S*1215 Session 112 (1997-1998)
S*1215(Rat #0434, Act #0416 of 1998) General Bill, By Saleeby and McConnell
A BILL TO AMEND SECTION 38-27-510, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE "INSURERS REHABILITATION AND LIQUIDATION ACT", FORMAL
PROCEEDINGS, AND REINSURER'S LIABILITY, SO AS TO, AMONG OTHER THINGS, DELETE
CERTAIN LANGUAGE AND PROVISIONS, PROVIDE DIFFERENT EXCEPTIONS TO THE RULE THAT
PAYMENT MADE DIRECTLY TO AN INSURED OR OTHER CREDITOR DOES NOT DIMINISH THE
REINSURER'S OBLIGATION TO THE INSURER'S ESTATE, AND PROVIDE, AMONG OTHER
THINGS, THAT THE REINSURANCE IS PAYABLE UNDER CONTRACTS REINSURED BY THE
ASSUMING INSURER ON THE BASIS OF REPORTED CLAIMS ALLOWED IN THE LIQUIDATION
PROCEEDINGS, SUBJECT TO COURT APPROVAL, WITHOUT DIMINUTION BECAUSE OF THE
INSOLVENCY OF THE CEDING INSURER.-AMENDED TITLE
04/23/98 Senate Introduced, read first time, placed on calendar
without reference SJ-4
04/29/98 Senate Amended SJ-61
04/29/98 Senate Read second time SJ-61
04/30/98 Senate Read third time and sent to House SJ-30
05/05/98 House Introduced and read first time HJ-12
05/05/98 House Referred to Committee on Labor, Commerce and
Industry HJ-12
05/20/98 House Committee report: Favorable Labor, Commerce and
Industry HJ-82
05/26/98 House Read second time HJ-20
05/27/98 House Read third time and enrolled HJ-22
06/04/98 Ratified R 434
06/10/98 Signed By Governor
06/29/98 Effective date 06/10/98
06/29/98 Copies available
06/30/98 Act No. 416
(A416, R434, S1215)
AN ACT TO AMEND SECTION 38-27-510, CODE OF LAWS OF
SOUTH CAROLINA, 1976, RELATING TO THE INSURERS
REHABILITATION AND LIQUIDATION ACT, FORMAL
PROCEEDINGS, AND REINSURER'S LIABILITY, SO AS TO,
AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE AND
PROVISIONS, PROVIDE DIFFERENT EXCEPTIONS TO THE RULE
THAT PAYMENT MADE DIRECTLY TO AN INSURED OR OTHER
CREDITOR DOES NOT DIMINISH THE REINSURER'S
OBLIGATION TO THE INSURER'S ESTATE, AND PROVIDE,
AMONG OTHER THINGS, THAT THE REINSURANCE IS PAYABLE
UNDER CONTRACTS REINSURED BY THE ASSUMING INSURER
ON THE BASIS OF REPORTED CLAIMS ALLOWED IN THE
LIQUIDATION PROCEEDINGS, SUBJECT TO COURT APPROVAL,
WITHOUT DIMINUTION BECAUSE OF THE INSOLVENCY OF
THE CEDING INSURER.
Be it enacted by the General Assembly of the State of South Carolina:
Reinsurance payable under reinsured contracts; etc.
SECTION 1. Section 38-27-510 of the 1976 Code is amended to read:
"Section 38-27-510. The amount recoverable by the liquidator from
reinsurers may not be reduced as a result of delinquency proceedings.
Payment made directly to an insured or other creditor does not diminish
the reinsurer's obligation to the insurer's estate except:
(1) where the contract or other written agreement specifically provides
another payee of the reinsurance in the event of the insolvency of the
ceding insurer; or
(2) where the assuming insurer, with the consent of the direct insured,
has assumed the policy obligations of the ceding insurer as direct
obligations of the assuming insurer to the payees under the policies and
in substitution for the obligations of the ceding insurer to the payees.
The reinsurance is payable under contracts reinsured by the assuming
insurer on the basis of reported claims allowed in the liquidation
proceedings, subject to court approval, without diminution because of the
insolvency of the ceding insurer.
The domiciliary liquidator of an insolvent ceding insurer shall give
written notice to the assuming insurer of the pendency of a claim against
the ceding insurer on the contract reinsured within a reasonable time after
the claim is filed in the liquidation proceeding. During the pendency of
the claim, an assuming insurer may investigate the claim and interpose,
at its own expense in the proceeding where the claim is to be adjudicated,
any defenses which it considers available to the ceding insurer or its
liquidator. This expense is chargeable, subject to court approval, against
the insolvent ceding insurer as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the
ceding insurer solely as a result of the defense undertaken by the
assuming insurer. Where two or more assuming insurers are involved in
the same claim and a majority in interest elect to interpose a defense to the
claim, the expense must be apportioned in accordance with the terms of
the reinsurance agreement as though the expense had been incurred by the
ceding insurer."
Time effective
SECTION 2. This act takes effect upon approval by the Governor.
Approved the 10th day of June, 1998. |