Bill 3546

Name change

SECTION 513. Section 33-14-200 of the 1976 Code is amended to read:

"Section 33-14-200. (a) The Secretary of State shall commence a proceeding under Section 33-14-210(a) to dissolve a corporation administratively if: (1) the corporation does not pay when they are due any franchise taxes, taxes payable under Chapter 7 of Title 12, or penalties imposed by law; (2) the corporation does not deliver its annual report to the Department of Revenue and Taxation when it is due; (3) the corporation is without a registered agent or registered office in this State; (4) the corporation does not notify the Secretary of State that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued; or (5) the corporation's period of duration stated in its articles of incorporation expires. (b) The Secretary of State shall dissolve a corporation under Section 33-14-210(c) if he is notified by the Department of Revenue and Taxation that the corporation has failed to file a required tax return within sixty days of the notice required by Section 12-7-1675."

Name change

SECTION 514. Section 33-14-220(a) of the 1976 Code is amended to read:

"(a) A corporation dissolved administratively under Section 33-14-210 may apply to the Secretary of State for reinstatement at any time after the effective date of dissolution. The application must: (1) recite the name of the corporation and the effective date of its administrative dissolution; (2) state that the grounds for dissolution either did not exist or have been eliminated; (3) state that the corporation's name satisfies the requirements of Section 33-4-101; and (4) contain a certificate from the South Carolina Department of Revenue and Taxation reciting that all taxes, penalties, and interest owed by the corporation, whether assessed or not, have been paid."

Name change

SECTION 515. Section 33-14-400 of the 1976 Code is amended to read:

"Section 33-14-400. Assets of a dissolved corporation that should be transferred to a creditor, claimant, or shareholder of the corporation who cannot be found or who is not competent to receive them, must be reduced to cash and deposited with the Department of Revenue and Taxation or other appropriate state official for safekeeping in accordance with the Uniform Disposition of Unclaimed Property Act. When the creditor, claimant, or shareholder furnishes satisfactory proof of entitlement to the amount deposited, the Department of Revenue and Taxation or other appropriate state official shall pay him or his representative that amount."

Name change

SECTION 516. Section 33-15-300(a)(1) and (b) of the 1976 Code are amended to read:

"(a)(1) the foreign corporation does not deliver its annual report to the Department of Revenue and Taxation when due; (b) the Secretary of State shall proceed under Section 33-15-310(c) to revoke the certificate of authority of a foreign corporation authorized to transact business in this State if he is notified by the Department of Revenue and Taxation that the corporation has failed to file a required tax return within sixty days of the notice required by Section 12-7-1675."

Name change

SECTION 517. Section 33-15-310(c) of the 1976 Code is amended to read:

"(c) If the Secretary of State is notified by the Department of Revenue and Taxation that the foreign corporation has failed to file a required tax return within sixty days of the notice required by Section 12-7-1675, the Secretary of State shall revoke the foreign corporation's certificate of authority by signing a certificate of revocation that recites the grounds for revocation and its effective date. The Secretary of State shall file the original of the certificate and send a copy to the foreign corporation by registered or certified mail addressed to its registered agent at its registered office or to the office of the secretary of the corporation at its principal office."

Name change

SECTION 518. Section 33-15-330(A)(4) of the 1976 Code is amended to read:

"(4) contain a certificate from the South Carolina Department of Revenue and Taxation stating that all taxes, penalties, and interest owed by the corporation, whether assessed or not, have been paid."

Name change

SECTION 519. Section 33-16-101(e)(7) of the 1976 Code is amended to read:

"(7) its most recent annual report delivered to the Department of Revenue and Taxation under Section 12-19-20;"

Name change

SECTION 520. Section 33-31-60 of the 1976 Code is amended to read:

"Section 33-31-60. Before issuing a charter of incorporation to any religious, educational, social, fraternal or other nonprofit organization, the Secretary of State shall first conduct an investigation to determine the merits of the claimed eligibility and status of the organization applying for a charter or an amendment to an existing charter. In the conduct of such investigation the Secretary of State is authorized to obtain information and assistance from any state agency including but not limited to the Department of Social Services and the Department of Revenue and Taxation and shall have access to any relevant records of such state agencies. The issuance of any charter of incorporation or amendment thereto subject to the provisions of this section shall constitute certification by the Secretary of State that the required investigation has been conducted and that the results of the investigation indicate that the organization concerned is eligible for the charter issued. In addition to the initial investigation conducted prior to the issuance of a charter, the Secretary of State may at any time investigate the status of an organization to which a charter has been issued and upon a finding that it no longer qualifies for the charter may at his discretion revoke such charter. Persons aggrieved by the action of the Secretary of State may appeal his decision to the court of common pleas in the judicial circuit where the organization's principal office is located."

