H*3508 Session 109 (1991-1992)
H*3508(Rat #0037, Act #0013 of 1991) General Bill, By
House Labor, Commerce and Industry
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Sections
38-9-200, 38-9-210, and 38-9-220 so as to provide reinsurance credits and
liability reductions allowed for domestic ceded insurers and define terms; to
amend the 1976 Code by adding Section 38-21-125 so as to provide for
acquisitions of insurers not covered by the Insurance Holding Company
Regulatory Act; to amend the 1976 Code by adding Chapter 26 to Title 38 so as
to provide for the Administrative Supervision of Insurers Act; to amend the
1976 Code by adding Section 38-27-100 so as to provide for the conduct of
insurance proceedings begun before the effective date of the Insurers
Supervision, Rehabilitation, and Liquidation Act; to amend the 1976 Code by
adding Section 38-27-110 so as to provide for payments to a guaranty
association when an insurer is subject to a delinquency proceeding; to amend
Section 38-5-120, relating to the revocation and suspension of insurance
certificates of authority, so as to provide standards for determining
hazardous insurance proceedings and authorize the Chief Insurance Commissioner
to take action when an insurer is in an unsound or a hazardous condition; to
amend Section 38-9-10, relating to capital and surplus of stock insurers, so
as to increase the required amounts, authorize the Chief Insurance
Commissioner to require additional initial 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, authorize
the Commissioner to require additional initial surplus, and provide for
initial surplus; 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; to
amend Section 38-9-170, relating to unearned premium reserves of insurers, so
as to revise the circumstances under which deductions may be made from
reserves; to amend Section 38-9-190, relating to loss and claim reserves of
insurers, so as to revise the circumstances under which credit for reinsurance
is allowed as an asset or a deduction from reserves; to amend Section
38-11-10, relating to legislative intent pertaining to investments by
insurers, so as to establish standards for the development and administration
of investments; to amend Section 38-11-50, relating to limitations on the
investments, so as to provide for the valuation of investments and
promulgation of related regulations; to amend Section 38-21-90, relating to
the Insurance Commissioner's approval of an acquisition of control of an
insurer, so as to provide for application of the competitive standard; to
amend Section 38-21-140, relating to the content of insurance registration
statements, so as to include a pledge of the insurer's stock for a loan made
to a member of the Insurance Holding Company System; to amend Section
38-21-270, relating to notice and approval of extraordinary dividends and
distributions by insurers, so as to revise the determination of an
extraordinary dividend and distribution; to amend Section 38-27-10, relating
to the cite for the "Insurers Supervision, Rehabilitation, and Liquidation
Act", so as to delete "supervision"; to amend Section 38-27-40, relating to
application of the Act, so as to add prepaid health care delivery plans; to
amend Sections 38-27-50, 38-27-230, and 38-27-310, relating to definitions,
hearings, and rehabilitation under the Act, so as to delete the references to
"valid" as it applies to "order" and Section 38-27-210, Insurance
Commissioner's orders and supervision; to amend Section 38-27-370, relating to
orders to liquidate an insurer, so as to provide for a plan for the continued
performance of a defendant company's policy claims obligations during the
pendency of an appeal; to amend Section 38-27-400, relating to the powers of a
liquidator, so as to authorize the audit of the books and records of agents of
the insurer and provide that a liquidator is not obligated to defend or
continue to defend claims after the entry of a liquidation order; to amend
Section 38-27-610, relating to the priority of distribution of claims from an
insurer's estate, so as to include in Class 3 claims of federal, state, and
local governments for losses incurred, "loss claims", and exclude those claims
from Class 5; to amend Section 38-27-950, relating to proceedings instituted
by the Insurance Commissioner, so as to delete the reference to Section
38-27-210, orders and supervision; 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; to amend Section 38-55-30, relating to limitation of
risk by insurers, so as to apply the limitation to captives and define the
term; to amend Section 38-87-40, relating to out-of-state chartered risk
retention groups, so as to provide for the examination regarding financial
condition to be conducted in accordance with the National Association of
Insurance Commissioners' Examiner's Handbook instead of the standards and
procedures applicable to examinations of admitted insurers; to amend Section
38-87-90, relating to the purchase of liability insurance from a nonstate
approved surplus lines insurer, so as to provide the conditions under which
insurance may be purchased from a risk retention group not chartered or an
insurer not admitted in the State; and to repeal Section 38-27-210 relating to
the Insurance Commissioner's orders and supervision.
02/13/91 House Introduced, read first time, placed on calendar
without reference HJ-13
02/14/91 House Read second time HJ-8
02/19/91 House Read third time and sent to Senate HJ-8
02/20/91 Senate Introduced, read first time, placed on calendar
without reference SJ-8
02/28/91 Senate Amended SJ-17
02/28/91 Senate Read second time SJ-21
02/28/91 Senate Unanimous consent for third reading on next
legislative day SJ-21
03/01/91 Senate Read third time and returned to House with
amendments SJ-1
03/06/91 House Concurred in Senate amendment and enrolled HJ-38
03/19/91 Ratified R 37
03/22/91 Signed By Governor
03/22/91 Effective date 03/22/91
03/22/91 Act No. 13
04/09/91 Copies available
(A13, R37, H3508)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING SECTIONS 38-9-200, 38-9-210, AND
38-9-220 SO AS TO PROVIDE REINSURANCE CREDITS AND
LIABILITY REDUCTIONS ALLOWED FOR DOMESTIC CEDED
INSURERS AND DEFINE TERMS; TO AMEND THE 1976 CODE BY
ADDING SECTION 38-21-125 SO AS TO PROVIDE FOR
ACQUISITIONS OF INSURERS NOT COVERED BY THE
INSURANCE HOLDING COMPANY REGULATORY ACT; TO
AMEND THE 1976 CODE BY ADDING CHAPTER 26 TO TITLE 38 SO
AS TO PROVIDE FOR THE ADMINISTRATIVE SUPERVISION OF
INSURERS ACT; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-27-100 SO AS TO PROVIDE FOR THE CONDUCT OF
INSURANCE PROCEEDINGS BEGUN BEFORE THE EFFECTIVE
DATE OF THE INSURERS SUPERVISION, REHABILITATION, AND
LIQUIDATION ACT; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-27-110 SO AS TO PROVIDE FOR PAYMENTS TO A
GUARANTY ASSOCIATION WHEN AN INSURER IS SUBJECT TO A
DELINQUENCY PROCEEDING; TO AMEND SECTION 38-5-120,
RELATING TO THE REVOCATION AND SUSPENSION OF
INSURANCE CERTIFICATES OF AUTHORITY, SO AS TO PROVIDE
STANDARDS FOR DETERMINING HAZARDOUS INSURANCE
PROCEEDINGS AND AUTHORIZE THE CHIEF INSURANCE
COMMISSIONER TO TAKE ACTION WHEN AN INSURER IS IN AN
UNSOUND OR A HAZARDOUS CONDITION; TO AMEND SECTION
38-9-10, RELATING TO CAPITAL AND SURPLUS OF STOCK
INSURERS, SO AS TO INCREASE THE REQUIRED AMOUNTS,
AUTHORIZE THE CHIEF INSURANCE COMMISSIONER TO
REQUIRE ADDITIONAL INITIAL 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,
AUTHORIZE THE COMMISSIONER TO REQUIRE ADDITIONAL
INITIAL SURPLUS, AND PROVIDE FOR INITIAL SURPLUS; 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; TO AMEND SECTION 38-9-170, RELATING
TO UNEARNED PREMIUM RESERVES OF INSURERS, SO AS TO
REVISE THE CIRCUMSTANCES UNDER WHICH DEDUCTIONS
MAY BE MADE FROM RESERVES; TO AMEND SECTION 38-9-190,
RELATING TO LOSS AND CLAIM RESERVES OF INSURERS, SO AS
TO REVISE THE CIRCUMSTANCES UNDER WHICH CREDIT FOR
REINSURANCE IS ALLOWED AS AN ASSET OR A DEDUCTION
FROM RESERVES; TO AMEND SECTION 38-11-10, RELATING TO
LEGISLATIVE INTENT PERTAINING TO INVESTMENTS BY
INSURERS, SO AS TO ESTABLISH STANDARDS FOR THE
DEVELOPMENT AND ADMINISTRATION OF INVESTMENTS; TO
AMEND SECTION 38-11-50, RELATING TO LIMITATIONS ON THE
INVESTMENTS, SO AS TO PROVIDE FOR THE VALUATION OF
INVESTMENTS AND PROMULGATION OF RELATED
REGULATIONS; TO AMEND SECTION 38-21-90, RELATING TO THE
INSURANCE COMMISSIONER'S APPROVAL OF AN ACQUISITION
OF CONTROL OF AN INSURER, SO AS TO PROVIDE FOR
APPLICATION OF THE COMPETITIVE STANDARD; TO AMEND
SECTION 38-21-140, RELATING TO THE CONTENT OF INSURANCE
