss, or prepares, makes, or subscribes to a false or fraudulent account, certificate, affidavit, or proof of loss, or other documents or writing, with intent that such documents may be presented or used in support of such claim, is guilty of a felony and, upon conviction, must be fined not more than ten thousand dollars or imprisoned for not more than five years or both in the discretion of the court.

The provisions of this section are supplemental to and not in lieu of existing law relating to falsification of documents and penalties therefor."

Burning personal property to defraud insurer - felony

SECTION 25. Section 16-11-130 of the 1976 Code is amended to read:

"Section 16-11-130. Any person who (a) wilfully and with intent to injure or defraud an insurer sets fire to or burns or causes to be burned or (b) aids, counsels, or procures the burning of any goods, wares, merchandise, or other chattels or personal property of any kind, whether the property of himself or of another, which is at the time insured by any person against loss or damage by fire is guilty of a felony and, upon conviction, must be imprisoned for not less than one nor more than five years."

Crimes, included as felonies

SECTION 26. The crimes in Sections 16-11-125, 16-11-130, and 38-55-170 of the 1976 Code and Section 32 of this act are added to the list of crimes classified as felonies in Section 16-1-10.

Denial of claim, notification

SECTION 27. Section 23-41-30 of the 1976 Code is amended to read:

"Section 23-41-30. (a) Any authorized agency may require, in writing, the insurance company at interest to release to the requesting agency any or all relevant information or evidence deemed important to the authorized agency which the company may have in its possession relating to the fire loss in question. Relevant information includes:

(1) Pertinent insurance policy information relevant to a fire loss under investigation and any application for such a policy;

(2) Policy premium payment records which are available;

(3) History of previous claims made by the insured;

(4) Material relating to the investigation of the loss, including statements of any person, proof of loss, and any other evidence relevant to the investigation.

(b) When an insurance company has reason to believe that a fire loss in which it has an interest may be of other than accidental cause, the company may notify, in writing, an authorized agency and provide it with any or all material developed from the company's inquiry into the fire loss; however, when such information includes possible evidence of arson or other unlawful burning involving specifically named persons, the information in all cases may be furnished to the solicitor in the circuit where the fire occurred and he shall furnish the information to other properly authorized agencies if he considers such action to be appropriate. When an insurance company provides any one of the authorized agencies with notice of a fire loss, it is sufficient notice for the purpose of this chapter.

(c) When an insurance company denies payment of a claim to an insured on grounds of arson, false swearing, material misrepresentation, fraud, or similar claim or defense such insurer shall in all cases notify in writing the Chief Insurance Commissioner. The commissioner may, after the investigation, notify an authorized agency if he considers the action to be appropriate.

(d) The authorized agency provided with information pursuant to this chapter may release or provide such information to any agency asked to participate in the investigation.

(e) Any insurance company providing information to an authorized agency pursuant to this chapter has the right to be informed, upon written request, as to the status of the case by such agency within a reasonable time, as determined by the authorized agency.

(f) Any insurance company or authorized agency which notifies the Chief Insurance Commissioner or provides or releases information, whether oral or written, and any person acting in their behalf, pursuant to this chapter is immune from any liability arising out of such notification or release."

License, first time; complete, verification form

SECTION 28. Section 56-1-80 of the 1976 Code is amended to read:

"Section 56-1-80. Every application for a driver's license or permit must:

(1) be made upon the form furnished by the department;

(2) be accompanied by the proper fee, and acceptable proof of date and place of birth;

(3) contain the full name, date of birth, sex, race, and residence address of the applicant and briefly describe the applicant;

(4) state whether the applicant has been licensed as an operator or chauffeur and, if so, when and by what state or country; and

(5) state whether any such license has ever been suspended or revoked or whether an application has ever been refused and, if so, the date of and reason for such suspension, revocation, or refusal.

Whenever application is received from a person previously licensed in another state, the department shall request copy of the applicant's record from the other state. When received, the record becomes a part of the driver's record in this State with the same force and effect as though entered on the operator's record in this State in the original instance. Every person who obtains a driver's license for the first time in South Carolina, and every person who renews his driver's license in South Carolina must be furnished a written request form for completion and verification of liability insurance coverage.

The completed and verified form or an affidavit prepared by the department that neither he, nor any resident relative, owns a motor vehicle subject to the provisions of this chapter, must be returned to the department within thirty days from the date the license is issued or renewed. Failure to return the form or affidavit results in the suspension of the newly issued or renewed driver's license until a properly executed form or affidavit is returned to the department."

Sample, premiums of; published

SECTION 29. The Chief Insurance Commissioner shall no less than annually cause to have published and make available a representative sample of the private passenger premiums being charged by at least the twenty insurance companies having the largest market share in each territory to facilitate price comparisons by insureds and prospective insureds who are seeking new coverage.

Commissioner, authority granted; legislation, court decision, effect of

SECTION 30. Article 9, Chapter 73, Title 38 of the 1976 Code is amended by adding:

"Section 38-73-915. (A) The commissioner in reviewing rate filings may take into consideration recently passed legislation or recently rendered court decisions which will have an effect on insurance rates. The commissioner may use such information to reduce or increase the rate level of the insurer or the rating organization.

(B) The commissioner may order an insurer or rating organization to reduce or increase its current rate levels as a result of recently passed legislation or recently rendered court decisions. The commissioner shall give the insurer or rating organization and the Consumer Advocate thirty days notice of his intention to order a reduction or increase in an insurer's or rating organization's rate level. The insurer or rating organization or the Consumer Advocate may request a hearing under the Administrative Procedures Act to contest the proposed order. The Consumer Advocate may participate as a party in any such hearings."