Name change

SECTION 521. Section 33-37-250(10) of the 1976 Code is amended to read:

"(10) to cooperate with and avail itself of the facilities of the Department of Commerce and any similar governmental agencies, including the Small Business Administration, an agency of the United States Government, and to cooperate with and assist and otherwise encourage organizations in the various communities of the State in the promotion, assistance and development of the business prosperity and economic welfare of such communities or of this State or of any part thereof; and"

Name change

SECTION 522. Section 33-37-460(3)(b) of the 1976 Code is amended to read:

"(b) the following limits, to be determined as of the time such member becomes a member on the basis of the audited balance sheet of such member at the close of its fiscal year immediately preceding its application for membership, or in the case of an insurance company its last annual statement to the director of the Department of Insurance or his designee:"

Name change

SECTION 523. Section 33-39-460(3)(b) of the 1976 Code is amended to read:

"(b) the following limits, to be determined as of the time such member becomes a member on the basis of the audited balance sheet of such member at the close of its fiscal year immediately preceding its application for membership, or, in the case of an insurance company, its last annual statement to the director of the Department of Insurance or his designee:"

Name change

SECTION 524. The ninth unnumbered paragraph of Section 34-29-160 of the 1976 Code is amended to read:

"Any accident and health or property insurance sold in conjunction with this chapter must be written on forms and at rates approved by the South Carolina Department of Insurance, provided that a minimum charge of two dollars may be made, pursuant to reasonable regulations adopted by it and having as their purpose the establishment and maintenance of premium rates which are reasonably commensurate with the coverage afforded and which are adequate, not excessive, and not unfairly discriminatory giving due consideration to past or prospective loss experience within or without this State, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to borrowers, to reasonable expense allowances necessary to achieve proper risk distribution and spread, and to all other relevant factors within or without this State. These regulations may include reasonable classification systems or programs based upon identifiable and measurable variations in the hazards or expense requirements and may include statistical plans, systems, or programs, which the insurers may be required to adopt, for the purpose of providing that statistical information and data as may be necessary or reasonably appropriate to the determination of premium rates or rate levels. The premium rates and rate levels must be calculated to produce and maintain a ratio of losses incurred, or reasonably expected to be incurred, to premiums earned, or reasonably expected to be earned, of not less than fifty percent, and rates producing a lesser loss ratio are considered excessive."

Name change

SECTION 525. Section 36-9-307(4) of the 1976 Code is amended to read:

"(4) In the case of a purchase of a motor vehicle made pursuant to the provisions of Section 29-15-10, the buyer takes free of a security interest even though perfected, and the Department of Revenue and Taxation shall upon request issue a new title free and clear of prior liens and encumbrances."

Name change

SECTION 526. Section 36-9-319 of the 1976 Code is amended to read:

"Section 36-9-319. Notwithstanding Section 36-9-311, any person who sells or disposes of any personal property subject to a security interest, except for personal property titled by the Department of Revenue and Taxation or the Natural Resources Enforcement Division of the South Carolina Department of Natural Resources, without the written consent of the secured party, and fails to pay the debt secured by the security interests within ten days after sale or disposal or fails in this time to deposit the amount of the debt with the clerk of the court of common pleas for the county in which the secured party resides is guilty of a misdemeanor and, upon conviction, must be fined not more than one thousand dollars or imprisoned for not more than one year, or both. This section does not apply when the sale is made without knowledge or notice of the security interest by the person selling the property. When the value of the property is less than two thousand five hundred dollars, the offense is triable in the magistrate's court and the punishment must be not more than is permitted by law without presentment or indictment by the grand jury. Otherwise, the offense is triable in the court of general sessions."

Reference revised

SECTION 527. Section 37-6-605 of the 1976 Code is amended to read:

"Section 37-6-605. In the performance of his assigned functions the advocate shall have reasonable access to records of all state agencies which are not classified by law as confidential and all state agencies shall cooperate with the advocate in the performance of his duties. In addition, the advocate shall have reasonable access to confidential records and information, provided he enters a proprietary agreement to insure their confidentiality. The South Carolina Department of Insurance and advocate also have access to records, information, and data of the insurance companies as well as all of their sister affiliates, subsidiaries, and parent companies. During the course of a rate making or other proceeding before the South Carolina Department of Insurance or the Public Service Commission, the Consumer Advocate, as a party of record, may request in writing, in addition to all other methods of discovery as provided by law for proceedings before the South Carolina Department of Insurance or the Public Service Commission, the issuance by the director of the Department of Insurance or the executive director of the Public Service Commission of an order compelling a witness or company to either produce or allow inspection of documentary evidence relevant to the matter before the South Carolina Department of Insurance or the Public Service Commission. If the executive director issues or refuses to issue the order, the aggrieved party may appeal to the full commission. The written request, in addition to showing a general relevance and reasonable scope of the evidence sought, must also specify with particularity the books, accounts, papers, records, or other materials of the business desired and the facts expected to be proved thereby. For good cause shown, in lieu of a written request, the request for such an order may be made orally upon the record to the presiding officer at the hearing. Any objections to the issuance of the order must be filed with the commission within three days of being notified of the written request for such order. Any objections so filed must list the specific grounds for objection. The commission shall rule on the objections within ten days or the objection is denied."