REGISTRATION STATEMENTS, SO AS TO INCLUDE A PLEDGE OF
THE INSURER'S STOCK FOR A LOAN MADE TO A MEMBER OF
THE INSURANCE HOLDING COMPANY SYSTEM; TO AMEND
SECTION 38-21-270, RELATING TO NOTICE AND APPROVAL OF
EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS BY
INSURERS, SO AS TO REVISE THE DETERMINATION OF AN
EXTRAORDINARY DIVIDEND AND DISTRIBUTION; TO AMEND
SECTION 38-27-10, RELATING TO THE CITE FOR THE
"INSURERS SUPERVISION, REHABILITATION, AND
LIQUIDATION ACT", SO AS TO DELETE
"SUPERVISION"; TO AMEND SECTION 38-27-40,
RELATING TO APPLICATION OF THE ACT, SO AS TO ADD
PREPAID HEALTH CARE DELIVERY PLANS; TO AMEND
SECTIONS 38-27-50, 38-27-230, AND 38-27-310, RELATING TO
DEFINITIONS, HEARINGS, AND REHABILITATION UNDER THE
ACT, SO AS TO DELETE THE REFERENCES TO "VALID"
AS IT APPLIES TO "ORDER" AND SECTION 38-27-210,
INSURANCE COMMISSIONER'S ORDERS AND SUPERVISION; TO
AMEND SECTION 38-27-370, RELATING TO ORDERS TO
LIQUIDATE AN INSURER, SO AS TO PROVIDE FOR A PLAN FOR
THE CONTINUED PERFORMANCE OF A DEFENDANT COMPANY'S
POLICY CLAIMS OBLIGATIONS DURING THE PENDENCY OF AN
APPEAL; TO AMEND SECTION 38-27-400, RELATING TO THE
POWERS OF A LIQUIDATOR, SO AS TO AUTHORIZE THE AUDIT
OF THE BOOKS AND RECORDS OF AGENTS OF THE INSURER
AND PROVIDE THAT A LIQUIDATOR IS NOT OBLIGATED TO
DEFEND OR CONTINUE TO DEFEND CLAIMS AFTER THE ENTRY
OF A LIQUIDATION ORDER; TO AMEND SECTION 38-27-610,
RELATING TO THE PRIORITY OF DISTRIBUTION OF CLAIMS
FROM AN INSURER'S ESTATE, SO AS TO INCLUDE IN CLASS 3
CLAIMS OF FEDERAL, STATE, AND LOCAL GOVERNMENTS FOR
LOSSES INCURRED, "LOSS CLAIMS", AND EXCLUDE
THOSE CLAIMS FROM CLASS 5; TO AMEND SECTION 38-27-950,
RELATING TO PROCEEDINGS INSTITUTED BY THE INSURANCE
COMMISSIONER, SO AS TO DELETE THE REFERENCE TO
SECTION 38-27-210, ORDERS AND SUPERVISION; TO AMEND
SECTION 38-33-100, RELATING TO CERTIFICATES OF
AUTHORITY FOR HEALTH MAINTENANCE ORGANIZATIONS, SO
AS TO PROVIDE THE CAPITAL NET WORTH REQUIREMENTS FOR
A STOCK HEALTH MAINTENANCE ORGANIZATION, DELETE THE
REFERENCE TO NET WORTH REQUIREMENTS FOR HEALTH
MAINTENANCE ORGANIZATIONS AFTER THE TRANSITION
PERIOD, AND AUTHORIZE THE COMMISSIONER TO REQUIRE
GREATER INITIAL NET WORTH REQUIREMENTS FOR HEALTH
MAINTENANCE ORGANIZATIONS; TO AMEND SECTION 38-55-30,
RELATING TO LIMITATION OF RISK BY INSURERS, SO AS TO
APPLY THE LIMITATION TO CAPTIVES AND DEFINE THE TERM;
TO AMEND SECTION 38-87-40, RELATING TO OUT-OF-STATE
CHARTERED RISK RETENTION GROUPS, SO AS TO PROVIDE FOR
THE EXAMINATION REGARDING FINANCIAL CONDITION TO BE
CONDUCTED IN ACCORDANCE WITH THE NATIONAL
ASSOCIATION OF INSURANCE COMMISSIONERS' EXAMINER'S
HANDBOOK INSTEAD OF THE STANDARDS AND PROCEDURES
APPLICABLE TO EXAMINATIONS OF ADMITTED INSURERS; TO
AMEND SECTION 38-87-90, RELATING TO THE PURCHASE OF
LIABILITY INSURANCE FROM A NONSTATE APPROVED
SURPLUS LINES INSURER, SO AS TO PROVIDE THE CONDITIONS
UNDER WHICH INSURANCE MAY BE PURCHASED FROM A RISK
RETENTION GROUP NOT CHARTERED OR AN INSURER NOT
ADMITTED IN THE STATE; AND TO REPEAL SECTION 38-27-210
RELATING TO THE INSURANCE COMMISSIONER'S ORDERS AND
SUPERVISION.
Be it enacted by the General Assembly of the State of South Carolina:
Reinsurance credits; liability reductions
SECTION 1. The 1976 Code is amended by adding:
"Section 38-9-200. (A) Credit for reinsurance must be allowed a domestic ceding insurer as
an asset or a deduction from liability on account of reinsurance ceded only
when the reinsurer meets the requirements of subsection (B), (C), (D), (E),
or (F). If meeting the requirements of subsection (D) or (E), the
requirements of subsection (G) must be met also.
(B) Credit must be allowed when the reinsurance is ceded to an
assuming insurer which is licensed to transact insurance or reinsurance in
this State or approved as a reinsurer by the Chief Insurance Commissioner
provided by Section 38-5-60.
(C) Credit must be allowed when the reinsurance is ceded to an
assuming insurer which is accredited as a reinsurer in this State. An
accredited reinsurer is one which:
(1) files with the commissioner evidence of its submission to this state's
jurisdiction;
(2) submits to this state's authority to examine its books and records;
(3) is licensed to transact insurance or reinsurance in at least one state,
or for a United States branch of an alien assuming insurer is entered
through and licensed to transact insurance or reinsurance, in at least one
state;
(4) pays an initial submission fee of four hundred dollars and annually
pays a four hundred dollar fee by March first;
(5) files annually with the commissioner a copy of its annual statement
filed with the insurance department of its state of domicile and a copy of its
most recent audited financial statement and:
(a) maintains a surplus as regards policyholders of not less than twenty
million dollars and whose accreditation has not been denied by the
commissioner within ninety days of its submission; or
(b) maintains a surplus as regards policyholders of less than twenty
million dollars and whose accreditation has been approved by the
commissioner.
No credit is allowed a domestic ceding insurer if the assuming insurer's
accreditation has been revoked by the commissioner after notice and
hearing.
(D) Credit must be allowed when the reinsurance is ceded to an
assuming insurer which is domiciled and licensed in, or for a United States
branch of an alien assuming insurer is entered through, a state which
employs standards regarding credit for reinsurance substantially similar to
those applicable under this statute, and the assuming insurer or United
States branch of an alien assuming insurer:
(1) maintains a surplus as regards policyholders of not less than twenty
million dollars;
(2) submits to the authority of this State to examine its books and
records.
However, the requirement of item (1) does not apply to reinsurance ceded
and assumed pursuant to pooling arrangements among insurers in the same
holding company system.
(E)(1) Credit must be allowed when the reinsurance is ceded to an
assuming insurer which maintains a trust fund in a qualified United States
financial institution, defined in Section 38-9-220(B), for the payment of the
valid claims of its United States policyholders and ceding insurers and their
assigns and successors in interest. The assuming insurer shall report
annually to the commissioner information substantially the same as that
required to be reported on the National Association of Insurance
Commissioners annual statement form by licensed insurers to enable the
commissioner to determine the sufficiency of the trust fund. For a single
assuming insurer, the trust must consist of a trusteed account representing
the assuming insurer's liabilities attributable to business written in the
United States and, in addition, the assuming insurer shall maintain a
trusteed surplus of not less than twenty million dollars. For a group of
individual unincorporated underwriters, the trust must consist of a trusteed
account representing the group's liabilities attributable to business written
in the United States and, in addition, the group shall maintain a trusteed
surplus of which one hundred million dollars must be held jointly for the
benefit of United States ceding insurers of a member of the group. The
group shall make available to the commissioner an annual certification of
the solvency of each underwriter by the group's domiciliary regulator and
its independent public accountants.
(2) For a group of incorporated insurers under common administration
which complies with the filing requirements contained in item (1), has
transacted continuously an insurance business outside the United States for
at least three years immediately before making application for
accreditation, submits to this state's authority to examine its books and
records and bears the expense of the examination, and has aggregate
policyholders' surplus of ten billion dollars, the trust must be in an amount
equal to the group's several liabilities attributable to business ceded by
United States ceding insurers to a member of the group pursuant to
reinsurance contracts issued in the name of the group. The group also shall
maintain a joint trusteed surplus of which one hundred million dollars must
be held jointly for the benefit of United States ceding insurers of a member
of the group as additional security for liabilities. Each member of the
group shall make available to the commissioner an annual certification of
the member's solvency by the member's domiciliary regulator and its
independent public accountant.
