H 3440 General Bill, By J.J. Bailey, R.S. Corning, J.T. McElveen, Quinn and 
Scott

Similar(S 392)
 A Bill to amend Section 42-7-50, Code of Laws of South Carolina, 1976,
 relating to the State Workers' Compensation Fund (Fund) and the provisions
 that subdivisions of the State may come under the article relating to the
 Fund, so as to, among other things, allow nongovernmental, private employers
 the option of participating under that Article; to amend Section 42-7-70,
 relating to rates and premiums paid by employers insured in the Fund, so as to
 provide that the premiums collected and investment income from private
 employers must be determined, maintained, and accounted for separately from
 premiums of governmental entities and that the Fund must pay a premium tax on
 private employers' premiums; and to require that the plan of operation
 required by Section 42-7-50(C) must be completed within twelve months of the
 effective date of this Act.

   02/10/93  House  Introduced and read first time HJ-4
   02/10/93  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-4

A BILL

TO AMEND SECTION 42-7-50, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE STATE WORKERS' COMPENSATION FUND ("FUND") AND THE PROVISIONS THAT SUBDIVISIONS OF THE STATE MAY COME UNDER THE ARTICLE RELATING TO THE FUND, SO AS TO, AMONG OTHER THINGS, ALLOW NONGOVERNMENTAL, PRIVATE EMPLOYERS THE OPTION OF PARTICIPATING UNDER THAT ARTICLE; TO AMEND SECTION 42-7-70, RELATING TO RATES AND PREMIUMS PAID BY EMPLOYERS INSURED IN THE FUND, SO AS TO PROVIDE THAT THE PREMIUMS COLLECTED AND INVESTMENT INCOME FROM PRIVATE EMPLOYERS MUST BE DETERMINED, MAINTAINED, AND ACCOUNTED FOR SEPARATELY FROM PREMIUMS OF GOVERNMENTAL ENTITIES AND THAT THE FUND MUST PAY A PREMIUM TAX ON PRIVATE EMPLOYERS PREMIUMS; AND TO REQUIRE THAT THE PLAN OF OPERATION REQUIRED BY SECTION 42-7-50(C) MUST BE COMPLETED WITHIN TWELVE MONTHS OF THE EFFECTIVE DATE OF THIS ACT.

Whereas, the General Assembly of South Carolina finds there is a substantial risk the workers' compensation insurance market in this State may collapse leaving South Carolina employers with no way to comply with laws requiring them to insure workers against workplace injuries; and

Whereas, twenty-five states have created state workers' compensation funds to protect against the risk; and

Whereas, South Carolina has a State Workers' Compensation Fund, which currently is not authorized to write coverage for private insurance risks; and Whereas, the State Budget and Control Board must be enabled to authorize the State Workers' Compensation Fund to write coverage for private risks if market conditions deteriorate to the point where this is required to meet the needs of employers in this State. Now, therefore,

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

SECTION 1. Section 42-7-50 of the 1976 Code is amended to read:

"Section 42-7-50. (A) Any A county or municipality in the State, or any an agency or institution thereof shall have of a county or municipality, and, subject to subsection (B), other employers in this State have the option of participating under the provisions of this article. but However, no county, municipality, agency or institution thereof shall be employer is covered by the workers' compensation insurance provided in this article until payment of the annual charge provided in this title shall have been is made to the fund, nor shall any county, municipality, agency or institution thereof may an employer be covered by this insurance after the lapse of the period for which the annual charge has been paid. The director shall notify bill each county, municipality, agency or institution thereof covered employer at least thirty days before the expiration date of its coverage in order that the county, municipality, agency, or institution employer may keep its insurance in force continuously. If the billed premium payment is not received by the fund by the commencement of the next coverage period, the director shall notify the employer and the commission promptly that coverage through the fund has expired.

(B) The option of private employers to participate under the provisions of this article may be exercised only after:

(1) a plan of operation has been developed by the fund and approved by the Chief Insurance Commissioner, the South Carolina Workers' Compensation Commission, and the State Budget and Control Board;

(2) funds required to establish an appropriate reserve and properly process the anticipated new business under the plan of operation have been approved by the Budget and Control Board; and

(3) the Budget and Control Board has declared that the private workers' compensation insurance market has collapsed or is no longer adequate to meet the needs of employers in this State.

(C) The plan of operation must provide for:

(1) an actuarially sound initial reserve recommended by the fund's consulting actuary;

(2) initially awarding contracts to private companies, pursuant to the provisions of the Procurement Code, to underwrite workers' compensation insurance, adjust and pay losses, or administer loss control and cost containment programs on behalf of the fund;

(3) a formal application for workers' compensation insurance to be made directly by a qualified employer or by a licensed property and casualty agent or broker on behalf of the employer;

(4) a reasonable commission to be paid to agents who write applications for the fund;

(5) initial minimum standards regarding loss control and cost containment which the fund may impose on employers as an underwriting criteria for initial and renewal policies; and

(6) additional provisions the Budget and Control Board may require to ensure a financially and actuarially sound implementation of the plan of operation.

(D) The funding to implement the plan as specified in subsection (B)(2) must be authorized by the board if and when it makes the emergency determination specified in subsection (B)(3).

(E) (1) After each three years of operation, and at other times considered prudent, the Chief Insurance Commissioner shall examine the affairs of the private employer business of the fund and make findings and recommendations as provided by this section. For purposes of examination the commissioner or persons making the examination shall have free access to all relevant records books, and papers in the possession of a person or an entity and may summon, administer oaths to, and examine as witnesses persons in relation to matters relevant to the examination.

(2) The Chief Insurance Commissioner shall examine all methods of operation of the private employer business of the fund to determine whether the funds are being administered in accordance with sound insurance practices and in the best interest of the State. Following examination the Chief Insurance Commissioner shall prepare a report for submission to the Budget and Control Board, the Speaker of the House of Representatives, and the President of the Senate containing his findings and conclusions and recommendations to improve the efficiency, effectiveness, and overall operations of the fund."

SECTION 2. Section 42-7-70 of the 1976 Code is amended to read:

"Section 42-7-70. The rates and premiums paid by employers insured in the fund shall must not be excessive, inadequate, or unfairly discriminatory. Employers may be grouped by classifications for the establishment of rates and minimum premiums, and classification rates may be modified to produce rates for individual employers in accordance with rating laws which establish standards for measuring any variations in hazards or expense provisions, or both, that can be demonstrated to have a probable effect upon losses or expenses. All premiums Premiums collected by the fund shall must be deposited by it in the State Treasury to the credit of the State Workers' Compensation Fund. The premiums collected and investment income from private employers must be determined, maintained, and accounted for separately from premiums of governmental entities. The fund must pay a premium tax on private employer premiums as provided in Section 38-7-50."

SECTION 3. The plan of operation required by subsection (C) of Section 42-7-50 of the 1976 Code, as added by Section 1 of this act, must be completed within twelve months of the effective date of this act.

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