Flex Rating, Other Insurance Bills Pass South Carolina Session

The South Carolina General Assembly recently concluded the final year of a two-year session, with several significant gains for insurers and consumers, according to a report from the Property Casualty Insurers Association of America (PCI).

“Although the Assembly was primarily focused on budgetary concerns, several important insurance-related bills managed to pass, including the Personal Lines Modernization Act (SB 686),” said PCI Regional Manager Robert Herlong. “South Carolina thus becomes one of the few states to enact meaningful regulatory modernization this year.”

The act permits insurers to use flex rating of plus or minus 7 percent for homeowners insurance and allows file-and-use rating if the Insurance Director declares the market to be competitive. It also requires a insurance department report to the legislature on coastal insurance issues by Feb. 1, 2005, and establishes an underwriting requirement that the absence of credit information can be used if satisfactory proof of its relation to the risk is shown to the insurance director. Over the last decade South Carolina has implemented file-and-use for most commercial lines and flex rating for automobile insurance.

PCI said it was successful in removing several onerous provisions, including a mandate to write homeowners policies for residences located anywhere in the state, including high-risk coastal areas.

Industry efforts were also successful in defeating a budget proviso that would have allowed the Legislature to “raid” the state’s Second Injury Fund of $40 million to help defray the budget deficit.

SB 1148, the South Carolina Automobile Liability Insurance Reporting (SCALIR) mechanism, passed and is operative at the Department of Motor Vehicles. The law requires insurers to report all mid-term policy cancellations, effective in September.

Tort reform legislation (HB 3744) passed the House but failed the Senate in the final days of the session. The bill was supported by insurance and business entities, the medical and dental associations, and the state chamber of commerce, which have expressed their conviction to continue their efforts in 2005.

Efforts to fund the South Carolina Judicial Department through premium taxes or Second Injury Fund assessments did not progress after industry representatives met with the Chief Justice of the South Carolina Supreme Court on several occasions.

Other insurance bills that passed both Houses include:

—HB 4797, which exempts 15-year-olds taking driver training courses from obtaining a beginner’s permit and repeals the requirement that the owner of the vehicle must be given notice by the Department of Motor Vehicles when a minor receives a moving violation while driving the vehicle. The bill awaits action by the governor.

—HB 3778, which includes procedures to follow after accidents or spillage on roadways; requires the reporting of accidents to authorities; sets out the responsibilities of drivers involved in accidents and includes a requirement that vehicles be moved in order to avoid obstructing traffic. The bill awaits action by the governor.

—SB 891, which requires certain assessments against insurers to be included in ratemaking. The bill awaits action by the governor.

—HB 5002, which includes provisions for captive insurance companies, including licensing, securitization, confidentiality of filings, and DOI examination of captives. The bill also contains sections on producer licensing, agent exams, and continuing insurance education for agents, as well as the DOI “clean-up” provisions from H 4076. The bill awaits action by the governor.

—R 2905, a DOI regulation concerning credit for reinsurance that protects ceding companies in the United States.

Topics Legislation South Carolina