(3) The trust must be established in a form approved by the
commissioner. The trust instrument must provide that contested claims
must be valid and enforceable upon the final order of a court of competent
jurisdiction in the United States. The trust must vest legal title to its assets
in the trustees of the trust for its United States policyholders and ceding
insurers and their assigns and successors in interest. The trust and the
assuming insurer are subject to examination determined by the
commissioner. The trust must remain in effect for as long as the assuming
insurer has outstanding obligations due under the reinsurance agreements
subject to the trust.
(4) No later than February twenty-eighth each year the trustees of the
trust shall report to the commissioner in writing setting forth the balance of
the trust and listing the trust's investments at the preceding year end and
shall certify the date of termination of the trust, if so planned, or certify that
the trust may not expire before the next following December thirty-first.
(F) Credit must be allowed when the reinsurance is ceded to an assuming
insurer not meeting the requirements of subsection (B), (C), (D), or (E) but
only with respect to the insurance of risks located in jurisdictions where the
reinsurance is required by applicable law or regulation of that
jurisdiction.
(G) If the assuming insurer is not licensed or accredited to transact
insurance or reinsurance in this State, the credit permitted by subsections
(D) and (E) must not be allowed unless the assuming insurer agrees in the
reinsurance agreements:
(1) that when the assuming insurer fails to perform its obligations under
the terms of the reinsurance agreement, the assuming insurer, at the request
of the ceding insurer, shall submit to the jurisdiction of a court of
competent jurisdiction in a state of the United States, comply with all
requirements necessary to give the court jurisdiction, and abide by the final
decision of the court or of an appellate court in an appeal;
(2) to designate the commissioner or a designated attorney as its true and
lawful attorney upon whom may be served lawful process in an action, a
suit, or a proceeding instituted by or on behalf of the ceding company.
This subsection does not conflict with or override the obligation of the
parties to a reinsurance agreement to arbitrate their disputes if an obligation
is created in the agreement.
(H) The commissioner may promulgate regulations to implement the
provisions of this section and Section 38-9-210.
Section 38-9-210. A reduction from liability for the reinsurance ceded by
a domestic insurer to an assuming insurer not meeting the requirements of
Section 38-9-200 must be allowed in an amount not exceeding the
liabilities carried by the ceding insurer. The reduction must be in the
amount of funds held by or on behalf of the ceding insurer, including funds
held in trust for the ceding insurer, under a reinsurance contract with the
assuming insurer as security for the payment of obligations, if the security
is held in the United States subject to withdrawal solely by and under the
exclusive control of the ceding insurer or, for a trust, held in a qualified
United States financial institution, defined in Section 38-9-220(B). This
security may be in the form of:
(1) cash;
(2) securities listed by the Securities Valuation Office of the National
Association of Insurance Commissioners and qualifying as admitted assets
under Section 38-11-100;
(3) clean, irrevocable, unconditional letters of credit issued or confirmed
by a qualified United States financial institution defined in Section
38-9-220(A) no later than December thirty-first of the year for which filing
is being made and in the possession of the ceding company on or before the
filing date of its annual statement. Letters of credit meeting applicable
standards of issuer acceptability as of the dates of their issuance or
confirmation, notwithstanding the issuing or confirming institution's
subsequent failure to meet applicable standards of issuer acceptability,
continue to be acceptable as security until their expiration, extension,
renewal, modification, or amendment, whichever first occurs;
(4) other form of security acceptable to the commissioner.
Section 38-9-220. (A) For purposes of Section 38-9-210, a `qualified United States financial
institution' means an institution that:
(1) is organized or, for a United States office of a foreign banking
organization, licensed under the laws of the United States or its state;
(2) is regulated, supervised, and examined by federal or state authorities
having regulatory authority over banks and trust companies;
(3) has been determined by the commissioner or the Securities Valuation
Office of the National Association of Insurance Commissioners to meet
standards of financial condition and standing necessary and appropriate to
regulate the quality of financial institutions whose letters of credit are
acceptable to the commissioner.
(B) For purposes of those provisions of this law specifying those
institutions that are eligible to act as a fiduciary of a trust, a `qualified
United States financial institution' means an institution that is:
(1) organized or, for a United States branch or agency office of a foreign
banking organization, licensed under the laws of the United States or its
state and has been granted authority to operate with fiduciary powers;
(2) regulated, supervised, and examined by federal or state authorities
having regulatory authority over banks and trust companies."
Acquisitions
SECTION 2. The 1976 Code is amended by adding:
"Section 38-21-125. (A) For purposes of this section:
(1) `Acquisition' means an agreement, arrangement, or activity the
consummation of which results in a person directly or indirectly acquiring
the control of another person and includes, but is not limited to, the
acquisition of voting securities, the acquisition of assets, bulk reinsurance,
and mergers.
(2) An `involved insurer' includes an insurer which acquires or is
acquired, is affiliated with an acquirer or acquired, or is the result of a
merger.
(B)(1) Except as exempted in item (2), this section applies to an
acquisition in which there is a change in control of an insurer authorized to
do business in this State.
(2) This section does not apply to:
(a) an acquisition subject to approval or disapproval by the
commissioner pursuant to Section 38-21-60;
(b) a purchase of securities solely for investment purposes so long as
the securities are not used by voting or otherwise to cause or attempt to
cause the substantial lessening of competition in an insurance market in this
State. If a purchase of securities results in a presumption of control under
Section 38-21-10(2), it is not solely for investment purposes unless the
commissioner of the insurer's state of domicile accepts a disclaimer of
control or affirmatively finds that control does not exist, and the disclaimer
action or affirmative finding is communicated by the domiciliary
commissioner to the commissioner of this State;
(c) the acquisition of a person by another person when both persons are
neither directly nor through affiliates primarily engaged in the business of
insurance if preacquisition notification is filed with the commissioner in
accordance with subsection (C)(1) thirty days before the proposed effective
date of the acquisition. However, preacquisition notification is not required
for exclusion from this section if the acquisition would be excluded by
other provisions of this subsection;
(d) the acquisition of already affiliated persons;
(e) an acquisition if, as an immediate result of the acquisition:
(i) In any market the combined market share of the involved insurers
does not exceed five percent of total market.
(ii) There is not an increase in a market share, or in any market the
combined market share of the involved insurers does not exceed twelve
percent of the total market, and the market share does not increase by more
than two percent of the total market.
For the purpose of this subitem a market means direct written insurance
premium in this State for a line of business as contained in the annual
statement required to be filed by insurers licensed to do business in this
State;
(f) an acquisition for which a preacquisition notification would be
required pursuant to this section due solely to the resulting effect on the
ocean marine insurance line of business;
(g) an acquisition of an insurer whose domiciliary commissioner
affirmatively finds that:
(i) The insurer is in failing condition.
(ii) There is a lack of feasible alternatives to improving the
condition.
(iii) The public benefits of improving the insurer's condition through
the acquisition exceed the public benefits that would arise from not
lessening competition.
(iv) The findings are communicated by the domiciliary commissioner
to the commissioner of this State.
(C)(1) An acquisition covered by subsection (B) may be subject to an
order pursuant to subsection (E) unless the acquiring person files a
preacquisition notification and the waiting period has expired. The
acquired person may file a preacquisition notification. The commissioner
shall give confidential treatment to information submitted under subsection
(C) in the same manner provided in Section 38-21-290.
(2) The preacquisition notification must be in a form and contain
information prescribed by the National Association of Insurance
Commissioners relating to those markets which, under subsection B(2)(e),
cause the acquisition not to be exempted from the provisions of this
section. The commissioner may require additional material and
information necessary to determine whether the proposed acquisition, if
consummated, violates the competitive standard of subsection (D). The
required information may include an opinion of an economist as to the
competitive impact of the acquisition in this State accompanied by a
summary of the education and experience of the person indicating ability to
render an informed opinion.
(3) The required waiting period begins on the date of receipt of the
commissioner of a preacquisition notification and ends on the earlier of the
thirtieth day after the date of receipt or termination of the waiting period by
the commissioner. Before the end of the waiting period, the commissioner
on a one-time basis may require the submission of additional needed
information relevant to the proposed acquisition. If he does, the waiting
period ends on the earlier of the thirtieth day after receipt of the additional
information by the commissioner or termination of the waiting period by
the commissioner.
(D)(1) The commissioner may enter an order under subsection (E) (1)
with respect to an acquisition if there is substantial evidence that the effect
of the acquisition may be to lessen competition substantially in a line of
insurance in this State or tend to create a monopoly or if the insurer fails to
file adequate information in compliance with subsection (C).
