Current Status Bill Number:453 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19970304 Primary Sponsor:McConnell All Sponsors:McConnell Drafted Document Number:bbm\9183jm.97 Residing Body:Senate Current Committee:Banking and Insurance Committee 02 SBI Subject:Insurance Director, Administrative Law Judge Division, jurisdiction in insurance matters, Courts
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19970325 Recommitted to Committee 02 SBI
Senate 19970320 Committee report: Favorable with 02 SBI
amendment
Senate 19970304 Introduced, read first time, 02 SBI
referred to Committee
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COMMITTEE REPORT
March 20, 1997
S. 453
S. Printed 3/20/97--S.
Read the first time March 4, 1997.
To whom was referred a Bill (S. 453), to amend Sections 38-3-150, 38-3-170, 38-3-190, 38-3-210, 38-5-140, 38-13-20, 38-19-825, 38-21-90, 38-21-125, 38-25-160, 38-26-40, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking Section 40, page 18, in its entirety and renumbering the remaining sections to conform.
Amend title to conform.
EDWARD E. SALEEBY, for Committee.
TO AMEND SECTIONS 38-3-150, 38-3-170, 38-3-190, 38-3-210, 38-5-140, 38-13-20, 38-19-825, 38-21-90, 38-21-125, 38-25-160, 38-26-40, 38-27-60, 38-27-80, 38-27-520, 38-29-90, 38-29-100, 38-31-70, 38-31-80, 38-31-170, 38-33-80, 38-33-200, 38-33-210, 38-33-230, 38-39-30, 38-39-40, 38-39-60, 38-41-110, 38-43-100, 38-43-130, 38-44-70, 38-45-140, 38-46-110, 38-47-70, 38-51-20, 38-53-160, 38-57-200, 38-57-210, 38-57-230, 38-59-30, 38-61-20, 38-70-40, 38-71-310, 38-71-510, 38-71-720, 38-71-940, ALL AS AMENDED, SECTIONS 38-71-1330, 38-71-1360, 38-71-1380, 38-71-1390, 38-71-1410, 38-71-1420, 38-71-1430, SECTIONS 38-73-120, 38-73-130, 38-73-457, 38-73-465, 38-73-750, ALL AS AMENDED, SECTION 38-73-775, SECTIONS 38-73-910, 38-73-915, 38-73-990, 38-73-1000, 38-73-1010, 38-73-1020, 38-73-1030, 38-73-1080, 38-73-1090, ALL AS AMENDED, SECTION 38-73-1095, SECTIONS 38-73-1100, 38-73-1240, 38-73-1260, 38-73-1270, 38-73-1320, 38-73-1340, 38-73-1350, 38-73-1370, 38-73-1380, 38-73-1420, 38-73-1430, 38-73-1530, 38-73-1720, 38-74-20, 38-75-370, 38-75-410, 38-75-980, 38-77-115, 38-77-580, 38-77-610, 38-79-140, 38-79-230, 38-81-250, 38-81-340, 38-83-40, 38-83-130 and 38-89-40, ALL AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURANCE, SO AS TO, AMONG OTHER THINGS, CLARIFY THE JURISDICTIONS OF THE DIRECTOR OF THE DEPARTMENT OF INSURANCE AND THE ADMINISTRATIVE LAW JUDGE DIVISION IN THE CONDUCT OF ADMINISTRATIVE HEARINGS AND CORRECT REFERENCES TO THE FORMER OFFICE OF CHIEF INSURANCE COMMISSIONER.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-3-150 of the 1976 Code, as last amended by Section 532 of Act 181 of 1993, is further amended to read:
"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 2. Section 38-3-170 of the 1976 Code, as last amended by Section 532 of Act 181 of 1993, is further amended to read:
"Section 38-3-170. All de novo, contested case hearings provided by this title, unless otherwise specifically provided, must be held by the Administrative Law Judge Division at the time and place designated in a written notice given by the director or his designee Administrative Law Judge Division in accordance with the rules of that agency to the person cited to appear at least thirty days before the designated date. The notice shall must 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. The administrative law judge conducting a de novo, contested case hearing has the authority and discretion otherwise given to the director to impose any penalty in this title. The actual cost to the Administrative Law Judge Division and the Department of Insurance in connection with any hearing may be charged by the Administrative Law Judge Division to the parties requesting the hearing in any proportion he considers proper and must be immediately paid by the respective parties. If not paid within thirty days, the costs may be entered and enforced as a judgment in any county circuit court having jurisdiction over the parties requesting the hearing. The costs obtained by the Department of Insurance must be retained by it and are considered 'other funds'."
SECTION 3. Section 38-3-190 of the 1976 Code, as last amended by Section 532 of Act 181 of 1993, is further amended to read:
"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 4. Section 38-3-210 of the 1976 Code, as last amended by Section 532 of Act 181 of 1993, is further amended to read:
"Section 38-3-210. Any order or decision made, issued, or executed by the director or his designee as a result of a hearing is subject to judicial appellate review by the circuit court of Richland County 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 circuit court 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. The actual cost to the Department of Insurance in connection with the appeal may be charged by the circuit court judge to the parties making the appeal in any proportion he considers proper and must be immediately paid by the respective parties. The costs obtained by the Department of Insurance must be retained by it and are considered 'other funds'."