Rate filings; information based upon, exceptions

SECTION 31. No rate filing for private passenger automobile insurance may include or be based upon actual or projected loss or expense data which includes payments made on policies, wherein the amount of the settlement, judgment, or other payment by the insurer was in excess of the policy limits, exclusive of interest and costs. No rate filing for private passenger automobile insurance may include or be based upon actual or projected loss or expense data which includes payments made as a result of the insurer's tortious breach of it's duty of good faith and fair dealing.

Provisions to ensure expenses allocated, treated properly

SECTION 32. (A) No automobile insurer or representative of any automobile insurer may wilfully include in a private passenger automobile insurance rate filing any expense or loss which was generated in whole or part by either another line of insurance or general expenses or overhead applicable to all lines, unless the insurer has allocated properly the expense or loss among all its lines of insurance. The insurer's compliance with generally accepted accounting and actuarial principles constitutes a complete defense to an action brought under this section. No insurer may adopt a different method or usage of allocating or treating expenses or losses for purposes of rate filings in South Carolina from that which it uses in other states for similar lines of insurance, unless different treatment is required by statute or regulation.

(B) The Chief Insurance Commissioner, at least once every four years, shall make or cause to be made, for each insurer which writes more than one percent of the private passenger market in South Carolina, an examination of each insurer's books, records, and accounts to ensure that the expenses are being allocated or treated properly. In lieu of an independent examination, the commissioner may request a sworn affidavit from the insurer's controller, accountant, or actuary that the companies' expenses are being allocated and treated properly and that private passenger automobile insureds are not being charged an inequitable or unfair share of the insurer's expenses, acquisition costs, overhead, or other expenses. The Chief Insurance Commissioner shall survey for the companies at appropriate intervals a comparison of the acquisition cost of private passenger business in South Carolina versus other similar states in which the companies do business.

(C) An insurer violating the provisions of this section is subject to a civil penalty of not less than twenty-five thousand dollars. A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be imprisoned for not more than ten years or fined not less than ten thousand dollars, or both.

Nonrefusal of insurance; exception provided

SECTION 33. Section 38-77-920 of the 1976 Code is amended to read:

"Section 38-77-920. 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, except as provided for in Section 38-77-110. 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, results 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 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 examine an insurer's records at any time the commissioner considers it necessary to determine that the insurer is not so restricting or limiting its offerings."

No PIP coverage; references to PIP deleted; no assignment, subrogation, or set-off

SECTION 34. There is no personal injury protection (PIP) coverage mandated under the automobile insurance laws of this State. Any reference to personal injury protection in Titles 38 or 56 of the 1976 Code of Laws or elsewhere is deleted. If an insurer sells no-fault insurance coverage which provides personal injury protection, medical payment coverage, or economic loss coverage, the coverage must not be assigned or subrogated and is not subject to a set-off.

Consideration of expenses; maximum allowable expense level; etc.

SECTION 35. Section 38-73-465(B) of the 1976 Code, as reenacted by this act, is amended by adding an appropriately numbered item to read:

"____________ (a) In making a determination that an insurance rate is unfairly discriminatory, excessive, or unreasonable, the Insurance Department, in accordance with generally accepted and reasonable actuarial techniques, shall include consideration of expenses. Effective after June 30, 1989, expenses must be given effect in all private passenger automobile insurance rates by inclusion in rates of a level of expenses approximating an efficient company for the appropriate category in which each insurer qualifies. Insurers must be categorized by the marketing mechanism utilized, either as a nonagency insurer, captive agency insurer, or independent agency insurer. Nonagency insurers are those who market the automobile insurance policy primarily through the mail. Captive agency insurers are those who market the automobile insurance policy primarily through agents, compensated by salary or commission or both, but who are restricted by contract with the insurer from contracting with other insurers for marketing of automobile insurance. Independent agency insurers are those who market the automobile insurance policy primarily through agents who are not restricted by contract from marketing automobile insurance with other insurers.

(b) For purposes of this item, the maximum allowable expense level for each respective category is the weighted average for the past three years for which data is reported of the average expenses by insurer category for the top ten most efficient insurers in that category writing automobile insurance in this State. If there are not ten insurers in any given category, then the expense level is the weighted average for all the insurers in that category. The Chief Insurance Commissioner may reward an insurer actually achieving less than the maximum expense level allowable by allowing a higher underwriting profit than would otherwise result. However, this reward may not exceed the difference between the insurer's actual expense level achieved and the maximum level allowable in rates in a given year.

(c) The commissioner may extend the provisions of this item to other lines of property and casualty insurance, by order, after public hearing, when the determination is made that to do so is in the public interest."

Per diem fine for lapse in required coverage

SECTION 36. Whenever a person furnishes proof of liability insurance, or surrenders or has his registration or license tags confiscated for failure to produce proof of insurance, after the Department of Highways and Public Transportation receives notice of the lapse or termination of the required liability insurance, the department shall compare the effective date of the lapse or termination with the date of the proof of insurance or the date of the confiscation or surrender. If the department determines there was a lapse in the required coverage the department shall assess, in addition to other fines or penalties imposed by the law, a per diem fine in the amount of five dollars. The department shall collect and keep this fine to defer the costs of the financial responsibility program. The fine provided for in this section must not be assessed if the person furnishes proof, as documented by his sworn statement, that the motor vehicle upon which the coverage has lapsed or been terminated has not been operated upon the roads, streets, or highways of this State during the lapse or termination, and the lapse or termination is due to military service or illness as documented by a signed physician's statement. The total amount of the fine provided for in this section may not exceed two hundred dollars for a first offense.