Name of title

SECTION 528. Section 38-1-10 of the 1976 Code of Laws is amended to read:

"Section 38-1-10. This title may be cited and is known as `The Insurance Law'."

Advisory committee, commission deleted; etc.

SECTION 529. Section 38-1-20 of the 1976 Code is amended to read:

"Section 38-1-20. In this title unless the context otherwise requires: (1) `Accident and health insurance' means insurance of human beings against death or personal injury by accident, and every insurance of human beings against sickness, ailment, and any type of physical disability resulting from accident or disease, and prepaid dental service, but not including coverages required by the Workers' Compensation Law of this State. (2) `Accommodation bondsman' means as defined in Section 38-53-10. (3) `Adjuster' means an individual who determines the extent of insured losses and assists in settling or attempts to settle claims. (4) `Admitted assets' means assets of an insurer considered admitted under Section 38-11-100. (4.5) `Admitted insurer' means an insurer licensed to do business in this State. (5) `Alien insurer' means an insurer incorporated or organized under the laws of a country other than the United States of America, its states, commonwealths, territories, or insular possessions. (6) `Annuity' means every contract or agreement to make periodic payments, whether in fixed or variable dollar amounts, or both, at specified intervals. (7) `Bail bondsman' means as defined in Section 38-53-10. (8) `By' means on or before. (9) `Casualty insurance' means every insurance against legal liability of the insured for bodily injury to or death of other persons, including workers' compensation insurance, and for damages to or loss or destruction of the property of others; medical payments insurance when written in conjunction with any insurance covering liability for the deaths or bodily injuries of others; guaranteeing the fidelity of persons holding positions of public or private trust; loss of or damage to property caused by burglary, theft, larceny, robbery, fraud, or any unlawful taking or secretion of property owned by or entrusted to the insured; loss of or damage to property of the insured resulting from the explosion of or damage to any fired or unfired boiler or other pressure vessel, engine, turbine, compressor, pump, wheel, any apparatus generating, transmitting, or using electric power, and any machinery or equipment connected with any of the foregoing; loss resulting from nonpayment of debts owed to merchants or other persons extending credit; and legal insurance. (10) `Certificate of insurance' means a memorandum copy, complete or abbreviated, of an insurance contract. (11) `Co-insurance' means a stipulation or requirement that the insured undertakes to be his own insurer to the extent that he fails to maintain insurance of a given percentage of the value of the property against loss or damage. (12) `Commission' means the part of the premium paid to the agent as compensation for his services. (13) `Company' includes any corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. (14) `Department' means the Department of Insurance of South Carolina. (15) `Designee or deputy director' means the person or persons appointed by the director, serving at the will and pleasure of the director as his designee, to supervise and carry out the functions and duties of the department as provided by law. Any duty or function of the director to manage and supervise the Insurance Department may be conferred by the director's authority upon his designee or deputy director. (16) `Director' means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance. The director has the authority to appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law to manage and supervise the Insurance Department. (17) `Domestic insurer' means an insurer incorporated or organized under the laws of this State. (17.5) `Eligible surplus lines insurer' means a nonadmitted insurer with which a resident broker may place surplus lines insurance. (18) `Foreign insurer' means an insurer incorporated or organized under the laws of the United States or of any jurisdiction within the United States other than this State. (19) `Insurance' means a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies. The term `insurance' includes annuities. (20) `Insurance agent' means an individual who represents an insurance company and performs the acts listed in Section 38-43-10. (21) `Insurance broker' means an individual licensed by the department to represent citizens of this State in placing their insurance. An insurance broker may place that insurance either with an eligible surplus lines insurer or with a licensed insurance agent in an insurance carrier licensed in this State. (22) `Insurance company' includes any corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. (23) `Insurance premium service company' means a person engaged in the business of entering into insurance premium service agreements. (24) `Insurance rate' means the price of insurance per unit of exposure. (25) `Insurer' includes any corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. (26) `Legal