(2) In determining whether a proposed acquisition violates the
competitive standard of item (1), the commissioner shall consider the
following:
(a) An acquisition covered under subsection (B) involving two or more
insurers competing in the same market is prima facie evidence of a
violation of the competitive standards:
(i) if the market is highly concentrated and the involved insurers
possess the following shares of the market:
Insurer A Insurer B
4% 4% or more
10% 2% or more
15% 1% or more
(ii) if the market is not highly concentrated and the involved
insurers possess the following shares of the market:
Insurer A Insurer B
5% 5% or more
10% 4% or more 15% 3% or more
19% 1% or more.
A highly concentrated market is one of which the share of the four largest
insurers is seventy-five percent or more of the market. Percentages not
shown in the tables are interpolated proportionately to the percentages that
are shown. If more than two insurers are involved, exceeding the total of
the two columns in the table is prima facie evidence of violation of the
competitive standard in item (1). For the purpose of this item, the insurer
with the largest share of the market is Insurer A.
(b) It must be determined whether there is a significant trend toward
increased concentration in the market. The trend exists when the aggregate
market share of a grouping of the largest insurers in the market, from the
two largest to the eight largest, has increased by seven percent or more of
the market over time extending from a base year five to ten years before the
acquisition up to the time of the acquisition. An acquisition or merger
covered under subsection (B) involving two or more insurers competing in
the same market is prima facie evidence of a violation of the competitive
standard in item (1) if all of the following exist:
(i) There is a significant trend toward increased concentration in the
market.
(ii) One of the insurers involved is one of the insurers in a grouping of
the large insurers showing the requisite increase in the market share.
(iii) Another involved insurer's market is two percent or more.
(c) Even though an acquisition is not prima facie violative of the
competitive standard under this item, the commissioner may establish the
requisite anticompetitive effect based upon other substantial evidence.
Even though an acquisition is prima facie violative of the competitive
standard under this item, a party may establish the absence of the requisite
anticompetitive effect based upon other substantial evidence. Relevant
factors in making a determination include, but are not limited to: market
shares, volatility of the ranking of market leaders, number of competitors,
concentration, trend of concentration in the industry, and ease of entry and
exit into the market.
(d) For the purpose of this item:
(i) `Insurer' includes a company or group of companies under common
management, ownership, or control.
(ii) `Market' means the relevant product and geographical markets. In
determining the relevant product and geographical markets the
commissioner shall give due consideration to the definitions or guidelines,
if any, promulgated by the National Association of Insurance
Commissioners and to information, if any, submitted by parties to the
acquisition. In the absence of sufficient information to the contrary, the
relevant product market is assumed to be the direct written insurance
premium for a line of business. The line is that used in the annual
statement required to be filed by insurers doing business in this State, and
the relevant geographical market is assumed to be this State.
(iii) The burden of showing prima facie evidence of a violation of the
competitive standard rests upon the commissioner.
(3) An order must not be entered under subsection (E)(1) if the
acquisition will:
(a) yield substantial economies of scale or economies in resource
utilization that cannot be achieved feasibly in another way, and the public
benefits which would arise from the economies exceed the public benefits
which would arise from not lessening competition; or
(b) substantially increase the availability of insurance, and the public
benefits of the increase exceed the public benefits which would arise from
not lessening competition.
(E)(1)(a) If an acquisition violates the standards of this section, the
commissioner may enter an order:
(i) requiring an involved insurer to stop doing business in this State
with respect to the line or lines of insurance involved in the violation;
or
(ii) denying the application of an acquired or acquiring insurer for a
license to do business in this State.
(b) An order must not be entered unless all of the following exist:
(i) There is a hearing.
(ii) Notice of the hearing is issued before the end of the waiting period
and not less than fifteen days before the hearing.
(iii) The hearing is concluded and the order is issued no later than sixty
days after the end of the waiting period.
An order must be accompanied by a written decision of the commissioner
setting forth his findings of fact and conclusions of law.
(c) An order does not become final earlier than thirty days after it is
issued. Before it becomes final the involved insurer may submit a plan to
remedy the anticompetitive impact of the acquisition within a reasonable
time. Based upon the plan or other information, the commissioner shall
specify the conditions, if any, under the time period during which the
aspects of the acquisition causing a violation of the standards of this section
would be remedied and the order vacated or modified.
(d) An order does not apply if the acquisition is not consummated.
(2) A person who violates an order under item (1), while the order is in
effect, after notice and hearing, and upon order of the commissioner, is
subject at his discretion to one or more of the following:
(a) monetary penalty of not more than ten thousand dollars for each day
of violation;
(b) suspension or revocation of license.
(3) An insurer or other person who fails to make a filing required by this
section and who fails to demonstrate a good faith effort to comply with a
filing requirement is subject to a fine of not more than fifty thousand
dollars.
(F) Sections 38-21-320, 38-21-330, and 38-21-350 do not apply to
acquisitions under subsection (B)."
Administration Supervision of Insurers Act
SECTION 3. The 1976 Code is amended by adding:
"CHAPTER 26
Administrative Supervision of Insurers
Section 38-26-10. This chapter may be cited as the `Administrative
Supervision of Insurers Act'.
Section 38-26-20. As used in this chapter:
(1) `Insurer' means a person who has done, purports to do, is going to do,
or is licensed to do an insurance business and is or has been subject to the
authority of, or to liquidation, rehabilitation, reorganization, supervision, or
conservation by the commissioner of insurance, or similar entity, of a state.
For purposes of this chapter, other persons included under Section
38-27-40 are considered insurers.
(2) `Exceed its powers' means the following conditions:
(a) The insurer has refused to permit examination of its books, papers,
accounts, records, or affairs by the commissioner or his deputies,
employees, or commissioned examiners.
(b) A domestic insurer unlawfully has removed from this State books,
papers, accounts, or records necessary for an examination of the
insurer.
(c) The insurer has failed to comply promptly with the applicable
financial reporting statutes or regulations and related departmental
requests.
(d) The insurer has neglected or refused to observe an order of the
commissioner to make good, within the time prescribed by law, prohibited
deficiency in its capital, capital stock, or surplus.
(e) The insurer is continuing to transact insurance or write business after
its license has been revoked or suspended by the commissioner.
(f) The insurer, by contract or otherwise, unlawfully, in violation of an
order of the commissioner, or without first having obtained written
approval of the commissioner if approval is required by law has:
(i) totally reinsured its entire outstanding business; or
(ii) merged or consolidated substantially its entire property or business
with another insurer.
(g) The insurer engaged in a transaction in which it is not authorized to
engage under the laws of this State.
(h) The insurer refused to comply with a lawful order of the
commissioner.
(3) `Consent' means agreement to administrative supervision by the
insurer.
Section 38-26-30. The provisions of this chapter apply to:
(1) domestic insurers;
(2) an insurer doing business in this State whose state of domicile has
asked the commissioner to apply the provisions of this chapter as regards
the insurer.
Section 38-26-40. (A) An insurer may be subject to administrative
supervision by the commissioner if upon examination or at another time it
appears in the commissioner's discretion that one or more of the following
circumstances exist:
(1) The insurer's condition renders the continuance of its business
hazardous to the public or to its insureds.
(2) The insurer has exceeded its powers granted under its certificate of
authority and applicable law.
(3) The insurer has failed to comply with a provision of the insurance
laws of this State.
(4) The business of the insurer is being conducted fraudulently.
(5) The insurer gives its consent.
(B) If the commissioner determines that one or more of the conditions set
forth in subsection (A) exist, he shall:
(1) notify the insurer of his determination;
(2) furnish to the insurer a written list of the requirements to abate this
determination;
(3) notify the insurer that it is under the supervision of the commissioner
and that the commissioner is applying the provisions of the chapter. Action
by the commissioner is subject to review pursuant to related regulations and
the Administrative Procedures Act.
(C) If placed under administrative supervision, the insurer has sixty days
or another period of time designated by the commissioner to comply with
the requirements of the commissioner subject to the provisions of this
chapter.
(D) If it is determined after notice and hearing that the conditions giving
rise to the supervision still exist at the end of the supervision period, the
commissioner may extend the period or may initiate proceedings under
Chapter 27 of this title.
(E) If it is determined that none of the conditions giving rise to the
supervision exist, the commissioner shall release the insurer from
supervision.
Section 38-26-50. (A) Proceedings, hearings, notices, correspondence,
reports, records, and other information in the possession of the
commissioner or the Department of Insurance relating to the supervision of
an insurer are confidential except as provided by this section.
(B) Department personnel have access to the proceedings, hearings,
notices, correspondence, reports, records, and other information permitted
by the commissioner.
(C) The commissioner may open the proceedings or hearings or disclose
notices, correspondence, reports, records, or other information to a
department, agency, or instrumentality of this or another state or of the
United States if the commissioner determines that the disclosure is
necessary or proper for the enforcement of the laws of this or another state
or the United States.
(D) The commissioner may open the proceedings or hearings or make
public notices, correspondence, reports, records, or other information if the
commissioner determines that it is in the best interest of the public or in the
best interest of the insurer, its insureds, its creditors, or the general
public.
(E) This section does not apply to hearings, notices, correspondence,
reports, records, or other information obtained after the appointment of a
receiver for the insurer by a court of competent jurisdiction.