Receipt for returned document

SECTION 37. Section 56-3-1350 of the 1976 Code is amended to read:

"Section 56-3-1350. Whenever the department, as authorized under this chapter, cancels, suspends, or revokes the registration and license of a vehicle or the registration card, license plate, revalidation sticker, or other document issued by it pursuant to this chapter, the owner or person in possession of the document shall immediately return it to the department. The department in all cases shall furnish the person returning the document with a receipt indicating the date of surrender."

Unfairly discriminatory, excessive, or unreasonable profits, rates, review of rates, rate experience

SECTION 38. Section 38-73-465 of the 1976 Code is reenacted to read:

"Section 38-73-465. (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 shall review the rate experience. 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 insurer 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, in accordance with generally accepted and reasonable actuarial techniques, shall 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. Investment income also must be given effect in all other property or casualty insurance rates and the commissioner may order the use of similar instructions and exhibits by replacement of that company's insurance data for other lines instead of the private passenger data referenced in this subitem. Companies shall supply the information requested in this item regardless of whether or not the references to the Annual Statements change.

Exhibit 1. Expected Underwriting Results with Unchanged Premium: This exhibit must display the following data and calculations:

i. total limits premium at current level;

ii. forecasted losses;

iii. forecasted loss adjustment expenses;

iv. other underwriting expense;

v. underwriting result (profit or loss);

which must be calculated as total limits premium at current level by coverage, less losses, less loss adjustment expenses, less other underwriting expenses; and

vi. underwriting result (profit or loss) as a percent of premium, which must be calculated as the ratio of underwriting result to earned premium at current levels.

Exhibit 2. Analysis of Earnings Requirements: This exhibit must display the following information:

i. the amount of surplus allocated to each coverage for South Carolina private-passenger automobile insurance as calculated in investment income Exhibit 4, Line 4;

ii. the target rate of return on surplus which the filer believes is appropriate for the coverage in question. Testimony and evidence in support of this target rate of return must accompany the filing;

iii. the required dollar return on surplus to produce the target rate of return;

iv. the ratio of investment income to premium earned as calculated on Investment Income Exhibit 4, Line 11;

v. forecasted South Carolina premium earned by coverage;

vi. the expected dollar return from investment calculated by multiplying the ratio of investment income to premium earned by forecasted premium earned;

vii. required underwriting return calculated as the required return on surplus less the dollar return from investment; and

viii. the ratio of the required underwriting return to forecasted premium earned.

EXHIBIT 1. EXPECTED UNDERWRITING

BODILY PROPERTY

INJURY DAMAGE

1. Earned Premium at

Current Level $_______________ $______________

2. Forecasted Loss $_____________ $______________

3. Forecasted Loss

Adjustment $__________________ $______________

4. Other Underwriting

Expenses $____________________ $______________

5. Underwriting Result $_________ $______________

6. Underwriting Result

as a Percent of

Premium ____________________% _____________%

RESULTS WITH UNCHANGED PREMIUM

COMPREHENSIVE COLLISION

$_______________ $_____________

$_______________ $_____________

$_______________ $_____________

$_______________ $_____________

$_______________ $_____________

_______________ % ____________%

EXHIBIT 2. ANALYSIS OF EARNINGS REQUIREMENTS

BODILY PROPERTY

INJURY DAMAGE

1. Surplus by Line,

Inv. Inc.

Exhibit 4, Line 4 $___________ $__________

2. Target Rate of Return

on Surplus __________% __________%

3. Required on Surplus

(1) x (2) $___________________ $__________

4. Ratio of Investment

Income to Premium

Earned Inv. Inc.

Exhibit 4, Line 11 ____________ __________

5. Forecasted Premium

Earned $______________________ $__________

6. Return from Investment

(4) x (5) $___________________ $__________

7. Required Underwriting

Return (3) - (6) $____________ $__________

8. Ratio, Required Under-

writing to Premium

Earned (7) / (5) _____________% _________%

COMPREHENSIVE COLLISION

$______________ $______________

_____________% _____________%

$______________ $______________

______________ _____________

$______________ $______________

$______________ $______________

$______________ $______________

_____________% _____________%

Instructions for Completing Investment

Income Exhibits

(A) Each filer shall provide the following exhibits pertaining to investment income associated with private passenger automobile insurance in the formats specified by Investment Income Exhibits 1, 2, 3, and 4.

1. Investment Income Exhibit 1: The filer shall provide the following information according to the format specified in Investment Income Exhibit 1, Investment Income from Loss and Loss Expense Reserves:

i. Net investment gain, from the filer's most recent annual statement, page 4, line 9a;

ii. cash and invested assets, from the filer's most recent annual statement, page 2, line 8A, for the two most recent years and mean cash and invested assets calculated for those two years;

iii. rate of return on investments calculated as the ratio of net investment gain to mean cash and invested assets;

iv. South Carolina loss reserves (Incl. IBNR) by coverage as of December thirty-first of the two most recent calendar years;

v. South Carolina loss adjustment expense reserves (Incl. IBNR) as of December thirty-first of the two most recent calendar years;

vi. mean loss and loss adjustment expense reserves for the period;

vii. premium earned by coverage;

viii. the ratio of loss and loss expense reserves to premium earned; and

ix. investment income from reserves as a percent of premium earned.

2. Investment Income Exhibit 2: The filer shall provide the following information according to the format specified in Investment Income Exhibit 2, Investment Income from Unearned Premium Reserves:

i. South Carolina unearned premium reserves by coverage as of December thirty-first of the two most recent calendar years and the mean unearned premium reserve calculated for that period;

ii. premium earned by coverage;

iii. the ratio of unearned premium reserve to earned premium, by coverage;

iv. rate of return on investments; and

v. investment income as a percent of premium earned, by coverage.