insurance' means the assumption of a contractual obligation for the sole purpose of providing specified legal services or reimbursement for legal expenses in consideration of a specified payment, for an interval of time, which services are rendered by an individual duly admitted or permitted to practice law in the jurisdictions in which the services were performed. (27) `Life Insurance' means a contract of insurance upon the lives of human beings. The following contracts are deemed to be contracts of life insurance within the meaning of this definition: (a) a contract providing acceleration of life benefits, beginning on the contract's original effective date, in advance of the time they otherwise would be payable for long-term care as defined in Section 38-72-40; (b) a contract providing acceleration of life benefits, beginning on the contract's original effective date, in advance of the time they otherwise would be payable for a life-threatening illness or a terminal illness as specified in the contract. (28) `Marine insurance' means every insurance against loss or destruction of or damage to aircraft, vessels, or watercraft and their cargoes; insurance covering the risks or perils of navigation, transit, or transportation of all forms of property, including the liability of any carrier for hire for the loss of property of shippers delivered for transporting; marine builder's risks; bridges, tunnels, piers, wharves, docks and slips, dry docks, marine railways, and other aids to navigation and transportation, precious stones, precious metals, and jewelry, whether in the course of transportation or otherwise; coverage of personal property by all risk forms known as the `Personal Property Floater'; and coverage of mobile machinery and equipment. (28.5) `Nonadmitted insurer' means an insurer not licensed to do an insurance business in this State. (29) `Person' means a corporation, partnership, association, voluntary organization, individual, or any other entity, organization, or aggregation of individuals. (30) `Policy' means a contract of insurance. (31) `Premium' means payment given in consideration of a contract of insurance. (32) `Premium service agreement' means an agreement by which an insured or prospective insured promises to pay to an insurance premium service company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or insurance broker in payment of premiums on an insurance contract together with a service charge as authorized by Chapter 39 of this title. (33) `Professional bondsman' means as defined in Section 38-53-10. (34) `Property insurance' means every insurance against direct or indirect loss of or damage to any property resulting from fire, smoke, weather disturbances, climatic conditions, earthquake, volcanic eruption, rising waters, insects, blight, animals, war damage, riot, civil commotion, destruction by order of civil authority to prevent spread of conflagration or for other reason, water damage, vandalism, glass breakage, explosion of any water systems, collision, theft of automobiles and personal effects therein (but no other forms of theft insurance), loss of or damage to domestic or wild animals, and any other perils to property which in the discretion of the director or his designee form proper subjects of property insurance, if not specified in items (1), (7), (9), (27), (28), (37), or (39) of this section. (35) `Runner' means as defined in Section 38-53-10. (36) `Surety bondsman' means as defined in Section 38-53-10. (37) `Surety insurance' means becoming surety on, or guaranteeing the performance of, any lawful contract except an insurance contract; becoming surety on, or guaranteeing the performance of, any bonds and undertaking required or permitted in any judicial proceeding or required or permitted by any government or any agency or instrumentality of any government. (37.5) `Surplus lines insurance' means insurance in this State of risks located or to be performed in this State, permitted to be placed through a resident broker with a nonadmitted insurer eligible to accept the insurance, other than reinsurance, wet marine and transportation insurance, insurance independently procured, and life and health insurance and annuities. Excess and stop-loss insurance coverage upon group life, accident, and health insurance or upon a self-insured's life, accident, and health benefits program may be approved as surplus lines insurance. (38) `Surplus to policyholders' is the excess of total admitted assets over the liabilities of an insurer which is the sum of all capital and surplus accounts minus any impairment thereof. (39) `Title insurance' means insurance of the owners of real property and other persons lawfully interested therein against loss by reason of defective titles and undisclosed liens and encumbrances affecting the property."

"Commissioner", etc., means "Director"

SECTION 530. The 1976 Code is amended by adding:

"Section 38-1-30. Wherever in any other chapter of Title 38 the term `Chief Insurance Commissioner' or `Commissioner' appears or is used, it shall be deemed to mean the Director of the Department of Insurance or his designee."

