Property and Casualty Insurance - South Carolina Law Supplement

Flashcards covering key concepts, rules, and regulations pertinent to Property and Casualty Insurance in South Carolina, based on the State Law Supplement.

Insurance producer

An individual who represents an insurer, solicits insurance, transmits applications, delivers policies, or collects premiums; represents the insurer, not the insured.

Insurance broker

A property and casualty insurance producer who sells, solicits, or negotiates insurance on behalf of an insured, receives or delivers surplus lines insurance policies for an insured on behalf of a surplus lines insurer; or receives, collects, or transmits surplus lines insurance premiums; represents the insured, not the insurer.

Producer or broker license

Requirement by the Director of Insurance that allows an individual or organization to conduct insurance business in South Carolina.

Broker Requirements

Brokers must file a $10,000 bond with the Department of Insurance in favor of South Carolina and submit quarterly premium tax payments on policy premiums of insurers not licensed in the state within 30 days after the end of each quarter every year.

Certificate of authority

An insurance company’s license to transact business in the state of South Carolina.

Insurance agency

A corporation, partnership, limited liability company, limited liability partnership, or other legal entity or association in which more than one person has a financial interest.

Requirements for an insurance producer license applicant

Be at least 18 years old; have not committed any act that is grounds for denial, suspension, or revocation of a license; pass the licensing examinations for the lines of authority for which the individual has applied; and complete the application and pay the required fee.

Requirements for the Director to issue an insurance producer's license to qualified nonresident producers

Must be currently licensed and in good standing in his resident state, must submit the proper application and applicable fees, and must live in a state that awards insurance producer licenses to producers in S.C. on the same basis (a reciprocal agreement).

Address Change Requirements for Producers

When a resident producer or nonresident producer moves to another state, the producer must file a change of address and provide certification from the new resident state within 30 days of the change of legal residence. No fee or license application is required.

Temporary Producer License

The Director may issue a temporary producer license for up to 180 days without requiring an examination if necessary for the servicing of an insurance business in the case of death or disability of the primary producer or active military service.

License Renewal

An insurance producer license renews on a biennial basis on the last day of a licensee’s month of birth, and all continuing education requirements must be met and the biennial license renewal fee paid.

License Reinstatement

A producer’s license that lapses for failure to complete continuing education requirements may be reinstated within 6 months from the deadline, and all continuing education requirements must be completed with a penalty fee paid.

Reporting of Actions

A producer or insurer must report, within 30 days, to the Director any administrative action taken against the producer in another jurisdiction or by another governmental agency in S.C.; or any criminal prosecution in any jurisdiction.

Name and Address Changes

Licensees must inform the Director within 30 days of any change of legal name, residence address, business address, mailing address, or email address.

Continuing Education (CE)

Every resident producer must complete 24 credit hours of continuing education every 2 years; at least 3 credit hours must consist of approved ethics courses. If licensed for both life, accident, and health and property and casualty, at least 8 of the 24 hours must be related to life, accident, and health, and at least 8 of the 24 hours must be related to property and casualty.

Cease-and-desist order

Unfair or deceptive act or method of competition penalties are a maximum fine of $2,500, a maximum fine of $5,000 for willful violations, suspension or revocation of license, or both; penalty for violating a cease and desist order is $50 each day of violation, or $100 each day if the violation is willful.

Notice of Hearings

The Director must, before holding any hearing, issue a written notice to the person cited to appear within 30 days of hearing date, stating the subject of the inquiry and specific charges.

Reasons for Suspension or Revocation of License

The Director may revoke, suspend, or refuse to reissue the license of a producer who provided incorrect, misleading, incomplete, or materially untrue information in the license application; violated any law, rule, regulation, subpoena, or order of the Director or of another state’s Director; obtained a license by fraud or misrepresentation; misappropriated any monies or properties received in the course of doing insurance business;

Penalties

Maximum fines for licensed insurers or health maintenance organizations that violate insurance laws are $15,000, suspension or revocation of authority to do business in South Carolina, or both; $30,000 for willful violations, suspension or revocation of authority to do business in South Carolina, or both; maximum fines for violators who are licensed, but not as insurers or health maintenance organizations are $2,500, suspension or revocation of authority to do business in South Carolina, or both; $5,000 for willful violations, suspension or revocation of authority to do business in South Carolina, or both.

Unauthorized Insurer Violations

Acting without a license results in a fine of up to $2,500, imprisonment for up to two years, or both; misdemeanor violations result in a fine of up to $2,500, imprisonment for up to two years, or both.