3. Investment Income Exhibit 3: Each filer shall provide the following information according to the format specified in Investment Income Exhibit 3, Companywide Reserves, Surplus, and Invested Assets. The references on the exhibit pertain to the filer's most recent annual statement:

i. loss reserves for the most recent calendar year;

ii. loss adjustment expenses reserves for the most recent calendar year and the ratio of unpaid loss adjustment expenses to unpaid losses;

iii. unearned premium reserves for the most recent calendar year;

iv. total reserves;

v. cash and invested assets as of December thirty-first of the most recent calendar year;

vi. surplus as of December thirty-first of the most recent calendar year;

vii. the percent of surplus invested, calculated as cash and invested assets less reserves divided by surplus; and

viii. the ratio of surplus to reserves.

4. Investment Income Exhibit 4: The filer shall provide the following information according to the format specified in Investment Income Exhibit 4, Investment Income as a percent of premium:

i. items 1 through 3 on the exhibit mean South Carolina premium, loss, and loss adjustment reserves, and the sum of these three components of reserves, by coverage;

ii. item 4 of the exhibit means the dollar amount of South Carolina surplus by coverage, calculated by multiplying total South Carolina reserves by coverage times the ratio of surplus to reserves;

iii. items 5 and 6 of the exhibit mean the dollar amount of invested South Carolina surplus by coverage, calculated as the product of South Carolina surplus times the percent of surplus invested;

iv. items 7 through 9 of the exhibit mean the sum of South Carolina reserves and surplus and the dollar amount of investment income earned on these reserves and surplus;

v. items 10 and 11 of the exhibit mean investment income as a percent of premium earned by coverage.

Charts To Follow

INVESTMENT INCOME EXHIBIT 1.

INVESTMENT INCOME FROM LOSS

1. Net Investment Gain,

Annual Statement

P-4, Line 9a $_________________

2. Cash Invested Assets,

Annual Statement

P-2, Line 9a

a. As of * $_____________________

t. As of ** $____________________

Mean Cash & Invested Assets $_____________________

3. Rate of Return on Investments (1./2c.)_____________%

BODILY PROPERTY

INJURY DAMAGE

4. S. C. Loss Reserves

a. As of * $____________________ $_____________________

b. As of ** $___________________ $_____________________

5. S. C. Loss Adjustment

Expense Reserves

a. As of * $____________________ $_____________________ b. As of ** $___________________ $_____________________

6. Mean Loss & LAX Reserves

((4a. + 4b.)/2) +

((5a. + 5b.)/2) $__________________ $_____________________

7. Premium Earned * $__________________ $_____________________

8. Ratio Loss & LAX Reserves

to Earned Premium

(6./7.) ________________% __________________ %

9. Investment Income as a

Percent of Premium

(3. x 8.)_______________% _________________ %

* Current Calendar Year Available

** Previous Calendar Year Available

AND LOSS EXPENSE RESERVES, SOUTH CAROLINA

COMPREHENSIVE COLLISION

$______________ $ _______________

$______________ $ _______________

$______________ $ _______________

$______________ $ _______________

$______________ $ _______________

$______________ $ _______________

____________ % ____________ %

____________ % ____________ %

INVESTMENT INCOME EXHIBIT 2.

INVESTMENT INCOME

BODILY PROPERTY

INJURY DAMAGE

1. S.C. Unearned Premium

Reserves

a. As of * $____________________ $________________

b. As of ** $____________________ $________________

c. Mean Premium

Reserve

(1a. + 1b.)/2 $______________ $________________

2. Premium Earned * $ $

3. Ratio, Unearned Premium

Reserves to Earned

Premium (1c./2.) ______________ % _________________ %

4. Rate of Return on

Investments

Investment Income

Exhibit 1, Line 3 ______________ % _________________ %

5. Investment Income as a

Percent of Premium

(3) x (4) ______________ % _________________ %

* Current Calendar Year Available

** Previous Calendar Year Available

FROM UNEARNED PREMIUM RESERVE, SOUTH CAROLINA

COMPREHENSIVE COLLISION

$________________ $_______________

$________________ $_______________

$________________ $_______________

$________________ $_______________

______________% _____________%

______________% _____________%

______________% _____________%

INVESTMENT INCOME EXHIBIT 3. COMPANYWIDE

RESERVES, SURPLUS AND INVESTED ASSETS

ITEM AMOUNT ANNUAL STATEMENT

REFERENCE

1. Loss Reserve* Page 10, Part 3A,

$____________ Line 32, Col. 5

2. Loss Adjustment Page 10, Part 3A,

Reserve* $__________ Line 32, Col. 6

3. Unearned Premium* Page 7, Part 2,

$_____________ Line 31, Col. 3

4. Total Reserves

(1+2+3) $______________

5. Cash and Invested Page 2, Line 8A,

Assets* $______________ Col. 1

6. Surplus * Page 4, Line 32,

$ __________________ Col. 1

7. Percent of

Surplus Invested

((5-4)/6) ______________%

8. Rate of Surplus

to Reserves ____________%

(6/4)

* Current Calendar Year Available

INVESTMENT INCOME EXHIBIT 4.