Name changed

SECTION 531. Section 38-2-10 of the 1976 Code is amended to read:

"Section 38-2-10. Unless otherwise specifically provided by law, the following administrative penalties apply for each violation of the insurance laws of this State: (1) If the violator is an insurer or a health maintenance organization licensed in this State, the director or his designee shall (a) fine the violator in an amount not to exceed fifteen thousand dollars, or (b) suspend or revoke the violator's authority to do business in this State, or both. If the violation is wilful, the director or his designee shall (a) fine the violator in an amount not to exceed thirty thousand dollars, or (b) suspend or revoke the violator's authority to do business in this State, or both. (2) If the violator is a person, other than an insurer or a health maintenance organization, licensed by the director or his designee in this State, the director or his designee shall (a) fine the person in an amount not to exceed two thousand five hundred dollars, or (b) suspend or revoke the license of the person, or both. If the violation is wilful, the director or his designee shall (a) fine the person in an amount not to exceed five thousand dollars, or (b) suspend or revoke the license of the person, or both. The penalties in items (1) and (2) are in addition to any criminal penalties provided by law or any other remedies provided by law. The administrative proceedings in items (1) and (2) do not preclude civil or criminal proceedings from taking place before, during, or after the administrative proceeding."

New department provided for, etc.

SECTION 532. Chapter 3, Title 38 of the 1976 Code is amended to read:

"CHAPTER 3

The Department of Insurance

Section 38-3-10. There is established a separate and distinct department of this State, known as the Department of Insurance. The department must be managed and operated by a director appointed by the Governor upon the advice and consent of the Senate. The director is subject to removal by the Governor as provided in Section 1-3-240(B). The director shall be selected with special reference to his training, experience, technical knowledge of the insurance industry, and demonstrated administrative ability. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the Department of Insurance.

Section 38-3-40. The director or his designee shall receive annual compensation as may be provided by the General Assembly and official expenses as provided by law for executing the duties and functions of the department.

Section 38-3-60. The director or his designee must follow the general policies and broad objectives enacted by the General Assembly regarding the operation of the insurance industry in this State.

Section 38-3-70. The department shall annually submit to the General Assembly, through the Governor, a report of its official acts and doings, together with a report of all insurers under the department doing business in this State, with condensed statements of their reports made to it, together with a statement of all licenses, taxes, and fees received by it through insurers and paid by it to the State Treasurer. The department shall report to the General Assembly any change which in its opinion should be made in the laws relating to insurance and other subjects pertaining to the department. By February first, it shall make to the Governor the recommendations called for in this section, to be transmitted to the General Assembly with its last annual report, including a statement of its receipts and disbursements.

Section 38-3-80. The department shall have a seal with a suitable inscription, an impression of which must be filed with the Secretary of State.

Section 38-3-100. The director or his designee is not subject to the State Employee Grievance Committee or any internal grievance procedure established at the Insurance Department. The director or his designee shall devote all of his working time to the duties of his office. Before taking the oath of office he shall sever all connections, either direct or indirect, except as a policyholder, with any insurance company or agency and shall maintain the severance during his tenure of office. If he becomes a candidate for public office or becomes a member of a political committee during tenure, his office as director or his designee must be immediately vacated.

Section 38-3-110. The director or his designee have the following duties: (1) supervise and regulate the rates and service of every insurer in this State and fix just and reasonable standards, classifications, regulations, practices, and measurements of service to be observed and followed by every insurer doing business in this State. Nothing contained in this title authorizes or requires a review by the department or the director of any order of the director's designee or the deputy director under the Administrative Procedures Act. This item does not grant any additional authority to the director or his designee with regard to insurance rates other than the rate-making authority specifically granted to the director or his designee, or the Department of Insurance for certain kinds of insurance in other provisions of this title; (2) see that all laws of this State governing insurers or relating to the business of insurance are faithfully executed and make regulations to carry out this title and all other insurance laws of this State, the enforcement or administration of which is not otherwise specifically provided for; (3) furnish to domestic insurers required by law to report to the department the necessary blank forms for the reports required, which forms may be changed as necessary to secure full information as to the standing, condition, and any other information desired by the director or his designee; (4) report to the Attorney General or other appropriate law enforcement officials criminal violations of the laws relative to the business of insurance or the provisions of this title which he considers necessary to report; (5) institute civil actions, either through his office or through the Attorney General, relative to the business of insurance or the provisions of this title which he considers necessary to institute.

Section 38-3-120. The director shall take the oath of office as prescribed for all state officers. Before entering upon or continuing the discharge of the duties of his office, he shall give bond to the State for the benefit of any person aggrieved by his unlawful or wrongful actions. This bond must be in the sum of fifty thousand dollars, with sufficient surety, to be approved by the State Treasurer, for the faithful performance of all the duties required of him under the law during the term of his office. The premium of the bond must be paid by the State.

Section 38-3-130. The director shall appoint or employ actuaries, examiners, clerks, and other employees necessary for the proper execution of the work of the department.

Section 38-3-140. The failure to do any act required by this title is considered a violation committed in part at the office of the director in Columbia.