SECTION 5. Section 38-5-140 of the 1976 Code, as last amended by Section 533 of Act 181 of 1993, is further amended to read:
"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 must 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 by the director or his designee. An insurer may appeal the decision or order of the director or his designee in accordance with Section 38-3-210."
SECTION 6. Section 38-13-20(D) of the 1976 Code, as last amended by Act 497 of 1994, is further amended to read:
"(D) When making an examination under Section 38-13-10, the director or his designee may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners. The cost of the retainment must be borne by the insurer which is the subject of the examination together with the expenses of the director or his designee and the expenses and compensation of the director's assistants. If a domestic insurer has less than one million dollars total capital and surplus as of December 31, 1993, and thereafter, then it must not be assessed the actual examination costs but shall must instead pay in accordance with the examination fee schedule in effect as of July 1, 1993. If an insurer determines that its examination fees have not been assessed as provided in this section or that the fees assessed are unreasonable in relation to the examination performed, the insurer may appeal have the assessments to the administrative law judge division reviewed pursuant to Section 38-3-170. Examination fees must be retained by the department and are considered 'other funds'."
SECTION 7. Section 38-19-825(A) of the 1976 Code, as last amended by Section 560 of Act 181 of 1993, is further amended to read:
"(A) A mutual insurer may engage in any of the transactions specified in Section 38-19-815 under such reasonable plan and procedure as approved by the director or his designee after he has held a public hearing on the matter. The director or his designee must give notice of the hearing must be given to those persons who were members, directors or trustees, officers, and employees of the mutual insurer on the date the plan was filed with the department. Notice may be given to any other person at the discretion of the director or his designee. All of these persons have the right to appear and be heard at the hearing."
SECTION 8. Section 38-21-90(A) of the 1976 Code, as last amended by Section 567 of Act 181 of 1993, is further amended to read:
"(A) The director or his designee shall must approve a merger or other acquisition of control in Section 38-21-60 unless, after holding 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 director or his designee finds that at least one of the situations in Section 38-21-125(D) exists.
(c) The director or his designee 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."
SECTION 9. Section 38-21-125 (E) (1) (b) (i) of the 1976 Code, as amended by Section 571 of Act 181 of 1993, is further amended to read:
"(i) There is The director or his designee has conducted a hearing."
SECTION 10. Section 38-25-160 of the 1976 Code, as last amended by Section 601 of Act 181 of 1993, is further amended to read:
"Section 38-25-160. The director or his designee may, by regulation of the department or by his order, exempt from all or any provisions of this chapter an insurer or other organization not formed or operating for profit which affords life insurance or annuities to nonprofit educational and scientific institutions and their staff members in this State. However, in affording this exemption the director or his designee shall must require the insurer or other organization to appoint the director as agent for service of process. The director or his designee may require the insurer or other organization to file with the department, as information, policy forms, annual statements, and financial and other similar material. The director or his designee may, after giving due notice and conducting a hearing, discontinue the exemption for any reason which would have, if then existing or known, justified his refusal to afford the exemption when it was granted."
SECTION 11. Section 38-26-40(D) of the 1976 Code, as last amended by Section 608 of Act 181 of 1993, is further amended to read:
"(D) If it is determined the director or his designee determines after notice and hearing that the conditions giving rise to the supervision still exist at the end of the supervision period, the director or his designee may extend the period or may initiate proceedings under Chapter 27 of this title."
SECTION 12. The first paragraph of Section 38-27-60 of the 1976 Code, as last amended by Section 609 of Act 181 of 1993, is designated as subsection (a) and is further amended to read:
"(a) Except as provided in this subsection, no delinquency proceeding may be commenced under this chapter by anyone other than the director or his designee and no court has jurisdiction to entertain, hear, or determine any proceeding commenced by any other person. However, the court may consider the application for receivership of a person other than the director or his designee if the applicant for receivership has proceeded as follows:
(1) The applicant for receivership, before presenting his complaint or petition to the court for action thereon, presents a copy thereof to the department at least thirty days in advance for action thereon, as hereinafter set forth, and gives reasonable notice to the insurance company to be affected that a copy has been lodged with the department.
(2) The insurance company affected thereby has ten days after the service of the notice within which to lodge with the department a copy of the answer which it proposes to file, and thereupon the director or his designee shall proceed to investigate and within a reasonable time determine the merits of the application for receivership and shall fix a time for the hearing of the investigation of the matters involved in the petition or complaint.
(3) The director or his designee, after completing the investigation, shall recommend to the court that the receiver be or not be appointed. The court shall then consider the application for a receiver."
SECTION 13. Section 38-27-80(d)(2) of the 1976 Code, as last amended by Section 609 of Act 181 of 1993, is further amended to read:
"(2) after a hearing, be subject to the imposition by the director or his designee of a civil penalty not to exceed ten thousand dollars pursuant to Section 38-2-10 and be subject further to the revocation or suspension of any insurance licenses issued by the director or his designee."
SECTION 14. Section 38-27-520(c) of the 1976 Code, as last amended by Section 621 of Act 181 of 1993, is further amended to read:
"(c) Before the director or his designee takes any action as set forth in subsection (b), he shall must give written notice to the person, company, association, or exchange accused of violating the law, stating specifically the nature of the alleged violation and advising of an opportunity of hearing to be held by the director or his designee at least ten days thereafter. After the hearing, upon failure of the accused to appear at the hearing, or upon failure to request the hearing, the director or his designee, if he finds a violation, shall must impose the penalties under subsection (b) he considers advisable."
