H 3237 Session 109 (1991-1992)
H 3237 General Bill, By Boan and J.T. McElveen
A Bill to amend Section 38-9-10, Code of Laws of South Carolina, 1976,
relating to capital and surplus of stock insurers, so as to increase the
required amounts, authorize the Chief Insurance Commissioner to require
additional capital and surplus, and provide for the initial capital and
surplus; to amend Section 38-9-20, relating to surplus of mutual insurers, so
as to increase the required amounts; to amend Section 38-9-30, relating to
capital and surplus of insurers licensed on July 1, 1988, so as to change the
date to July 1, 1991, change related dates determining application of the
Section, and provide requirements for an insurer which is the subject of a
change of control; and to amend Section 38-33-100, relating to certificates of
authority for health maintenance organizations, so as to increase the net
worth requirements, provide requirements for a stock health maintenance
organization, and provide for organizations in compliance with the law on
December 31, 1990.
01/17/91 House Introduced and read first time HJ-11
01/17/91 House Referred to Committee on Labor, Commerce and
Industry HJ-11
02/12/91 House Tabled in committee
A BILL
TO AMEND SECTION 38-9-10, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO CAPITAL AND SURPLUS OF
STOCK INSURERS, SO AS TO INCREASE THE REQUIRED
AMOUNTS, AUTHORIZE THE CHIEF INSURANCE
COMMISSIONER TO REQUIRE ADDITIONAL CAPITAL AND
SURPLUS, AND PROVIDE FOR THE INITIAL CAPITAL AND
SURPLUS; TO AMEND SECTION 38-9-20, RELATING TO
SURPLUS OF MUTUAL INSURERS, SO AS TO INCREASE THE
REQUIRED AMOUNTS; TO AMEND SECTION 38-9-30,
RELATING TO CAPITAL AND SURPLUS OF INSURERS
LICENSED ON JULY 1, 1988, SO AS TO CHANGE THE DATE TO
JULY 1, 1991, CHANGE RELATED DATES DETERMINING
APPLICATION OF THE SECTION, AND PROVIDE
REQUIREMENTS FOR AN INSURER WHICH IS THE SUBJECT OF
A CHANGE OF CONTROL; AND TO AMEND SECTION 38-33-100,
RELATING TO CERTIFICATES OF AUTHORITY FOR HEALTH
MAINTENANCE ORGANIZATIONS, SO AS TO INCREASE THE
NET WORTH REQUIREMENTS, PROVIDE REQUIREMENTS FOR
A STOCK HEALTH MAINTENANCE ORGANIZATION, AND
PROVIDE FOR ORGANIZATIONS IN COMPLIANCE WITH THE
LAW ON DECEMBER 31, 1990.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-9-10 of the 1976 Code is amended to read:
"Section 38-9-10. (a)(A)(1) Before
licensing a stock insurer, the commissioner shall require the insurer to
be possessed of capital which must be maintained at all times and
surplus, twenty-five percent of which must be maintained at all times, in
amounts not less than the following:
If licensed to write: Capital Surplus
(a) life: $300,000 $300,000
600,000 600,000
(b) accident and 300,000 300,000
health: 600,000 600,000
(c) life, accident, 600,000 600,000
and health: 1,200,000 1,200,000
(d) property: 600,000 600,000
1,200,000 1,200.000
(e) casualty: 600,000 600,000
1,200,000 1,200,000
(f) surety: 600,000 600,000
1,200,000 1,200,000
(g) marine: 600,000 600,000
1,200,000 1,200,000
(h) title: 300,000 300,000
600,000 600,000
(i) multiple lines: 750,000 750,000
1,500,000 1,500,000
(2) The commissioner may require additional capital and
surplus based on the type or nature of business transacted, and the initial
capital and surplus of the insurer must consist of cash or marketable
securities which are eligible investments under Section 38-11-40.
(b)(B) If at any time the surplus
of a stock insurer is less than twenty-five percent of the surplus initially
required, as set forth in subsection (a)(A), the insurer is
considered delinquent, and the commission may begin
delinquency proceedings may be commenced by the Commissioner
as provided by Chapter 27 of this title.
(c)(C) If at any time the capital of a stock
insurer is impaired to any extent, the insurer is
delinquent, and the commissioner shall commence
begin delinquency proceedings."
SECTION 2. Section 38-9-20 of the 1976 Code is amended to read:
"Section 38-9-20. (a)(A)(1) Before licensing
a mutual insurer, the commissioner shall require the insurer to be
possessed of surplus of not less than the following amounts:
Surplus which must be
possessed at time
If licensed to write: of licensing
(a) life: $ 600,000 1,200,000
(b) accident and
health: 600,000 1,200,000
(c) life, accident,
and health: 1,200,000 2,400,000
(d) property: 1,200,000 2,400,000
(e) casualty: 1,200,000 2,400,000
(f) surety: 1,200,000 2,400,000
(g) marine: 1,200,000 2,400,000
(h) title: 600,000 1,200,000
(i) multiple lines: 1,500,000 3,000,000
(2) The commissioner may require additional surplus based
on the type or nature of business transacted, and the initial capital and
surplus of the insurer must consist of cash or marketable securities
which are eligible investments under Section 38-11-40.
(b)(B) If at any time the surplus of a
licensed mutual insurer is less than the sum of the capital and minimum
surplus required to be maintained by a stock insurer licensed to write the
same kind or kinds of business, the mutual insurer is considered
delinquent, and the commissioner may begin
delinquency proceedings may be commenced by the Commissioner
as provided by Chapter 27 of this title.
(c)(C) If at any time the surplus of a licensed mutual insurer is
less than the minimum capital required to be possessed by a stock
insurer licensed to write the same kind or kinds of business, the mutual
insurer is delinquent, and the commissioner shall
commence begin delinquency proceedings."
