Bulletin 2019-04 - Notice of Tentative 2020 Credit Property Insurance Rates and Opportunity to Request a Hearing

[LOGO] South Carolina Department of Insurance Capitol Center 1201 Main Street, Suite 1000 Columbia, South Carolina 29201 HENRY McMASTER Governor RAYMOND G. FARMER Director Mailing Address: P.O. Box 100105, Columbia, S.C. 29202-3105 Telephone: (803) 737-6160 # BULLETIN NUMBER 2019-04 TO: Insurers Writing Credit Property Insurance in South Carolina in Conjunction with Consumer Credit Transactions subject to 1966 S.C. Act No. 988, Consumer Finance Law FROM: Raymond G. Farmer Director Raymond G. Farmer SUBJECT: Notice of Tentative 2020 Credit Property Insurance Rates and Opportunity to Request a Hearing DATE: July 18, 2019 # I. NOTICE OF TENTATIVE CREDIT PROPERTY INSURANCE RATES Regulation 69-11.1, Regulation of Credit Insurance, requires the South Carolina Department of Insurance to promulgate tentative rates for credit property insurance by August 1 of each year. The tentative rates are those the Department believes may reasonably be expected to produce a loss ratio of not less than fifty percent (50%) in the following calendar year. This bulletin constitutes official notice of the tentative rates for 2020. The Department has reviewed past loss experience for credit property insurance written in conjunction with consumer credit transactions subject to the Consumer Finance Law. The aggregate 2018 loss ratio at prima facie rates is twenty-nine and two tenths percent (29.2%). The aggregate 2017 loss ratio at prima facie rates is twenty-six and nine tenths percent (26.9%). The aggregate 2016 loss ratio at prima facie rates was forty-one and three tenths percent (41.3%). It appears that previous rate decreases have begun to increase the aggregate loss ratio. Since there is a statutory minimum premium of $3, we will continue to monitor the results to be assured that further reductions in rates will effectively increase the aggregate loss ratio. The average loss ratios from 2007 to 2018 by coverage are as follows: | Coverage | Loss Ratio | | --- | --- | | Automobile, Fire and Theft – Single Interest | 42.4 percent | | Automobile Collision – Single Interest | 42.4 percent | | Household Goods – Single Interest | 92.2 percent | | Household Goods – Dual Interest | 6.1 percent | We propose to hold the rate for Household Goods – Single Interest coverage at the 2019 level and to decrease the other rates ten percent from their current level. The tentative rates expressed as a percentage of the total amount of the loan are as follows: | Coverage | Tentative Rate | | --- | --- | | Automobile, Fire and Theft – Single Interest | 0.84 percent | | Automobile Collision – Single Interest | 3.13 percent | | Household Goods – Single Interest | 5.81 percent | | Household Goods – Dual Interest | 0.92 percent | Based on premiums earned in 2018, the overall impact resulting from these tentative rates would be a decrease of nine and seven tenths percent (-9.7%). ## II. OPPORTUNITY FOR A HEARING Regulation 69-11.1.C.(4) provides that “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.” Accordingly, all requests for a hearing must be submitted to the Department in writing on or before August 15, 2019. Please direct any requests for a hearing to the attention of: Steve DuBois South Carolina Department of Insurance Post Office Box 100105 Columbia, South Carolina 29202-3105 All requests must include documentation supporting your position that the tentative rates for credit property insurance need to be changed. After any requested hearings have been held, the final rate or an affirmation of the tentative rate shall be sent to all companies before October 1, 2019. ### III. QUESTIONS Any questions or concerns about this Bulletin should be submitted in writing to the attention of: Will Davis, FCAS, MAAA South Carolina Department of Insurance 1201 Main Street, Suite 1000 Columbia, South Carolina 29201 Facsimile: (803) 737-6145 E-mail: WDavis@doi.sc.gov Bulletins are the method by which the Director of Insurance formally communicates with persons and entities regulated by the Department. Bulletins are departmental interpretations of South Carolina insurance laws and regulations and provide guidance on the Department's enforcement approach. Bulletins do not provide legal advice. Readers should consult applicable statutes and regulations or contact an attorney for legal advice or for additional information on the impact of that legislation on their specific situation.