South Carolina Code of Regulations › Chapter 69 - DEPARTMENT OF INSURANCE › Section 69-63 - South Carolina Reinsurance Facility Recoupment

Current through Register Vol. 48, No. 6, June 28, 2024
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.