Section 38-3-150. All examinations or investigations provided by this title, unless otherwise provided by any other insurance laws of this State, may be conducted by the director or by one or more of his duly authorized assistants or agents. All hearings must be held by the director or by one of his duly authorized assistants or agents when authorized to do so in writing by the director. However, in any hearing concerning the adjustment of insurance rates the director or his designee may conduct the hearing.

Section 38-3-160. The director or his duly appointed assistants or agents shall administer all oaths required in the discharge of his official duties.

Section 38-3-170. All hearings, unless otherwise specifically provided, must be held at the time and place designated in a written notice given by the director or his designee to the person cited to appear at least thirty days before the designated date. The notice shall state the subject of the inquiry and specific charges, if any. It is sufficient to give notice either by delivering it to the person or by depositing it in the United States mail, postage prepaid, addressed to the last known address of the person and registered with return receipt requested.

Section 38-3-180. The director or any assistants or agents appointed to conduct examinations may summon and compel the attendance of witnesses to testify in relation to any matter which is, by the provisions of this title or by any other insurance laws of this State, a subject of inquiry and investigation. The director or his designee has the power of a circuit judge to punish for contempt any witness failing to answer any summons or failing or refusing to testify when so required. The director or any assistants or agents appointed to conduct examinations may also administer oaths and affirmations to persons appearing as witnesses before them, and false testimony in any matter or proceeding is considered perjury and must be punished in accordance with the laws of this State.

Section 38-3-190. Any person summoned by the Insurance Department to testify as a witness at any hearing must be paid for his actual mileage at the same rate as provided by law for state departments or divisions.

Section 38-3-200. No order of the director or his designee is effective unless made in writing and signed by the director or by his authority.

Section 38-3-210. Any order or decision made, issued, or executed by the director or his designee is subject to judicial review in accordance with the appellate procedures of the South Carolina Administrative Law Judge Division, as provided by law. An appeal from an order or decision under this section must be heard in the Administrative Law Judge Division, as provided by law. The administrative law judge or judges may not, under any terms, order a stay of enforcement of any order of the director or his designee to make good an impairment of capital or surplus or a deficiency in the amount of admitted assets.

Section 38-3-220. Every certificate or other paper executed by the director or his designee in pursuance of any authority conferred upon him by law and sealed with the seal of the department and all copies of papers certified by the director or his designee and authenticated by the director's or his designee's seal may in all cases be used as evidence in any suit or proceeding in any court of this State with the same force and effect as the originals.

Section 38-3-230. In any case or controversy where it is necessary to determine whether any insurance or other company, or agent thereof, is or has been licensed by the director or his designee to do business in this State, the certificate of the director or his designee under the seal of the department is admissible in evidence as proof of this authority.

Section 38-3-240. (A) Beginning July 1, 1992, the department shall begin converting certain licenses required by statute or regulation to a biennial license fee collection period. These license fees must be collected as follows: (1) All insurers transacting business in this State including reciprocals, fraternal benefit associations, mutual insurers doing a property business only in no more than three counties, mutual insurers doing a property business only in a single county, and approved reinsurers shall pay a license fee for two years to the department by March 1, 1994, and every two years after that time by March 1st every even-numbered year. (2) An agency transacting the business of insurance in this State shall pay a license fee for two years to the department within thirty days after January 1, 1994, and every two years after that time within thirty days after January 1st every even-numbered year. (3) A broker transacting the business of insurance in this State shall pay a license fee for two years to the department within thirty days after May 1, 1994, and every two years after that time within thirty days after May 1st every even-numbered year. (4) An adjuster transacting business in this State shall pay a license fee for two years to the department within thirty days after August 1, 1993, and every two years after that time within thirty days after August 1st every odd-numbered year. (5) A motor vehicle damage appraiser transacting business in this State shall pay a license fee for two years to the department within thirty days after October 1, 1993, and every two years after that time within thirty days after October 1st every odd-numbered year. (6) An agent transacting the business of insurance in this State shall pay a license fee for two years to the department within thirty days after September 1, 1992, and every two years after that time within thirty days after July 1st every even-numbered year. (B) The fees described in this section must be earned fully when paid and are not refundable, proratable, or transferable. They must be collected in the amount and manner prescribed by statute or regulation before July 1, 1992, until the dates prescribed in subsection (A) when collections must be made pursuant to that subsection."

Name changed, etc.

