H*4141 Session 109 (1991-1992)
H*4141(Rat #0297, Act #0280 of 1992) General Bill, By J.J. Bailey,
R.S. Corning, J.T. McElveen, Quinn and Scott
A Bill to amend Section 38-9-80, Code of Laws of South Carolina, 1976,
relating to certificates of deposit or securities required of insurers, so as
to authorize the Insurance Commissioner to require deposits in excess of the
limits in the Section; to amend Section 38-9-100, relating to conditions under
which deposits are not necessary, so as to authorize the Commissioner to
require a deposit of qualified insurers instead of requiring the insurer to be
relieved of making the deposit; and to amend Section 38-33-130, relating to
security deposits and other requirements for health maintenance organizations,
so as to require the organizations to satisfy the requirements applicable to
an insurer for the return of deposited securities.
01/14/92 House Introduced and read first time HJ-193
01/14/92 House Referred to Committee on Labor, Commerce and
Industry HJ-194
02/12/92 House Committee report: Favorable Labor, Commerce and
Industry HJ-5
02/19/92 House Read second time HJ-21
02/20/92 House Read third time and sent to Senate HJ-12
02/25/92 Senate Introduced, read first time, placed on calendar
without reference SJ-14
02/26/92 Senate Read second time SJ-9
02/26/92 Senate Unanimous consent for third reading on next
legislative day SJ-9
02/27/92 Senate Read third time and enrolled SJ-14
03/04/92 Ratified R 297
03/10/92 Signed By Governor
03/10/92 Effective date 03/10/92
03/10/92 Act No. 280
04/07/92 Copies available
(A280, R297, H4141)
AN ACT TO AMEND SECTION 38-9-80, CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO
CERTIFICATES OF DEPOSIT OR SECURITIES REQUIRED
OF INSURERS, SO AS TO AUTHORIZE THE INSURANCE
COMMISSIONER TO REQUIRE DEPOSITS IN EXCESS OF
THE LIMITS IN THE SECTION; TO AMEND SECTION
38-9-100, RELATING TO CONDITIONS UNDER WHICH
DEPOSITS ARE NOT NECESSARY, SO AS TO AUTHORIZE
THE COMMISSIONER TO REQUIRE A DEPOSIT OF
QUALIFIED INSURERS INSTEAD OF REQUIRING THE
INSURER TO BE RELIEVED OF MAKING THE DEPOSIT;
AND TO AMEND SECTION 38-33-130, RELATING TO
SECURITY DEPOSITS AND OTHER REQUIREMENTS FOR
HEALTH MAINTENANCE ORGANIZATIONS, SO AS TO
REQUIRE THE ORGANIZATIONS TO SATISFY THE
REQUIREMENTS APPLICABLE TO AN INSURER FOR THE
RETURN OF DEPOSITED SECURITIES.
Be it enacted by the General Assembly of the State of South
Carolina:
Requirement of excess deposits
SECTION 1. Section 38-9-80 of the 1976 Code is amended to
read:
"Section 38-9-80. (A) The commissioner shall
require every insurer, other than fraternal benefit societies,
transacting, or desiring to transact, business in this State to deposit
with him certificates of deposit of building and loan associations
chartered by South Carolina or federal savings and loan
associations located within the State in which deposits are
guaranteed by the Federal Savings and Loan Insurance
Corporation, not to exceed the amount covered by insurance, or of
national banks located within the State or banks chartered by
South Carolina in which deposits are guaranteed by the Federal
Deposit Insurance Corporation, not to exceed the amount covered
by insurance; or other securities which:
(1) qualify as legal investments under the laws of this
State for public sinking funds;
(2) are not in default as to principal or interest;
(3) have a current market value of not less than ten
thousand nor more than two hundred thousand dollars, as
determined by the commissioner pursuant to the standards
promulgated by him.
(B) The commissioner shall prescribe the amount, within the
limits of this section, of the securities required, and he
subsequently may increase or decrease the amount required.
