S*452 Session 112 (1997-1998)
S*0452(Rat #0128, Act #0068 of 1997) General Bill, By McConnell
A BILL TO AMEND SECTION 38-11-30, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO INSURANCE, INVESTMENTS, AND THE DEFINITION OF "POLICYHOLDER
OBLIGATIONS", SO AS TO DELETE THE REFERENCE TO "MANDATORY SECURITIES VALUATION
RESERVE" AND SUBSTITUTE THEREFOR "ASSET VALUATION RESERVE"; TO AMEND SECTION
38-13-300, AS AMENDED, RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS,
RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND
CERTAIN REGULATIONS, SO AS TO, AMONG OTHER THINGS, DELETE THE REQUIREMENT UPON
THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO PROMULGATE THESE REGULATIONS,
AUTHORIZE, RATHER THAN REQUIRE, THE DIRECTOR TO HAVE CERTAIN INSURERS RECORD
AND REPORT LOSS AND EXPENSE EXPERIENCE AND CERTAIN OTHER DATA, AND ALLOW THE
DIRECTOR TO HAVE CERTAIN INSURERS SUBMIT A REPORT SHOWING DIRECT WRITINGS AND
CERTAIN OTHER INFORMATION, RATHER THAN REQUIRING THE INSURERS TO DO THIS; TO
AMEND SECTION 38-13-310, RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS,
RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND
THE SUPPLEMENTAL REPORT REQUIRED BY SECTION 38-13-300, SO AS TO PERMIT, RATHER
THAN REQUIRE, THAT THE SUPPLEMENTAL REPORT INCLUDE CERTAIN SPECIFIED TYPES OF
INSURANCE WRITTEN BY THE INSURER; TO AMEND SECTION 38-13-320, AS AMENDED,
RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS,
REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND THE DATA IN THE
SUPPLEMENTAL REPORT, SO AS TO, AMONG OTHER THINGS, PERMIT, RATHER THAN
REQUIRE, THAT THE SUPPLEMENTAL REPORT INCLUDE CERTAIN SPECIFIED DATE BOTH AS
TO SOUTH CAROLINA AND THE UNITED STATES FOR THE PREVIOUS YEAR ENDING ON
DECEMBER THIRTY-FIRST; TO AMEND SECTION 38-13-340, AS AMENDED, RELATING TO
INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS
AND EXPENSE EXPERIENCE BY INSURERS, AND REVIEW OF THE SUPPLEMENTAL REPORTS, SO
AS TO, AMONG OTHER THINGS, PROVIDE THAT THE INSURANCE DEPARTMENT'S ANNUAL
COMPILATION AND REVIEW OF REPORTS SUBMITTED BY INSURERS BE IN ACCORDANCE WITH
OR PURSUANT TO AN ORDER OF THE DIRECTOR OF TH
03/04/97 Senate Introduced and read first time SJ-5
03/04/97 Senate Referred to Committee on Banking and Insurance SJ-5
03/20/97 Senate Committee report: Favorable Banking and Insurance SJ-12
03/25/97 Senate Read second time SJ-11
03/25/97 Senate Unanimous consent for third reading on next
legislative day SJ-11
03/26/97 Senate Read third time and sent to House SJ-22
04/01/97 House Introduced and read first time HJ-22
04/01/97 House Referred to Committee on Labor, Commerce and
Industry HJ-24
05/15/97 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-3
05/20/97 House Amended HJ-53
05/21/97 House Read second time HJ-24
05/22/97 House Read third time and returned to Senate with
amendments HJ-25
05/27/97 Senate Concurred in House amendment and enrolled SJ-13
06/04/97 Ratified R 128
06/10/97 Signed By Governor
06/10/97 Effective date 06/10/97
06/24/97 Copies available
06/24/97 Act No. 68
(A68, R128, S452)
AN ACT TO AMEND SECTION 38-11-30, CODE OF LAWS OF
SOUTH CAROLINA, 1976, RELATING TO INSURANCE,
INVESTMENTS, AND THE DEFINITION OF
"POLICYHOLDER OBLIGATIONS", SO AS TO DELETE
THE REFERENCE TO "MANDATORY SECURITIES
VALUATION RESERVE" AND SUBSTITUTE THEREFOR
"ASSET VALUATION RESERVE"; TO AMEND SECTION
38-13-300, AS AMENDED, RELATING TO INSURANCE,
EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS,
REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS,
AND CERTAIN REGULATIONS, SO AS TO, AMONG OTHER
THINGS, DELETE THE REQUIREMENT UPON THE DIRECTOR OF
THE DEPARTMENT OF INSURANCE TO PROMULGATE THESE
REGULATIONS, AUTHORIZE, RATHER THAN REQUIRE, THE
DIRECTOR TO HAVE CERTAIN INSURERS RECORD AND
REPORT LOSS AND EXPENSE EXPERIENCE AND CERTAIN
OTHER DATA, AND ALLOW THE DIRECTOR TO HAVE CERTAIN
INSURERS SUBMIT A REPORT SHOWING DIRECT WRITINGS
AND CERTAIN OTHER INFORMATION, RATHER THAN
REQUIRING THE INSURERS TO DO THIS; TO AMEND SECTION
38-13-310, RELATING TO INSURANCE, EXAMINATIONS,
INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS
AND EXPENSE EXPERIENCE BY INSURERS, AND THE
SUPPLEMENTAL REPORT REQUIRED BY SECTION 38-13-300, SO
AS TO PERMIT, RATHER THAN REQUIRE, THAT THE
SUPPLEMENTAL REPORT INCLUDE CERTAIN SPECIFIED TYPES
OF INSURANCE WRITTEN BY THE INSURER; TO AMEND
SECTION 38-13-320, AS AMENDED, RELATING TO INSURANCE,
EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS,
REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS,
AND THE DATA IN THE SUPPLEMENTAL REPORT, SO AS TO,
AMONG OTHER THINGS, PERMIT, RATHER THAN REQUIRE,
THAT THE SUPPLEMENTAL REPORT INCLUDE CERTAIN
SPECIFIED DATA BOTH AS TO SOUTH CAROLINA AND THE
UNITED STATES FOR THE PREVIOUS YEAR ENDING ON
DECEMBER THIRTY-FIRST; TO AMEND SECTION 38-13-340, AS
AMENDED, RELATING TO INSURANCE, EXAMINATIONS,
INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS
AND EXPENSE EXPERIENCE BY INSURERS, AND REVIEW OF
THE SUPPLEMENTAL REPORTS, SO AS TO, AMONG OTHER
THINGS, PROVIDE THAT THE INSURANCE DEPARTMENT'S
ANNUAL COMPILATION AND REVIEW OF REPORTS
SUBMITTED BY INSURERS BE IN ACCORDANCE WITH OR
PURSUANT TO AN ORDER OF THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE; TO AMEND SECTION 38-19-50,
AS AMENDED, RELATING TO DOMESTIC MUTUAL INSURERS,
MEMBERS AND MEETINGS, AND USE OF PROXIES, SO AS TO
PROVIDE THAT NO PROXY MAY BE USED BY A DOMESTIC
MUTUAL INSURER UNLESS THE LANGUAGE AND FORM OF
THE PROXY HAVE BEEN APPROVED BY THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE OR HIS DESIGNEE, AND DELETE
THE FIVE CONDITIONS SPECIFIED FOR THE USE OF THE
PROXY; TO AMEND SECTION 38-33-30, AS AMENDED,
RELATING TO THE INSURANCE LAWS, HEALTH
MAINTENANCE ORGANIZATIONS, THE NECESSITY OF A
CERTIFICATE OF AUTHORITY, AND FOREIGN CORPORATIONS,
SO AS TO DELETE THE REQUIREMENT THAT EACH
APPLICATION FOR A CERTIFICATE OF AUTHORITY BE FILED
"IN TRIPLICATE"; TO AMEND SECTION 38-73-1060, AS
AMENDED, RELATING TO THE INSURANCE LAWS, RATES,
RATE-MAKING, AND RATE-FILING, AND STATUTORY
PERMISSION TO USE RATES IN EXCESS OF THOSE WHICH ARE
FILED, SO AS TO DELETE THE TERM "RATE IN EXCESS OF
THAT PROVIDED BY A FILING OTHERWISE APPLICABLE"
AND SUBSTITUTE THEREFOR "RATE DIFFERENT FROM
THAT PROVIDED BY A FILING OTHERWISE APPLICABLE",
AND ADD PROVISIONS WHICH PROVIDE THAT, UPON THE
WRITTEN APPLICATION OF AN INSURED HAVING AGGREGATE
INSURANCE PREMIUMS, OTHER THAN LIFE, ACCIDENT, AND
HEALTH, IN EXCESS OF ONE HUNDRED THOUSAND DOLLARS,
A POLICY FORM DIFFERENT FROM THAT PROVIDED BY A
FILING OTHERWISE APPLICABLE MAY BE USED ON ANY
SPECIFIC RISK, UNDER CERTAIN CONDITIONS; TO REPEAL
SECTIONS 38-13-330 AND 38-13-370 RELATING TO INSURANCE,
EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS,
REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS,
THE REQUIREMENT THAT, FOR THE FIRST YEAR ONLY IN
