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									                                   South Carolina General Assembly
                                       117th Session, 2007-2008

S. 711

STATUS INFORMATION

General Bill
Sponsors: Senators Campsen, McConnell, McGill, Rankin, Grooms, Elliott, Ford, Ryberg, Scott and
Pinckney
Document Path: l:\council\bills\gjk\20318sd07.doc
Companion/Similar bill(s): 3820

Introduced in the Senate on April 25, 2007
Currently residing in the Senate Committee on Banking and Insurance

Summary: Omnibus Coastal Property Insurance Reform Act of 2007


HISTORY OF LEGISLATIVE ACTIONS

    Date   Body Action Description with journal page number
 4/25/2007 Senate Introduced and read first time SJ-6
 4/25/2007 Senate Referred to Committee on Banking and Insurance SJ-6

View the latest legislative information at the LPITS web site


VERSIONS OF THIS BILL

4/25/2007
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 9                       A BILL
10
11   TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
12   1976, BY ENACTING THE “OMNIBUS COASTAL
13   PROPERTY INSURANCE REFORM ACT OF 2007”; BY
14   ADDING ARTICLE 11 TO CHAPTER 6, TITLE 12 SO AS TO
15   ALLOW AN INSURANCE POLICYHOLDER TO ESTABLISH
16   A CATASTROPHE SAVINGS ACCOUNT, TO DEFINE
17   QUALIFIED CATASTROPHE SAVINGS EXPENSES AND
18   QUALIFIED DEDUCTIBLE, AND TO ALLOW A TAXPAYER
19   TO CLAIM A CREDIT AGAINST THE STATE INCOME TAX
20   FOR DEPOSITS MADE INTO A CATASTROPHE SAVINGS
21   ACCOUNT; BY ADDING SECTION 12-6-3660 SO AS TO
22   ALLOW A TAXPAYER TO CLAIM A CREDIT AGAINST THE
23   STATE INCOME TAX FOR COSTS INCURRED TO
24   RETROFIT A LEGAL RESIDENCE TO MAKE IT MORE
25   RESISTANT TO LOSS DUE TO HURRICANE, RISING
26   WATER, OR OTHER CATASTROPHIC WIND EVENT; BY
27   ADDING SECTION 12-6-3665 SO AS TO ALLOW A
28   TAXPAYER TO CLAIM A CREDIT AGAINST THE STATE
29   INCOME TAX FOR STATE SALES AND USE TAXES PAID
30   ON PURCHASES OF TANGIBLE PERSONAL PROPERTY
31   USED ON HOMES TO MITIGATE DAMAGE FROM WIND;
32   BY ADDING SECTION 12-6-3670 SO AS TO ALLOW A
33   TAXPAYER TO CLAIM A CREDIT AGAINST THE STATE
34   INCOME TAX EQUAL TO THE INSURANCE PREMIUM
35   COSTS INCURRED BY THE TAXPAYER; TO DESIGNATE
36   SECTIONS 38-3-10 THROUGH 38-3-240 AS ARTICLE 1,
37   CHAPTER 3, TITLE 38 AND ENTITLED “GENERAL
38   PROVISIONS”; BY ADDING ARTICLE 3 TO CHAPTER 3,
39   TITLE 38 SO AS TO PROVIDE THAT THE DIRECTOR OF
40   THE DEPARTMENT OF INSURANCE HAS AUTHORITY TO
41   ISSUE GENERAL ORDERS APPLICABLE TO ALL
42   INSURANCE COMPANIES AFTER THE GOVERNOR

     [711]                   1
 1   DECLARES A STATE OF EMERGENCY; TO PROVIDE THAT
 2   THE DEPARTMENT BY ORDER, MAY ADOPT ANY RULE
 3   THAT FACILITATES RECOVERY FROM THE EMERGENCY;
 4   TO PROVIDE THAT THE DEPARTMENT SHALL ADOPT
 5   RULES STANDARDIZING REQUIREMENTS THAT MAY BE
 6   APPLIED TO INSURERS AFTER A HURRICANE,
 7   ADDRESSING CLAIMS REPORTING REQUIREMENTS,
 8   GRACE PERIODS FOR PAYMENT OF PREMIUMS,
 9   TEMPORARY POSTPONEMENT OF CANCELLATIONS AND
10   NONRENEWAL, AND ANY OTHER RULE THE DIRECTOR
11   CONSIDERS NECESSARY; BY ADDING SECTION 38-7-200
12   SO AS TO ALLOW TAX CREDIT INCENTIVES TO
13   INSURANCE COMPANIES THAT PROVIDE FULL
14   INSURANCE COVERAGE TO PROPERTY OWNERS ALONG
15   THE COAST OF SOUTH CAROLINA, SPECIFYING THE
16   AMOUNT OF THE CREDIT, AND ALLOWING UNUSED
17   CREDITS TO BE APPLIED IN SUCCEEDING TAXABLE
18   YEARS UNDER CERTAIN CIRCUMSTANCES; BY ADDING
19   SECTION 38-75-755 SO AS TO REQUIRE INSURERS TO
20   DISCLOSE ALL AVAILABLE DISCOUNTS TO THE
21   INSURED; TO AMEND SECTION 38-73-260, AS AMENDED,
22   SO AS TO CLARIFY THAT RATES FALLING WITHIN THE
23   SEVEN PERCENT FLEX-BAND LIMITATION REMAIN
24   SUBJECT TO THE PROHIBITION AGAINST RATES NOT
25   BEING EXCESSIVE, INADEQUATE, OR UNFAIRLY
26   DISCRIMINATORY AND THAT THE DEPARTMENT MAY
27   CONSIDER THE RATE IMPACT ON INDIVIDUALS AND
28   TERRITORIES WHEN DETERMINING WHETHER A RATE IS
29   EXCESSIVE,      INADEQUATE,      OR     UNFAIRLY
30   DISCRIMINATORY; TO AMEND SECTION 38-73-1095,
31   RELATING TO ESSENTIAL PROPERTY INSURANCE AND
32   RATING PLAN FACTORS, SO AS TO PROVIDE DISCOUNTS
33   FOR RETROFITTING PROPERTY; TO AMEND ARTICLE 5,
34   CHAPTER 75, TITLE 38, RELATING TO WINDSTORM AND
35   HAIL INSURANCE, SO AS TO CLARIFY THE DEFINITIONS
36   OF INSURABLE PROPERTY AND COASTAL AREA
37   RELATING TO ELIGIBILITY FOR COVERAGE BY THE
38   SOUTH CAROLINA WIND AND HAIL UNDERWRITING
39   ASSOCIATION; TO CLARIFY THE PURPOSE OF ARTICLE 5;
40   TO CLARIFY THAT THE SOUTH CAROLINA WIND AND
41   HAIL UNDERWRITING ASSOCIATION SHALL PROVIDE
42   WIND AND HAIL INSURANCE FOR RESIDENTIAL AND
43   COMMERCIAL PROPERTY TO APPLICANTS UNABLE TO