SECTION 15. Section 38-29-90(1) of the 1976 Code, as last amended by Section 631 of Act 181 of 1993, is further amended to read:
"(1) The association shall must submit to the department a plan of operation and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments become effective upon the written approval of the director or his designee. If the association fails to submit suitable amendments to the plan, the director or his designee shall must, after giving notice and conducting a hearing, adopt and promulgate reasonable amendments necessary or advisable to effectuate the provisions of this chapter. These amendments must continue in force until modified by the director or his designee or superseded by amendments submitted by the association and approved by the director or his designee."
SECTION 16. Section 38-29-100(2) of the 1976 Code, as last amended by Section 631 of Act 181 of 1993, is further amended to read:
"(2) The director or his designee may suspend or revoke, after notice and hearing, The certificate of authority to transact insurance in this State of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation may be suspended or revoked, after notice and hearing before the Administrative Law Judge Division. As an alternative, the director or his designee may impose the penalties provided in Section 38-2-10."
SECTION 17. Section 38-31-70(1) of the 1976 Code, as last amended by Section 632 of Act 181 of 1993, is further amended to read:
"(1) The association shall must submit to the department a plan of operation and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments become effective upon the written approval of the director or his designee. If the association fails to submit suitable amendments to the plan, the director or his designee shall must, after giving notice and conducting a hearing, adopt and promulgate reasonable amendments necessary or advisable to effectuate the provisions of this chapter. These amendments continue in force until modified by the director or his designee or superseded by amendments submitted by the association and approved by the director or his designee."
SECTION 18. Section 38-31-80(B)(2) of the 1976 Code, as last amended by Section 632 of Act 181 of 1993, is further amended to read:
"(2) suspend or revoke, after notice and hearing before the Administrative Law Judge Division, the certificate of authority to transact insurance in this State of a member insurer who fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the director or his designee may impose the penalties provided in Section 38-2-10;"
SECTION 19. Section 38-31-170(1) of the 1976 Code, as last amended by Section 632 of Act 181 of 1993, is further amended to read:
"(1) The director or his designee shall must by order terminate the operation of the association as to any kind of insurance covered by this chapter with respect to which he has found, after hearing, that there is in effect a statutory or voluntary plan which:
(a) is a permanent plan which is adequately funded or for which adequate funding is provided; and
(b) extends, or will extend, to the South Carolina policyholders and residents protection and benefits with respect to insolvent insurers not substantially less favorable and effective to such policyholders and residents than the protection and benefits provided with respect to such kinds of insurance under this chapter."
SECTION 20. Section 38-33-80(C) of the 1976 Code, as last amended by Act 58 of 1995, is further amended to read:
"(C) The director or his designee shall, within a reasonable period, must approve any form if the requirements of subsection (A) are met and any schedule of charges if the requirements of subsection (B) are met. It is unlawful to issue a form or to use a schedule of charges until approved. If the director or his designee disapproves the filing, he shall must notify the filer. The notice must contain the reasons for disapproval, and the filer, upon request in writing is entitled to a public hearing thereon before the Administrative Law Judge Division. If no action is taken to approve or disapprove any form or schedule of charges within ninety days of the filing of the forms or charges, the filing is deemed approved."
SECTION 21. Section 38-33-200 of the 1976 Code, as last amended by Section 633 of Act 181 of 1993, is further amended to read:
"Section 38-33-200. The department may, after notice and hearing before the Administrative Law Judge Division, promulgate regulations to carry out the provisions of this chapter."
SECTION 22. Section 38-33-210 of the 1976 Code, as last amended by Section 633 of Act 181 of 1993, is further amended to read:
"Section 38-33-210. (A) When the director or his designee has cause to believe that grounds for the denial of an application for a certificate of authority exist, or that grounds for the suspension or revocation of a certificate of authority exist, he shall must notify the health maintenance organization in writing specifically stating the grounds for denial, suspension, or revocation and fixing a time of at least thirty days thereafter for a hearing on the matter providing an opportunity for a hearing on the matter before the Administrative Law Judge Division pursuant to Section 38-3-170. However, if the ground for suspension or revocation relates solely to financial condition, the director or his designee may immediately and without hearing suspend the certificate of authority of the health maintenance organization.
(B) The provisions of Article 3, Chapter 23, Title 1, apply to administrative proceedings under this section. Whenever the director or his designee issues an order of suspension without an administrative hearing before the director or his designee based upon a health maintenance organization's financial condition, as authorized under subsection (A), the health maintenance organization has a right to judicial review before have the order reviewed by the Administrative Law Judge Division in accordance with law."
SECTION 23. Section 38-33-230 (A) of the 1976 Code, as last amended by Section 633 of Act 181 of 1993, is further amended to read:
"(A) The director or his designee may, in lieu of revocation or suspension of a certificate of authority under Section Sections 38-33-180 and 38-33-210, levy an administrative penalty of not more than fifteen thousand dollars for each violation or ground as prescribed therein. A series of acts by an organization 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. A monetary penalty may be imposed under this paragraph only after notice and an opportunity to be heard have been afforded in accordance with Section 38-33-210."