Director of Insurance's Powers and Duties

Making reasonable rules and regulations; issuing orders and notices; supervising and regulating insurance policy forms and rates; conducting investigations and examinations; imposing penalties—including fines, suspensions, and revocations; issuing insurance licenses and certificates of authority; and instituting civil actions.

Unfair Claims Settlement Practices

Knowingly misrepresenting relevant facts or policy provisions to claimants and insureds. Failing to acknowledge communications regarding claims. Failing to implement procedures for the prompt investigation and settlement of claims. Not attempting in good faith to bring about prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear.

Claim Handling Deadlines

After receiving notice of a claim from an insured, the insurer must acknowledge receipt of the claim within 10 working days; all insurers must begin claim investigations after receiving notice of claim from an insured within 5 working days; once a settlement has been reached, the claim must be paid within 5 working days.

Insurer Examinations

The Director may examine an authorized insurance carrier’s financial condition and compliance with state insurance laws as often as needed, and authorized insurers must be examined at least once every 5 years.

Appointment of Producers

An individual producer acting as an agent of an insurer must be appointed by the insurer; the appointing insurer must file a notice of appointment with the Director within 15 days from the date the agency contract is executed or the first insurance application is submitted; licensed producers and brokers do not need to be appointed by surplus lines insurers.

Appointment Termination

The Director must be notified within 30 days of the date an insurer terminates its agency relationship with a producer, and within 15 days after the notification, the insurer must mail a copy to the producer at his last known address.

Records and Record Retention

Producers must keep records of all transactions showing date, term, amount insured, premiums, and name(s) of insured; records must be retained for at least 5 years.

Fiduciary Responsibility

A fiduciary responsibility is one of special trust and confidence in which a person is entrusted with the funds of another person; all premiums belonging to insurers and insureds received by a producer are held in a fiduciary capacity, and return of premiums must be paid to an insured within 30 days after being instructed to do so.

Blank Forms

Producers may not sign any blank applications for insurance or blank policies, and the penalty is a fine up to $200 for each offense.

Unfair Trade Practices - Misrepresentation

It is illegal to make any written or oral statement, sales presentation, or comparison that misrepresents the dividends, benefits, advantages, conditions, or terms of any policy; uses a name of any insurance policy that misrepresents its true nature; and is a misrepresentation for the purpose of inducing the lapse, forfeiture, exchange, conversion, policy loan, or surrender of any insurance policy.

Unfair Trade Practices - False Advertising

It is illegal for any producer to formulate or use an advertisement or statement that is untrue, deceptive, or misleading regarding any insurance company or persons associated with that company; no person may make any false report, entry in a book, or statement about an insurer’s financial condition with the intent to deceive.

Unfair Trade Practices - Defamation

Making any statement, written or oral, that is false or maliciously critical of the financial condition of an insurance company or a producer representing that company is illegal.

Unfair Trade Practices - Boycott & Coercion

A group that avoids a certain company or producer to steer business to another company or producer; forcing a person to buy insurance through a particular company or producer.

Unfair Trade Practices - Unfair Discrimination

It is illegal to unfairly discriminate between individuals of the same class and equal life expectancy in the rates, dividends, benefits, or terms of any life or life annuity contract; or between neighborhoods within a municipality and of essentially the same hazard.

Unfair Trade Practices - Rebating & Twisting

Offering valuable consideration, other than that which is offered in the contract, as an inducement to purchase a policy is illegal, including kickbacks of commission, extraordinary gifts, payment of consulting fees, or offering to pay the insured’s premium; misrepresenting the terms of a contract in order to convince a person to lapse, forfeit, surrender, or exchange a present policy for a new one.

Unfair Trade Practices - Free Insurance

Offering insurance to a purchaser for no identifiable or additional charge, or charging less than the cost of the insurance; free insurance may not be used in advertising whether selling or purchasing real or personal property, or used to describe life or accident and health insurance in connection with the advertising or offering of any kinds of goods, merchandise, or services.

Insurance Fraud Act

It is illegal to make or conspire to make a false statement or misrepresentation with an intent to injure, defraud, or deceive another and subjects the violator(s) to criminal and civil penalties.

Consumer Privacy Regulation

Require insurers to provide a notice to customers or consumers about its privacy policies and practices; describe to whom and what type of nonpublic personal health and financial information may be disclosed; and provide an opt-out method for individuals who do not wish to have such information disclosed; privacy notices must be sent to customers at least one time per year during the continuation of the customer relationship.

Captive Insurance Company

Are licensed to provide any lines of insurance except workers’ compensation insurance, personal motor vehicle, and homeowners insurance written on a direct basis.

