SCDOI Says Uninsured Motorist Fund Payments Should Be Considered ‘Other Income’

Auto insurers in South Carolina should soon start receiving checks from the state to help defray the cost of providing uninsured motorist coverage, but carriers must properly calculate and account for the money.

The state Department of Insurance announced in a bulletin last week that the distributions will be based on insurers’ 2024 share of the auto liability market in the state, as set by state law.

Uninsured motorist coverage is required for all drivers in South Carolina. Some drivers choose to pay a $600 fee to avoid purchasing the insurance. People who haven’t paid the fee are subject to fines if found guilty of driving without auto liability insurance. Both of those funding sources go into a fund, which is distributed once a year to auto insurers, according to the DOI and state law.

The funds must be distributed 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 the previous year, the statute explains. Premium income is considered gross premiums less cancellation and return premiums. The calculations are based on annual statements filed by 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 reads. “These funds must be accounted for as other income in accordance with the statutory accounting guidance from the National Association of Insurance Commissioners.”

More information is available via email to mmills@doi.sc.gov.

The department said the fund held almost $7.7 million as of Jan. 6. But only part of the fund will be distributed to carriers. Some 360 carriers qualified, and the average distribution this year is $5,985. Checks were sent Jan. 2, said Kamry Bell, communications and outreach coordinator for the DOI.

Few, if any, other states appear to offer a similar fund arrangement, although the District of Columbia maintains a district-run program that provides funds for people injured by uninsured drivers.

The share of drivers that are uninsured has risen nationwide, from about 12% in 2021 to 15.4% in 2023, the Insurance Information Institute reported. South Carolina ranks among the states with the least amount of uninsured drivers, with 10.3% in 2023. Mississippi ranked the highest, with more than 28% uninsured that year.

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