Current through Register Vol. 48, No. 3, March 22, 2024
This regulation replaces Regulation Regulation 69-11 and provides
one comprehensive regulation for all insurance sold in connection with the
Consumer Finance Act or the Consumer Protection Code, as amended.
A. Background and Purpose. 1976 Code Sections
34-29-10
et seq. is known as the Consumer Finance Act and provides that accident and
health or property insurance sold in conjunction with consumer loans, as
defined in Act 988, shall be subject to rules and regulations adopted by the
South Carolina Insurance Commission. Such rules and regulations are contained
in Regulation Regulation 69-11 issued October 13, 1967. 1976 Code Title 37 is
known as the South Carolina Consumer Protection Code. Act 686 of 1976 amended
Act 1241 in many particulars, but neither Act 1241 nor Act 686 amended any of
the insurance or provisions of 1976 Code Sections
34-29-10
et seq., except to provide that such sections shall apply only to restricted
loans and restricted lenders, as defined in Act 686. It is the purpose of this
Regulation to replace Regulation Regulation 69-11 and provide one comprehensive
regulation for all insurance sold in connection with the Consumer Finance Act
(1976 Code Sections
34-29-10
et seq) or the Consumer Protection Code (1976 Code Title 37 as amended by Act
686 of 1976).
B. Definitions. For
the purpose of this Regulation definitions of words or phrases herein relating
to types of loans and other financial transactions on which insurance is
permitted and relating to all types of lenders and financial organizations that
are subject to the types of supervision or regulation as defined in the
Consumer Finance Act or the Consumer Protection Code, shall be those
definitions set forth in said Act and said Code, respectively.
C. Provisions Applicable to Restricted Loans
and Restricted Lenders.
(1) Forms.
(a) General: All forms of policies,
certificates, or other evidence of insurance used in South Carolina or covering
South Carolina lives, property or interests must be filed with and approved by
the Chief Insurance Commissioner before use in this State. Forms offered for
filing and approval must be submitted in duplicate and, if approved for use in
the State, one counterpart of each form will be marked as approved and returned
to the insurer affected to serve as evidence of compliance with the Act and
Section
38-61-20
of the 1976 Code. Filing and approval of forms as required hereunder shall be
deemed prima facie evidence of compliance with the provisions of the South
Carolina Consumer Finance Act by the insurer and the agent.
The Chief Insurance Commissioner shall disapprove any form if it
contains provisions which are unjust, unfair, inequitable, misleading,
deceptive or which encourages misrepresentation of coverage or is contrary to
any provision of the South Carolina Code of Laws or any rule or regulation
issued thereunder.
(b) Life
Insurance: Where the borrower pays for the cost of credit life insurance
written individually or under a group contract, no form will be approved unless
the insurer can demonstrate that the coverage provided in such form bears a
reasonable and bona fide relation to the hazard or risk of loss to be assumed
by the insurer proposing to issue such form of contract.
No form providing level term life insurance will be approved
unless the insurer offering such form can demonstrate to the satisfaction of
the Commission that the coverage provided thereunder is a lawful requirement of
the Act.
If individual life insurance policies do not state the reserve
method used by the insurer, the insurer must notify the Insurance Department of
its reserve method pursuant to Sections
38-5-60,
38-9-170,
and
38-9-180
of the 1976 Code.
(c)
Accident and Health Insurance: All coverages must be written on forms providing
for a maximum three (3) day waiting period for a covered disability with
benefits to be retroactive to the first day of disability.
(d) Property Insurance: Property insurance
must cover the property of a borrower used to secure a loan, and the amount of
insurance must not exceed the reasonable value of the property insured.
Single interest coverage and dual interest coverage may be
offered pursuant to the Act, but the borrower must have the option to purchase
either single interest or dual interest. If the lender does not represent an
insurer writing dual interest property insurance, a reasonable effort must be
made by the lender to obtain dual interest property insurance for the account
of the borrower if he requests such coverage. When a borrower specifically
requests dual interest coverage, he may also request a term of coverage to
exceed the term of the secured loan.
No insurer or agent may lawfully issue a policy or charge an
insurance premium to cover property securing a loan if such a property is not
eligible for coverage under the forms approved for use by such insurer in this
State.
(e) Non-Filing
Insurance: Non-filing insurance is authorized under the provisions of the South
Carolina Consumer Protection Code, and such coverage may be written on forms
and rates as approved by the Chief Insurance Commissioner, provided that the
premiums payable for such insurance in lieu of perfecting a security interest
do not exceed the fees and charges authorized by law.
