SC’s House and Senate reach compromise on lawsuit and insurance overhaul

COLUMBIA — After weeks of negotiations, House and Senate leaders reached a compromise Tuesday on legislation that aims to drive down insurance premiums that have skyrocketed for businesses across South Carolina.

The agreement, which passed the House on an unrecorded voice vote, came with two days left in the legislative session.

The Senate will likely take a vote Wednesday.

The compromise gives bars and restaurants options, as well as requirements, for reducing their minimum insurance coverage for serving alcohol.

It also reforms state rules for personal injury lawsuits that allows businesses to be held 100% financially responsible in a lawsuit even if they're barely at fault.

The agreement allows leaders in both chambers to check off a majority priority of the session.

However, it goes further than the House intended. In March, House GOP leaders insisted they wanted to focus this year on helping restaurant owners.

And it's not as broad as the bill that passed the Senate, which dealt with a host of business insurance and litigation issues, including medical malpractice. That piece is gone, as is a proposal to double bare minimums in auto insurance coverage.

"At the end of the day, this is about not holding our bars and restaurants hostage," House Judiciary Chairman Weston Newton told the chamber Tuesday in advocating for passage.

Lowering the minimum

A 2017 state law has gotten a lot of the blame.

It required bars and restaurants that serve alcohol after 5 p.m. to carry insurance policies covering at least $1 million in damages in case a customer is overserved and causes an accident — what's called liquor liability. That caused premiums to rise and insurers to leave the state. As the insurance options dwindled, the cost of policies kept rising.

Business owners have told legislators they struggle to stay open. Others said insurance rates resulted in their decision not to expand or open at all.

The compromise would leave the $1 million minimum in state law but allow policies to be far lower.

For example, it would require all businesses that sell alcohol by the drink to have their servers complete alcohol training, which would lower the minimum policy by $100,000. For bars that stay open between midnight and 4 a.m., they must use scanners to verify that customers' IDs are legit, which would shave another $100,000.

But closing before midnight, an option, would reduce coverage by $250,000.

Restaurants that make most of their money from food instead of alcohol could also get a break. If less than 40% of sales come from alcohol, policies can lower by $100,000.

By broadening the House bill to lawsuits, Newton said, the compromise addresses another reason for restaurants' hike in premiums: rules known as "joint and several liability." That refers to the possibility of businesses being required to pay the full amount of a court-ordered award even if they're just 1% responsible for whatever happened.

Business owners said it forces them to pay — and perhaps puts them out of business — for things that aren't their fault.

Personal injury lawyers, including those in the Legislature, have argued the law need to ensure victims can be fully compensated for their loss following a tragedy.

Under the compromise, businesses can be held fully responsible if they're more than 50% at fault. If no single business or person meets that threshold, fault will be divided proportionately between all those involved.

The president of the South Carolina Manufacturers Alliance praised the House and urged the Senate to adopt the compromise. That would send it to Gov. Henry McMaster, who has urged legislators to send him a solution to an unfair legal framework that's crippling businesses.

"We thank the SC House today for moving manufacturers — and the state's business community — another step closer toward achieving the bold goal we set when session began: meaningful reform to our civil litigation system," alliance president and CEO Sara Hazzard said in the written statement.

She said the compromise is "stronger than current law, making the business landscape more predictable, fair and good for South Carolina families, businesses and consumers."

No guarantees

But some legislators said they remain concerned that there's no guarantee the agreement will lead to lower insurance rates.

Rep. Justin Bamberg noted that as South Carolina businesses struggle, insurance companies continue to thrive.

He reiterated a consistent complaint made in both chambers about a lack of testimony from the insurance industry.

"You know who we didn't hear from? Anybody high up in the insurance industry," the Bamberg Democrat said.

"Wouldn't show up, wouldn't talk to anybody, wouldn't give the secret sauce because it's a 'trade secret' about how they even label our state. How they label people at risk, how they determine premiums," he said.

Up next

Senate Majority Leader Shane Massey, who led the fight in the Senate for a broader bill, said he's expecting plenty of questions about the compromise when it comes up.

"I've told the folks in the House, I can't guarantee you that we're going to be able to concur with that," Massey, R-Edgefield, told reporters Tuesday. "I'll tell you that I support it and that I will go in and I will advocate for it, and I'm hopeful that we'll be able to prevail.

"But I don't expect it's going to be easy," he said.