WHICH THE INSURER IS REQUIRED TO FILE THE
SUPPLEMENTAL REPORT, THE DATA REQUIRED BY CERTAIN
ITEMS OF SECTION 38-13-320 SHALL INCLUDE THE PREVIOUS
CALENDAR YEAR AND EACH OF THE PRECEDING TWO
CALENDAR YEARS, AND THE REQUIREMENT THAT FIRST
REPORTS REQUIRED UNDER SECTIONS 38-13-300 THROUGH
38-13-360 MUST BE FILED ON JULY 1, 1988, AND ON JULY FIRST
OF EACH FOLLOWING YEAR; TO AMEND SECTION 38-19-30,
RELATING TO DOMESTIC MUTUAL INSURERS AND THE
GENERAL RIGHTS OF MEMBERS, SO AS TO DELETE THE
EXISTING PROVISIONS OF THE SECTION AND TO PROVIDE,
AMONG OTHER THINGS, THAT EXCEPT AS OTHERWISE
PROVIDED BY LAW, EVERY DOMESTIC MUTUAL INSURER
MUST BE ORGANIZED, GOVERNED, AND OPERATED AS A
DOMESTIC BUSINESS CORPORATION UNDER, AND IN
ACCORDANCE WITH, THE SOUTH CAROLINA BUSINESS
CORPORATION ACT OF 1988, AND PROVIDE FOR AN
EXCEPTION; TO AMEND SECTION 38-27-490, RELATING TO THE
"INSURERS' REHABILITATION AND LIQUIDATION
ACT", FORMAL PROCEEDINGS, AND SETOFFS AND
COUNTERCLAIMS, SO AS TO DELETE
"COUNTERCLAIM" FROM THE PROHIBITION ON
ALLOWING THE SAME OR ANY SETOFF IN FAVOR OF A
PERSON UNDER CERTAIN SPECIFIED CONDITIONS AND
CIRCUMSTANCES, AND DELETE CERTAIN LANGUAGE; AND TO
AMEND SECTION 38-57-160, RELATING TO INSURANCE TRADE
PRACTICES AND THE ADVERTISING GIFTS, SO AS TO ADD A
PROVISION THAT NOTHING IN THIS SECTION PRECLUDES ANY
LICENSED INSURANCE AGENT FROM PROVIDING
REFRESHMENTS DURING A SALES PRESENTATION WHICH DO
NOT EXCEED TEN DOLLARS A PERSON IN COST.
Be it enacted by the General Assembly of the State of South Carolina:
"Asset Valuation Reserve" substituted
SECTION 1. Section 38-11-30 of the 1976 Code is amended to read:
"Section 38-11-30. As used in this chapter, unless the context
requires otherwise, 'policyholder obligations' means those liabilities of the
insurer to, or for, its policyholders arising out of its policies and to its
creditors and includes the liabilities required to be included in the insurer's
annual statement including, but not limited to, (a) the unearned premium
reserve, (b) reserves required by applicable mortality or morbidity tables,
and (c) claim or loss reserves including incurred but not reported claims.
'Policyholder obligations' does not include that portion of the insurer's
capital or guaranty fund, or that portion of its surplus, in excess of the
minimum capital, or guaranty fund, and surplus required by law for such
insurer, or the Asset Valuation Reserve."
Requirement to promulgate certain regulations deleted; etc.
SECTION 2. Section 38-13-300 of the 1976 Code, as last amended by
Section 537 of Act 181 of 1993, is further amended to read:
"Section 38-13-300. The director may require insurers licensed
to write property or casualty insurance in the State to record and report
loss and expense experience and any other data necessary to determine
whether rates are excessive, inadequate, or unfairly discriminatory. The
director or his designee may designate one or more statistical
agents, organizations, or advisory organizations to gather and compile this
experience and data. In addition, the director may require each insurer
licensed to write property and casualty insurance in this State, as a
supplement to its annual statement, to submit a report on a form furnished
by the department showing the insurer's direct writings in this State and
the United States and any information required by Sections 38-13-310
and 38-13-320.