Section 38-26-60. During the period of supervision, the commissioner or
his designated appointee shall serve as the administrative supervisor. The
commissioner may provide, after notice to the insurer, that the insurer may
not do any of the following things during supervision without the prior
approval of the commissioner or his appointed supervisor:
(1) dispose of, convey, or encumber its assets or its business in force;
(2) withdraw its bank accounts;
(3) lend its funds;
(4) invest its funds;
(5) transfer its property;
(6) incur debt, obligation, or liability;
(7) merge or consolidate with another company;
(8) approve new premiums or renew policies;
(9) enter into a new reinsurance contract or treaty;
(10) terminate, surrender, forfeit, convert, or lapse an insurance policy, a
certificate, or a contract, except for nonpayment of premiums due;
(11) release, pay, or refund premium deposits, accrued cash or loan
values, unearned premiums, or other reserves on an insurance policy,
certificate, or contract;
(12) make a material change in management;
(13) increase salaries and benefits of officers or directors or the
preferential payment of bonuses, dividends, or other preferential
payments.
Section 38-26-70. During supervision the insurer may contest an action
taken or proposed to be taken by the supervisor specifying the manner in
which the action being complained of would not result in improving the
condition of the insurer. Denial of the insurer's request upon
reconsideration entitles the insurer to review under related regulations and
the Administrative Procedures Act.
Section 38-26-80. Nothing in this chapter precludes the commissioner
from initiating judicial proceedings to place an insurer in conservation,
rehabilitation, or liquidation or other delinquency proceedings, however
designated under the laws of this State, regardless of whether the
commissioner previously has initiated administrative supervision
proceedings under this chapter against the insurer.
Section 38-26-90. The commissioner may meet with a supervisor
appointed under this chapter and with his attorney or other representative
without the presence of another person at the time of or during a
proceeding held under authority of this chapter to carry out the
commissioner's duties or for the supervisor to carry out his duties under this
chapter.
Section 38-26-100. There is no liability on the part of, and no cause of
action may arise against, the commissioner or the Department of Insurance
or its employees or agents for action taken by them in the performance of
their powers and duties under this chapter.
Section 38-26-110. The commissioner may promulgate regulations
necessary for the implementation of this chapter."
Conduct of insurance proceedings
SECTION 4. The 1976 Code is amended by adding:
"Section 38-27-100. An insurance proceeding under this chapter
begun before the effective date of the `Insurers Supervision, Rehabilitation,
and Liquidation Act' is deemed to have begun after that date for the
purpose of conducting the proceeding. However, in the discretion of the
commissioner, the proceeding may be continued, in whole or in part, as it
would have been if this act was not in effect.
Section 38-27-110. Until payments of or on account of an insurer's
contractual obligations by a guaranty association, including expenses and
interest, are repaid to the guaranty association or a plan of repayment by the
insurer is approved by the guaranty association, no insurer that is subject to
a delinquency proceeding, whether formal or informal, administrative or
judicial, may:
(1) be released from the proceeding unless it is converted into a judicial
rehabilitation or liquidation proceeding;
(2) be permitted to solicit or accept new business or request or accept the
restoration of a suspended or revoked license or certificate of authority;
(3) be returned to the control of its shareholders or private management;
or
(4) have its assets returned to the control of its shareholders or private
management."
Hazardous insurance proceedings
SECTION 5. Section 38-5-120 of the 1976 Code is amended to read:
"Section 38-5-120. (A) The commissioner shall revoke or suspend certificates of authority granted
to an insurer and its officers and agents if he is of the opinion upon
examination or other evidence that one or more of the following exist:
(1) The insurer is in an unsound condition.
(2) The insurer has not complied with the law or with the provisions of
its charter.
(3) The insurer's condition renders its proceedings hazardous to the
public or its policyholders. For the purpose of the application of this item,
one or more of the following standards may be considered by the
commissioner in determining whether the continued operation of an insurer
transacting insurance business in this State is hazardous to the public or its
policyholders:
(a) adverse findings reported in financial condition and market conduct
examination reports;
(b) the National Association of Insurance Commissioners Insurance
Regulatory Information System and its related reports;
(c) the ratios of commission expense, general insurance expense, policy
benefits, and reserve increases as to annual premium and net investment
income which could lead to an impairment of capital and surplus;
(d) whether the insurer's asset portfolio when viewed in light of current
economic conditions is not of sufficient value, liquidity, or diversity to
assure the company's ability to meet its outstanding obligations as they
mature;
(e) whether the ability of an assuming reinsurer to perform and the
insurer's reinsurance program provides sufficient protection for the
company's remaining surplus after taking into account the insurer's cash
flow and the classes of business written as well as the financial condition of
the assuming reinsurer;
(f) whether the insurer's operating loss in the last twelve months or a
shorter time including, but not limited to, net capital gain or loss, change in
nonadmitted assets, and cash dividends paid to shareholders, is greater than
fifty percent of the insurer's remaining surplus as regards policyholders in
excess of the minimum required;
(g) whether an affiliate, a subsidiary, or a reinsurer is insolvent,
threatened with insolvency, or delinquent in payment of its monetary or
other obligations;
(h) contingent liabilities, pledges, or guaranties which individually or
collectively involve a total amount which in the opinion of the
commissioner may affect the solvency of the insurer;
(i) whether a `controlling person' of an insurer is delinquent in the
transmitting to or payment of net premiums to the insurer;
(j) the age and collectibility of receivables;
(k) whether the management of an insurer, including officers, directors,
or other persons who directly or indirectly control the operation of the
insurer, fails to possess and demonstrate the competence, fitness, and
reputation necessary to serve the insurer in that position;
(l) whether management of an insurer has failed to respond to inquiries
relative to the condition of the insurer or has furnished false and misleading
information concerning an inquiry;
(m) whether management of an insurer has filed a false or misleading
sworn financial statement, released a false or misleading financial statement
to lending institutions or to the general public, made a false or misleading
entry, or omitted an entry of a material amount in the books of the
insurer;
(n) whether the insurer has grown so rapidly and to an extent that it
lacks adequate financial and administrative capacity to meet its obligations
in a timely manner;
(o) whether the company has experienced or will experience in the
foreseeable future cash flow or liquidity problems.
(4) The true value of the insurer's assets, if it is a life insurer, is less than
its liabilities, exclusive of its capital.
(5) The officers or agents of an insurer refuse to submit to examination or
to perform a legal obligation relative to an examination.
(6) The insurer has not complied with a lawful order of the
commissioner.
(B) Notice of revocation and suspension must be published in a
newspaper of general circulation in this State. No new business may be
done by the insurer or its agents in this State while the default or disability
continues nor until its authority to transact business is restored by the
commissioner.
(C) Notwithstanding the provisions of subsection (A)(6), if the
commissioner determines that an insurer is in an unsound condition or in a
hazardous condition provided in subsection (A)(1) and (3), he may issue an
order requiring the insurer to:
(1) reduce the total amount of present and potential liability for policy
benefits by reinsurance;
(2) reduce, suspend, or limit the volume of business being accepted or
renewed;
(3) reduce general insurance and commission expenses by specified
methods;
(4) increase the insurer's capital and surplus;
(5) suspend or limit the declaration and payment of dividends by an
insurer to its stockholders or to its policyholders;
(6) file reports in a form acceptable to the commissioner concerning the
market value of an insurer's assets;
(7) limit or withdraw from certain investments or discontinue certain
investment practices to the extent the commissioner considers
necessary;
(8) document the adequacy of premium rates in relation to the risks
insured;
(9) file, in addition to regular annual statements, interim financial
reports on the form adopted by the National Association of Insurance
Commissioners or on a format approved by the commissioner;
(10) disregard credit or an amount receivable resulting from transactions
with a reinsurer which is insolvent, impaired, or otherwise subject to a
delinquency proceeding;
(11) make appropriate adjustments to asset values attributable to
investments in or transactions with parents, subsidiaries, or affiliates;
(12) refuse to recognize the stated value of accounts receivable if the
ability to collect receivables is highly speculative in view of the age of the
account or the financial condition of the debtor;
(13) increase the insurer's liability in an amount equal to a contingent
liability, pledge, or guarantee not otherwise included if there is a substantial
risk that the insurer will be called upon to meet the obligation undertaken
within the next twelve months; or
(14) take other action he considers appropriate."
Required capital and surplus of stock insurers
SECTION 6. Section 38-9-10 of the 1976 Code is amended to read:
"Section 38-9-10. (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:
If licensed to write Capital Surplus
(a) life: $600,000 $600,000
(b) accident and
health: 600,000 600,000
(c) life, accident,
and health: 1,200,000 1,200,000
(d) property: 1,200,000 1,200,000
(e) casualty: 1,200,000 1,200,000
(f) surety: 1,200,000 1,200,000
(g) marine: 1,200,000 1,200,000
(h) title: 600,000 600,000
(i) multiple lines:1,500,000 1,500,000
(2) The commissioner may require additional initial 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) If the surplus of a stock insurer is less than twenty-five percent of the
surplus initially required, as set forth in subsection (A), the insurer is
considered delinquent, and the commissioner may begin delinquency
proceedings as provided by Chapter 27 of this title.
