Recoupment and Regulation 69-63
To: Private Passenger Automobile Insurers
From: Ernst N. Csiszar
Director
Subject: Recoupment and Regulation 69-63
Date: September 18, 2001
Regulation 69-63 has been enacted and this affects the Property and Casualty Industry. Regulation 69-63 was enacted pursuant to Act 154 of 1997. This bulletin is intended to bring the provisions of that regulation to the attention of insurers in South Carolina.
The contact person for this Bulletin is Dean Kruger, Property and Casualty Actuary, S.C. Department of Insurance. P.O. Box 100105, Columbia, SC 29202, Phone 803-737-6230, Fax 803-737-6233, E-mail dkruger@doi.sc.gov.
The regulation provides the following:
"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."
The Department has available a listing of all drivers having such points. An insurer may obtain such a listing by sending to Ms. Hoffman a fax indicating the insurer, the contact person, the address and phone number and the E-mail address the information should be sent to. The Department intends to E-mail the listing to insurers in a text format.
Once the information is received, the Department will send out the file and the file layout.
Questions and Answers
The following consists of questions and answers that may occur during this process. If additional questions are pertinent, please send them to the Department and another bulletin will be issued.
Q1. Does the elimination of recoupment for "good drivers" occur midterm on 3/1/02, or at the next renewal?
A. At the next renewal.
Q2. Does recoupment follow the driver, or apply to all vehicles on the policy if a driver was pointed on 3/1/99?
A. It follows the driver. If any driver of the vehicle, principal or occasional, is included on the CD, recoupment applies.
Q3. Are accidents charged under the old Merit Rating Plan considered for recoupment effective 3/1/02?
A. No.
Q4. Are drivers charged a point under the old Merit Rating Plan solely because they were an inexperienced principal operator considered for recoupment effective 3/1/02?
Q5. Are operators with a driver's license from a state other than South Carolina charged recoupment effective 3/1/02?
A. No. There is no way for DMV to research these records and include them on the CD, and companies will generally not order more than a 3 year MVR.
Q6. Is a driver excluded from a policy, in accordance with South Carolina law, charged recoupment?
Q7. How will new carriers entering the SC automobile market be made aware of the necessity of charging recoupment and the existence of the DMV CD?
A. The Department of Insurance will so advise the company at the time the company files its rates, rules and forms.
Q8. If an insured disagrees with being charged recoupment, who handles appeals?
A. The company initially handles, the insured can appeal to the Department of Insurance.
Q9. Will the DMV include on the CD drivers who may no longer be licensed in SC?
A. The CD will include all driver's license numbers subject to recoupment as per the DMV's records for 3/2/96 – 3/1/99 (inclusive), and will include those licenses with expired credentials.
Q10. Does the Fair Credit Reporting Act (FCRA) apply inasmuch as information is being received from a third party?
A. The information is to be treated the same as an MVR. Further information will be provided when the data is sent out.
Q11. If a driver is added midterm, is recoupment also added midterm?
A. Yes.
Q12. What information will be included on the CD?
A. It will include the driver’s license number, name and date of birth for individuals subject to recoupment.
Q13. Will drivers with out-of-state driver's licenses who are convicted of moving traffic convictions in South Carolina be included on the CD?
A. Yes, under the 6,000,000 series license numbers that DMV assigns for record keeping purposes.
Q14. Will deceased drivers be removed from the CD?
A. DMV has no way of knowing a driver is deceased unless relatives notify the Department and the record is properly notated. DMV will not report drivers that they know are deceased.
Q15. Will a driver who had a permit and convictions be included on the CD?
Q16. Is recoupment to be shown on the Dec Page or other documents separately from premiums?
Q17. When an agent is quoting a new applicant, how will he or she know to charge recoupment?
A. A copy of the CD will be made available to agents and brokers.
Q18. Are motorcycles and named nonowner policies subject to recoupment?
Q19. Can the information provided on the CD be provided by electronic file?
A. Yes, the Department of Insurance expects to be able to email the data to companies.
Q20. If a policy is canceled pro-rata, short-rate, or flat, how is recoupment treated?
A. The same as premium.
Q21. If there are multiple drivers of one vehicle who were pointed on 3/1/99, is 10 % recoupment charged, or is 10% charged for each pointed driver of the vehicle?
A. Only 10% recoupment applies regardless how many drivers of the vehicle under consideration were pointed.
Q22. Does recoupment apply to both private passenger and small commercial risks on 3/1/02, or just to private passenger risks?
A. Under the law, recoupment applies to both lines of business. However, in July, 2001, commercial lines recoupment was reduced to 0%, so it will apply only to private passenger business 3/1/02 and later.
Q23. Is there a charge for the driver data on the CD?