SECTION 533. Chapter 5, Title 38 of the 1976 Code is amended to read:

"CHAPTER 5

Authority and Requirements to Transact Business

Section 38-5-10. Every insurer doing business in this State must be licensed and supervised by the director or his designee, with the following exceptions: (a) Without excluding other activities which may not constitute doing business in this State, a foreign or alien insurer is not considered to be doing business in this State, for purposes of this chapter, or Chapter 7, 13, 25, or 27, solely by reason of carrying on in this State any one or more of the following activities: (1) Maintaining bank accounts. (2) Creating or acquiring evidences of debt, mortgages, or liens on real or personal property, and enforcing rights in connection therewith in any action or proceeding, whether judicial, administrative, or otherwise. (3) Owning and controlling a subsidiary corporation incorporated in or transacting business within this State. (b) [Blank]

Section 38-5-20. A charitable, religious, benevolent, or educational corporation, not operating for profit and in active operation for at least five years, may receive transfers of property conditioned upon its agreement to pay an annuity or lump-sum benefit to the transferor or his nominee without being subject to the insurance laws of this State. No corporation operating for profit, including nursing homes or any other type of business, is permitted to issue charitable or gift annuities without the director's or his designee's approval.

Section 38-5-30. The director or his designee may license insurers, subject to other requirements of existing insurance laws, to transact the following kinds of insurance in this State: (a) Life insurance and annuities. (b) Accident and health insurance. (c) Property insurance. (d) Casualty insurance. (e) Surety insurance. (f) Marine insurance. (g) Title insurance. (h) Multiple lines insurance, meaning any two or more of the kinds of insurance listed in items (b), (c), (d), (e), (f), and (g) of this section. Each license issued is for an indefinite term unless revoked or suspended.

Section 38-5-40. No life insurer may be licensed to write any other kinds of insurance listed in Section 38-5-30 except accident and health insurance. However, any life insurer licensed to transact other kinds of insurance immediately prior to March 18, 1964, shall continue to be so licensed if otherwise qualified.

Section 38-5-50. No insurer licensed to write any of the kinds of insurance listed in items (c), (d), (e), (f), (g), and (h) of Section 38-5-30 may be licensed to write life insurance. However, any life insurer licensed to transact other kinds of insurance immediately prior to March 18, 1964, shall continue to be so licensed if otherwise qualified.

Section 38-5-60. For purposes of calculating deductions for reserves, insurers not licensed in this State may be approved as reinsurers by the director or his designee for an indefinite term only if: (1) Upon initial application a fee of four hundred dollars is enclosed, and, every two years after that time, a fee of four hundred dollars is paid by March first. (2) There is filed with the department a power of attorney approved as to form by the director or his designee and authorizing the director to accept service of process in behalf of the reinsurer. (3) There is filed with the department the reinsurer's annual statement and the reinsurer's most recent report of examination, and after that time each annual statement and report of examination is filed. (4) The reinsurer meets the capital and surplus requirements of South Carolina law with respect to the lines to be reinsured.

Section 38-5-70. Every insurer shall, before being licensed, appoint in writing the director and his successors in office to be its true and lawful attorney upon whom all legal process in any action or proceeding against it must be served and in this writing shall agree that any lawful process against it which is served upon this attorney is of the same legal force and validity as if served upon the insurer and that the authority continues in force so long as any liability remains outstanding in the State. Copies of the appointment, certified by the director, are sufficient evidence of the appointment and must be admitted in evidence with the same force and effect as the original might be admitted.

Section 38-5-80. Before granting the original certificate of authority or license to a domestic insurer to do business in this State, the director or his designee must be satisfied by proper evidence that: (a) The insurer is duly qualified to transact business under the laws of this State. (b) The insurer has filed with him an affidavit of its president or other chief officer that it has not violated this title in the past year and that it accepts the terms and obligations of this title as part of the consideration for license. (c) The insurer pays all taxes and performs all duties required by law. (d) The reserves of the insurer are adequate for the protection of policyholders of this State. (e) The insurer's directors and officers are competent, trustworthy, and have a good business reputation and that none of the directors and officers have been convicted of a crime in any jurisdiction involving fraud, dishonesty, or like moral turpitude or convicted of violating an insurance statute of any jurisdiction. (f) The insurer has employed one or more persons residing in this State with adequate experience and training to manage properly its business and affairs. (g) The insurer has not entered into any management contract, agency agreement, or other agreement which may materially affect its financial condition so as to render its proceedings hazardous to the public or to its policyholders. (h) The insurer has made adequate reinsurance arrangements if required. (i) The insurer's proposed method of operation, when considered in light of its financial condition and the absence of any prior operating experience, will not likely render its proceedings hazardous to the public or to its policyholders. (j) The reserve basis to be used by the insurer will be adequate for the protection of policyholders in this State. (k) The insurer's principal place of business and primary executive, administrative, and home offices and all original books and records of the insurer are located and maintained in this State. The provisions of this subsection apply to domestic health maintenance organizations. Item (k) of this section does not apply to any domestic insurer whose primary executive, administrative, and home offices were located outside this State on July 1, 1987. If subsequently the director or his designee is of the opinion that a condition exists which would have prohibited him from issuing the original certificate of authority or license to the insurer, then that condition also constitutes a ground for license revocation under Section 38-5-120.