(C) If the capital of a stock insurer is impaired, the insurer is delinquent,
and the commissioner shall begin delinquency proceedings."
Required surplus of mutual insurers
SECTION 7. Section 38-9-20 of the 1976 Code is amended to read:
"Section 38-9-20. (A)(1) Before licensing a mutual insurer, the
commissioner shall require the insurer to be possessed of surplus of not less
than:
Surplus which must be
possessed at time
If licensed to write: of licensing
(a) life: $1,200,000
(b) accident and
health: 1,200,000
(c) life, accident,
and health: 2,400,000
(d) property: 2,400,000
(e) casualty: 2,400,000
(f) surety: 2,400,000
(g) marine: 2,400,000
(h) title: 1,200,000
(i) multiple lines: 3,000,000
(2) The commissioner may require additional initial surplus based on the
type or nature of business transacted, and the initial surplus of the insurer
must consist of cash or marketable securities which are eligible investments
under Section 38-11-40.
(B) If 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 as provided by Chapter 27 of this title. (C) If 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 begin delinquency proceedings."
Requirements for capital and surplus; date changes; change of
control
SECTION 8. 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, 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:
(1) An insurer, if possessed of capital and surplus amounts on December
31, 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,
shall maintain not less than the amount of capital stated in its 1990 annual
statement and maintain surplus of not less than twenty-five percent of that
amount of capital. If 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 the minimum capital
required to be maintained by this section by the insurer becomes impaired,
the insurer is delinquent, and the commissioner shall begin delinquency
proceedings. If the capital is increased to an amount greater than the
amount possessed on December 31, 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, the insurer is delinquent, and the commissioner shall begin
delinquency proceedings.
(2) A mutual insurer, if possessed of surplus 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 Section 38-9-20, shall maintain not less than
the amount of surplus stated in its 1990 annual statement. If the surplus of
the insurer is reduced to less than eighty percent of the amount shown in its
1990 annual statement, the insurer is considered delinquent, and the
commissioner may begin delinquency proceedings as provided by Chapter
27 of this title. If the surplus of the insurer is increased to an amount
greater than the amount possessed on December 31, 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 38-9-20, whichever is
applicable."
Deductions from unearned premium reserves
SECTION 9. Section 38-9-170 of the 1976 Code is amended to read:
"Section 38-9-170. (A) An insurer authorized to transact business in this State, except as to risks
or policies for which reserves are required under subsections (B) and (C)
and Section 38-9-180 except for real estate title insurance policies, and
subject to specific provisions of this title, shall maintain reserves equal to
the unearned portions of the gross premiums charged on unexpired or
unterminated risks and policies.
Credit for reinsurance is allowed a ceding insurer as a deduction from
reserves required by this section only as provided in Section 38-9-200 or
38-9-210.
(B)(1) With reference to insurance against loss or damage to property
except as provided in item (5) and with reference to all general casualty
insurance and surety insurance every insurer shall maintain an unearned
premium reserve on all policies in force.
(2) The commissioner may require that these reserves are equal to the
unearned portions of the gross premiums in force as computed on each
respective risk from the policy's date of issue. If the commissioner does not
so require, the portions of the gross premium in force to be held as
premium reserve must be computed according to the following table:
Term for Which Reserved for
Policy was Written Unearned Premium
1 year or less 1/2
2 years 1st year 3/4
2nd year 1/4
3 years 1st year 5/6
2nd year 1/2
3rd year 1/6
4 years 1st year 7/8
2nd year 5/8
3rd year 3/8
4th year 1/8
5 years 1st year 9/10
2nd year 7/10
3rd year 1/2
4th year 3/10
5th year 1/10
Over 5 years pro rata.
(3) All of these reserves may be computed, at the option of the insurer, on
a yearly or more frequent pro rata basis.
(4) After adopting a method for computing the reserve, an insurer may
not change methods without the commissioner's approval.
(5) With reference to marine insurance, premiums on trip risks not
terminated are considered unearned, and the commissioner may require the
insurer to carry a reserve equal to one hundred percent on trip risks written
during the month ended as of the date of statement. For all accident and
health policies the insurer shall maintain an active life reserve which places
a sound value on its liabilities under these policies and which is not less
than the reserve according to standards set forth in regulations issued by the
commissioner and not less, in the aggregate, than the pro rata gross
unearned premium reserves for these policies."
Credit for reinsurance
SECTION 10. Section 38-9-190 of the 1976 Code is amended to read:
"Section 38-9-190. A company authorized to transact insurance in
this State shall maintain reserves in an amount estimated in the aggregate as
being sufficient to provide for the payment of all losses or claims arising by
the date of an annual or other statement, whether reported or unreported,
which are unpaid as of that date and for which the insurer may be liable and
also reserves in an amount estimated to provide for the expenses of
adjustment or settlement of these claims.
The reserves for unpaid losses and loss expenses under policies of
personal injury liability insurance, employer's liability insurance, and
workers' compensation insurance must be calculated in accordance with
regulations the commissioner prescribes. A company authorized to write
these kinds of insurance shall file with its annual statement schedules of its
experience in the form the commissioner requires.
Credit for reinsurance is allowed a ceding insurer as an asset or a
deduction from reserves required by this section only as provided in
Section 38-9-200 or 38-9-210."
Development and administration of investments
SECTION 11. Section 38-11-10 of the 1976 Code is amended to read:
"Section 38-11-10. The legislative intent is that policyholder
obligations and the minimum capital or guaranty fund and surplus required
by law must be covered only by assets of unquestioned integrity and
stability and that assets in excess of those required to cover policyholder
obligations, minimum capital or guaranty funds, and surplus may be
invested by insurers at the discretion of the insurers. However, the assets
must not be invested in assets prohibited under Section 38-11-90. The
purpose of this section is to protect and further the interests of
policyholders, claimants, creditors, and the public by providing standards
for the development and administration of programs for the investment of
the assets of companies organized under this chapter. These standards and
the investment programs developed by companies must take into account
the safety of the company's principal, investment yield, and growth,
stability in the value of the investment, and liquidity necessary to meet the
company's expected business needs, and investment diversification."
Valuation of investments; regulations
SECTION 12. Section 38-11-50 of the 1976 Code is amended to read:
"Section 38-11-50. (A) Investments made by insurers to cover
policyholder obligations and their minimum capital or guaranty fund and
surplus required by law, provided in Section 38-11-40, are subject to:
(1) None of the securities in Section 38-11-40 are eligible for the
purposes of that section if, within five years immediately preceding, the
obligor has defaulted in the payment of principal or interest on its bonds,
warrants, or other securities.
(2) With respect to investments under Section 38-11-40(g), not more
than twenty percent of the insurer's policyholder obligations may be
invested in the securities of a county, city, town, village, municipality, or
district of a state or territory of the United States or its political
subdivisions or a civil division or public instrumentality of the United
States. However, this limitation does not apply to an investment which
qualifies for sinking fund purposes under the laws of this State.
(3) Investments in Section 38-11-40(h) may not exceed ten percent of
the insurer's policyholder obligations.
(4) Investments in Section 38-11-40(i) may not exceed sixty-six and
two-thirds percent of the insurer's policyholder obligations, nor may more
than ten percent of the insurer's policyholder obligations be invested in one
investment.
(5) Investments in Section 38-11-40(j) may not exceed fifteen percent of
the insurer's policyholder obligations.
(6) Investments in Section 38-11-40(l), (m), and (n) may not exceed in
the aggregate sixty-six and two-thirds percent of the insurer's policyholder
obligations, nor, with respect to investments under these items, may more
than ten percent of the insurer's policyholder obligations be invested in one
investment or in one project, subdivision, or transaction or series of related
transactions.
(7) Investments in Section 38-11-40(o) may not exceed ten percent of
the insurer's policyholder obligations.
(8) Investments in Section 38-11-40(p) may not exceed ten percent of
the insurer's policyholder obligations. Where a life insurer does not, wholly
or in part, avail itself of Section 38-11-40(o), as limited by Section
38-11-40(f), the investments under Section 38-11-40(p) may be increased
to the extent of the unused portion, but the life insurer's investments under
Section 38-11-40(p) may not exceed fifteen percent of the insurer's
policyholder obligations. However, this limitation does not apply to real
estate acquired by bona fide mortgage foreclosure if the insurer has had
title to the real estate for less than five years.
(9) Investments in Section 38-11-40(q) may not exceed ten percent of
the insurer's policyholder obligations.
(10) Investments in Section 38-11-40(r) may not exceed ten percent of
the insurer's policyholder obligations.
(11) Investments authorized under Section 38-11-40(s) may not exceed
ten percent of the insurer's policyholder obligations.
(B) For purposes of the limitations contained in this section:
(1) Except as otherwise provided in item (2), investments in Section
38-11-40 must be valued in accordance with stated values or standards
published by the Securities Valuation Office of the National Association of
Insurance Commissioners in its Valuations of Securities Manual.
