Current Status Introducing Body:Senate Bill Number:1263 Primary Sponsor:Committee (02) Committee Number:26 Type of Legislation:GB Subject:Insurers, certificates of deposit or securities Residing Body:House Current Committee:Labor, Commerce and Industry Companion Bill Number:1150 4141 Computer Document Number:BBM/9712.BD Introduced Date:Feb 04, 1992 Last History Body:House Last History Date:Mar 19, 1992 Last History Type:Recommitted to Committee Scope of Legislation:Statewide Sponsor Committee:Banking and Insurance Sponsor Committee Number:02 Type of Legislation:General Bill
Bill Body Date Action Description CMN
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1263 House Mar 19, 1992 Recommitted to Committee 26
1263 House Mar 04, 1992 Committee Report: Favorable 26
1263 House Feb 11, 1992 Introduced, read first time, 26
referred to Committee
1263 Senate Feb 06, 1992 Read third time, sent to House
1263 Senate Feb 05, 1992 Read second time, notice of
general amendments
1263 Senate Feb 04, 1992 Introduced, read first time,
placed on Calendar without
reference
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COMMITTEE REPORT
March 4, 1992
S. 1263
S. Printed 3/4/92--H.
Read the first time February 11, 1992.
To whom was referred a Bill (S. 1263), to amend Section 38-9-80, Code of Laws of South Carolina, 1976, relating to certificates of deposit or securities required of insurers, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass:
THOMAS C. ALEXANDER, for Committee.
TO AMEND SECTION 38-9-80, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CERTIFICATES OF DEPOSIT OR SECURITIES REQUIRED OF INSURERS, SO AS TO AUTHORIZE THE INSURANCE COMMISSIONER TO REQUIRE DEPOSITS IN EXCESS OF THE LIMITS IN THE SECTION; TO AMEND SECTION 38-9-100, RELATING TO CONDITIONS UNDER WHICH DEPOSITS ARE NOT NECESSARY, SO AS TO AUTHORIZE THE COMMISSIONER TO REQUIRE A DEPOSIT OF QUALIFIED INSURERS INSTEAD OF REQUIRING THE INSURER TO BE RELIEVED OF MAKING THE DEPOSIT; AND TO AMEND SECTION 38-33-130, RELATING TO SECURITY DEPOSITS AND OTHER REQUIREMENTS FOR HEALTH MAINTENANCE ORGANIZATIONS, SO AS TO REQUIRE THE ORGANIZATIONS TO SATISFY THE REQUIREMENTS APPLICABLE TO AN INSURER FOR THE RETURN OF DEPOSITED SECURITIES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-9-80 of the 1976 Code is amended to read:
"Section 38-9-80. (A) The commissioner shall require every insurer, other than fraternal benefit societies, transacting, or desiring to transact, business in this State to deposit with him certificates of deposit of building and loan associations chartered by the State of South Carolina or federal savings and loan associations located within the State in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount covered by insurance, or of national banks located within the State or banks chartered by the State of
South Carolina in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount covered by insurance; or other securities which:
(1) qualify as legal investments under the laws of this State for public sinking funds;
(2) are not in default as to principal or interest; and
(3) have a current market value of not less than ten thousand dollars nor more than two hundred thousand dollars, as determined by the commissioner pursuant to the standards promulgated by him.
(B) The commissioner shall prescribe the amount, within the limits of this section, of the securities required, and he may subsequently may increase or decrease the amount required.
(C) Notwithstanding the limitations in this section as to the amount of deposits required, the commissioner may require an insurer to deposit an amount of securities in excess of the limits based on his consideration of the following:
(1) adverse findings reported in financial condition and market conduct examination reports;
(2) the National Association of Insurance Commissioners Insurance Regulatory Information System and its related reports;
(3) 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 a significant adjustment to an insurer's capital and surplus;
(4) 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 insurer's ability to meet its outstanding obligations as they mature;
(5) whether an insurer had a significant operating loss in the last twelve months or a shorter time;
(6) whether an affiliate, subsidiary, or a reinsurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations;
(7) 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;
(8) whether the management of an insurer, including officers, directors, or other persons who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation necessary to serve the insurer in that position;
(9) whether management has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;
(10) 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;
(11) whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems."
SECTION 2. Section 38-9-100 of the 1976 Code is amended to read:
"Section 38-9-100. If a qualified insurer deposits with an officer or official body of any other another state for the protection of all its policyholders, or all its policyholders and creditors, acceptable securities not in default as to principal or interest and of a current market value of not less than one million dollars, and delivers to the commissioner a certificate to that effect, duly authenticated by the appropriate state official holding the deposit, then the insurer is may be relieved of making the deposit required by Section 38-9-80. For the purpose of this section a `qualified insurer' is a licensed stock insurer possessed of at least ten million dollars of capital and surplus or a licensed mutual, fraternal, or reciprocal insurer possessed of at least ten million dollars of surplus, according to its most recent annual statement filed with the commissioner and, in the discretion of the commissioner, may include eligible surplus lines insurers which meet these capital and surplus requirements. For the purpose of this section, `acceptable securities' means bonds of the United States or of any a state of the United States, or of any a municipality or county thereof, upon which is pledged the full faith and credit of the appropriate political division, or bonds or notes secured by mortgages or deeds of trust on otherwise unencumbered real estate of a market value of not less than double the amount loaned, or other securities as are approved by the commissioner."
SECTION 3. Section 38-33-130(A) of the 1976 Code is further amended to read:
"(A) Each health maintenance organization shall deposit and maintain with the commissioner cash or securities which qualify as legal investments under the laws of this State for public sinking funds in the amount of three hundred thousand dollars. The commissioner may require a health maintenance organization to make deposits in excess of the amount specified in this section if in his opinion the additional deposits are necessary for the protection of enrollees and the public. All income from deposits must belong to the depositing organization and must be paid to it as it becomes available. A health maintenance organization that has made a security deposit may withdraw that deposit or any part thereof of it after making a substitute deposit of cash, securities, or any a combination of these of equal amount and value. Any Securities must be approved by the commissioner before being substituted. The return of cash or securities deposited with the commissioner by a health maintenance organization pursuant to this section is governed by Section 38-9-150."
SECTION 4. This act takes effect upon approval by the Governor.