The director may adopt data disclosure requirements developed by the
National Association of Insurance Commissioners. If adopted, the NAIC
disclosure requirements must be deemed to be in full compliance with the
reporting requirements of Sections 38-13-300 through 38-13-360."
Action now permitted, rather than required; etc.
SECTION 3. Section 38-13-310 of the 1976 Code is amended to read:
"Section 38-13-310. The supplemental report required by Section
38-13-300 may include, but is not limited to, the following types of
insurance written by the insurer:
(a) political subdivision liability insurance reported separately in the
following categories:
(1) municipalities;
(2) school districts;
(3) other political subdivisions;
(b) public official liability insurance;
(c) dram shop liability insurance;
(d) day care center liability insurance;
(e) labor, fraternal, or religious organizations liability insurance;
(f) errors and omissions liability insurance;
(g) officers and directors liability insurance reported separately as
follows:
(1) nonprofit entities;
(2) for-profit entities;
(h) products liability insurance;
(i) medical malpractice insurance;
(j) attorney malpractice insurance;
(k) architects and engineers malpractice insurance; and
(l) motor vehicle insurance reported separately for commercial and
private passenger vehicles as follows:
(1) motor vehicle liability insurance first-party benefits;
(2) motor vehicle bodily injury liability insurance;
(3) motor vehicle property liability insurance;
(4) uninsured motorist insurance; and
(5) underinsured motorist insurance."
Action now permitted, rather than required; etc
SECTION 4. Section 38-13-320 of the 1976 Code, as last amended by
Section 537 of Act 181 of 1993, is further amended to read:
"Section 38-13-320. The supplemental report may include, but
is not limited to, the following data both as to this State and the United
States for the previous year ending on December thirty-first:
(a) direct premiums written,
(b) direct premiums earned,
(c) net investment income, including net realized capital gains and
losses, using appropriate estimates where necessary,
(d) incurred claims, developed as the sum of the following (the report
shall include data for each of the following categories used to develop the
sum of incurred claims):
(1) dollar amount of claims closed with payment, plus
(2) dollar amount of payments on claims still open, plus
(3) reserves for reported claims at the end of the current year, minus
(4) reserves for reported claims at the end of the previous year, plus
(5) reserves for incurred but not reported claims at the end of the
current year, minus
(6) reserves for incurred but not reported claims at the end of the
previous year, plus
(7) loss adjustment expenses for claims closed, plus
(8) reserves for loss adjustment expense at the end of the current
year, minus
(e) actual incurred expenses allocated separately to loss adjustment,
commissions, other acquisition costs, advertising, general office expenses,
taxes, licenses and fees, and all other expenses;
(f) net underwriting gain or loss;
(g) net operation gain or loss, including net investment income;
(h) the number and dollar amount of claims closed with payment, by
year incurred and the amount reserved for them;
(i) the number of claims closed without payment and the dollar
amount reserved for those claims;
(j) federal income tax recoverable; and
(k) any other information requested by the director or his
designee."
Order of the director of the Department of Insurance; etc.
SECTION 5. Section 38-13-340 of the 1976 Code, as last amended by
Section 537 of Act 181 of 1993, is further amended to read:
"Section 38-13-340. The department shall annually compile and
review reports submitted by insurers pursuant to this article by order of
the director to determine the appropriateness of premium rates for
property and casualty insurance in this State. Any findings and filings of
the department must be published, provided to the General Assembly, and
made available to any interested insured or citizen, subject to the cost of
copying. If the director or his designee finds at any time that any rate is
excessive, inadequate, or unfairly discriminatory, he shall issue an order
withdrawing its approval. The order shall specify reasons for withdrawal
of approval and must be furnished to each affected insurer and rating
organization. Any such order is effective not less than sixty days from its
issuance unless an affected insurer meets the burden of showing that the
rate is fair and appropriate."
Proxy not to be used, exception; etc.
SECTION 6. Section 38-19-50(C) of the 1976 Code, as last amended
by Section 552 of Act 181 of 1993, is further amended to read:
"(C) No proxy may be utilized by a domestic mutual insurer
subject to the provisions of this chapter unless the language and form of
the proxy have been approved by the director or his designee."
