S*0589(Rat #0196, Act #0129 of 1989)  General Bill, By 
Senate Banking and Insurance
 A Bill to amend Sections 38-79-230, 38-81-340, and 38-83-130, Code of Laws of
 South Carolina, 1976, relating to insurer participation in the expenses,
 profits, and losses of the joint underwriting associations for the writing of
 professional liability insurance, medical malpractice liability insurance, and
 legal professional liability insurance, so as to eliminate the capping
 provisions on participation by an individual insurer at one percent of its
 surplus to policyholders and to provide for deferral of payments of
 assessments under certain conditions.

   03/29/89  Senate Introduced, read first time, placed on calendar
                     without reference SJ-9
   03/30/89  Senate Read second time SJ-26
   03/30/89  Senate Unanimous consent for third reading on next
                     legislative day SJ-26
   03/31/89  Senate Read third time and sent to House SJ-15
   04/04/89  House  Introduced and read first time HJ-19
   04/04/89  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-20
   05/17/89  House  Committee report: Favorable Labor, Commerce and
                     Industry HJ-42
   05/31/89  House  Read second time HJ-54
   05/31/89  House  Unanimous consent for third reading on next
                     legislative day HJ-55
   06/01/89  House  Read third time and enrolled HJ-32
   06/02/89         Ratified R 196
   06/08/89         Signed By Governor
   06/08/89         Effective date 06/08/89
   06/08/89         Act No. 129
   06/15/89         Copies available

AN ACT TO AMEND SECTIONS 38-79-230, 38-81-340, AND 38-83-130, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURER PARTICIPATION IN THE EXPENSES, PROFITS, AND LOSSES OF THE JOINT UNDERWRITING ASSOCIATIONS FOR THE WRITING OF PROFESSIONAL LIABILITY INSURANCE, MEDICAL MALPRACTICE LIABILITY INSURANCE, AND LEGAL PROFESSIONAL LIABILITY INSURANCE, SO AS TO ELIMINATE THE CAPPING PROVISIONS ON PARTICIPATION BY AN INDIVIDUAL INSURER AT ONE PERCENT OF ITS SURPLUS TO POLICYHOLDERS AND TO PROVIDE FOR DEFERRAL OF PAYMENTS OF ASSESSMENTS UNDER CERTAIN CONDITIONS.

Be it enacted by the General Assembly of the State of South Carolina:

Participation by medical malpractice insurers in Joint Underwriting Associations

SECTION 1. Section 38-79-230 of the 1976 Code is amended to read:

"Section 38-79-230. All insurers which are members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premiums of each member (excluding that portion of premiums attributable to the operation of the association) written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."

Participation by legal malpractice insurers in Joint Underwriting Associations

SECTION 2. Section 38-81-340 of the 1976 Code is amended to read:

"Section 38-81-340. All insurers which are members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."

Participation by professional liability insurers in Joint Underwriting Associations

SECTION 3. Section 38-83-130 of the 1976 Code is amended to read:

"Section 38-83-130. All insurers which are members of the association shall participate in its writings, expenses, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."

Time effective

SECTION 4. This act takes effect upon approval by the Governor.