INVESTMENT INCOME

BODILY PROPERTY

INJURY DAMAGE

1. Mean S.C. Premium

Reserve Investment Income

Exhibit 2, Line 1c. $________________ $_________________

2. Mean S.C. Loss &

Loss Adj. Reserve Investment

Income Exhibit 1, Line 6 $___________ $_________________

3. Total S.C. Reserves $____________ $_________________

4. S.C. Surplus,

(3) x Inv. Inc. Exhibit

3, Line 8 $__________________ $_________________

5. Percent of Surplus

Invested Investment Income

Exhibit 3, Line 7 _______________ % _____________ %

6. Invested Surplus,

(4)x(5) $________________ $________________

7. Sum, Reserves, and

Invested Surplus (3)+(6) $____________ $________________

8. Rate of Return on

Investments Investment

Income Exhibit 1, Line 3 _____________ % ________________%

9. Investment Income

Earned on Reserves and

Invested Surplus (7)x(8) $____________ $________________

10. Premium Earned,

Investment Income

Exhibit 1, Line 7 $___________________ $________________

11. Investment Income as

a % of Premium

Earned (9)/(10) ___________________% ________________%

AS A PERCENT OF PREMIUM, SOUTH CAROLINA

COMPREHENSIVE COLLISION

$______________ $________________

$______________ $________________

$______________ $________________

______________ % ________________ %

$______________ $________________

$______________ $________________

______________ % ________________ %

$______________ $________________

$______________ $________________

______________ % ________________ %

The Chief Insurance Commissioner may reward an insurer actually achieving less than the maximum expense level allowable in rates after the initial three-year period by allowing a higher underwriting profit than would otherwise result from use of the instructions and exhibits set forth in this item. However, this reward may not exceed the difference between the insurer's actual expense level achieved and the maximum level allowable in rates in a given year.

5. the reasonableness of the judgment reflected in the filing;

6. a reasonable margin for underwriting profit and contingencies which may be a negative margin;

7. other relevant factors such as those which impact upon the frequency or severity of claims or upon expenses or profits, percentage of surplus relative to earned premium, as well as additional factors to be considered as a result of the enactment of the Automobile Insurance Reform Act of 1989.

(C) 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 and including statutorily-required notice provisions relative to rate filings."

No increase in auto insurance premiums after certain first offense violations; etc.

SECTION 39. The 1976 Code is amended by adding:

"Section 38-77-360. (A) A person who is guilty of a violation, for a first offense, of Section 56-5-5310 for not having a taillight in good working order or a person who is guilty of a violation, for a first offense, of Section 56-5-1520 for driving too fast for conditions may not have his automobile insurance premiums increased as a result of that violation.

(B) A person violating Section 56-5-5310, for a first offense, has ten days to repair the taillight. If this person is found in violation of Section 56-5-5310 as stated in subsection (A), after the ten-day period, he must be punished as provided by law."

No increase in recoupment charge

SECTION 40. The 1976 Code is amended by adding:

"Section 38-77-625. If an insured is involved in a motor vehicle accident where he is not the at-fault driver, his facility recoupment charge may not be increased by his insurer because of this occurrence."

Cooperation prohibited, exception, prior approval for filings; rating organizations, rates, rate increases, premium charges, extension to other lines; etc.

SECTION 41. A. Section 38-73-1350 of the 1976 Code is amended to read:

"Section 38-73-1350. Notwithstanding the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410, 38-73-1420, and 38-73-1430, after public hearing the Chief Insurance Commissioner may prohibit cooperation among or within property/casualty rating or advisory organizations by insurers or among or within these rating or advisory organizations and insurers in rate making or in other matters within the scope of this chapter, except to the extent that these organizations may compile and disseminate only historic loss data with no mathematical trending or analytical methodologies, upon a finding by the commissioner that the anti-competitive effects of this cooperation outweigh practical constraints of prohibitions. All property/casualty filings are subject to prior approval by the Chief Insurance Commissioner. The provisions of Title 1, Chapter 23 (Administrative Procedures Act) apply to all property/casualty rate filings."

B. Article 11, Chapter 73, Title 38 of the 1976 Code is amended by adding:

"Section 38-73-1370. After June 30, 1989, no rating organization may file a rate increase with the commissioner for any previously approved final rate or premium charge for any private passenger automobile insurance coverage. A rating organization may file the pure loss component of the rate or premium charge for any private passenger automobile insurance coverage, by class and territory, for the approval of the commissioner. After a public hearing, the commissioner may approve the pure loss component of the rate or premium charge for use by the members or subscribers of the rating organization. No member or subscriber may use the approved pure loss component of the rate or premium charge unless and until the expense component of the rate or premium charge has also been filed with and approved by the commissioner pursuant to Section 38-73-1380.

Section 38-73-1380. After June 30, 1989, no member or subscriber of a rating organization may utilize a rate or premium charge for any private passenger automobile insurance coverage unless and until the final rate or premium charge has been filed and approved by the commissioner. After the effective date of this section, the final rate or premium charge is the pure loss component filed and approved by a rating organization on behalf of its members or subscribers added to the expense component of the rate or premium charge, filed with and approved by the commissioner, by each member or subscriber of a rating organization independently.

No expense component filed by a member or subscriber of a rating organization may be approved by the commissioner unless it has been the subject of a public hearing, if that member's or subscriber's total written private passenger automobile insurance premium during the previous calendar year equaled or exceeded one percent of the total written private passenger automobile insurance premium in this State during the previous calendar year.

Section 38-73-1400. (1) After June 30, 1989, the 'pure loss component' of the final rate or premium charge for private passenger automobile insurance is that portion of the final rate or premium charge applicable to calendar/accident year incurred losses (the sum of paid losses plus loss reserves including incurred but not reported loss reserves) and loss adjustment expense (those expenses directly related to the payment of claims) in this State, trended to include both the past and prospective loss experience. If the insurer writes one percent or more of the written premium for automobile insurance during the previous calendar year, that insurer must file its own trending methodology as independently derived.

(2) The 'expense component' of the final rate or premium charge for private passenger automobile insurance is that portion of the final rate or premium charge applicable to production costs (including commissions and other acquisition expenses), underwriting costs, administrative costs (including the actual costs of taxes, licenses and fees), and profit margin in this State.