SECTION 24. Section 38-39-30(a) of the 1976 Code, as last amended by Section 653 of Act 181 of 1993, is further amended to read:
"(a) Upon the filing of an application and the payment of the license fee the director or his designee shall must make an investigation of the applicant and shall issue a license if the applicant is qualified. If the director or his designee does not find the applicant qualified, he the applicant shall has, within thirty days after he has received denial of the application, at the request of the applicant, give the applicant to request a full hearing before the Administrative Law Judge Division."
SECTION 25. Section 38-39-40(a)(4) of the 1976 Code, is amended to read:
"(4) The company has violated this chapter title; or"
SECTION 26. Section 38-39-40(b) of the 1976 Code, as last amended by Section 653 of Act 181 of 1993, is further amended to read:
"(b) Before the director or his designee revokes, suspends, or refuses to renew the license of a premium service company, he shall must give the person an opportunity to be fully heard before the Administrative Law Judge Division and to introduce evidence in his behalf. In lieu of revoking or suspending the license for any of the causes enumerated in this section, after a hearing, the director or his designee may subject the company to a monetary penalty as provided for in Section 38-2-10 for each offense when in his judgment he finds that the public interest would not be harmed by the continued operation of the company. The penalty must be paid to the department and must be deposited by the department in the state treasury. Any action by the director or his designee pursuant to this section may be appealed by the premium service company before the Administrative Law Judge Division."
SECTION 27. Section 38-39-60 of the 1976 Code, as last amended by Section 653 of Act 181 of 1993, is further amended to read:
"Section 38-39-60. The department, after a public hearing before the Administrative Law Judge Division, has authority to make and enforce any regulations necessary to carry out this chapter, but these regulations may not be contrary to nor inconsistent with this chapter."
SECTION 28. Section 38-41-110 of the 1976 Code, as last amended by Section 654 of Act 181 of 1993, is further amended to read:
"Section 38-41-110. If the director or his designee is of the opinion that a multiple employer self-insured health plan is in an unsound condition, that it has failed to comply with the law or any applicable regulations or orders issued by the director or his designee, or that it is in a condition which renders its proceedings hazardous to the public or to persons covered under the plan, the director or his designee may, after conducting a hearing, revoke or suspend the license of the plan or, in lieu thereof, impose a monetary penalty not to exceed five thousand dollars for each violation or ground.
If the director or his designee is of the opinion that any of the grounds set forth in the first paragraph of this section exists, he may commence delinquency proceedings against the plan and supervise, rehabilitate, or liquidate the plan in accordance with the procedures set forth in Chapter 27 of this title."
SECTION 29. Section 38-43-100(d) of the 1976 Code, as last amended by Section 659 of Act 181 of 1993, is further amended by deleting (d), which reads:
"(d) If more than twenty-five percent of the temporary licensees of an insurer fail to receive a permanent license, not counting those who fail the written examination twice, in any twelve-month period it is prima facie evidence that the insurer is abusing the privilege of obtaining temporary licenses. Upon a determination by the director or his designee of abuse being made, following a public hearing, no temporary license may be issued for twenty-four months following the month of the determination of abuse on behalf of the insurer."
SECTION 30. Section 38-43-130 of the 1976 Code, as last amended by Section 663 of Act 181 of 1993, is further amended to read:
"Section 38-43-130. The administrative law judge or the director or his designee may revoke or suspend an agent's license after ten days' notice or refuse to issue or to reissue a license when it appears that an agent has been convicted of a crime involving moral turpitude, has violated this title or any regulation promulgated by the department, or has wilfully deceived or dealt unjustly with the citizens of this State. The director or his designee may revoke or suspend an agent's license after ten days' notice of an opportunity for a hearing on the merits before the Administrative Law Judge Division when the agent fails to request in writing such a hearing within the ten-day period.
For purposes of this section, 'convicted' includes a plea of guilty or a plea of nolo contendere, and the record of conviction, or a copy of it, certified by the clerk of court or by the judge in whose court the conviction occurred is conclusive evidence of the conviction.
The words 'deceived or dealt unjustly with the citizens of this State' include, but are not limited to, action or inaction by the agent as follows:
(1) misstating the facts in an application for insurance or aiding in the misstatement of the facts;
(2) failing to inform promptly the customer or insured of the correct premium or informing him of an incorrect premium based on the information furnished the agent by the customer or insured;
(3) failing to transmit promptly or pay all or a portion of the amount of an insurance premium when the agent or one of his employees has received payment from a customer or insured or someone on his behalf or when it has been financed by the agent;
(4) issuing his check covering all or a portion of an insurance premium which is not accepted by the bank on which it is written when it is initially submitted to the bank;
(5) failing to deliver promptly a policy, endorsement, or rider to any insured;
(6) failing to notify promptly the customer or insured if the agent has been unable to obtain the requested insurance for him;
(7) failing to maintain adequate records regarding insurance sought or obtained from or through the agent which can be examined by the director or his designee or one of his representatives for and on behalf of a citizen of this State.
When upon investigation the director or his designee finds that an agent has obtained a license by fraud or misrepresentation, he may suspend immediately the license. The director or his designee, in an order suspending a license, shall must specify the period during which the suspension is to be in effect. The period may not exceed two years. No licensee whose license has been revoked or an applicant who has been refused a license by the director or his designee has the right to apply for another license within two years from the effective date of the revocation or refusal or, if judicial review a hearing on the merits before the Administrative Law Judge Division of the revocation or refusal is sought, within two years from the date of a final court order or decree affirming the revocation or suspension.
