South Carolina Code of Regulations
Chapter 69 - DEPARTMENT OF INSURANCE
Section 69-24 - Workmen's Compensation-Dividends to Policyholders

Section 1. Background and Purpose. It has come to the attention of the South Carolina Insurance Commission that some Workmen's Compensation insurers and agents may be using unfairly discriminatory and other misleading practices in connection with policyholder dividend plans. In order to aid the South Carolina Insurance Commission in its efforts to prevent such practices and enforce the insurance laws of this state pertaining to such unlawful practices, the following regulation is deemed necessary.

Section 2. Rules for Filing of Dividend Plans. Each insurer which intends to issue Workmen's Compensation policies on a participating basis in South Carolina shall file with the Chief Insurance Commissioner of South Carolina any dividend plan or plans already implemented or intended to be implemented by such insurer including any amendments thereto. Each such insurer shall also attach to every workmen's compensation policy an endorsement thereto reading as follows:

The insured shall participate in the earnings of the company, only in accordance with law and with a plan applicable to this policy which has been filed with the Chief Insurance Commissioner of South Carolina, provided the insured has complied with all the terms of this policy with respect to the payment of premium.

Neither dividends nor any factor in their calculation may be guaranteed. By purchasing this policy, the insured obtains no contractual right to a dividend. Dividends are declared in the sole discretion of the governing body of the insurer, in accordance with law. Any representations to the contrary are false.

In lieu of an endorsement, the same or substantially similar wording may be incorporated as condition 18 of the standard Workmen's Compensation policy.

Section 3. Compliance with Insurance Laws and Regulations. Any dividend plan or plans filed pursuant to this regulation may provide for a reasonable classification of risks for purposes of determining dividends, but may not provide for rebates of premium or unfair discrimination in favor of individuals between insureds of the same class and hazard, as described in Section 38-55-50. Specifically, any dividend plan which provides for higher rates of dividend and lower rates of commission, to risks with other characteristics affecting losses and expenses remaining the same, shall be deemed to be in violation of Section 38-55-50. Any dividend plan which provides that dividends may not be paid under a policy unless the policy is renewed in the same company shall be deemed to be in violation of Section 38-57-130.

This regulation in no way modifies or extends any of the sections dealing with unfair trade practices, Sections 38-57-20, et seq., and violations shall be treated pursuant to the procedures set forth in Sections 38-57-200 through 38-57-320 of the South Carolina Code of Laws of 1976, as amended.

Section 4. Effective Date. This regulation shall take effect 120 days after it is filed with the Secretary of State except that insurers may immediately upon the filing of the Regulation with the Secretary of State submit such dividend plans to the Chief Insurance Commissioner in accordance with this Regulation. (Based on Insurance Commission designation R11-76.)