Investments for which the National Association of Insurance
Commissioners has not published valuations or standards must be valued as
follows:
(a) Obligations having a fixed term and rate, if not in default as to
principal or interest, must be valued, if purchased at par, at the par value
and, if purchased above or below par, on the basis of the purchase price
adjusted so as to bring the value to par at maturity and so as to yield in the
meantime the effective rate of interest at which the purchase was made.
(b) Common, preferred, or guaranteed stocks must be valued at their
market value or, at the option of the company, may be valued at the
purchase price if it is less than market value.
(c) Other securities investments must be valued in accordance with
regulations promulgated pursuant to subsection (D).
(2) Investments not provided for in item (1), including real property, must
be valued in accordance with regulations promulgated pursuant to
subsection (D), but they must not be valued at more than their purchase
price. Purchase price for real property includes capitalized permanent
improvements less depreciation spread evenly over the life of the property
or, at the option of the company, less depreciation computed on a basis
permitted under the Internal Revenue Code and its regulations.
Investments affected by permanent declines in value must be valued at not
more than their market value. However, mortgage loans may be valued at
amortized value.
(C) An investment, including real property, not purchased by a company
but acquired in satisfaction of a debt or otherwise must be valued in
accordance with the applicable procedures for that type of investment
contained in this section. For purposes of applying the valuation
procedures, the purchase price is the market value at the time the
investment is acquired or, for an investment acquired in satisfaction of debt,
the amount of the debt including interest, taxes, and expenses, whichever is
less.
(D) The commissioner shall promulgate regulations for determining and
calculating values to be used in financial statements submitted to the
Department of Insurance for investments not subject to published National
Association of Insurance Commissioner's valuation standards."
Competitive standard
SECTION 13. Section 38-21-90 of the 1976 Code is amended to read:
"Section 38-21-90. (A) The commissioner shall approve a merger
or other acquisition of control in Section 38-21-60 unless, after a public
hearing, he finds that:
(1) After the change of control the domestic insurer referred to in Section
38-21-60 is not able to satisfy the requirements for the issuance of a license
to write the line or lines of insurance for which it is presently licensed.
(2) The effect of the merger or other acquisition of control would
substantially lessen competition in insurance in this State or tend to create a
monopoly. In applying the competitive standard in this item:
(a) The information requirements and standards of Section 38-21-125(C)
and (D) apply.
(b) The merger or other acquisition must not be approved if the
commissioner finds that at least one of the situations in Section
38-21-125(D) exists.
(c) The commissioner may condition the approval of the merger or other
acquisition on the removal of the basis of disapproval within a specified
period of time.
(3) The financial condition of the acquiring party might jeopardize the
financial stability of the insurer or prejudice the interest of its
policyholders.
(4) The plans or proposals which the acquiring party has to liquidate the
insurer, sell its assets, or consolidate or merge it with a person or to make
another material change in its business or corporate structure or
management are unfair and unreasonable to policyholders of the insurer
and not in the public interest.
(5) The competence, experience, and integrity of those persons who
would control the operation of the insurer are such that it is not in the
interest of policyholders of the insurer and of the public to permit the
merger or other acquisition of control.
(6) The acquisition is likely to be hazardous or prejudicial to the
insurance-buying public.
(B) The public hearing referred to in subsection (A) must be held within
thirty days after the statement required by Section 38-21-60 is filed, and at
least twenty days' notice must be given by the commissioner to the person
filing the statement, to the insurer, and to other persons designated by the
commissioner. The commissioner shall make a determination within thirty
days after the conclusion of the hearing. At the hearing, the person filing
the statement, the insurer, a person to whom notice of hearing was sent,
and other persons whose interests are affected may present evidence,
examine and cross-examine witnesses, and offer oral and written arguments
and are entitled to conduct discovery proceedings in the same manner
allowed in the circuit courts of this State. Discovery proceedings must be
concluded not later than three days before the public hearing.
(C) The commissioner may retain at the acquiring person's expense
attorneys, actuaries, accountants, and other experts not otherwise a part of
the commissioner's staff reasonably necessary to assist the commissioner in
reviewing the proposed acquisition of control."
Pledge of insurer's stock for loan
SECTION 14. Section 38-21-140 of the 1976 Code is amended to read:
"Section 38-21-140. Every insurer subject to registration shall file
the registration statement on a form prescribed by the commissioner which
must contain the following current information:
(1) capital structure, general financial condition, ownership, and
management of the insurer and a person controlling the insurer;
(2) identity and relationship of every member of the insurance holding
company system;
(3) the following agreements in force and transactions currently
outstanding or which have occurred during the last calendar year between
the insurer and its affiliates:
(a) loans, other investments, or purchases, sales, or exchanges of
securities of the affiliates by the insurer or of the insurer by its
affiliates;
(b) purchases, sales, or exchanges of assets;
(c) transactions not in the ordinary course of business;
(d) guarantees or undertakings for the benefit of an affiliate which result
in an actual contingent exposure of the insurer's assets to liability, other
than insurance contracts entered into in the ordinary course of the insurer's
business;
(e) management agreements, service contracts, and cost-sharing
arrangements;
(f) reinsurance agreements;
(g) dividends and other distributions to shareholders;
(h) consolidated tax allocation agreements.
(4) pledge of the insurer's stock, including stock of a subsidiary or
controlling affiliate, for a loan made to a member of the insurance holding
company system;
(5) other matters concerning transactions between registered insurers and
affiliates included in registration forms adopted or approved by the
commissioner."
Determination of extraordinary dividend and distribution
SECTION 15. Section 38-21-270 of the 1976 Code is amended to read:
"Section 38-21-270. (A) No domestic insurer may pay an
extraordinary dividend or make another extraordinary distribution to its
shareholders until the commissioner:
(1) has approved the payment; or
(2) has not disapproved the payment within thirty days after receiving
notice of the declaration.
(B)(1) For purposes of this section, an extraordinary dividend or
distribution includes a dividend or distribution of cash or other property
whose fair market value together with that of other dividends or
distributions made within the preceding twelve months exceeds the greater
of:
(a) ten percent of the insurer's surplus as regards policyholders as
reflected in the insurers most recent annual statement;
(b) the net gain from operations of the insurer, if the insurer is a life
insurer, or the net investment income, if the insurer is not a life insurer not
including realized capital gains as reflected in the insurers most recent
annual statement.
(2) It does not include pro rata distributions of a class of the insurer's
own securities.
(C) An insurer may declare an extraordinary dividend or distribution
which is conditional upon the commissioner's approval. The declaration
confers no rights upon shareholders until the commissioner:
(1) has approved the payment of the dividend or distribution; or
(2) has not disapproved the payment within thirty days after receiving
notice of the declaration."
Supervision" cite deleted
SECTION 16. Section 38-27-10 of the 1976 Code is amended to read:
"Section 38-27-10. This chapter may be cited as the `Insurers
Rehabilitation and Liquidation Act'."
Prepaid health care delivery plans
SECTION 17. Section 38-27-40 of the 1976 Code is amended to read:
"Section 38-27-40. The proceedings authorized by this chapter may
be applied to:
(1) insurers who are doing, or have done, an insurance business in this
State and against whom claims arising from that business may exist now or
in the future;
(2) insurers who purport to do an insurance business in this State;
(3) insurers who have insureds resident in this State;
(4) other persons organized or in the process of organizing with the intent
to do an insurance business in this State;
(5) nonprofit service plans, fraternal benefit societies, and beneficial
societies;
(6) title insurance companies;
(7) surety companies subject to Chapter 15 of Title 38;
(8) multiple employer self-insured health plans defined in Chapter 41 of
Title 38;
(9) prepaid health care delivery plans."
Delete references to "valid" as it applies to order
SECTION 18. Section 38-27-50(3) of the 1976 Code is amended to
read:
"(3) `Delinquency proceeding' means a proceeding instituted
against an insurer to liquidate, rehabilitate, reorganize, or conserve the
insurer and a summary proceeding under Section 38-27-220. `Formal
delinquency proceeding' means a liquidation or rehabilitation
proceeding."
Delete references to "valid" as it applies to order
SECTION 19. Section 38-27-230 of the 1976 Code is amended to read:
"Section 38-27-230. In proceedings and judicial reviews under
Section 38-27-220, records of the insurer, other documents, insurance
department files, and court records and papers, so far as they pertain to or
are a part of the record of the proceedings, are and must remain confidential
except as is necessary to obtain compliance, unless the circuit court, after
hearing arguments from the parties in chambers, orders otherwise, or unless
the insurer requests that the matter be made public. Until a court order,
papers filed with the clerk of the circuit court must be held by him in a
confidential file."
Delete references to "valid" as it applies to order
SECTION 20. Section 38-27-310(9) of the 1976 Code is amended to
read:
"(9) Within the previous three years the insurer wilfully has violated
its charter, articles of incorporation, or bylaws, an insurance law of this
State, or an order of the commissioner."