If, after notice of a hearing before the Administrative Law Judge Division administrative law judge conducting the hearing or notice of an opportunity for hearing before the Administrative Law Judge Division, the director or his designee finds that one or more grounds exist for the revocation or suspension of, or the refusal to issue or reissue a license, the director or his designee he may, in his discretion, in lieu of revocation, suspension, or refusal, may impose upon the agent or applicant an administrative penalty as provided in Section 38-2-10 for each offense or ground.
If, after giving notice of an opportunity to be heard before the Administrative Law Judge Division, the director or his designee determines that one or more grounds exist for the revocation or suspension of, or the refusal to issue or reissue a license, he may, in his discretion, in lieu of transferring the case to the Administrative Law Judge Division for a hearing on the merits, and with the agent's consent, impose upon the agent or applicant an administrative penalty as provided in Section 38-2-10 for each offense or ground.
The director or his designee may allow the agent or applicant a reasonable period, not to exceed thirty days, within which to pay to the director or his designee the amount of the penalty imposed. If the agent or applicant fails to pay the penalty in its entirety to the director or his designee at his office in Columbia within the period allowed, the license or application stands revoked, suspended, or renewal refused, as the case may be, upon expiration of the period and without any further proceedings."
SECTION 31. Section 38-44-70(A) of the 1976 Code, as last amended by Section 670 of Act 181 of 1993, is further amended to read:
"(A) If the director or his designee administrative law judge finds after a hearing conducted in accordance with Insurance Department Regulation 69-31 the procedures of the Administrative Law Judge Division that a person has violated this chapter, the director or his designee administrative law judge may order:
(1) for each separate violation, a penalty as provided in Section 38-2-10;
(2) revocation or suspension of the agent's license of the MGA;
(3) the MGA to reimburse the insurer, the rehabilitator, or liquidator of the insurer for losses incurred by the insurer caused by a violation of this chapter committed by the MGA."
SECTION 32. Section 38-45-140 of the 1976 Code, as last amended by Section 672 of Act 181 of 1993, is further amended to read:
"Section 38-45-140. When the director or his designee administrative law judge determines after investigation a hearing that a broker has violated this title, he may, upon ten days' notice, impose the penalties provided in Section 38-2-10. The revocation of a South Carolina agent's license automatically revokes any broker's license held by that agent."
SECTION 33. Section 38-46-110(A) of the 1976 Code, as last amended by Section 679 of Act 181 of 1993, is further amended to read:
"(A) A reinsurance intermediary, insurer, or reinsurer found by the director or his designee after a hearing conducted in accordance with Insurance Department Regulation 69-31 to be in violation of this chapter:
(1) for each separate violation, shall must pay a penalty of not more than fifteen thousand dollars and thirty thousand dollars if the violation is wilful;
(2) is subject to revocation or suspension of its license;
(3) for a violation committed by the reinsurance intermediary, make restitution to the insurer, reinsurer, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to the violation."
SECTION 34. Section 38-47-70 of the 1976 Code, as last amended by Section 681 of Act 181 of 1993, is further amended to read:
"Section 38-47-70. When the director or his designee administrative law judge determines after investigation a hearing that there has been a violation of this title by an adjuster, upon ten days' notice, he may impose the penalties provided in Section 38-2-10."
SECTION 35. Section 38-51-20 of the 1976 Code, as last amended by Section 683 of Act 181 of 1993, is further amended to read:
"Section 38-51-20. No person may act as an administrator in this State without first being licensed by the director or his designee.
Any person who acts as an administrator without a license is guilty of a misdemeanor and, upon conviction, must be fined not more than ten thousand dollars or imprisoned for not more than two years, or both, and is subject to revocation of any insurance licenses issued by the director or his designee.
Application for a license must be upon forms prescribed by the director or his designee and must be accompanied by an initial license fee of one hundred dollars. Thereafter, the administrator shall must pay to the department a license renewal fee of one hundred dollars by March first of each year.
Before granting any license, the director or his designee must be satisfied that the administrator is competent, trustworthy, financially responsible, has a good personal and business reputation, has not had an insurance license revoked, suspended, or denied in any jurisdiction within the preceding five years, and has not been convicted of a crime involving fraud, dishonesty, or moral turpitude in any jurisdiction. For purposes of this section, 'convicted' includes a plea of guilty or a plea of nolo contendere.
The director or his designee may revoke or suspend any license issued to an administrator may be revoked or suspended after notice and a hearing before the Administrative Law Judge Division when he the administrative law judge finds that any condition exists which would have prohibited issuance of the original license, that the administrator has violated any provision of this chapter, or that the administrator has deceived or dealt unjustly with the citizens of this State. In lieu of revocation or suspension of license, the director or his designee may impose an administrative monetary penalty not to exceed one thousand dollars for each offense."
SECTION 36. Section 38-53-160 of the 1976 Code, as last amended by Section 695 of Act 181 of 1993, is further amended to read:
"Section 38-53-160. Notice and hearing required; right to appeal.