SECTION 3. Section 38-9-30 of the 1976 Code is amended to
read:
"Section 38-9-30. Sections 38-9-10 and 38-9-20 do
not apply to an insurer that is licensed to do business in this State on
July 1, 1988 1991, if the insurer continues to remain
licensed in this State and continues to maintain at least the following
minimum capital and surplus amounts if a stock insurer, or
minimum surplus if a mutual insurer:
(a)(1) An insurer, if possessed of capital and surplus amounts on December
31, 1987 1990, that were in compliance with the law at
that time, but which are less than the minimums required to be
maintained by Section 38-9-10, must shall maintain not
less than the amount of capital stated in its 1987 1990
annual statement and, in addition, must maintain surplus of not
less than twenty-five percent of that amount of capital. If at any
time the surplus of the insurer is reduced to less than twenty-five
percent of this minimum amount of required capital, the insurer is
considered delinquent, and the commissioner may begin delinquency
proceedings as provided by Chapter 27 of this title. If at any
time the minimum capital required to be maintained by this section
by the insurer becomes impaired to any extent, the insurer is
delinquent, and the commissioner shall begin delinquency proceedings.
If at any time the capital is increased to an amount greater than
the amount possessed on December 31, 1987 1990, the
amount of surplus that must be maintained after the increase is
twenty-five percent of that greater amount of capital, and if this amount
is not maintained, the commissioner may begin delinquency proceedings
as provided by Chapter 27 of this title. This increased amount of
capital must not be reduced to an amount less than the amount required
by Section 38-9-10, and if it becomes reduced or impaired to any
extent, the insurer is delinquent, and the commissioner shall begin
delinquency proceedings.
(b)(2) A mutual insurer,
if possessed of surplus on December 31, 1987 1990,
that was in compliance with the law at that time but is less than the
minimum required to be maintained by Section 38-9-20, shall maintain
not less than the amount of surplus stated in its 1987
1990 annual statement. If at any time the surplus of the
insurer is reduced to less than eighty percent of the amount shown in its
1987 1990 annual statement, the insurer is considered
delinquent, and the commissioner may begin delinquency proceedings
as provided by Chapter 27 of this title. If at any time the
surplus of the insurer is increased to an amount greater than the amount
possessed on December 31, 1987 1990, eighty percent
of that greater amount of surplus, or the minimum amount required to be
maintained by Section 38-9-20, whichever amount is the lesser, must be
maintained after the increase, and if it is not maintained, the insurer is
considered delinquent, and the commissioner may begin delinquency
proceedings as provided by Chapter 27 of this title.
(3) A domestic stock insurer possessed of the minimum capital and
surplus required by item (1) or a domestic mutual insurer possessed of
the minimum surplus required by item (2), which is the subject of a
change of control defined in Chapter 21 of this title, the Insurance
Holding Company Regulatory Act, immediately shall increase its
minimum capital and surplus if a stock insurer, or its minimum surplus
if a mutual insurer, to comply with the minimums in Section 38-9-10 or
39-9-20, whichever is applicable.
(4) Upon request of the
board of directors, notwithstanding the limitation on assessments
contained in Section 38-31-60(c)(iii), increase the maximum assessment
in a year in an account in order for that assessment to provide an amount
sufficient to make all necessary payments by the association from that
account. However, no member insurer may be assessed in a year on an
account under this provision an amount greater than two percent of the
member insurers' net direct written premiums for the calendar year
preceding the insolvency on the kinds of insurance in the account.
(5) After determining that an insurance emergency or catastrophe
exists in this State, direct the association to pay the first one hundred
dollars of each unearned premium claim and the first two hundred fifty
dollars of each covered claim, notwithstanding the provisions of Section
38-31-60(a)."
SECTION 4. Section 38-33-100 of the
1976 Code is amended to read:
"Section 38-33-100. (A) No health maintenance organization may be issued a certificate of
authority unless it is possessed of net worth of at least one
two million, two four hundred thousand
dollars, one million, two hundred thousand dollars of which must be
capital if it is a stock health maintenance organization.
Thereafter After the issuance, the health maintenance
organization shall at all times maintain a net worth of not less
than six one million, two hundred thousand dollars. Net
worth means total assets less total liabilities. Instruments acceptable to
the commissioner may be utilized in determining net worth. If the
commissioner determines that the number of enrollees in the health
maintenance organization is excessive or may become excessive in
relation to the organization's net worth as specified herein, the
commissioner may require that future enrollment be limited until
such time as the limitation it is no longer necessary.
(B) After the expiration of a transition period of one hundred
eighty days, every health maintenance organization previously licensed
as of the effective date of this chapter must be possessed of a net worth
of not less than six hundred thousand dollars. A health
maintenance organization, if possessed of net worth on December 31,
1990, that was in compliance with the law at that time but is less than
the minimum required to be maintained by this section, shall maintain
not less than the amount of net worth stated in its 1990 annual statement.
If the net worth of the health maintenance organization is reduced to less
than eighty percent of the amount shown in its 1990 annual statement,
the organization is considered delinquent, and the commissioner may
begin delinquency proceedings provided by Chapter 27 of this title. If
the net worth of the health maintenance organization is increased to an
amount greater than the amount possessed on December 31, 1990, eighty
percent of that greater amount of net worth, or the minimum amount
required to be maintained by this section whichever amount is the lesser,
must be maintained after the increase. If it is not maintained, the health
maintenance organization is considered delinquent, and the
commissioner may begin delinquency proceedings provided by Chapter
27 of this title."
SECTION 5. This act takes effect
upon approval by the Governor.
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