S 1263 Session 109 (1991-1992)
S 1263 General Bill, By Senate Banking and Insurance
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.
02/04/92 Senate Introduced, read first time, placed on calendar
without reference SJ-10
02/05/92 Senate Read second time SJ-13
02/05/92 Senate Ordered to third reading with notice of
amendments SJ-13
02/06/92 Senate Read third time and sent to House SJ-25
02/11/92 House Introduced and read first time HJ-7
02/11/92 House Referred to Committee on Labor, Commerce and
Industry HJ-7
03/04/92 House Committee report: Favorable Labor, Commerce and
Industry HJ-11
03/19/92 House Recommitted to Committee on Labor, Commerce and
Industry HJ-27
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
March 4, 1992
S. 1263
Introduced by Banking and Insurance Committee
S. Printed 3/4/92--H.
Read the first time February 11, 1992.
THE COMMITTEE ON LABOR, COMMERCE AND
INDUSTRY
To whom was referred a Bill (S. 1263), to amend Section 38-9-80,
Code of Laws of South Carolina, 1976, relating to certificates of deposit
or securities required of insurers, etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass:
THOMAS C. ALEXANDER, for Committee.
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.
Be it enacted by the General Assembly of the State of South Carolina:
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
the State of 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 the State of
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; and
(3) have a current market value of not less than ten thousand
dollars 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 may
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."
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 any other 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, duly authenticated
by the appropriate state official holding the deposit, then the
insurer is 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 any a state of the
United States, or of any a municipality or county
thereof, 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
as are approved by the commissioner."
SECTION 3. Section 38-33-130(A) of the 1976 Code is further
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 any part thereof of it after making a substitute
deposit of cash, securities, or any a combination of
these of equal amount and value. Any 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."
SECTION 4. This act takes effect upon approval by the Governor.
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