     [711]                   2
 1   PROCURE IT IN THE COASTAL AREAS OF THIS STATE; TO
 2   PROVIDE INFORMATION THAT MUST BE ADDRESSED IN
 3   THE PLAN OF OPERATION; TO MAKE TECHNICAL
 4   CHANGES; TO PROVIDE FOR ADDITIONAL GENERAL
 5   CORPORATE POWERS AND DUTIES FOR THE SOUTH
 6   CAROLINA     WIND   AND    HAIL   UNDERWRITING
 7   ASSOCIATION; TO PROVIDE THAT RATES CHARGED BY
 8   THE     SOUTH   CAROLINA     WIND    AND    HAIL
 9   UNDERWRITING ASSOCIATION BE ESTABLISHED AT A
10   SELF-SUSTAINING LEVEL; TO PROVIDE OBJECTIVE
11   STANDARDS FOR EXPANDING THE TERRITORY
12   COVERED BY THE SOUTH CAROLINA WIND AND HAIL
13   UNDERWRITING ASSOCIATION; TO AMEND ARTICLE 8,
14   CHAPTER 75, TITLE 38, RELATING TO THE ADVISORY
15   COMMITTEE TO THE DIRECTOR AND THE SOUTH
16   CAROLINA BUILDING CODES COUNCIL AND LOSS
17   MITIGATION GRANT PROGRAM, SO AS TO MODIFY THE
18   MEMBERSHIP OF THE ADVISORY COMMITTEE AND TO
19   CLARIFY THAT THE CONTINUED EXISTENCE OF THE
20   PROGRAM IS SUBJECT TO ANNUAL LEGISLATIVE
21   APPROPRIATIONS; TO CLARIFY THAT THE PURPOSE IS
22   TO PROVIDE FOR ONGOING TRAINING FOR INSPECTORS
23   AND FOR OTHER PURPOSES CONSISTENT WITH THE
24   ARTICLE; TO ESTABLISH THE “SOUTH CAROLINA
25   HURRICANE GRANT DAMAGE MITIGATION PROGRAM”
26   WHICH PROVIDES FOR A GRANT PROGRAM FOR THE
27   MITIGATION OF DAMAGE TO OR THE ENHANCEMENT OF
28   MANUFACTURED HOMES; TO PROVIDE FOR MATCHING
29   GRANTS TO ENCOURAGE SINGLE-FAMILY SITE-BUILT
30   HOMES TO RETROFIT TO REDUCE THE STRUCTURE‟S
31   VULNERABILITY TO A HURRICANE; TO PROVIDE
32   MATCHING GRANT FUNDS TO LOCAL GOVERNMENTS
33   FOR PROJECTS THAT REDUCE HURRICANE DAMAGE TO
34   SINGLE-FAMILY SITE-BUILT RESIDENTIAL PROPERTY;
35   TO PROVIDE THAT IN ADDITION TO STATE
36   APPROPRIATIONS AND OTHER POTENTIAL GRANT
37   FUNDS, THE PREMIUM TAXES PAID BY THE SOUTH
38   CAROLINA     WIND   AND    HAIL   UNDERWRITING
39   ASSOCIATION    AND    ONE    PERCENT    OF   THE
40   COMMISSIONS PAID TO PRODUCERS MUST BE USED TO
41   FUND THIS PROGRAM ANNUALLY; TO AMEND SECTION
42   38-75-1140, RELATING TO THE EVALUATION OF
43   NATURAL HAZARD CATASTROPHE MODELS AND

     [711]                   3
 1   REQUIREMENTS FOR MODELING ORGANIZATIONS, SO
 2   AS TO REQUIRE MODELERS TO PROVIDE THE
 3   DEPARTMENT WITH A LIST OF VARIABLES THAT ARE
 4   SUBJECT TO INSURER INPUT WITH THEIR FILING AND
 5   TO PROVIDE THAT THE DEPARTMENT MAY IMPOSE A
 6   FEE ON MODELERS AND INSURERS TO RECOVER THE
 7   COSTS OF EVALUATING HURRICANE MODELS; AND TO
 8   AMEND SECTION 38-75-1160, RELATING TO NOTICE
 9   REQUIREMENTS      AND     EXCEPTIONS      BEFORE
10   CANCELLATION OR REFUSAL TO RENEW A POLICY OF
11   INSURANCE, SO AS TO INCREASE THE TIME PERIOD FOR
12   NOTIFYING AN INSURED OF THE CANCELLATION OR
13   REFUSAL TO RENEW A POLICY OF INSURANCE.
14
15   Be it enacted by the General Assembly of the State of South
16   Carolina:
17
18   SECTION 1. This act may be cited as the “Omnibus Coastal
19   Property Insurance Reform Act of 2007”.
20
21   SECTION 2. Chapter 6, Title 12 of the 1976 Code is amended by
22   adding:
23
24                               “Article 11
25
26                      Catastrophe Savings Account
27
28     Section 12-6-1610. As used in this article:
29     (1) „Qualified catastrophe expenses‟ mean expenses paid or
30   incurred by reason of a major disaster that has been declared by the
31   governor to be an emergency by executive order.
32     (2) „Qualified deductible‟ means the deductible for the
33   individual‟s homeowner‟s policy for a taxpayer‟s legal residence.
34     (3) „Legal residence‟ means the taxpayer‟s legal residence
35   pursuant to Section 12-43-220(c).
36
37     Section 12-6-1620. (A)(1) An individual taxpayer is allowed a
38   deduction from the tax imposed pursuant to Section 12-6-510 for
39   amounts contributed to a Catastrophe Savings Account in
40   accordance with subsection (B)(3); and
41     (2) All interest income earned by the Catastrophe Savings
42   Account is exempt from the tax imposed pursuant to Section
43   12-6-510 as provided in this article.

     [711]                            4
 1      (B)(1) As used in this article, „Catastrophe Savings Account‟
 2   means a regular savings account or money market account
 3   established by an insurance policyholder for residential property in
 4   this State to cover an insurance deductible under an insurance
 5   policy for the taxpayer‟s legal residence property that covers
 6   hurricane, rising floodwaters, or other catastrophic windstorm
 7   event damage or by an individual to cover self-insured losses for
 8   the taxpayer‟s legal residence from a hurricane, rising floodwaters,
 9   or other catastrophic windstorm event. The account must be
10   labeled as a Catastrophe Savings Account in order to qualify as a
11   Catastrophe Savings Account as defined in this article. A taxpayer
12   shall establish only one Catastrophe Savings Account and must
13   specify that the purpose of the account is to cover the amount of
14   insurance deductibles and other uninsured portions of risks of loss
15   from hurricane, rising floodwater, or other catastrophic windstorm
16   event.
17        (2) A Catastrophe Savings Account is not subject to
18   attachment, levy, garnishment, or legal process in this State.
19        (3) The total amount that may be contributed to a
20   Catastrophe Savings Account may not exceed:
21           (a) in the case of an individual whose qualified deductible
22   is not more than one thousand dollars, two thousand dollars;
23           (b) in the case of an individual whose qualified deductible
24   is more than one thousand dollars, the amount equal to the lesser
25   of fifteen thousand dollars or twice the amount of the taxpayer‟s
26   qualified deductible; or
27           (c) in the case of a „self-insured‟ individual who chooses
28   not to obtain insurance on his legal residence two hundred fifty
29   thousand dollars, but in no event shall exceed the value of the
30   individual taxpayer‟s legal residence.
31        (4) If a taxpayer contributes in excess of the limits provided
32   in subsection (3), the taxpayer must withdraw the amount of the
33   excess contributions and include that amount in South Carolina
34   income for purposes of Section 12-6-510 in the year of withdrawal.
35
36      Section 12-6-1630. (A) A distribution from a Catastrophe
37   Savings Account must be included in the income of the distributee
38   unless the amount of the distribution is used to cover qualified
39   catastrophe expenses.
40      (B) No amount is included in income, pursuant to subsection
41   (A) of this section, if the qualified catastrophe expenses of the
42   distributee during the taxable year are equal to or greater than the
43   aggregate distributions during the taxable year.

