S 1231 General Bill, By Saleeby, Land, McConnell, M.F. Mullinax and T.H. Pope
 A Bill to amend Section 42-7-50, Code of Laws of South Carolina, 1976,
 relating to participation under the State Workers' Compensation Fund, so as to
 include employers with twenty-five or fewer employees at the time of initial
 coverage, provide for notification when coverage expires, and provide for
 private employers to exercise their option to participate; and to amend
 Section 42-7-70, relating to rates and premiums paid by participants, so as to
 require premiums collected and investment income from private employers to be
 determined, maintained, and accounted for separately from premiums of
 governmental entities.

   01/28/92  Senate Introduced and read first time SJ-9
   01/28/92  Senate Referred to Committee on Judiciary SJ-9
   01/29/92  Senate Recalled from Committee on Judiciary SJ-85
   01/29/92  Senate Committed to Committee on Banking and Insurance SJ-85
   03/12/92  Senate Committee report: Favorable with amendment
                     Banking and Insurance SJ-12
   04/23/92  Senate Special order SJ-38
   04/28/92  Senate Debate interrupted SJ-132
   05/19/92  Senate Debate interrupted SJ-32

Indicates Matter Stricken
Indicates New Matter

COMMITTEE REPORT

March 12, 1992

S. 1231

Introduced by SENATORS Saleeby, Pope, Land, Mullinax and McConnell

S. Printed 3/16/92--S.

Read the first time January 28, 1992.

To whom was referred a Bill (S. 1231), to amend Section 42-7-50, Code of Laws of South Carolina, 1976, relating to participation under the State Workers' Compensation Fund, etc., respectfully

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

Amend the bill, as and if amended, by striking all after the title and inserting therein:

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

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

Whereas, the State of South Carolina has a State Workers' Compensation Fund that is not currently authorized to write such coverage for any private insurance risks; and

Whereas, the Budget and Control Board should be enabled to authorize the State Workers' Compensation Fund to write coverage for private risks if market conditions should deteriorate to the point that 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), any other employer in this State has 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 Workers' Compensation Commission and the Budget and Control Board; and

(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 be completed within twelve months from the effective date of this act and must provide for:

(1) an actuarially sound initial reserve as recommended by the funds 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 with respect thereto or to 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 any licensed property and casualty agent or broker on behalf of such 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) such additional provisions as the Budget and Control Board might require to ensure a financially and actuarially sound implementation of the plan of operation should it be required.

(D) The Budget and Control Board is directed to provide for immediate funding sufficient to develop the plan of operation. The funding to implement the plan as specified in item (2) of paragraph (B) of this section shall be authorized by the board if and when it makes the emergency determination specified in item (3) of paragraph (B) of this section.

(E) (1) At the end of each three years of operation, and at any other time 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 has free access to all relevant records, books, and papers in the possession of any person or entity and may summon, administer oaths to, and examine as witnesses any 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 State Budget and Control Board, the Speaker of the House of Representatives, and the President of the Senate containing his findings and conclusions and any 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. This act takes effect upon approval by the Governor. /

Amend title to conform.

JOHN A. MARTIN, for Committee.

A BILL

TO AMEND SECTION 42-7-50, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PARTICIPATION UNDER THE STATE WORKERS' COMPENSATION FUND, SO AS TO INCLUDE EMPLOYERS WITH TWENTY-FIVE OR FEWER EMPLOYEES AT THE TIME OF INITIAL COVERAGE, PROVIDE FOR NOTIFICATION WHEN COVERAGE EXPIRES, AND PROVIDE FOR PRIVATE EMPLOYERS TO EXERCISE THEIR OPTION TO PARTICIPATE; AND TO AMEND SECTION 42-7-70, RELATING TO RATES AND PREMIUMS PAID BY PARTICIPANTS, SO AS TO REQUIRE PREMIUMS COLLECTED AND INVESTMENT INCOME FROM PRIVATE EMPLOYERS TO BE DETERMINED, MAINTAINED, AND ACCOUNTED FOR SEPARATELY FROM PREMIUMS OF GOVERNMENTAL ENTITIES.

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), another employer in the State with twenty-five or fewer employees at the time of initial coverage with the State Workers' Compensation Fund has 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 this article may be exercised only after the General Assembly provides for an initial reserve of four hundred thousand dollars and to the extent that sufficient staff and expenditures are authorized to process properly the additional business contemplated. After that time the option must be restricted by the fund as necessary to maintain a minimum of fifty percent mix of premium volume from private employers whose present or last coverage is or was in the voluntary market. The option is further subject to compliance with reasonable loss control and cost containment requirements established by the fund to reduce injuries and contain costs of the system. The initial reserve advanced by the State must be repaid to the State when an appropriate reserve has been established from private employer premiums."

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."

SECTION 3. This act takes effect upon approval by the Governor.