(2) Basic Statistical Plan. To comply with
1976 Code Section
34-29-160,
which specifies that credit accident and health and credit property insurance
rates shall be deemed excessive if the loss ratio resulting from their use may
reasonably be expected to be less than fifty percent, the Commission has
adopted a Basic Statistical Plan to be used by all insurers writing insurance
pursuant to the Act. The data specified in the Basic Statistical Plan shall be
filed under oath by March 1 of each year for the business of the preceding
calendar year, and shall be submitted both as part of the Annual Statement, on
forms prescribed by the Chief Insurance Commissioner, and as a separate
document, sworn to by an officer of the company. The data required are:
|
Line of Insurance
|
Direct Premiums Written
|
Direct Premiums Earned
|
Direct Losses Paid (Deducting Salvage)
|
Direct Losses Incurred
|
|
Accident & Health (1) Group and Individual Accident
and Health Property
|
(1)
|
(2)
|
(3)
|
(4)
|
|
(1) Automobile Fire and Theft Single Interest
|
|
(2) Automobile Collision Single Interest
|
|
(3) Household Goods Single Interest
|
|
(4) Household Goods Dual Interest
|
The definitions of Direct Premiums Written, Direct Premiums
Earned, Direct Losses Paid (Deducting Salvage) and Direct Losses Incurred shall
be the definitions applicable to the Annual Statement.
The Commission may take all reasonable steps to insure the
accuracy of the data submitted. Failure of the entries submitted as part of the
Annual Statement to agree with the corresponding entries submitted as a
separate document will be prima facie evidence of inaccuracy. Other indications
of possible inaccuracy may be investigated.
(3) Compilation of Statistics by
Commission--Determination of Rates. As soon as practicable after March 1 of
each year, after satisfying itself of the accuracy of the data submitted under
the Basic Statistical Plan, the Commission will compile the total earned
premiums and incurred losses for all insurers submitting data, for each line of
insurance, for the preceding calendar year. These totals, together with such
corresponding totals for previous calendar years as are available, will be
adjusted to a common rate base, to determine the rate for each line of
insurance which may reasonably be expected to produce a loss ratio of not less
than fifty percent for the following calendar year. In making this
determination the Commission shall give due consideration to past and
prospective loss experience and to all other relevant factors within and
outside of this State.
(4)
Promulgation of Tentative Rates by Commission. On or before August 1 of each
year, the Commission shall notify all insurers writing credit insurance under
1976 Code Sections
34-29-10
et seq, of the rates which it believes may reasonably be expected to produce a
loss ratio of not less than fifty percent in the following calendar year. Every
insurer which feels aggrieved by any of the rates so promulgated shall have
fifteen days to request a public hearing with respect to such rate or rates.
Following such hearing or hearings, the Commission shall either modify its
previous determination or reaffirm it. Such modification or reaffirmation shall
be made before October 1.
(5)
Promulgation of Final Rates by Commission. On or before October 1 of each year,
the Commission shall notify all insurers of the rates which shall become
effective on new policies issued on or after January 1 of the following
year.
(6) Filing of Rates by
Insurers. On or before December 1 of each year, each insurer shall notify the
Commission of its intention to use rates no higher than the final rates
promulgated by the Commission for the lines of insurance which it
writes.
D. Provisions
Applicable to Lenders and Financial Organizations and to Loans and Other
Financial Transactions Subject to Article 4 of the Consumer Protection Code
[1976 Code Title 37, Chapter 4].
(1)
Application. These provisions are applicable to insurance provided or to be
provided in relation to a consumer credit sale, a consumer credit lease, or a
consumer loan, other than as excepted in 1976 Code Section
37-4-102,
Subsection (2) of the Consumer Protection Code.
(2) Forms.
(a) General: All forms of policies,
certificates or other evidence of insurance used in South Carolina or covering
South Carolina lives, property or interests must be filed with and approved by
the Chief Insurance Commissioner before use in this State. Forms offered for
filing and approval must be submitted in duplicate, and if approved for use in
the State, one counterpart of each form will be marked as approved and returned
to the insurer affected to serve as evidence of compliance with the South
Carolina Consumer Protection Code and Section
38-61-20
of the 1976 Code. Filing and approval of forms as required hereunder shall be
deemed prima facie evidence of compliance with the provisions of the South
Carolina Consumer Protection Code by the insurer and the agent.
The Chief Insurance Commissioner shall disapprove any form if it
contains provisions which are unjust, unfair, inequitable, misleading,
deceptive or encourages misrepresentation of coverage, or is contrary to any
provision of the South Carolina Code of Laws or any rule or regulation issued
thereunder.
(b) Life
Insurance: Where the borrower pays for the cost of credit life insurance
written individually or under a group contract, no form will be approved unless
the insurer can demonstrate that the coverage provided in such form bears a
reasonable and bona fide relation to the hazard or risk of loss to be assumed
by the insurer proposing to issue such form of contract.