     [711]                            5
 1      (C) If aggregate distributions exceed the qualified catastrophe
 2   expenses during the taxable year, the amount otherwise included in
 3   income must be reduced by the amount of the distributions for
 4   qualified catastrophe expenses.
 5      (D)(1) The tax imposed pursuant to Section 12-6-510
 6   attributable to a taxable distribution must be increased by two and
 7   one-half percent of the amount which is includable in income.
 8         (2) This additional tax shall not apply if:
 9              (a) the taxpayer no longer owns a legal residence that
10   qualifies under Section 12-43-220(c); or
11              (b) the distribution is from an account conforming with
12   subsection (B)(3)(c) of Section 12-6-1620 and is made on or after
13   the date on which the distributee attains the age of seventy.
14      (E)(1) No amount is includable in taxable income, pursuant to
15   subsection (A) of this section, if the distribution is from an account
16   conforming with subsection (B)(3)(a) or (B)(3)(b) and is made on
17   or after the date on which the distributee attains the age of seventy.
18         (2) If a taxpayer receives a nontaxable distribution under this
19   subsection, the taxpayer cannot make further contributions to any
20   Catastrophe Savings Account.
21      (F) In the event of death of the taxpayer that owns the
22   Catastrophe Savings Account, the account must be included in
23   income of the person who receives the account, unless that person
24   is the surviving spouse of the taxpayer. Upon the death of the
25   surviving spouse, the account must be included in the income of
26   the person who receives the account. The additional tax in
27   subsection (D) shall not apply in the event of a distribution on
28   death.”
29
30   SECTION 3. Article 25, Chapter 6, Title 12 of the 1976 Code is
31   amended by adding:
32
33      “Section 12-6-3660. (A) An individual taxpayer is allowed a
34   credit against the tax imposed pursuant to Section 12-6-510 for
35   costs incurred to retrofit, as specified in subsection (B), a structure
36   qualifying as the taxpayer‟s legal residence pursuant to Section
37   12-43-220(c) to make it more resistant to loss due to hurricane,
38   rising water, or other catastrophic wind event.
39      (B) In order to qualify for the state income tax credit allowed
40   pursuant to this section, costs must not include ordinary repair or
41   replacement of existing items, and must be associated with those
42   fortification measures defined in accordance with subsection (C) of
43   this section, and must actually increase the residence‟s resistance

     [711]                              6
 1   to hurricane, rising water, or catastrophic wind event damage as
 2   defined by the director or his designee via bulletin, order, or
 3   regulation.
 4      (C) The fortification measures qualifying for the state income
 5   tax credit allowed pursuant to this section shall be defined and
 6   promulgated by the Department of Insurance by written order
 7   pending promulgation of written regulations pursuant to the
 8   Administrative Procedures Act.
 9      (D) The tax credit allowed pursuant to this section for any
10   taxable year may not exceed the lesser of:
11        (1) twenty-five percent of the cost incurred; or
12        (2) one thousand dollars.
13      (E) The cost of items that would otherwise qualify for the
14   credit that are purchased with grant funds awarded pursuant to
15   Section 38-75-485 are not eligible for this credit if the grants are
16   not included in the income of the taxpayer.
17
18      Section 12-6-3665. (A) An individual taxpayer is allowed a
19   credit from the income tax imposed pursuant to Section 12-6-510
20   for South Carolina state sales or use taxes paid on purchases of
21   tangible personal property used to retrofit the individual‟s legal
22   residence in accordance with Section 12-6-3660. The credit
23   amount is calculated by multiplying the purchase price of tangible
24   personal property for which the individual may claim the income
25   tax credit in Section 12-6-3660 by six percent. The maximum
26   credit allowed under this section is one thousand five hundred
27   dollars.
28      (B) The cost of items that would otherwise qualify for the
29   credit that are purchased with grant funds awarded pursuant to
30   Section 38-75-485 are not eligible for this credit if the grants are
31   not included in the income of the taxpayer.
32
33      Section 12-6-3670. (A) An individual taxpayer may claim a
34   credit against the income tax imposed pursuant to Section
35   12-6-510 for excess premium paid during the applicable tax year
36   for property and casualty insurance, as defined in Articles 1, 3, and
37   5 of Chapter 75, Title 38, providing coverage on the taxpayer‟s
38   legal residence pursuant to Section 12-43-220(c).
39      (B) For the purposes of computing the credit allowed by this
40   section, excess premium paid is the amount by which the premium
41   paid exceeds five percent of the taxpayer‟s federal adjusted gross
42   income.


     [711]                             7
 1      (C)(1) The credit allowed pursuant to this section for any
 2   taxable year may not exceed one thousand two hundred fifty
 3   dollars.
 4        (2) If the credit allowed under this section exceeds the state
 5   income tax liability for the taxable year, any unused credit may be
 6   carried forward for five succeeding taxable years.”
 7
 8   SECTION 4. A. Sections 38-3-10 through 38-3-240 of the 1976
 9   Code are designated Article 1, Chapter 3, Title 38 and entitled
10   “General Provisions”.
11
12   B. Chapter 3, Title 38 of the 1976 Code is amended by adding:
13
14                                “Article 3
15
16                           Emergency Powers
17
18      Section 38-3-410. (A) If the Governor declares a state of
19   emergency pursuant to Section 1-3-420, the director may issue one
20   or more general orders applicable to all insurance companies,
21   entities, and persons, as defined in Section 38-1-20, that are subject
22   to Title 38.
23      (B) An order issued by the director under this section becomes
24   effective upon issuance and continues for one hundred twenty days
25   unless terminated sooner by the director. The director may extend
26   an order for additional periods of one hundred twenty days if he
27   determines that the emergency conditions that gave rise to the
28   initial order still exist. By concurrent resolution, the General
29   Assembly may terminate an order issued under this section.
30      (C) The director shall publish in the next available publication
31   of the State Register a copy of the text of an order issued under this
32   section, together with a statement explaining how the order
33   facilitates recovery from the emergency.
34
35      Section 38-3-420. (A) By an order issued pursuant to Section
36   38-3-410, the director may adopt any rule that facilitates recovery
37   from the emergency. The department may adopt a rule by any
38   procedure which is fair under the circumstances if the:
39        (1) procedure provides at least the procedural protection
40   given by other statutes, the Constitution of this State, or the United
41   States Constitution;
42        (2) department takes only that action necessary to protect the
43   public interest under the emergency procedure; and

     [711]                             8
 1         (3) department publishes in writing, at the time of or before
 2   its action, the specific facts and reasons for finding an immediate
 3   danger to the public health, safety, or welfare and its reasons for
 4   concluding that the procedure used is fair under the circumstances.
 5   If, notice of emergency rules, other than those of educational units
 6   or units of government with jurisdiction in only one or a part of
 7   one county, including the full text of the rules, is published in the
 8   first available issue of the State Register and provided to the
 9   General Assembly, then the department‟s findings of immediate
10   danger, necessity, and procedural fairness are judicially reviewable
11   under Section 38-3-210.
12      (B) Subject to applicable constitutional and statutory
13   provisions, an emergency rule becomes effective immediately on
14   filing, or on a date less than twenty days after that time if specified
15   in the rule, if the adopting department finds that the effective date
16   is necessary because of immediate danger to the public health,
17   safety, or welfare.
18
19      Section 38-3-430. (A) The department may promulgate by
20   order, pursuant to Section 38-3-410, standardized requirements
21   that may be applied to insurers as a consequence of a hurricane or
22   other natural disaster. The rules must address the following areas:
23        (1) claims reporting requirements;
24        (2) grace periods for payment of premiums and performance
25   of other duties by insureds;
26        (3) temporary postponement of cancellations and
27   nonrenewals; and
28        (4) any other rule the director considers necessary.
29      (B) The rules adopted under this section shall require the
30   department to issue an order within ten days after the occurrence of
31   a hurricane or other natural disaster specifying, by line of
32   insurance, which of the standardized requirements apply, the
33   geographic areas in which they apply, the time at which
34   applicability commences, and the time at which applicability
35   terminates.
36
37     Section 38-3-440. The department may promulgate the
38   regulations necessary to implement the provisions of this article.”
39
40   SECTION 5. Chapter 7, Title 38 of the 1976 Code is amended by
41   adding:
42