No license may be refused, suspended, or revoked, or renewal refused, except on reasonable ten days' notice and of an opportunity to be heard afforded the person licensed or seeking renewal of the license for a hearing on the merits before the Administrative Law Judge Division. Any applicant for a license as a bail bondsman or runner whose application has been denied or whose license has been suspended or revoked, or renewal of the license denied, has the right of appeal from the final order of the director or his designee to the Administrative Law Judge Division as provided by law."
SECTION 37. Section 38-57-200 of the 1976 Code, as last amended by Section 711 of Act 181 of 1993, is further amended to read:
"Section 38-57-200. If, after a hearing, the director or his designee determines that a method of competition or an act or practice is unfair or deceptive as defined in this title and that the person complained of has engaged in the method of competition, act, or practice in violation of this title, he the director shall must reduce his finding to writing and shall issue and cause to be served upon the person charged with the violation:
(1) an order requiring the person to cease and desist from engaging in the method of competition, act, or practice; and
(2) an order imposing penalties provided in Section 38-2-10."
SECTION 38. Section 38-57-210 of the 1976 Code, as last amended by Section 712 of Act 181 of 1993, is further amended to read:
"Section 38-57-210. Upon good cause shown, the director or his designee shall must permit any person to intervene, appear, and be heard at the hearing by counsel or in person. If the report of the director or his designee does not charge a violation of this chapter, then any intervenor in the proceedings may, within thirty days after the service of the report, cause a petition to be filed in the circuit court of Richland County for a review of the report. Upon review the court has authority to issue appropriate orders and decrees in connection therewith, including, if the court finds that it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act, or practice which it finds, notwithstanding the report of the director or his designee, constitutes a violation of this chapter."
SECTION 39. Section 38-57-230 of the 1976 Code, as last amended by Section 714 of Act 181 of 1993, is further amended to read:
"Section 38-57-230. Any person who contemptuously violates a cease and desist order of any practice issued by the director or his designee shall must, upon due notice, receive a hearing before the director or his designee circuit court of Richland County. Upon the determination of the director or his designee that the contemptuous violation has been committed, the director or his designee circuit court judge shall must issue his order to the effect that the person is in contempt of his the director's order to cease and desist. Any person who contemptuously violates a cease and desist order of the director or his designee shall must pay a fine set by the director or his designee circuit court judge but not to exceed fifty dollars for each day of violation. However, if the violation is wilful, the fine may be assessed in an amount not to exceed one hundred dollars per day of violation."
SECTION 40. Section 38-59-30 of the 1976 Code, as last amended by Section 723 of Act 181 of 1993, is further amended to read:
"Section 38-59-30. If, after giving due notice and conducting a hearing, the director or his designee determines that the insurer has engaged in any of the improper claim practices defined in Section 38-59-20, he shall must order the insurer to cease and desist from the practice and may impose a penalty as provided in Section 38-2-10. If the penalty is imposed, the penalty may not be considered a cost of the insurer for purposes of determining whether or not the rates of the insurer warrant adjustment. Upon good cause shown, the director or his designee may permit any person to intervene, appear, and be heard at the hearing by counsel or in person. If the report of the director or his designee does not charge a violation of this chapter, then any intervenor in the proceedings may, within thirty days after the service of the report, cause a petition to be filed in the circuit court of Richland County for a review of the report. Upon review the court has authority to issue appropriate orders and decrees in connection therewith, including, if the court finds that it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act, or practice which it finds, notwithstanding the report of the director or his designee, constitutes a violation of this chapter."
SECTION 41. Section 38-61-20(B) of the 1976 Code, as last amended by Section 724 of Act 181 of 1993, is further amended to read:
"(B) At any time after having given written approval, and after an opportunity for a hearing before the Administrative Law Judge Division for which at least thirty days' written notice has been given, the director or his designee may withdraw approval if he finds that the forms (1) do not meet the requirements of law, (2) contain any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory, or (3) are being solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading."
SECTION 42. Section 38-70-40 of the 1976 Code, as last amended by Section 748 of Act 181 of 1993, is further amended to read:
"Section 38-70-40. (A) The director or his designee may conduct periodic reviews of the operations of private review agents in this State to ensure that they continue to meet the specifications outlined in this chapter and any applicable regulations which may be promulgated by the department. The director or his designee may perform periodic telephone audits of private review agents authorized to conduct business in this State, to determine if the agents are reasonably accessible.
(B) Within ninety days upon receipt of a complaint from a licensed health care provider, the director or his designee may investigate the complaint, including holding investigatory hearings and taking testimony or other appropriate actions, and shall must present a written response to the complainant and the private review agent named. This response must include the following:
(1) a statement of the original complaint;
(2) a determination of findings of the director or his designee;
(3) corrective actions, if any, on the part of the private review agent which the director or his designee finds appropriate; and
(4) a time frame in which any corrective actions are to be completed.
(C) The director or his designee is authorized to take appropriate action against A private review agent who fails to meet the standards of this chapter or of any applicable regulations promulgated by the department, or who fails to respond in a timely fashion to corrective actions ordered by the director or his designee. The director or his designee may impose be subject to an administrative fine not to exceed one thousand dollars for each violation. The certificate of the private review agent or may also be deny denied, suspend suspended, or revoke revoked the certificate of the private review agent.
