S.C. Code Ann. Regs. 69-11.1 – Regulation of Credit Insurance.

This regulation replaces 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 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 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.
1. (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 Sections 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.
2. (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.
3. (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.
4. (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.
5. (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 Sections 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)	(2)	(3)	(4)
(1) Group and Individual
	Accident and Health

Property
(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. (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 Sections 37-4-102, Subsection (2) of the Consumer Protection Code.
2. (2) Forms.
  1. (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 Sections 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.
  2. (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.
  3. (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.
  4. (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.
  5. (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. (3) Basic Statistical Plan. To comply with 1976 Code Sections 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. (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. (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. (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. (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. (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.