(3) The 'final rate or premium charge' is the approved pure loss component added to the approved expense component. In the determination of whether the pure loss component should be approved and in the determination of whether the expense component should be approved, neither may be inadequate, excessive, nor unfairly discriminatory and the commissioner shall take into account investment income from unearned premium and loss reserves, surplus and realized capital gains.

Section 38-73-1410. After June 30, 1989, upon the effective date of this section, nothing herein should be construed to require a rating organization or its members or subscribers to immediately refile final rates or premium charges previously approved by the commissioner for private passenger automobile insurance coverages. Members or subscribers of a rating organization are authorized to continue to use automobile insurance rates or premium charges, approved before the effective date of this section, or decreases from those rates or premium charges filed by the rating organization and, subsequently, approved after the effective date of this section.

Section 38-73-1420. After June 30, 1989, the Board of Governors of the South Carolina Reinsurance Facility shall file an expense component for private passenger automobile insurance rate or premium charges after the rating organization with the largest number of members or subscribers has filed a pure loss component for private passenger automobile insurance with the commissioner. Upon the approval of such component, those automobile insurers designated pursuant to Section 38-77-590(A), for risks written by them through producers designated pursuant to that same section, shall utilize these final rate or premium charges. Automobile insurers designated pursuant to Section 38-77-590(A) are not required to use those same final rates or premium charges for risks written through their agents not appointed pursuant to Section 38-77-590.

Section 38-73-1430. After June 30, 1989, the commissioner may extend the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, and 38-73-1410 to other lines of property and casualty insurance, by order, after public hearing, when the determination is made that to do so is in the public interest."

Claims audits

SECTION 42. Section 38-77-590 of the 1976 Code is amended by adding:

"(h) A designated carrier who fails a claims audit shall have no new designated producer assignments until the time it passes a re-audit within a reasonable time prescribed by the governing board. If this carrier fails two claims audits, including a re-audit, within any three-year period that carrier is disqualified for renewal of its contract with the facility upon expiration of its existing contract."

Severability

SECTION 43. If any provision of this act or the application of it to any person or circumstance is held invalid, the remainder of the act and the application of that provision to other persons or circumstances is not affected.

Unreasonable use and notification to policyholders

SECTION 44. Section 38-77-950 of the 1976 Code is amended to read:

"Section 38-77-950. It is the intent of this chapter that the facility may not be excessively nor unreasonably utilized by automobile insurers for unfairly competitive purposes or for purposes of unfairly discriminating against certain classes or types of automobile insurance risks having the same or similar objective risk characteristics as other risks in the same class under the rating plan for the classification of risks promulgated by the department, nor for the purpose of discriminating against such risks or any risks in certain rating territories. The commissioner shall prohibit unreasonable or excessive utilization of the facility.

A prima facie case of excessive or unreasonable utilization is 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 thirty-five percent of total direct cedeable written premiums on South Carolina automobile insurance as reported in the most recently filed annual statement(s) of such insurer or group.

Upon the written request of the policyholder, all insurance companies doing business in this State shall give written notice to the policyholder informing him whether or not he and any driver under the policy is in the facility."

Computation of recoupment charge and applicability thereof revised; small commercial automobile risks, rates

SECTION 45. A. Section 38-77-600 of the 1976 Code is amended to read:

"Section 38-77-600. 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 38-73-455 and 38-73-457. 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 prudently incurred expenses, consistent with the provisions of Section 38-73-465, and the time value of money, by mandated 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. .386 multiplied by the recoupment is to be bourne by risks having zero surcharge points under the Uniform Merit Plan promulgated by the commissioner. The remainder of the recoupment (.614 multiplied by the recoupment) represents R in the formula, P1X + 2P2X + 3P3X + 4P4X + 5P5X + 6P6X + 7P7X + 8P8X + 9P9X + 10P10X = R. In this formula to be utilized in determining the facility recoupment charge:

(a) P1 is the percentage of risks which have one surcharge point under the Uniform Merit Rating Plan;

(b) P2 is the percentage of risks which have two surcharge points under the Uniform Merit Rating Plan;

(c) P3 is the percentage of risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan;

(d) P4 is the percentage of risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan;

(e) P5 is the percentage of risks subject to a surcharge of five points under the Uniform Merit Rating Plan;

(f) P6 is the percentage of risks subject to a surcharge of six points under the Uniform Merit Rating Plan;

(g) P7 is the percentage of risks subject to a surcharge of seven points under the Uniform Merit Rating Plan;

(h) P8 is the percentage of risks subject to a surcharge of eight points under the Uniform Merit Rating Plan;

(i) P9 is the percentage of risks subject to a surcharge of nine points under the Uniform Merit Rating Plan;

(j) P10 or more is the percentage of risks subject to a surcharge of ten or more points under the Uniform Merit Rating Plan;

(k) X is the dollar amount by coverage, to be charged all risks having one surcharge point 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 38-73-455 and 38-73-457 for all risks which have one surcharge point.

(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 one.

(3) The facility recoupment charge by coverage to be added to the base rate or objective standards rate for all risks which have two surcharge points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of two.

(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 points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of three.

(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 four points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of four.

(6) 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 five points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of five.

(7) 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 six points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of six.

(8) 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 seven points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of seven.

(9) 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 eight points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of eight.

(10) 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 points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of nine.

(11) 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 ten or more points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of ten.

(12) 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.

(13) This section applies to all private passenger automobile insurance policies issued or renewed after June 30, 1989. However, insurers unable to comply with the provisions of this section and renewal provisions required by law may comply with this section at any time after June 30, 1989, but in no event later than October 1, 1989."