     [711]                              9
 1      “Section 38-7-200. (A) A licensed insurer providing full
 2   property and casualty coverage, to specifically include wind and
 3   hail coverage, to property owners within the designated Wind Pool
 4   territory as defined in Section 38-75-310(7), may claim as a
 5   nonrefundable credit against the premium tax imposed by Sections
 6   38-7-20 and 38-7-40 in an amount equal to twenty-five percent of
 7   the tax that otherwise is due on the premium written for the
 8   property owners for the taxable year.
 9      (B) The credit allowed by this section is available only to an
10   insurer licensed or authorized to do business in this State with
11   respect to a property and casualty insurance policy providing full
12   coverage as defined in subsection (A).
13      (C) A taxpayer who claims the credit allowed by this section
14   shall provide information required by the Department of Insurance
15   to demonstrate that the taxpayer is eligible for the credit and that
16   the amount paid for premiums for which the credit is claimed was
17   not excluded from the taxpayer‟s gross income for the taxable
18   year.
19      (D) The tax credit allowed under this section for a taxable year
20   may be claimed only once for any one structure, regardless of the
21   number of policies written on the structure.
22      (E) This section applies to all new policies issued on or after
23   January 1, 2008.”
24
25   SECTION 6. Article 9, Chapter 75, Title 38 is amended by
26   adding:
27
28      “Section 38-75-755. All insurers, at the issuance of a new
29   policy and at each renewal, clearly shall notify the applicant or
30   policyholder of a commercial property or personal lines residential
31   property insurance policy of the availability and the range of each
32   premium discount, credit, other rate differential, or reduction in
33   deductibles for properties on which fixtures or construction
34   techniques demonstrated to reduce the amount of loss in a
35   windstorm have been installed or implemented. The notice must
36   describe generally what measures the policyholders may take to
37   reduce their windstorm premium.”
38
39   SECTION 7. Section 38-73-260 of the 1976 Code, as last
40   amended by Act 332 of 2006, is further amended by adding at the
41   end:
42


     [711]                            10
 1      “(F) Nothing in this section prevents the director or his designee
 2   from considering the impact on individual territories or individual
 3   insureds when determining whether the rate is excessive,
 4   inadequate, or unfairly discriminatory. Rate level increases or
 5   decreases falling within the limitation specified in this subsection
 6   must comply with the requirements of this chapter prohibiting rate
 7   increases from being excessive, inadequate, or unfairly
 8   discriminatory. All insurers, at the issuance of a new policy and at
 9   each renewal of a commercial property insurance policy, shall
10   include a notice that advises the policyholder that a reduction in
11   premium may be available if the policyholder has taken steps to
12   prevent or reduce damage from windstorm and that the
13   policyholder may contact its agent, broker, or insurer for additional
14   information.”
15
16   SECTION 8. Section 38-73-1095(C) of the 1976 Code is
17   amended to read:
18
19      “(C) Rating plans for essential property insurance in the coastal
20   area or in the seacoast area, may shall include discounts and credits
21   or surcharges and debits calculated upon the following rating
22   factors:
23        (1) use of storm shutters;
24        (2) use of roof tie downs;
25        (3) construction standards;
26        (4) building codes;
27        (5) distance from water;
28        (6) elevation;
29        (7) flood insurance;
30        (8) policy deductibles; and
31        (9) other applicable factors requested by the insurer or rating
32   organization or selected by order of the director involving the risk
33   or hazard.
34      The department may by order or regulation define how the
35   implementation of these factors would qualify for the credits or
36   discounts. The regulation or order must specify what evidence or
37   proof the policyholder or applicant must present to obtain the
38   credit or discount.”
39
40   SECTION 9. Article 5, Chapter 75, Title 38 of the 1976 Code is
41   amended to read:
42
43                                “Article 5

     [711]                            11
 1
 2                        Wind and Hail Insurance
 3
 4      Section 38-75-310. In this article, unless the context otherwise
 5   requires:
 6      (1) „Essential property insurance‟ means insurance against
 7   direct loss to property as defined and limited in the wind and hail
 8   insurance policy and forms approved by the director or his
 9   designee; and after January 1, 1995, at the request of the insured,
10   coverage for:
11         (a) actual loss of business income; or
12         (b) additional living expense; or
13         (c) fair rental value loss.
14      Prior to Before November 1, 1994, the South Carolina Wind and
15   Hail Underwriting Association must file with the Department for
16   approval additional policy forms defining the terms of and
17   providing coverage for actual loss of business income, additional
18   living expense and fair rental value loss.
19      (2) „Association‟ means the South Carolina Wind and Hail
20   Underwriting Association established pursuant to the provisions of
21   this article.
22      (3) „Plan of operation‟ means the plan of operation of the
23   association approved or promulgated by the department pursuant
24   to the provisions of this article.
25      (4) „Insurable property‟ means immovable property at fixed
26   locations in coastal areas of the State as that term is hereinafter
27   defined, or tangible personal property located therein in it, which
28   property is determined by the association to be in an insurable
29   condition as determined by reasonable underwriting standards, but
30   not to include farm or manufacturing property, or motor vehicles
31   which are eligible to be licensed for highway use. Any A structure
32   commenced on or after September 15, 1971, not built in substantial
33   compliance with the Southern Standard most recent building code,
34   adopted by the Building Codes Council as referenced in Section
35   6-9-50, or the approved building code in existence at the time of
36   construction including the design-wind requirements therein in it,
37   is not an insurable risk under the terms of this article. Any A
38   structure commenced on or after September 15, 1971, shall must
39   comply with any construction and zoning requirements affecting
40   the structure, promulgated or adopted pursuant to the requirements
41   of the Federal Flood Insurance Program.
42      (5) „Coastal area‟ means:


     [711]                           12
 1        (a) all areas in Beaufort County and Colleton County which
 2   are east of the west bank of the intracoastal waterway;
 3        (b) the following areas in Georgetown County: all areas
 4   between the Harrell Siau Bridge and Murrells Inlet which are east
 5   of a line paralleling and lying one hundred fifty feet east of U.S.
 6   Highway No. 17 Business, all areas in Murrells Inlet which are
 7   east of U.S. Highway No. 17 Business, and Cedar Island, North
 8   Island, and South Island;
 9        (c) all areas in Horry County east of a line paralleling and
10   lying one hundred fifty feet east of U. S. Highway No. 17
11   Business;
12        (d) the following areas in Charleston County: Edingsville
13   Beach, Kiawah Island, Botany Bay Island, Folly Island, Seabrook
14   Island, Morris Island, and all areas north of the city of Charleston
15   which are east of the west bank of the intracoastal waterway.
16      (6) „Net direct premiums‟ means gross direct premiums
17   excluding reinsurance assumed and ceded written on property
18   other than farm or manufacturing in this State for fire and extended
19   coverage insurance, including the fire and extended coverage
20   components of homeowners policy and commercial multiple peril
21   package policies, less return premiums upon canceled contracts,
22   dividends paid or credited to policyholders, or the unused or
23   unabsorbed portion of premium deposits.
24      (7) „Seacoast area‟ means all areas within Horry, Georgetown,
25   Berkeley, Charleston, Dorchester, Colleton, Beaufort, and Jasper
26   Counties.
27
28      Section 38-75-320. The purpose of this article is to provide a
29   method whereby wind and hail insurance may be obtained more
30   easily and equitably assure an adequate market for wind and hail
31   insurance in the coastal areas of this State.
32
33      Section 38-75-330. (A) There is created the South Carolina
34   Wind and Hail Underwriting Association, an unincorporated
35   association whose responsibilities, liability, and regulations are
36   governed and defined by this article, consisting. The association
37   shall function as a residual market mechanism to provide wind and
38   hail insurance for residential and commercial property to
39   applicants who are unable to procure this insurance in the coastal
40   area.
41      (B) The association consists of all private insurers authorized to
42   write and engage in writing property insurance within this State on
43   a direct and statewide basis, but excluding insurers whose writings