(D) The certificate of the private review agent director or his designee may also be deny denied, suspend suspended, or revoke revoked a certificate if, upon review, the director or his designee finds that the private review agent does not:
(1) have a utilization review program that meets the requirements of subsection (C) of Section 38-70-20;
(2) have available the services of sufficient numbers of registered nurses, medical records technicians, or similarly qualified persons supported and supervised by appropriate physicians to carry out its utilization review activities;
(3) meet any applicable regulations the department promulgates under this chapter relating to the qualifications of private review agents or the performance of utilization review;
(4) remain accessible to patients and providers.
(E) Before taking the actions authorized by this section to deny, suspend, or revoke the certificate of a private review agent, the director or his designee shall must provide the private review agent with reasonable time to supply additional information demonstrating compliance with the requirements of this chapter and the opportunity to request a hearing before the Administrative Law Judge Division. If a private review agent requests a hearing, the director or his designee shall must send a hearing notice to the involved parties by certified mail, return receipt requested, at least thirty days before the hearing. The director or his designee shall hold the hearing in accordance with the provisions of Chapter 3 of this title, and the State Administrative Procedures Act. Any action or decision of the director or his designee pursuant to the administrative hearing may be appealed to the Administrative Law Judge Division as provided by law by the private review agent."
SECTION 43. Section 38-71-310(A) and (C) of the 1976 Code, as last amended by Section 753 of Act 181 of 1993, are further amended to read:
"(A) No policy or certificate of accident, health, or accident and health insurance may be issued or delivered in this State, nor may any application, endorsement, or rider which becomes a part of the policy be used, until a copy of its form has been filed with and approved by the director or his designee except as exempted by regulation of the department as permitted by Section 38-61-20. The director or his designee may disapprove the form if the form (1) does not meet the requirements of law, (2) contains any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory, or (3) is going to be solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading. The director or his designee shall must notify in writing, as soon as is practicable, the insurer which has filed the form of his approval or disapproval. In the event of disapproval, the notice must contain the reasons for disapproval, and the insurer is entitled to a public hearing thereon before the Administrative Law Judge Division. If the director or his designee takes no action has been taken to approve or disapprove a policy or certificate, application, endorsement, or rider after the documents have been filed for ninety days, they are deemed to be approved.
(C) At any time the director or his designee, after a public hearing of which at least thirty days' written notice has been given, may withdraw approval of forms or rates previously approved under subsections (A) and (B) if he determines that the forms or rates no longer meet the standards for approval specified in subsections (A) and (B). The insurer is entitled to a public hearing thereon before the Administrative Law Judge Division."
SECTION 44. Section 38-71-510 of the 1976 Code, as last amended by Section 762 of Act 181 of 1993, is further amended to read:
"Section 38-71-510. The purpose of this subarticle is to provide reasonable standardization and simplification of terms and coverages of individual accident and health insurance policies or subscriber contracts of nonprofit hospital, medical, and dental service associations in order to facilitate public understanding and comparison, to eliminate provisions contained in individual accident and health insurance policies or subscriber contracts of nonprofit hospital, medical, and dental service associations which may be misleading or unreasonably confusing in connection with the purchase of the coverage or with the settlement of claims, to provide for full disclosure in the sale of accident and health coverages, and to provide for the termination of approval, after due notice and hearing before the director or his designee, of policy forms which do not comply with the minimum standards. Any decision or determination by the director or his designee to terminate approval pursuant to the administrative hearing may be appealed to is subject to a public hearing before the Administrative Law Judge Division as provided in accordance with Section 38-3-210 38-3-170."
SECTION 45. Section 38-71-720 of the 1976 Code, as last amended by Section 766 of Act 181 of 1993, is further amended to read:
"Section 38-71-720. No policy or contract of group accident, group health, or group accident and health insurance may be issued or delivered in this State, nor may any application, endorsement, or rider which becomes a part of the policy be used, until a copy of the form thereof has been filed with and approved by the director or his designee except as exempted by regulation of the department as permitted by Section 38-61-20. The director or his designee may disapprove the form if the form (1) does not meet the requirements of law, (2) contains any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory, or (3) is going to be solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading. However, if no action has been taken to approve or disapprove a policy, contract, certificate, application, endorsement, or rider after the documents have been filed for ninety days, they may be issued and delivered until or unless subsequently disapproved by the director or his designee. This time period may be extended thirty days if the director or his designee gives written notice to the filer that he needs additional time to review the filing. The director or his designee shall must, as soon as is practicable, notify in writing the insurer which has filed the form of his approval or disapproval. In the event of disapproval the notice must contain the reasons for disapproval and the insurer is entitled to a public hearing thereon. At any time after having given written approval thereof the director or his designee may, after a public hearing of which at least thirty days' written notice has been given, withdraw approval if he finds that the forms (1) do not meet the requirements of law, (2) contain any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory, or (3) are being solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading. The withdrawal of approval must be effected by written notice to the insurer and the insurer is entitled to a public hearing thereon Any action or decision of the director or his designee to withdraw approval may be appealed to before the Administrative Law Judge Division in accordance with Section 38-3-210 38-3-170."
SECTION 46. Section 38-71-940(C) of the 1976 Code, as last amended by Act 339 of 1994, is further amended to read:
"(C) The commissioner director or his designee may approve wellness incentives developed by small employer insurers that allow premium reductions from the rating limitations of this section. Wellness incentives to be considered may include, but are not limited to, smoking status, participation in physical fitness activities, and dietary habits."
