A. Purpose
The purpose of this regulation is provided by South Carolina Code
of Laws Section 38-77-530 that states in part:
"Beginning on March 1, 2002 and continuing thereafter, every
insured or policyholder who does not have any insurance merit rating points
pursuant to the Uniform Merit Rating Plan in effect upon the effective date of
this act must not be surcharged for the recoupment of any facility assessments
or losses; therefore, a clean or nonpointed risk shall no longer pay any form
of recoupment seeking to recoup facility losses. Any surcharge as provided
above during the period of March 1, 1999 through February 28, 2002 must be
displayed as a part of the applicable premium charge for liability insurance
coverage. However, beginning on March 1, 2002 every insured or policyholder who
does have insurance merit rating points pursuant to the Uniform Merit Rating
Plan in effect upon the effective date of this act shall be surcharged for the
recoupment of any facility assessments or losses; therefore, these pointed
risks shall be the only persons in the State of South Carolina who shall pay
any recoupment fee for facility losses or assessments remaining in the facility
on March 1, 2002 or any losses accruing in the facility after March 1, 2002.
Furthermore, the director of the Department of Insurance shall promulgate a
plan by regulation to recoup any losses remaining in the facility on March 1,
2002 or any losses accruing after March 1, 2002 only from those insureds or
policyholders having insurance merit rating points as provided above. This plan
shall include, but is not limited to, a schedule of recoupment and method of
surcharge method whether a fixed fee, a percentage basis, or otherwise consider
appropriate by the director."
B. Basis of Recoupment
Beginning on March 1, 2002 and continuing thereafter, a premium
surcharge of 10% of liability premium shall be made on all drivers having
points on March 1, 1999 on the basis of the merit rating plan in effect on
March 1, 1999, as determined by convictions contained in the motor vehicle
records.
C. Schedule of
Recoupment
(1) Beginning on March 1, 2003 and
each year thereafter, the director shall evaluate the funds collected by this
surcharge and compare this amount with the projected runoff. The director may
reduce the percentage surcharge from 10% to a lower amount or eliminate the
surcharge completely by issuing a notice 120 days in advance to insurers that
the director is considering reducing the percentage surcharge. The notice must
include a 30 day period to allow comments from insurers. After the 30 day
period has expired, the director may lower the surcharge by order.
(2) The director shall not lower the
percentage surcharge unless the amount of recoupment projected to be recovered
in the next fiscal year of the Reinsurance Facility is greater than the
projected total remaining runoff of the South Carolina Reinsurance Facility.
The collection of recoupment under this regulation must continue until the
runoff obligations of the South Carolina Reinsurance Facility have been funded
completely.
(3) In the event any
recoupment fees are collected in excess of the ultimate Facility debt as
determined upon a final Facility settlement and accounting, such excess funds
must be forwarded to the South Carolina Department of Motor Vehicles for the
enforcement of the uninsured motorist laws of South Carolina.
(4) The term "Ultimate Facility Debt" means
the balance of all income and expense items for all open South Carolina
Reinsurance Facility policy years and includes expenses incurred after the
termination of the Facility, a final independent audit of the Facility, final
disposition of all records and data as directed by the Board of Governors, and
any other administrative and legal expenses that may be necessary to finalize
the affairs of the Facility as determined by the Board of Governors or the
South Carolina Department of Insurance.
Notes
S.C. Code Regs. §
69-63
Added by State Register
Volume 25, Issue No. 6, eff June 22, 2001. Amended by State Register Volume 34,
Issue No. 3, eff March 26, 2010.