     [711]                            13
 1   are limited to property wholly owned by parent, subsidiary, or
 2   allied organizations, or insurers whose writings are limited to
 3   property wholly owned by religious organizations, provided,.
 4   However, as a condition of exemption from membership such
 5   these insurers providing property insurance for insurable property
 6   in the coastal area as defined by this article shall also shall provide
 7   essential property insurance for such these risks. Every such Each
 8   insurer must be a member of the association and must shall remain
 9   a member of the association so long as the association is in
10   existence as a condition of its authority to continue to transact the
11   business of insurance in this State.
12
13      Section 38-75-340. (A) The association must shall operate
14   pursuant to a plan of operation which shall set forth provides for
15   the following:
16         (1) the number, qualifications, terms of office, and manner
17   of election of the members of the board of directors and shall
18   provide for;
19         (2) the efficient, economical, fair, and nondiscriminatory
20   administration of the association; and for
21         (3) the prompt and efficient provision of essential property
22   insurance in the coastal areas of the State so as to promote orderly
23   community development in those areas and to provide means for
24   the adequate maintenance and improvement of the property in such
25   areas. The plan may include;
26         (4) the manner of election of officers;
27         (5) the establishment of necessary facilities,;
28         (6) the management of the association, plan for;
29         (7) the assessment of members to defray losses and
30   expenses,;
31         (8) reasonable underwriting standards, rating subdivisions
32   and rates;
33         (9) commissions to be paid to agents or brokers,;
34         (10) procedures for the acceptance and cession of reinsurance,
35   procedures and for determining the amounts of insurance to be
36   provided to specific risks,;
37         (11) time limits and procedures for processing applications
38   for insurance,; and for any
39         (12) other provisions considered necessary by the director or
40   his designee to carry out the purposes of this article.
41      (B) Insurance effected pursuant to this article shall must have
42   limits of liability provided in the plan of operation. The director or
43   his designee shall approve the limits. Excess insurance is not

     [711]                             14
 1   permitted until the maximum available under the plan has been
 2   purchased. Thereafter After that, excess insurance may be
 3   purchased and must be included for the purpose of meeting any
 4   coinsurance requirement.
 5      (C) The directors board of the association may, subject to the
 6   approval of the director or his designee, may amend the plan of
 7   operation at any time. The director or his designee shall review the
 8   plan of operation, including annually. The director or his designee
 9   shall review the rate structure and loss experience, not less than
10   once in each calendar year annually in accordance with Section
11   38-75-400. After review of the plan, the director or his designee
12   may amend the plan upon approval of the directors of the
13   association and the amendment takes effect immediately upon
14   ratification by the board.
15
16      Section 38-75-350. (a)(A) Any A person having an insurable
17   interest in insurable property is entitled to apply to the association
18   for coverage and for an inspection of the property. The application
19   must be made on behalf of the applicant by a licensed broker or
20   agent authorized by him. Applications An application must be
21   submitted on forms a form prescribed by the association and
22   approved by the director or his designee. The application shall
23   must contain a statement as to whether or not there are any unpaid
24   premiums due from the applicant for fire insurance on the
25   property. The term „insurable interest‟ as used in this section
26   includes any lawful and substantial economic interest in the safety
27   or preservation of property from loss, destruction, or pecuniary
28   damage.
29      (b)(B) If the association determines that the property is
30   insurable and that there is no unpaid premium due from the
31   applicant for prior insurance on the property, the association upon
32   receipt of the premium, or such a portion thereof of it as is
33   prescribed in the plan of operation, shall cause to be issued a
34   policy of essential property insurance for a term of at least one
35   year.
36      (c)(C) If the association, for any reason, denies an application
37   and refuses to cause to be issued an insurance policy on insurable
38   property to any an applicant or takes no action on an application
39   within the time prescribed in the plan of operation, the applicant
40   may appeal to the director or his designee and the director or a
41   member of his staff designated by him, after reviewing the facts,
42   may direct the association to issue or cause to be issued an
43   insurance policy to the applicant. In carrying out its duties

     [711]                             15
 1   pursuant to this section, the director or his designee may request,
 2   and the association shall provide, any information the director or
 3   his designee considers necessary to a determination concerning the
 4   reasons for the denial or delay of the application.
 5
 6      Section 38-75-360. (A) The association, pursuant to the
 7   provisions of this article and the plan of operation, and with
 8   respect to essential property insurance on insurable property, has
 9   the power on behalf of its members to:
10        (a)(1) To cause to be issued policies of insurance to
11   applicants.;
12        (b)(2) To assume reinsurance from its members.;
13        (c)(3) To cede reinsurance to its members and to purchase
14   reinsurance in behalf of its members. on risks insured by the
15   association in amounts that are in accordance with procedures
16   adopted by the board;
17        (4) receive, hold, and transfer personal and real property in
18   the name of the association;
19        (5) contract for goods and services that reasonably may not
20   be performed by its employees;
21        (6) solicit and accept goods, loans, grants, etc., in the name
22   of the association;
23        (7) borrow funds; and
24        (8) issue bonds, surplus notes, or other debentures.
25      (B) The association, pursuant to the provisions of this article
26   and the plan of operation, and with respect to essential property
27   insurance on insurable property, shall perform other acts necessary
28   or proper to effectuate the purpose of this subsection.
29
30      Section 38-75-370. (A) All members of the association shall
31   participate in its writings, expenses, profits, and losses in the
32   proportion that the net direct premium of the member written in
33   this State during the calendar year two years before the current
34   year bears to the aggregate net direct premiums written in this
35   State by all members of the association, as certified to the
36   association by the department after review of annual statements,
37   other reports, and other statistics which the department considers
38   necessary to provide the information required and which the
39   department is authorized to obtain from a member of the
40   association. After certification by the department, the association
41   may rely on the member company‟s annual statement in
42   determining the company‟s participation in profits and losses for
43   each year.