B. Section 38-77-620 of the 1976 Code is amended to read:

"Section 38-77-620. The facility recoupment charges approved or established pursuant to Section 38-77-610 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 38-73-457 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 :

(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 38-77-30, consideration must be given to the net gains or losses incurred by insurers as a result of participation in the operating results and actual, prudently incurred expenses, respectively, of the facility."

Reduction of rates and subsequent adjustments

SECTION 46. Section 38-73-465 of the 1976 Code as reenacted by this act is amended by adding:

"D. As a result of the enactment of the Automobile Insurance Reform Act of 1989, automobile insurance rates must be decreased on the policy anniversary date of each insured after September 30, 1989, by five percent after elimination of the appropriate amount of the recoupment charge. After the first year following the reductions, an insurer may apply to the Chief Insurance Commissioner for a rate adjustment, based on its actual experience, and include consideration of the time value of money. In every filing following the effective date of this section for an increase in automobile insurance rates, every insurer shall include in that filing a rate report under this methodology. Every rate filing, after that time, is effective only after prior approval of the Chief Insurance Commissioner, consistent with provisions of Chapter 23 of Title 1."

Safety belts

SECTION 47. (A) Chapter 5, Title 56 of the 1976 Code is amended by adding:

"Article 48

Safety Belts

Section 56-5-6510. As used in this article:

(1) 'Motor vehicle' means a passenger car, truck, van, or recreational vehicle required to be equipped with safety belts by Federal Motor Vehicle Safety Standard No. 208 (49 CFR 571.208), manufactured after July, 1966.

(2) 'Driver' means a person who drives or is in actual physical control of a motor vehicle.

Section 56-5-6520. The driver and every occupant of a motor vehicle, when it is being operated on the public streets and highways of this State, shall wear a fastened safety belt which complies with all provisions of federal law for their use. The driver is charged with the responsibility of requiring each occupant over six and under seventeen years of age to wear a safety belt.

Section 56-5-6530. The provisions of this article do not apply to:

(1) a driver or occupant who possesses a written verification from a physician that he is unable to wear a safety belt for physical or medical reasons;

(2) medical or rescue personnel attending to injured or sick individuals in an emergency vehicle when operating in an emergency situation as well as the injured or sick individuals;

(3) school, church, or day care buses;

(4) public transportation vehicles except taxis;

(5) occupants of vehicles in parades;

(6) United States mail carriers;

(7) an occupant for which no safety belt is available because all belts are being used by other occupants;

(8) a driver or occupant frequently stopping or leaving a motor vehicle for pick up or delivery purposes;

(9) occupants of the back seat of a motor vehicle unless the vehicle is equipped with a shoulder harness in addition to the lap belt;

(10) children under six years of age who must be properly restrained as provided by Article 47, Chapter 5 of Title 56.

Section 56-5-6540. (A) A person violating the provisions of this article, upon conviction, must be fined not more than ten dollars, all or part of which may be suspended. No court costs may be assessed against the person convicted. No person may be fined more than twenty dollars for any one incident of one or more violations of the provisions of this article. No custodial arrest for a violation of this article may be made, except upon a warrant issued for failure to appear in court when summoned or for failure to pay an imposed fine. A conviction for violation of this article does not constitute a criminal offense.

(B) A law enforcement officer may not stop a driver for a violation of this article in the absence of another violation of the motor vehicle laws except when the stop is made in conjunction with a driver's license check or registration check conducted at a checkpoint established to stop all drivers on a certain road for a period of time. A citation for a violation of this article must not be issued without citing the violation that initially caused the officer to effect the enforcement stop.

(C) A violation of this article does not constitute negligence per se or contributory negligence and is not admissible as evidence in a civil action.

Section 56-5-6550. No points provided for in Section 56-1-720 or any other provision of law may be assessed for a violation of this article."

(B) For six months after the effective date of this section, only warnings may be issued for violations of Article 48, Chapter 5, Title 56, Code of Laws of South Carolina, 1976.

(C) (1) The School Bus Transportation Study Committee created pursuant to Senate Bill 1152 of 1988, in addition to its other duties, shall continue to meet during fiscal year 1989-90 to evaluate the feasibility of installing lap seat belts and lap/shoulder safety belts on small school buses and school vans weighing less than ten thousand pounds, on large school buses manufactured after April 1, 1977, and on large and small school buses and school vans purchased by the State Department of Education after July 1, 1990. The committee also has the following responsibilities:

(a) Determine the feasibility of, cost of, and appropriate anchorage requirements for installing lap seat belts and lap/shoulder safety belts on large and small school buses and school vans as defined above;

(b) Determine if mandatory usage of seat belts on large and small school buses will improve the safety of school bus passengers and could be enforced;

(c) Study the potential liability, if any, of installing and mandating seat belt usage on large and small school buses and school vans as defined above;

(d) Determine the effect that installation of and mandatory usage of seat belts on school buses would have on teaching students to form the 'buckle-up' habit when riding in or driving a motor vehicle.

(2) The committee shall report its findings to the House Education and Public Works Committee, the Senate Education Committee, the Department of Education, and the South Carolina Department of Highways and Public Transportation by January 1, 1990. All state agencies shall provide services the committee may require in conducting its study of seat belt installation and usage on school buses.

Confiscation of license plates

SECTION 48. For the purpose of recovering motor vehicle registration plates as required by Section 56-10-40 of the 1976 Code, the department may contract with or make working arrangements with local law enforcement agencies including sheriffs and municipal law enforcement departments for them to confiscate these plates, upon a contract or working arrangement being agreed to. The local law enforcement agencies are authorized to confiscate these plates. The local law enforcement agencies must be paid for this service in the manner agreed upon between them and the executive director from funds of the department which are to be used for this purpose.