Continued performance during appeal
SECTION 21. Section 38-27-370 of the 1976 Code is amended to read:
"Section 38-27-370. (A) An order to liquidate the business of a
domestic insurer must appoint the commissioner and his successors in
office as liquidator and direct the liquidator immediately to take possession
of the assets of the insurer and to administer them under the general
supervision of the court. The liquidator is vested by operation of law with
the title to the property, contracts, and rights of action and the books and
records of the insurer ordered liquidated, wherever located, as of the entry
of the final order of liquidation. The filing or recording of the order with
the clerk of court or the register of mesne conveyances of the county in
which its principal office or place of business is located or, for real estate,
with the clerk of court and the register of mesne conveyances of the county
where the property is located imparts the same notice which a deed, bill of
sale, or other evidence of title filed or recorded with that office would have
imparted.
(B) Upon issuance of the order, the rights and liabilities of the insurer and
its creditors, policyholders, shareholders, members, and other persons
interested in its estate become fixed as of the date of entry of the order of
liquidation, except as provided in Sections 38-27-380 and 38-27-560.
(C) An order to liquidate the business of an alien insurer domiciled in this
State must be in the same terms and has the same legal effect as an order to
liquidate a domestic insurer, except that the assets and the business in the
United States are the only assets and business included.
(D) At the time of petitioning for an order of liquidation, or after that
time, the commissioner, after making appropriate findings of an insurer's
insolvency, may petition the court for a judicial declaration of insolvency.
After providing notice and hearing it considers proper the court may make
the declaration.
(E) An order issued under this section must require accounting to the
court by the liquidator. Accountings must be at intervals the court specifies
in its order.
(F)(1) Within five days of the effective date of this subsection or within
five days after the initiation of an appeal of an order of liquidation, which
order has not been stayed, the commissioner shall present for the court's
approval a plan for the continued performance of the defendant company's
policy claims obligations, including the duty to defend insureds under
liability insurance policies during the pendency of an appeal. The plan
must provide for the continued performance and payment of policy claims
obligations in the normal course of events notwithstanding the grounds
alleged in support of the order of liquidation including the ground of
insolvency. If the defendant company's financial condition, in the
judgment of the commissioner, does not support the full performance of
policy claims obligations during the appeal pendency period, the plan may
prefer the claims of certain policyholders and claimants over creditors and
interested parties as well as other policyholders and claimants as the
commissioner finds to be fair and equitable considering the relative
circumstances of the policyholders and claimants. The court shall examine
the plan submitted by the commissioner and if it finds the plan to be in the
best interests of the parties, the court shall approve the plan. No action may
lie against the commissioner or his deputies, agents, clerks, assistants, or
attorneys based on preference in an appeal pendency plan approved by the
court.
(2) The appeal pendency plan may not supersede or affect the obligations
of an insurance guaranty association. An appeal pendency plan must
provide for equitable adjustments to be made by the liquidator to
distributions of assets to guaranty associations, if the liquidator pays claims
from assets of the estate, which otherwise would be the obligations of a
guaranty association but for the appeal of the order of liquidation, so that
guaranty associations equally benefit on a pro rata basis from the assets of
the estate. If an order of liquidation is set aside upon appeal, the company
must not be released from delinquency proceedings unless funds advanced
by a guaranty association, including reasonable administrative expenses
relating to obligations of the company, are repaid in full, together with
interest at the judgment rate of interest or unless an arrangement for
repayment has been made with the consent of applicable guaranty
associations."
Audit of books and records
SECTION 22. Section 38-27-400(a) of the 1976 Code is amended by
adding an appropriately numbered item to read:
"( ) To audit the books and records of agents of the insurer insofar
as those records relate to the business activities of the insurer."
Entry of liquidation order; no obligation to defend
SECTION 23. Section 38-27-400 of the 1976 Code is amended by adding
an appropriately lettered subsection to read:
"( ) Notwithstanding the powers of the liquidator in subsections (a)
and (b), the liquidator is not obligated to defend claims or to continue to
defend claims after the entry of a liquidation order."
Loss claims
SECTION 24. Section 38-27-610(3) and (5) of the 1976 Code are
amended to read:
"(3) Class 3. Claims under policies, including claims of federal,
state, and local governments, for losses incurred, loss claims, including
third party claims, claims against the insurer for liability for bodily injury
or for injury to or destruction of tangible property which are not under
policies, and claims of a guaranty association or foreign guaranty
association. Claims under life insurance and annuity policies, whether for
death proceeds, annuity proceeds, or investment values, must be treated as
loss claims. That portion of a loss, indemnification for which is provided
by other benefits or advantages recovered by the claimant, must not be
included in this class, other than benefits or advantages recovered or
recoverable in discharge of familial obligations of support or by way of
succession at death, or as proceeds of life insurance or as gratuities. No
payment by an employer to his employee may be treated as a
gratuity."
"(5) Class 5. Claims of federal, state, and local governments,
except those under item (3). Claims, including those of a governmental
body for a penalty or forfeiture, are allowed in this class only to the extent
of the pecuniary loss sustained from the act, transaction, or proceeding out
of which the penalty or forfeiture arose, with reasonable and actual costs.
The remainder of the claims are postponed to the class of claims under item
(9)."
Reference to orders and supervision deleted
SECTION 25. Section 38-27-950 of the 1976 Code is amended to read:
"Section 38-27-950. The commissioner in his sole discretion may
institute proceedings under Sections 38-27-220 and 38-27-230 at the
request of the commissioner or other appropriate insurance official of the
domiciliary state of a foreign or an alien insurer having property located in
this State."
Required capital of stock health maintenance organization; greater
initial net worth requirements
SECTION 26. 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 million, two hundred thousand dollars, six hundred thousand
dollars of which must be capital if it is a stock health maintenance
organization. After the issuance, the health maintenance organization shall
maintain a net worth of not less than six 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, the commissioner may require that future
enrollment be limited until it is no longer necessary.
(B) The commissioner may require a health maintenance organization to
meet greater initial net worth requirements based on the health maintenance
organization's plan of operation. In making a determination to require
greater initial net worth, the commissioner may consider, among other
factors, the health maintenance organization's projected enrollment, rates,
and expenses."
Captives; limitation of risk
SECTION 27. Section 38-55-30 of the 1976 Code is amended to read:
"Section 38-55-30. Except as otherwise provided in this title, no
insurer or captive doing business in this State may expose itself to a loss on
one risk in an amount exceeding ten percent of its surplus to policyholders.
A risk or portion of it which has been reinsured must be deducted in
determining the limitation of risk prescribed in this section. As used in this
section, `captive' means an insurance company owned by another
organization whose exclusive purpose is to insure risks of the parent
organization and affiliated companies, or for groups and associations, an
insurance organization owned by the insureds whose exclusive purpose is
to insure risks of member organizations or group members and their
affiliates, or both."
Financial condition examination
SECTION 28. Section 38-87-40(6) of the 1976 Code is amended to
read:
"(6) Examination Regarding Financial Condition. A risk retention
group shall submit to an examination by the Chief Insurance Commissioner
to determine its financial condition if the commissioner of the jurisdiction
in which the group is chartered and licensed has not initiated an
examination or does not initiate an examination within sixty days after a
request by the Chief Insurance Commissioner of this State. The
examination must be coordinated to avoid unjustified repetition and must
be conducted in an expeditious manner and in accordance with the National
Association of Insurance Commissioners' Examiner's Handbook."
Purchase of insurance; risk retention group not chartered; insurer not
admitted in South Carolina
SECTION 29. Section 38-87-90 of the 1976 Code is amended to read:
"Section 38-87-90. (A) A purchasing group may not purchase
insurance from a risk retention group that is not chartered in a state or from
an insurer not admitted in the state in which the purchasing group is located
unless the purchase is effected through a licensed agent or broker acting
pursuant to the surplus lines laws and regulations of that state.
(B) A purchasing group which obtains liability insurance from an
approved surplus lines insurer not admitted in this State or a risk retention
group shall inform each of the members of the group which has a risk
resident or located in this State that the risk is not protected by an insurance
insolvency guaranty fund in this State and that the risk retention group or
the insurer may not be subject to all insurance laws and regulations of this
State.
(C) No purchasing group may purchase insurance providing for a
deductible or self-insured retention applicable to the group as a whole.
However, coverage may provide for a deductible or self-insured retention
applicable to individual members.
(D) Purchases of insurance by purchasing groups are subject to the same
standards regarding aggregate limits which are applicable to all purchases
of group insurance."
Application of act to reinsurance agreements with certain inception
anniversary or renewal date
SECTION 30. Sections 38-9-200 through 38-9-220 of the 1976 Code,
added in Section 1 of this act, apply to insurance cessions after the effective
date of this act under reinsurance agreements which have an inception
anniversary or renewal date not less than six months after the effective date
of this act.
Repeal
SECTION 31. Section 38-27-210 of the 1976 Code is repealed.
Time effective
SECTION 32. This act takes effect upon approval by the Governor.
Approved the 22nd day of March, 1991. |