If individual life insurance policies do not state the reserve
method used by the insurer, the insurer must notify the Insurance Department of
its reserve method pursuant to Sections
38-5-60,
38-9-170
and
38-9-180
of the 1976 Code.
(c)
Accident and Health Insurance: All coverages of credit accident and health
insurance written hereunder must be written on forms providing for either a
fourteen (14) or thirty (30) day retroactive coverage.
(d) Property Insurance: Property insurance
must cover the property of a borrower used to secure a loan, and the amount of
insurance must not exceed the reasonable value of the property insured.
No insurer or agent may lawfully issue a policy or charge an
insurance premium to cover property securing a loan if such property is not
eligible for coverage under the forms approved for use by such insurer in this
State.
(e) Non-Filing
Insurance. Non-filing insurance is authorized under the provisions of the South
Carolina Consumer Protection Code, and such coverage may be written on forms
and rates as approved by the Chief Insurance Commissioner, provided that the
premiums payable for such insurance in lieu of perfecting a security interest
do not exceed the fees and charges authorized by law.
(3) Basic Statistical Plan. To comply with
1976 Code Section
37-4-203(4)
of the South Carolina Consumer Protection Code, which provides that premium
rates and premium rate levels for credit accident and health insurance shall be
calculated to produce and maintain a ratio of losses incurred to premiums
earned, or reasonably expected to be earned, of approximately fifty percent,
the Commission has adopted a Basic Statistical Plan to be used by all insurers
writing such insurance under the Code. The data specified in the Basic
Statistical Plan shall be filed under oath by March 1 of each year for the
business of the preceding calendar year, and shall be submitted both as a part
of the Annual Statement, and on separate forms prescribed by the Chief
Insurance Commissioner, sworn to by an officer of the company.
The Commission may take all reasonable steps to insure the
accuracy of the data submitted. Failure of the entries submitted as a part of
the Annual Statement to agree with the corresponding entries submitted on the
separate forms prescribed by the Chief Insurance Commissioner will be deemed
prima facie evidence of inaccuracy. Other indications of possible inaccuracy
may be investigated.
(4)
Compilation of Statistics by Commission--Determination of Rates. As soon as
practicable after March 1 of each year, after satisfying itself of the accuracy
of the data submitted under the Basic Statistical Plan, the Commission will
compile the total earned premiums and incurred losses for all insurers
submitting data, for such credit accident and health insurance, for the
preceding calendar year. These totals, together with such corresponding totals
for previous calendar years as are available, will be adjusted to a common rate
base, to determine the rate for each plan of benefits and class of business for
credit accident and health insurance which may be calculated to produce and
maintain a ratio of losses incurred, or reasonably expected to be incurred, to
premiums earned, or reasonably expected to be earned, of approximately fifty
percent. In making this determination, the Commission shall give due
consideration to past and prospective loss experience and to all other relevant
factors within and outside of this State.
(5) Promulgation of Tentative Rates by
Commission. On or before August 1 of each year, the Commission shall notify all
insurers writing credit accident and health insurance through Supervised
Lenders under the South Carolina Consumer Protection Code, of the rates which
it believes may reasonably be expected to produce and maintain a ratio of
losses incurred, or reasonably expected to be incurred, to premiums earned, or
reasonably expected to be earned, of approximately fifty percent in the
following calendar year. Every insurer which feels aggrieved by any of the
rates so promulgated shall have fifteen days to request a public hearing with
respect to such rate or rates. Following such hearing, or hearings if more than
one, the Commission shall either modify its previous determination or reaffirm
it. Such modification or reaffirmation shall be made before October
1.
(6) Promulgation of Final Rates
by Commission. On or before October 1 of each year, the Commission shall notify
all insurers of the rates which shall become effective on new policies of
credit accident and health insurance issued hereunder on or after January 1 of
the following year.
(7) Filing of
Rates by Insurers. On or before December 1 of each year, each insurer shall
notify the Commission of its intention to use rates no higher than the final
rates of credit accident and health insurance promulgated by the Commission for
the plan of benefits of such insurance which it writes.
(8) Implementation of this Regulation. The
Basic Statistical Plan applicable to all credit insurance sold in conjunction
with Restricted loans, as defined in B., shall be the Basic Statistical Plan
prescribed by C. (2). This Plan shall be used for the recording of statistics
by insurers for calendar year 1977, to be reported by March 1, 1978.
The Basic Statistical Plan applicable to all credit insurance
sold in conjunction with Supervised Loans, as defined in B., shall be in
conformance with D. (3), and as promulgated by Order 01-77.
The South Carolina Insurance Commission will notify all
interested insurers by Order of any change in either Basic Statistical Plan
applicable to the business of a calendar year by July 1 of the preceding
calendar year.