Deductible on comprehensive and collision coverage

SECTION 49. Section 38-77-280 of the 1976 Code is amended to read:

"Section 38-77-280. (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 an insured or qualified applicant who requests the coverage.

Collision coverage must have a mandatory deductible of two hundred 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 must have a mandatory deductible of two hundred fifty dollars, but an insured, at his option, may select an additional deductible in appropriate increments up to one thousand dollars. This deductible does not apply to auto safety glass. It is an unfair trade practice, as described in Sections 38-57-30 and 38-57-40, for an insurer or an agent to sell collision insurance, comprehensive coverage, or fire, theft, and combined additional coverages 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. An insurer may offer insureds lower deductibles at the insurer's option.

(B) Notwithstanding subsection (A) and Sections 38-77-110 and 38-77-920, 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 38-77-340 and who resides in the same household, where one or more of the conditions or factors prescribed in Section 38-73-455 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 38-77-110, 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 38-73-455(A) or Section 38-77-280(B) which existed before 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 38-73-457 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 38-73-457. 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.

(F) A carrier may not cede collision coverage, comprehensive coverage, or fire, theft, and combined additional coverages with a deductible of less than two hundred fifty dollars. An insured or qualified applicant may select an additional deductible in appropriate increments up to one thousand dollars. However, the mandatory deductible does not apply to safety glass."

Attorneys' fees

SECTION 50. Section 38-59-40 of the 1976 Code is amended to read:

"Section 38-59-40. (1) In the event of a claim, loss, or damage which is covered by a policy of insurance or a contract of a nonprofit hospital service plan or a medical service corporation and the refusal of the insurer, plan, or corporation to pay the claim within ninety days after a demand has been made by the holder of the policy or contract and a finding on suit of the contract made by the trial judge that the refusal was without reasonable cause or in bad faith, the insurer, plan, or corporation is liable to pay the holder, in addition to any sum or any amount otherwise recoverable, all reasonable attorneys' fees for the prosecution of the case against the insurer, plan, or corporation. The amount of reasonable attorneys' fees must be determined by the trial judge and the amount added to the judgment. The amount of the attorneys' fees may not exceed one-third of the amount of the judgment.

(2) If attorneys' fees are allowed and, on appeal to the Supreme Court by the defendant, the judgment is affirmed, the Supreme Court shall allow to the respondent an additional sum as the court adjudges reasonable as attorneys' fees of the respondent on the appeal.

(3) Nothing in this section may be construed to alter or affect the Tyger River Pine Co. v. Maryland Casualty Co., 161 SE 491, 163 SC 229, doctrine.

(4) This section applies to cases filed or removed to federal court and cases appealed in the federal court system."

Policies ceded

SECTION 51. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by adding:

"Section 38-77-111. An automobile insurer may cede the coverages of an automobile insurance policy that it is mandated to write to the Reinsurance Facility but it may not cede coverages under a policy that it is not mandated by law to write. However, if an insurer cedes a coverage it is mandated to write by law, it shall cede all coverages under that policy that it is mandated to write."

Definition

SECTION 52. Section 38-77-30(14) of the 1976 Code, as last amended by Act 399 of 1988, is further amended to read:

"(14) '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 38-77-140 and the amount of the insurance or bond is less than the amount of the insureds' damages."

Uninsured motorist coverage

SECTION 53. Section 38-77-170 of the 1976 Code is amended to read:

"Section 38-77-170. 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; provided however, the witness must sign an affidavit attesting to the truth of the facts of the accident contained in the affidavit;

(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.

The following statement must be prominently displayed on the face of the affidavit provided in subitem (2) above: A FALSE STATEMENT CONCERNING THE FACTS CONTAINED IN THIS AFFIDAVIT MAY SUBJECT THE PERSON MAKING THE FALSE STATEMENT TO CRIMINAL PENALTIES AS PROVIDED BY LAW."

Agreement

SECTION 54. Section 38-39-70(a)(2) of the 1976 Code is amended to read:

"(2) Must be dated and signed by the insured;".

Policies ceded

SECTION 55. Section 38-77-630 of the 1976 Code is amended to read:

"Section 38-77-630. (A) A policy, other than a renewal policy, may be ceded to the South Carolina Reinsurance Facility only when the application is accompanied by either a renewal notice from another insurer or a motor vehicle report (MVR), issued at the point of sale, together with the full premium correctly reflecting the facts shown on the MVR or consistent with the premium quoted in the renewal notice.

(B) To facilitate compliance with this requirement, a carrier shall require an applicant other than a renewal applicant, to obtain the MVR or a renewal notice from the insurance carrier who provided the insurance coverage then in effect and present it to the agent upon making an application. In those cases, the applicant must be credited for the amount paid for the MVR.

(C) In the case of an applicant who holds a valid driver's license from another state but is not yet licensed in this State, a copy of this out-of-state driver's license may be submitted with the application in lieu of the MVR or renewal notice above required in this section. The MVR, renewal notice, or copy of the applicant's driver's license, as applicable, must be kept with the application by the carrier in the manner the facility requires."

Repeal

SECTION 56. Section 38-73-470 is repealed effective March 1, 1991.

Repeal

SECTION 57. Sections 38-77-240, 38-77-250, 38-77-290, 38-77-300, 38-77-310, and subsections (b) and (c) of Section 38-77-260 are repealed.

Time effective

SECTION 58. Sections 17, 20, 28, 44, 49, 51, 52, and 55 of this act take effect October 1, 1989.

Time effective

SECTION 59. Except as otherwise specifically provided herein, this act takes effect July 1, 1989.