     [711]                           16
 1      (B) Each member‟s participation in the association must be
 2   determined annually in the same manner as the initial
 3   determination. An insurer authorized to write and engage in
 4   writing insurance, the writing of which requires the insurer to be a
 5   member of the association pursuant to Section 38-75-330, becomes
 6   a member of the association on January first immediately
 7   following the authorization. The determination of the insurer‟s
 8   participation in the association must be made as of the date of the
 9   membership in the same manner as for all other members of the
10   association. Member insurers shall receive credit annually for
11   essential property insurance voluntarily written in the coastal area
12   and their participation in the writings of the association must be
13   reduced accordingly. The board of directors shall authorize the
14   method of determining the credit. In order to receive credit for
15   essential property voluntarily written in the coastal area, each
16   member company shall submit its requests by March thirty-first of
17   the year preceding the year for which credit is sought.
18      (C) The assessment of a member insurer after hearing may be
19   ordered deferred in whole or in part upon application by the insurer
20   if, in the opinion of the director or his designee, payment of the
21   assessment would render the insurer insolvent or in danger of
22   insolvency or would otherwise leave the insurer in a condition so
23   that further transaction of the insurer‟s business would be
24   hazardous to its policyholders, creditors, members, subscribers,
25   stockholders, or the public. If payment of an assessment against a
26   member insurer is deferred by order of the director or his designee
27   in whole or in part, the amount by which the assessment is deferred
28   must be assessed against other member insurers in the same
29   manner as provided in this section. In its order of deferral, or in
30   necessary subsequent orders, the director or his designee shall
31   prescribe a plan by which the assessment so deferred must be
32   repaid to the association by the impaired insurer with interest at the
33   six-month treasury bill rate adjusted semiannually. Profits,
34   dividends, or other funds of the association to which the insurer is
35   otherwise entitled must not be distributed to the impaired insurer
36   but must be applied toward repayment of an assessment until the
37   obligation has been satisfied. The association shall distribute the
38   repayments, including interest, to the other member insurers on the
39   basis at which assessments were made.
40
41      Section 38-75-375. (A) If a member company perceives an
42   assessment or interest levied by the association to be unjust or
43   illegal, the company shall pay the assessment or interest under

     [711]                             17
 1   protest in writing within thirty days of the assessment or interest
 2   charge. Upon receiving this payment, the association shall pay the
 3   money collected into the association account and designate the
 4   money as having been paid under protest.
 5     (B) A member company paying an assessment or interest under
 6   protest shall appeal to the association within thirty days after
 7   making the payment. If it is determined in that appeal that the
 8   assessment or interest was collected unjustly or illegally, the
 9   association shall refund the assessment or interest to the payor.
10     (C) If a member company fails to pay an assessment or interest
11   within thirty days of the assessment or interest charge by the
12   association, the company is subject to disciplinary procedures
13   pursuant to Section 38-5-120 or 38-5-130.
14
15      Section 38-75-380. There may be no liability on the part of and
16   no cause of action of any nature may arise against the department
17   or any of its staff or the association or its agents, employees, or any
18   participating insurer for any inspections made hereunder or any
19   statements made in good faith by them in any reports or
20   communications concerning risk submitted to the association or at
21   any administrative hearings conducted in connection therewith
22   with it under the provisions of this article.
23
24      Section 38-75-385. There is no liability on the part of, and no
25   cause of action of any nature may arise against, any member
26   insurer, the association‟s agents or employees, the board of
27   directors, or the director, his designees, or his representatives for
28   any act or omission in the performance of their powers and duties
29   under this article. This section does not relieve the association of
30   any of its liability.
31
32      Section 38-75-386. No liability on the part of, and no cause of
33   action of any nature may arise against, the director, the Department
34   of Insurance or its staff, the association, any member insurer, the
35   association‟s agents or employees, its board of directors, or the
36   legal representatives of any of the above persons, for any act or
37   omission made in good faith or for any statement made to, or for
38   information provided to, any insurer regarding rates; premiums;
39   classifications; cancellations, determinations, or nonrenewals of
40   coverage; underwriting; inspections; or claims experience history
41   made to facilitate the underwriting of essential property insurance
42   for risks in the coastal area by private insurers or to facilitate


     [711]                             18
 1   competition for the underwriting of essential property insurance
 2   for risks in the coastal area among private insurers.
 3
 4     Section 38-75-390. Any A member of the association who is
 5   designated to receive and write essential property insurance from
 6   or through the association shall cede one hundred percent cede to
 7   the association that the essential property insurance.
 8
 9      Section 38-75-400. (A) The rates, rating plans, and rating rules
10   applicable to the insurance written by the association are those
11   approved for use of the association by the director or his designee.
12   Surcharges may be used as approved by the director or his
13   designee. Rates may include rules for classification of risks
14   insured hereunder under the provisions of this article and rate
15   modifications thereof of it.
16      (B) As a residual market mechanism, the association is not
17   intended to offer rates competitive with the admitted market.
18   Rates for policies issued by the association must be adequate and
19   established at a level that permits the association to operate as a
20   self-sustaining mechanism. The association shall maintain the
21   necessary rate-making data in order to permit the actuarial
22   determination of rates and rating plans appropriate for the business
23   insured by the association. The association shall monitor rate
24   adequacy and shall notify the director annually to enable the
25   director to take corrective action by an order. Rates adjusted by a
26   corrective action order are exempt from the twelve-month
27   limitation requirement of Section 38-73-920. The corrective action
28   order is subject to judicial review by the Administrative Law
29   Court.
30
31      Section 38-75-410. (A) A person insured pursuant to this article
32   or his representative or a member company who is aggrieved by an
33   act, ruling, or decision of the association:
34         (1) regarding rates, classification of risks, assessments,
35   voluntary credits, cancellation or termination of policies, or
36   underwriting shall appeal to the director or his designee within
37   sixty days after the act, ruling, or decision;
38         (2) other than those specified in item (1), may appeal to the
39   director or his designee within thirty days after the act, ruling, or
40   decision.
41      (B) Hearings A hearing held by the director or his designee
42   pursuant to this section must be in accordance with the procedures


     [711]                            19
 1   set forth in Chapter 3, Title 38 and Article 3, Chapter 23, Title 1,
 2   „Administrative Procedures‟.
 3
 4     Section 38-75-420. All reports of inspection performed by or on
 5   behalf of the association must be made available to the members of
 6   the association, applicants, agent, or broker, and the department.
 7
 8      Section 38-75-430. The association shall file with the
 9   department by March thirty-first of each year a statement which
10   summarizes the transactions, conditions, operations, and affairs of
11   the association during the preceding fiscal year ending October
12   thirty-first. The statement shall must contain any matters and
13   information prescribed by the department and must be in the form
14   required by it. The department may at any time require the
15   association to furnish to it any additional information with respect
16   to its transactions or any other matter which it considers material to
17   assist it in evaluating the operation and experience of the
18   association.
19
20      Section 38-75-440. The department may make an examination
21   into the affairs of the association and in undertaking the
22   examination may hold a public hearing. The expense of the
23   examination must be borne and paid by the association.
24
25     Section 38-75-450. The department has authority to make
26   reasonable regulations, not inconsistent with law, to enforce, carry
27   out, and make effective the provisions of this article after notice
28   and hearing before the Administrative Law Judge Division.
29
30      Section 38-75-460. The director or his designee, by written
31   order, temporarily may expand the area in which the association
32   shall provide essential property insurance. The director or his
33   designee shall find and declare the existence of an emergency
34   because of the unavailability of coastal property insurance or other
35   unavailability of coastal property insurance on a reasonable basis
36   through normal channels. The order must include the surveys of
37   the market conducted in order to make the determination. The
38   director or his designee may expand the area in which the
39   association shall provide essential property insurance to the whole
40   area or just part of the area. The director may expand the area by
41   construction type or age of construction. The area may not be
42   expanded further than the seacoast territory as defined in Section
43   38-75-310(7) and may not be expanded to cover the area for more