Requirement of filing application in triplicate deleted
SECTION 7. The initial paragraph of Section 38-33-30(B) of the 1976
Code, as last amended by Section 633 of Act 181 of 1993, is further
amended to read:
"Each application for a certificate of authority must be verified
by an officer or authorized representative of the applicant, must be filed
in a form prescribed by the director or his designee, and must set forth the
following:"
Different policy form allowed; etc.
SECTION 8. Section 38-73-1060 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1060. (A) Upon the written application of the
insured, stating his reasons therefor, filed with the department and
approved by the director or his designee, a rate different from that
provided by a filing otherwise applicable may be used on any specific
risk.
(B) Upon the written application of an insured which has aggregate
insurance premiums, other than life, accident, and health, in excess of one
hundred thousand dollars, stating the reasons therefor, filed with the
department, and approved by the director or his designee, a policy form
different from that provided by a filing otherwise applicable may be used
on any specific risk. Any policy form filed with the department pursuant
to this subsection must be considered approved if not approved or
disapproved within thirty days of receipt by the department. However,
the consent-to-form does not apply to policy forms providing private
passenger automobile insurance coverage subject to the mandate-to-write,
workers' compensation insurance coverage, or employer's liability
insurance coverage and policy forms underwritten by joint underwriting
transactions or joint insurance transactions."
Provisions deleted, added; domestic mutual insurers are domestic
business corporations; etc.
SECTION 9. Section 38-19-30 of the 1976 Code is amended to read:
"Section 38-19-30. (A) Except as otherwise provided by law,
every domestic mutual insurer must be organized, governed, and operated
as a domestic business corporation under and in accordance with the
South Carolina Business Corporation Act of 1988, (the 'Business
Corporation Act'). Without limiting the generality of the foregoing, the
provisions of the Business Corporation Act concerning the rights and
duties of a stock corporation and its shareholders in respect of one another
shall apply to a domestic mutual insurer and its members as if the insurer
were a stock corporation and its members were shareholders therein.
(B) Notwithstanding subsection (A), as to any domestic mutual insurer
existing on the effective date of this subsection and organized prior to that
date under any South Carolina statute other than the Business Corporation
Act, such domestic mutual insurer shall continue to be organized under
such statute, and the Business Corporation Act applies to the governance
and operation of that domestic mutual insurer only to the extent the
Business Corporation Act does not conflict with the statute under which
that domestic mutual insurer was organized or with any other insurance
law of this State.
(C) A corporation organized under Chapter 13 or Chapter 14 of Title
37 of the South Carolina Code of Laws (1962), or any predecessor
statutes, and subsequently licensed as a domestic mutual insurer under the
laws of this State, as of the date of the licensure and for all purposes, must
be deemed to have been reconstituted as a domestic mutual insurer under
the insurance laws of this State as then in effect and rechartered as a
domestic business corporation under the business corporation law then in
effect."
"Counterclaim" deleted from prohibition; etc.
SECTION 10. Section 38-27-490(b) of the 1976 Code is amended to
read:
"(b) No setoff is allowed in favor of any person where:
(1) the obligation of the insurer to the person would not at the date
of the filing of a petition for liquidation entitle the person to share as a
claimant in the assets of the insurer;
(2) the obligation of the insurer to the person was purchased by or
transferred to the person with a view to its being used as a setoff; or
(3) the obligation of the person is to pay an assessment levied
against the members or subscribers of the insurer or is to pay a balance
upon a subscription to the capital stock of the insurer or is in any other
way in the nature of a capital contribution."
Refreshments allowed; monetary limitation
SECTION 11. Section 38-57-160 of the 1976 Code is amended to read:
"Sections 38-57-130, 38-57-140, and 38-57-150 do not prohibit
a licensed agent from giving to insureds, prospective insureds, and to
others, for the purpose of advertising, any article of merchandise having
a value of not more than five dollars and having an advertisement for the
insurer or agent printed on it. Nothing within this section precludes any
licensed agent from providing refreshments during a sales presentation
which do not exceed ten dollars a person in cost."
Repeal
SECTION 12. Sections 38-13-330 and 38-13-370 of the 1976 Code are
repealed.
Time effective
SECTION 13. This act takes effect upon approval by the Governor.
Approved the 10th day of June, 1997. |