SCDOI Declares Uninsured Motorist Fund Payments as ‘Other Income’

Auto insurers in South Carolina are set to receive checks from the state aimed at alleviating the costs associated with providing uninsured motorist coverage. However, it is crucial for these carriers to accurately calculate and account for the funds they receive.

Recently, the South Carolina Department of Insurance issued a bulletin detailing that these distributions will be determined based on each insurer’s share of the auto liability market for 2024, as mandated by state law.

In South Carolina, uninsured motorist coverage is mandatory for all drivers. Some individuals opt to pay a $600 fee to bypass purchasing this insurance. Those who fail to pay the fee may face fines if caught driving without auto liability insurance. Both funding sources contribute to a fund that is distributed annually to auto insurers, as outlined by the Department of Insurance and state regulations.

According to the statute, the funds must be allocated in proportion to each insurer’s premium income from auto liability coverage compared to the total premium income for auto liability coverage written in the state during the previous year. Premium income is defined as gross premiums minus cancellation and return premiums, with calculations based on annual statements submitted by the carriers.

“The purpose of the Fund is to reduce the cost of uninsured motorist insurance coverage. Therefore, the method used to account for these funds must be consistent with the purpose set forth in S.C. Code Ann. § 38-77-154,” the DOI bulletin states. “These funds must be accounted for as other income in accordance with the statutory accounting guidance from the National Association of Insurance Commissioners.”

For further inquiries, individuals can reach out via email at mmills@doi.sc.gov.

At this time, the department has not disclosed the total amount in the fund or the average payment that carriers can expect to receive. While few other states have a similar fund arrangement, the District of Columbia operates a district-run program that provides financial assistance to individuals injured by uninsured drivers.

Nationwide, the percentage of uninsured drivers has increased, rising from approximately 12% in 2021 to 15.4% in 2023, according to the Insurance Information Institute. South Carolina, however, ranks among the states with the lowest rates of uninsured drivers, standing at 10.3% in 2023. In contrast, Mississippi has the highest rate, with over 28% of drivers uninsured that year.

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Profit Loss

Auto insurers in South Carolina are set to receive checks from the state aimed at alleviating the costs associated with providing uninsured motorist coverage. However, it is crucial for these carriers to accurately calculate and account for the funds they receive.

Recently, the South Carolina Department of Insurance issued a bulletin detailing that these distributions will be determined based on each insurer’s share of the auto liability market for 2024, as mandated by state law.

In South Carolina, uninsured motorist coverage is mandatory for all drivers. Some individuals opt to pay a $600 fee to bypass purchasing this insurance. Those who fail to pay the fee may face fines if caught driving without auto liability insurance. Both funding sources contribute to a fund that is distributed annually to auto insurers, as outlined by the Department of Insurance and state regulations.

According to the statute, the funds must be allocated in proportion to each insurer’s premium income from auto liability coverage compared to the total premium income for auto liability coverage written in the state during the previous year. Premium income is defined as gross premiums minus cancellation and return premiums, with calculations based on annual statements submitted by the carriers.

“The purpose of the Fund is to reduce the cost of uninsured motorist insurance coverage. Therefore, the method used to account for these funds must be consistent with the purpose set forth in S.C. Code Ann. § 38-77-154,” the DOI bulletin states. “These funds must be accounted for as other income in accordance with the statutory accounting guidance from the National Association of Insurance Commissioners.”

For further inquiries, individuals can reach out via email at mmills@doi.sc.gov.

At this time, the department has not disclosed the total amount in the fund or the average payment that carriers can expect to receive. While few other states have a similar fund arrangement, the District of Columbia operates a district-run program that provides financial assistance to individuals injured by uninsured drivers.

Nationwide, the percentage of uninsured drivers has increased, rising from approximately 12% in 2021 to 15.4% in 2023, according to the Insurance Information Institute. South Carolina, however, ranks among the states with the lowest rates of uninsured drivers, standing at 10.3% in 2023. In contrast, Mississippi has the highest rate, with over 28% of drivers uninsured that year.

Topics
Profit Loss