(C) Notwithstanding the limitations in this section as to the
amount of deposits required, the commissioner may require an
insurer to deposit an amount of securities in excess of the limits
based on his consideration of the following:
(1) adverse findings reported in financial condition and
market conduct examination reports;
(2) the National Association of Insurance Commissioners
Insurance Regulatory Information System and its related
reports;
(3) the ratios of commission expense, general insurance
expense, policy benefits, and reserve increases as to annual
premium and net investment income which could lead to a
significant adjustment to an insurer's capital and surplus;
(4) whether the insurer's asset portfolio when viewed in
light of current economic conditions is not of sufficient value,
liquidity, or diversity to assure the insurer's ability to meet its
outstanding obligations as they mature;
(5) whether an insurer had a significant operating loss in
the last twelve months or a shorter time;
(6) whether an affiliate, subsidiary, or a reinsurer is
insolvent, threatened with insolvency, or delinquent in payment of
its monetary or other obligations;
(7) contingent liabilities, pledges, or guaranties which
individually or collectively involve a total amount which in the
opinion of the commissioner may affect the solvency of the
insurer;
(8) whether the management of an insurer, including
officers, directors, or other persons who directly or indirectly
controls the operation of the insurer, fails to possess and
demonstrate the competence, fitness, and reputation necessary to
serve the insurer in that position;
(9) whether management has failed to respond to
inquiries relative to the condition of the insurer or has furnished
false and misleading information concerning an inquiry;
(10) whether the insurer has grown so rapidly and to an
extent that it lacks adequate financial and administrative capacity
to meet its obligations in a timely manner;
(11) whether the insurer has experienced or will experience
in the foreseeable future cash flow or liquidity
problems."
Deposit required of qualified insurers
SECTION 2. Section 38-9-100 of the 1976 Code is amended to
read:
"Section 38-9-100. If a qualified insurer deposits with
an officer or official body of another state for the protection of all
its policyholders, or all its policyholders and creditors, acceptable
securities not in default as to principal or interest and of a current
market value of not less than one million dollars, and delivers to
the commissioner a certificate to that effect, authenticated by the
appropriate state official holding the deposit, the insurer may be
relieved of making the deposit required by Section 38-9-80. For
the purpose of this section a `qualified insurer' is a licensed stock
insurer possessed of at least ten million dollars of capital and
surplus or a licensed mutual, fraternal, or reciprocal insurer
possessed of at least ten million dollars of surplus, according to its
most recent annual statement filed with the commissioner and, in
the discretion of the commissioner, may include eligible surplus
lines insurers which meet these capital and surplus requirements.
For the purpose of this section, `acceptable securities' means
bonds of the United States or of a state of the United States, or of
a municipality or county, upon which is pledged the full faith and
credit of the appropriate political division, or bonds or notes
secured by mortgages or deeds of trust on otherwise
unencumbered real estate of a market value of not less than
double the amount loaned, or other securities approved by the
commissioner."
Health maintenance organizations to satisfy insurer
requirements for return of deposited securities
SECTION 3. Section 38-33-130(A) of the 1976 Code is
amended to read:
"(A) Each health maintenance organization shall deposit
and maintain with the commissioner cash or securities which
qualify as legal investments under the laws of this State for public
sinking funds in the amount of three hundred thousand dollars.
The commissioner may require a health maintenance organization
to make deposits in excess of the amount specified in this section
if in his opinion the additional deposits are necessary for the
protection of enrollees and the public. All income from deposits
must belong to the depositing organization and must be paid to it
as it becomes available. A health maintenance organization that
has made a security deposit may withdraw that deposit or part of it
after making a substitute deposit of cash, securities, or a
combination of these of equal amount and value. Securities must
be approved by the commissioner before being substituted. The
return of cash or securities deposited with the commissioner by a
health maintenance organization pursuant to this section is
governed by Section 38-9-150."
Time effective
SECTION 4. This act takes effect upon approval by the
Governor.
Approved the 10th day of March, 1992. |