Purpose of the South Carolina Insurance Guaranty Association

To protect the public against the insolvency of insurers.

Association's Maximum Liability per Covered Claim

The full amount of any covered claim under workers’ compensation insurance, and not more than $300,000 for all other types of covered claims.

Cancellation and Nonrenewal (Other Than Automobile Insurance)

Policies in effect less than 120 days may be cancelled for any reason: a 10-day advance notice is required for nonpayment of premium, and a 30-day advance notice of cancellation must be sent for any other reason; policies in effect more than 120 days may only be cancelled for nonpayment of premium, material misrepresentation, substantial change in risk, substantial breach of contractual duties, or loss of insurer’s reinsurance.

Automobile Insurance Cancellation and Nonrenewal

Policies may be cancelled within the first 60 days for nonpayment of premium, insured vehicle has been sold, or insured has secured another policy; policies must remain in effect for at least 30 days for failure to pay premium, and a $15 penalty may be charged by the insurer or producer, which is not a premium charge; policies must be issued for at least a six-month term.

Dwelling Policies - Special Provisions

For the perils of fire and lightning, the stated limit of liability for Coverage A is the value of the building described.

Purpose of South Carolina Wind and Hail Underwriting Association (SCWHUA)

To provide easy and equitable access to essential property insurance for the perils of wind and hail.

Automobile Insurance

Southern Carolina Motor Vehicle Financial Responsibility Act requires proof of financial responsibility for owners or operators of motor vehicles when involved in accidents causing $400 or more dollars in property damage, bodily injury, or death.

The minimum financial responsibility liability limits in South Carolina (25/50/25)

$25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 per accident for property damage.

Uninsured Motorist Provision

All policies must include uninsured motorist coverage; insurers must provide uninsured motorists coverage in the same amounts as required for bodily injury liability or death; at least $25,000 coverage for property damage to the insured’s vehicle caused by an uninsured motorist is required, and a $200 deductible may be required for uninsured motorist property damage coverage.

Identity Fraud Expense Coverage

Provides up to $15,000 of coverage for homeowners policies for expenses such as notary services for affidavits, cost of certified mailings, loss of income for time away from work (up to $200 a day to $5,000 total), loan reapplication fees, and attorney’s fees.

Workers' Compensation Requirements

Notice of accident must be given to the employer within 90 days; actual claims for injury or death must be filed within two years; claims for occupational disease must be filed within two years.

Workers' Compensation Benefits

Total disability benefits are 662/3% of the employee’s average weekly wages; waiting period is 7 calendar days; benefits are retroactive if disability lasts beyond 14 days; maximum duration of disability benefit payments is 500 weeks; death benefits of $12,000 are provided as a burial allowance.

Amount of insurance for fire insurance policy

Fixed by the insurer and insured at or before a policy is issued; in case of total loss by fire, the insured is entitled to recover the full amount of insurance.

South Carolina Wind and Hail Underwriting Association (SCWHUA)

To provide easy and equitable access to essential property insurance for the perils of wind and hail; any person or business having an insurable interest in insurable property at fixed locations in the coastal area of South Carolina; immovable property at fixed locations; tangible personal property when located within an immovable structure at a fixed location.

South Carolina Wind and Hail Underwriting Association (SCWHUA) - Public Hearings

The Director must, at a minimum, hold annual public hearings regarding rates and information pertinent to SCWHUA and give notice of hearings at least 30 days in advance.

Southern Carolina Motor Vehicle Financial Responsibility Act

Proof of financial responsibility required for owners or operators of motor vehicles when involved in accidents causing $400 or more dollars in property damage, bodily injury, or death.

Minimum financial responsibility liability limits in South Carolina

$25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 per accident for property damage.

Uninsured Motorist Provision

All policies must include uninsured motorist coverage; insurers must provide uninsured motorists coverage in the same amounts as required for bodily injury liability or death; at least $25,000 coverage for property damage to the insured’s vehicle is required.

Workers' Compensation

Employers with at least four employees must provide compensation for injuries or occupational diseases; notice of accident must be given to the employer within 90 days; actual claims for injury or death must be filed within two years; claims for occupational disease must be filed within two years.

Workers' Compensation Benefits

Total disability benefits are 662/3% of the employee’s average weekly wages.

Insurance Broker’s bond.

10,000

How many hours of ethics continuing education must a producer complete every 24 months?

3

Licensees must report any change of address to the Director of Insurance with-in

30 days

Authorized Insures must be examined at least once every

5 years

Property coverages include dwellings, condominiums, and manufactured homes up to

$1.3 million

Years that an applicant has been refused on a license.

2