Section 38-5-90. Before granting the original certificate of authority or license to a foreign or alien insurer to do business in this State, the director or his designee must be satisfied by proper evidence that: (a) The insurer is duly qualified to transact business under the laws of this State. (b) The insurer has filed with him an affidavit of its president or other chief officer that it has not violated this title in the past year and that it accepts the terms and obligations of this title as part of the consideration for license. (c) The insurer pays all taxes and performs all duties required by law. (d) The reserves of the insurer are adequate for the protection of policyholders of this State. (e) The insurer's directors and officers are competent, trustworthy, and have a good business reputation. (f) The insurer has employed one or more persons residing in this State with adequate experience and training to manage properly its business and affairs relating to its policies in South Carolina. (g) The insurer has not entered into any management contract, agency agreement, or other agreement which may materially affect its financial condition so as to render its proceedings hazardous to the public or to its policyholders. (h) The insurer has made adequate reinsurance arrangements if required. (i) The insurer's proposed method of operation, when considered in light of its financial condition and the absence of any prior operating experience, will not likely render its proceedings hazardous to the public or to its policyholders. (j) The insurer is safe and solvent. (k) The insurer's dealings are fair and equitable. (l) The insurer conducts its business in a manner not contrary to the public interest. If subsequently the director or his designee is of the opinion that a condition exists which would have prohibited him from issuing a certificate of authority or license to the insurer, then that condition also constitutes a ground for license revocation under Section 38-5-120.

Section 38-5-100. No foreign or alien insurer may be licensed to do business in this State when its name is identical with that of any active insurer previously licensed to do business in this State which has engaged in business therein for one year or more. No foreign or alien insurer may be licensed to do business in this State when its name is so nearly similar to that of any active insurer previously licensed to do business in this State which has engaged in business therein for one year or more so as to lead to confusion and uncertainty.

Section 38-5-110. It is unlawful for the Secretary of State to issue any charter or grant any amendments of charter to any insurer or permit any foreign or alien insurer to do business within this State without the written approval of the director or his designee.

Section 38-5-120. (A) The director or his designee 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 director or his designee 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 director or his designee 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 director or his designee. (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 director or his designee. (C) Notwithstanding the provisions of subsection (A), if the director or his designee 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 director or his designee 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 director or his designee 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 director or his designee; (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.

Section 38-5-130. The director or his designee may, in lieu of license revocation or suspension as provided by Section 38-5-120, impose a monetary penalty as provided in Section 38-2-10 for each violation or failure of compliance or refusal to submit or perform as prescribed therein. Series of acts by an insurer which merely implement a basic violation and are not separate and distinct violations of an independent nature are considered to be part of the basic violation and only one penalty may be imposed thereon.

Section 38-5-140. Unless the grounds for revocation relate only to the financial condition or soundness of the insurer or to a deficiency in its assets, the director or his designee shall notify the insurer not less than thirty days before revoking its authority to do business in this State and he must specify in the notice the particulars of the alleged violation of the law or its charter or grounds for revocation and a proper opportunity must be offered the insurer to be heard.

Section 38-5-150. While the certificate of authority is suspended, no domestic insurer or any of its officers may pay out any funds belonging to the insurer without first receiving the director's or his designee's approval.

Section 38-5-160. If he considers it necessary, the director or his designee may apply to a judge of the circuit court to issue an injunction restraining a domestic insurer whose certificate of authority has been suspended, in whole or in part, from proceeding further with its business. The judge may immediately issue the injunction and, upon notice and after a full hearing of the matter, may (a) dissolve or modify the injunction or make it permanent, (b) make all orders and judgments necessary in the matter, and (c) appoint agents or a receiver to take possession of the property and effects of the insurer and to settle its affairs, subject to any rules and orders the court prescribes.

Section 38-5-170. The certificate of authority, agents' appointments and licenses, rates, and other items which the director or his designee may allow which are in existence at the time any insurer licensed to transact the business of insurance in this State transfers its corporate domicile to this or any other state by merger, consolidation, or any other lawful method shall continue in effect upon such transfer if the insurer remains duly qualified to transact the business of insurance in this State. All outstanding policies of any transferring insurer shall remain in effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the director or his designee. Every transferring insurer shall file new policy forms with the department on or before the effective date of the transfer but may use existing policy forms with appropriate endorsements if allowed by, and under conditions as approved by, the director or his designee. Every transferring insurer shall notify the director or his designee of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the department."