     [711]                             20
 1   than twenty-four months. If the director or his designee issues an
 2   order that expands the area in which the association provides
 3   essential property insurance, he shall notify the General Assembly
 4   of that order and he shall recommend to the General Assembly any
 5   appropriate statutory changes in the law concerning the definition
 6   of „coastal area‟ which he believes needs to be enacted.(A)In order
 7   to maintain stability in the property insurance market and to assure
 8   the continued, consistent availability of essential property
 9   insurance coverage in the coastal area, the director or his designee,
10   by written order, may expand the coastal area in which the
11   association shall provide essential property insurance for periods
12   up to twenty-four months. The order is subject to renewal by the
13   director but no renewal shall exceed twenty-four months. In
14   determining whether expansion of the coastal area is warranted,
15   the director or his designee shall consider:
16        (1) changes in the number of insurers writing essential
17   property insurance in the seacoast area and the capacity of those
18   insurers;
19        (2) changes in the extent to which nonadmitted or surplus
20   lines insurers are providing essential property insurance in the
21   seacoast area;
22        (3) changes in reinsurance activity impacting insurers
23   writing essential property insurance in the seacoast area;
24        (4) changes in the demand for property insurance in the
25   seacoast area; and
26        (5) any other information considered relevant to effectuate
27   the purpose of this chapter.
28      (B) The director or his designee shall find and declare the
29   existence of conditions that threaten to destabilize the property
30   insurance market and jeopardize the continued, consistent
31   availability of essential property insurance in the seacoast area.
32   The director or his designee shall utilize market surveys, data calls,
33   catastrophe models, reinsurance information, and other objective
34   sources to support the order of expansion.
35      (C) The director or his designee may expand the coastal area in
36   which the association shall provide essential property insurance.
37   The expansion may encompass a portion of the seacoast area or the
38   entire seacoast area, but may not extend further than the seacoast
39   area. The area must not be expanded more than reasonably
40   necessary to ensure a stable property insurance market. An
41   expansion of the coastal area is subject to the plan of operation as
42   amended and approved by the director or his designee. The
43   director or his designee shall report any expansion of the coastal

     [711]                             21
 1   area to the General Assembly within thirty days of the order of
 2   expansion or upon commencement of the next term of the General
 3   Assembly, if expansion occurs when the General Assembly is not
 4   in session. The General Assembly may vacate any expansion
 5   order by passage of a joint resolution.”
 6
 7   SECTION 10. Article 8, Chapter 75, Title 38 of the 1976 Code
 8   is amended to read:
 9
10                               “Article 8
11
12      Advisory Committee to the Director and the South Carolina
13     Building Codes Council and, Loss Mitigation Grant Program,
14            and South Carolina Comprehensive Hurricane
15                    Damage Mitigation Program
16
17      Section 38-75-470. (A) The Director of Insurance shall appoint
18   an advisory committee to the director and the South Carolina
19   Building Codes Council to study issues associated with the
20   development of strategies for reducing loss of life and mitigating
21   property losses due to hurricane, earthquake, and fire. The
22   advisory committee also must shall consider the costs associated
23   with these strategies to individual property owners. The advisory
24   committee must include is composed of:
25        (1) the director or his designee;
26        (2) the chairman of the Building Codes Council or his
27   designee;
28        (3) one a representative from Clemson University involved
29   with wind engineering;
30        (2)(4) one a representative from an academic institution
31   involved with the study of earthquakes;
32        (3) one representative from the Department of Insurance;
33        (4)(5) one a representative from an insurer writing property
34   insurance in South Carolina;
35        (5)(6) one a representative from the Department of
36   Commerce;
37        (6)(7) one a representative from the Federal Emergency
38   Management South Carolina‟s Municipal Association;
39        (8) a representative from the South Carolina Association of
40   Counties;
41        (7)(9) one a representative from the Homebuilders
42   Association;


     [711]                           22
 1         (8)(10) one a representative from the Manufactured Housing
 2   Institute of South Carolina;
 3         (9)(11) one a representative from the State Fire Marshal‟s
 4   office;
 5         (10)(12) one a representative from the South Carolina
 6   Emergency Management Division;
 7         (11)(13) one a representative from the State Flood Mitigation
 8   Program;
 9         (12)(14) three two at-large members appointed by the
10   director; and
11         (13)(15) three two at-large members appointed by the
12   Governor;
13         (16) a general contractor;
14         (17) a representative from the South Carolina Association of
15   Realtors; and
16         (18) a structural engineer.
17      (B) Members shall serve for terms of two years and shall
18   receive no per diem, mileage, or subsistence. Vacancies must be
19   filled in the same manner as the original appointment.
20      (C) Within thirty days after its appointment, the advisory
21   committee shall meet at the call of the Director of Insurance. The
22   advisory committee shall elect from its members a chairman and a
23   secretary and shall adopt rules not inconsistent with this chapter.
24   Meetings may be called by the chairman on his own initiative and
25   must be called at the request of three or more members of the
26   advisory committee. All members shall must be notified by the
27   chairman of the time and place of the meeting at least seven days
28   in advance of the meeting. All meetings must be open to the
29   public. At least two-thirds vote of those members in attendance at
30   the meeting shall constitute an official decision of the advisory
31   committee. Implementation of this program and continued
32   existence of this program is subject to the availability of funding
33   through legislative appropriations or alternative funding sources.
34
35      Section 38-75-480. (A) There is established within the
36   Department of Insurance a loss mitigation grant program. Funds
37   may be appropriated to the grant program, and any funds so
38   appropriated shall must be used for the purpose of making grants
39   to local governments or for the study and development of
40   strategies for reducing loss of life and mitigating property losses
41   due to hurricane, flood, earthquake, and fire. Grants to local
42   governments shall must be for the following purposes:


     [711]                           23
 1        (1) implementation of building code enforcement programs
 2   including preliminary and ongoing training of inspectors;
 3        (2) conducting assessments to determine need for and
 4   desirability of making agreements to provide enforcement services
 5   pursuant to Section 6-9-60; and
 6        (3) providing technical assistance to and acting as an
 7   information resource for local governments in the development of
 8   proactive hazard mitigation strategies as they relate to reducing the
 9   loss of life and mitigating property losses due to natural hazards to
10   include hurricane, flood, earthquake, and fire.
11      (B) Funds may be appropriated for a particular grant only after
12   a majority affirmative vote on each grant by the advisory
13   committee.
14      (B)(C) The Department of Insurance may make application and
15   enter into contracts for and accept grants in aid from federal and
16   state government and private sources for the purposes of:
17        (1) implementation of building code enforcement programs
18   including preliminary and ongoing training of inspectors;
19        (2) conducting assessments to determine need for and
20   desirability of making agreements to provide enforcement services
21   pursuant to Section 6-9-60; and
22        (3) study and development of strategies for reducing loss of
23   life and mitigating property losses due to hurricane, flood,
24   earthquake, and fire; and
25        (4) any other purposes consistent with this article.
26   The department may promulgate the regulations necessary to
27   implement this section.
28
29      Section 38-75-485. (A) There is established within the
30   Department of Insurance, the South Carolina Hurricane Damage
31   Mitigation Program. The advisory council, established pursuant to
32   Section 38-75-470, shall provide advice and assistance to the
33   program administrator with regard to his administration of the
34   program.
35      (B) This section does not create an entitlement for property
36   owners or obligate the State in any way to fund the inspection or
37   retrofitting of residential property in this State. Implementation of
38   this program is subject to annual legislative appropriations.
39      (C) The program shall develop and implement a comprehensive
40   and coordinated approach for hurricane damage mitigation that
41   includes the following:
42         (1) The program administrator shall apply for financial
43   grants to be used to assist single-family, site-built,

     [711]                            24
 1   owner-occupied, residential property owners to retrofit their
 2   properties to make them less vulnerable to hurricane damage.
 3           (a) To be eligible for a grant, a residential property must:
 4               (i) have been granted a homestead exemption;
 5              (ii) be a dwelling with an insured value of three
 6   hundred thousand dollars or less; and
 7              (iii) have undergone an acceptable wind certification and
 8   hurricane mitigation inspection.
 9           (b) All grants must be matched on a dollar-for-dollar basis
10   for a total of ten thousand dollars for the mitigation project with
11   the State‟s contribution not to exceed five thousand dollars.
12           (c) The program must create a process in which mitigation
13   contractors agree to participate and seek reimbursement from the
14   State and homeowners selected from a list of participating
15   contractors. All mitigation must be based upon the securing of all
16   required local permits and inspections. Mitigation projects are
17   subject to random reinspection of up to at least ten percent of all
18   projects.
19           (d) Matching fund grants also must be made available to
20   local governments and nonprofit entities for projects that reduce
21   hurricane damage to single-family, site-built, owner-occupied,
22   residential property.
23           (e) Grants may be used for the following improvements:
24                   (i) roof deck attachment;
25                  (ii) secondary water barrier;
26                 (iii) roof covering;
27                 (iv) brace gable ends;
28                  (v) reinforce roof-to-wall connections;
29                 (vi) opening protection;
30                (vii) exterior doors, including garage doors;
31               (viii) tie downs;
32                 (ix) problems associated with weakened trusses, studs
33   and other structural components; and
34                  (x) any other mitigation techniques approved by the
35   advisory committee.
36           (f)(i) Low-income homeowners, who otherwise meet the
37   requirements of subitems (a) and (c) are eligible for a grant of up
38   to five thousand dollars and are not required to provide a matching
39   amount to receive the grant. These grants must be used to retrofit
40   single-family, site-built, owner-occupied, residential properties,
41   valued at one hundred fifty thousand dollars or less, in order to
42   make them less vulnerable to hurricane damage.


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 1              (ii) For purposes of this item, „low-income persons‟
 2   means one or more natural persons or a family, the total annual
 3   adjusted gross household income of which does not exceed eighty
 4   percent of the median annual adjusted gross income for households
 5   within the county in which the person or family resides, whichever
 6   is greater.
 7            (g)(i) There is created the „Manufactured Housing
 8   Mitigation and Enhancement Program‟. The program requires the
 9   mitigation of damage to or the enhancement of manufactured
10   houses in this State. The mitigation or enhancement includes, but
11   is not limited to, problems associated with weakened trusses, studs,
12   and other structural components caused by wood rot or termite
13   damage, site-built additions, or tie-down systems, and, also may
14   address other issues considered appropriate by the advisory
15   council. The program includes an education and outreach
16   component to ensure that owners of manufactured homes are
17   aware of the benefits of participation.
18              (ii) The program must be a grant program that ensures
19   that entire manufactured home communities and mobile home
20   parks may be improved wherever practicable. The grant funding
21   appropriated for this program must be distributed directly to the
22   Department of Insurance for the uses set forth under this
23   subsection.
24              (iii) Upon evidence of completion of the program,
25   insurers shall grant, on a pro rata basis, discounts, credits, or other
26   rate differentials or appropriate reductions in deductibles for the
27   properties of owners of manufactured homes on which fixtures or
28   construction techniques, that have been demonstrated to reduce the
29   amount of loss in a windstorm, have been installed or implemented
30   in accordance with building code standards. The discount on the
31   premium must be applied to subsequent renewal premium
32   amounts.
33              (iv) On or before January thirty-first of each year, the
34   advisory council shall provide a report of activities under this
35   subsection to the Governor, the President of the Senate, and the
36   Speaker of the House of Representatives. The report must set forth
37   the number of homes that have taken advantage of the program,
38   the types of enhancements and improvements made to the
39   manufactured homes and attachments to these homes, and whether
40   there has been an increase in availability of insurance products to
41   owners of manufactured homes.
42              (v) The advisory council shall develop the programs as
43   provided for in this subsection. The grant monies appropriated for

     [711]                             26
 1   the programs as provided for in this subsection must be distributed
 2   directly to the department to be used as provided for in this
 3   subsection.
 4               (vi) Grant monies provided to the department under this
 5   section are intended to supplement other funding sources of the
 6   mitigation program and may not supplant other funding sources of
 7   the mitigation program.
 8         (2) Multimedia public education, awareness, and advertising
 9   efforts designed to specifically address mitigation techniques must
10   be employed, as well as a component to support ongoing consumer
11   resources and referral services.
12         (3)(a) The department shall use its best efforts to obtain
13   grants or funds from the federal government to supplement the
14   financial resources of the program.           In addition to state
15   appropriations, if any, this program must be funded as follows:
16               (i) by the premium taxes due to this State by the South
17   Carolina Wind and Hail Underwriting Association; and
18               (ii) one percent of the premium taxes collected annually
19   by the Department of Insurance.
20            (b) These funds must be remitted to the department by
21   July first, to be used for the purposes provided for in this section.
22         (4) The director or his designee may promulgate regulations
23   or order the rules necessary to implement the provisions of this
24   article.
25      The department shall define by regulation the details of the
26   mitigation measures necessary to qualify for the grants or public
27   assistance described in this section.”
28
29   SECTION 11. Section 38-75-1140(C) of the 1976 Code, as
30   added by Act 290 of 2004, is amended to read:
31
32      “(C) The modeling organization shall submit a supplemental
33   report to the director or his designee following any substantially
34   material revision of the model if the revision is used by insurers in
35   determining rates for this State. The supplemental report must
36   specify the changes made to the catastrophe model, specify a list of
37   variables that are subject to insurer input, and contain one or more
38   statements by experts attesting to the continuing validity of the
39   model for use in predicting losses associated with natural hazard
40   catastrophes in this State.
41      The fees collected under this section shall be used solely to
42   offset expenses associated with the review of catastrophe models.”
43

     [711]                            27
 1   SECTION 12. Section 38-75-1140 of the 1976 Code, as added
 2   by Act 290 of 2004, is amended by adding at the end:
 3
 4      “(G) To recover the costs associated with the review and
 5   evaluation of catastrophe models, the director or his designee may
 6   impose a filing fee on:
 7        (1) all insurers who use catastrophe or other computer
 8   simulated models; and
 9        (2) modelers or modeling organizations that submit a model
10   to the department for its review, evaluation or approval. This fee
11   must be retained by the department to defray the costs of retaining
12   actuaries and other experts to evaluate such models.”
13
14   SECTION 13. Section 38-75-1160(A)(1)(b) and (d), as added by
15   Act 290 of 2004, is amended to read:
16
17     “(b) state the date not less than thirty sixty days after the date of
18   the mailing or delivering on which the cancellation or refusal to
19   renew becomes effective;
20
21      (d) inform the insured of his right to request in writing within
22   fifteen thirty days of the receipt of notice that the director review
23   the action of the insurer. The notice of cancellation or refusal to
24   renew must contain the following statement in bold print to inform
25   the insured of this right:
26   „IMPORTANT NOTICE: Within fifteen thirty days of receiving
27   this notice, you or your attorney may request in writing that the
28   director review this action to determine whether the insurer has
29   complied with South Carolina laws in canceling or nonrenewing
30   your policy. If this insurer has failed to comply with the
31   cancellation or nonrenewal laws, the director may require that your
32   policy be reinstated. However, the director is prohibited from
33   making underwriting judgments. If this insurer has complied with
34   the cancellation or nonrenewal laws, the director does not have the
35   authority to overturn this action.‟;”
36
37   SECTION 14. This act takes effect upon approval by the
38   Governor and is applicable to all taxable years beginning after
39   January 1, 2008.
40                             ----XX----
41



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