SECTION 47. Section 38-71-1330(C), (D), and (N) of the 1976 Code, as added by Act 339 of 1994, are amended to read:
"(C) 'Commissioner Director' means the Chief Director of Insurance Commissioner of this State.
(D) 'Committee' means the advisory committee to the commissioner director referred to in Section 38-71-1420.
(N) 'Risk-assuming insurer' means a small employer insurer whose application is approved by the commissioner director pursuant to Section 38-71-1390."
SECTION 48. Section 38-71-1360 of the 1976 Code, as added by Act 339 of 1994, is amended to read:
"Section 38-71-1360. (A)(1) Every small employer insurer shall, as a condition of transacting business in this State with small employers, fairly market to small employers at least two health insurance plans. One health insurance plan offered by each small employer insurer must be a basic health insurance plan and one plan must be a standard health insurance plan.
(2) Coverage under the basic or standard health insurance plan must be offered to all eligible employees of a small employer and their dependents. A small employer insurer may not offer coverage only to certain individuals in a small employer group, or to only part of the group, except as provided in Section 38-71-1370(B).
(3) Except with respect to applicable preexisting condition limitation periods or late enrollees as provided in Section 38-71-1370(B), a small employer insurer shall not modify a health insurance plan with respect to a small employer or any eligible employee or dependent through rider, endorsements, or otherwise, to restrict or exclude coverage or benefits for specific diseases, medical conditions or services otherwise covered under the plan.
(4)(a) A small employer insurer shall issue a basic health insurance plan or a standard health insurance plan to any eligible small employer that applies for either such plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health insurance plan not inconsistent with this article.
(b) In the case of a small employer insurer that establishes more than one class of business pursuant to Section 38-71-920(11) of the 1976 Code of Laws, the small employer insurer shall maintain and issue to eligible small employers at least one basic health insurance plan and at least one standard health insurance plan in each class of business so established. A small employer insurer may apply reasonable criteria in determining whether to accept a small employer into a class of business, provided that:
(i) The criteria are not intended to discourage or prevent acceptance of small employers applying for a basic or standard health insurance plan;
(ii) The criteria are not related to the health status or claim experience of the small employer;
(iii) The criteria are applied consistently to all small employers applying for coverage in the class of business; and
(iv) The small employer insurer provides for the acceptance of all eligible small employers into one or more classes of business.
The requirement to offer at least two health insurance plans to small employers shall not apply to a class of business into which the small employer insurer is no longer enrolling new small businesses.
(5) The provisions of this subsection (A) of this section shall be become effective one hundred eighty days after the commissioner's director's approval of the basic health insurance plan and the standard health insurance plan developed pursuant to Section 38-71-1420; provided, that if the Small Employer Insurer Reinsurance Program created pursuant to Section 38-71-1410 is not yet operative on that date, the provisions of this paragraph shall be become effective on the date that the program begins operation.
(B)(1) After the commissioner's director or his designee has approval approved of the basic health insurance plan and the standard health insurance plan developed pursuant to Section 38-71-1420, a small employer insurer shall must file with the commissioner director or his designee in the form and manner prescribed by the commissioner director or his designee, the basic and standard health insurance plans to be used by the insurer. The insurer shall must certify to the commissioner director or his designee that the plans as filed are in substantial compliance with the provisions as approved by the commissioner director or his designee. Upon the commissioner's receipt by the director or his designee of the certification, the insurer may use the certified plans unless their use is disapproved by the commissioner director or his designee.
(2) The commissioner director or his designee may, at any time, after providing notice and an opportunity for hearing, disapprove the continued use by a small employer insurer of a basic or standard health insurance plan on the grounds that the plan does not meet the requirements of this article.
(C)(1) A health maintenance organization shall not be required to offer coverage or accept applications pursuant to subsection (A) in the case of the following:
(a) to a small employer, where the small employer is not physically located in the health maintenance organization's established geographic service area;
(b) to an employee, when the employee does not work or reside within the health maintenance organization's established geographic service area; or
(c) within an area where the health maintenance organization reasonably anticipates, and demonstrates to the satisfaction of the commissioner director or his designee, that it will not have the capacity within its established geographic service area to deliver service adequately to the members of such groups because of its obligations to existing group policyholders and enrollees.
(2) A health maintenance organization that cannot offer coverage pursuant to paragraph (1)(c) may not offer coverage in the applicable area to new cases of employer groups with more than fifty eligible employees or to any small employer groups until the later of one hundred eighty days following each such refusal or the date on which the health maintenance organization notifies the commissioner director or his designee that it has regained capacity to deliver services to small employer groups.
(D) A small employer insurer may not be required to provide coverage to small employers pursuant to subsection (A) for any period of time for which the commissioner director or his designee determines that requiring the acceptance of small employers in accordance with the provisions of subsection (A) would place the small employer insurer in a financially impaired condition."
SECTION 49. Section 38-71-1380(A) of the 1976 Code, as added by Act 339 of 1994, is amended to read:
"(A)(1) Within sixty days after the plan of operation is approved by the commissioner director or his designee under Section 38-71-1410, each small employer insurer shall must notify the commissioner director or his designee of the insurer's intention to operate as a risk-assuming insurer or a reinsuring insurer. A small employer insurer seeking to operate as a risk-assuming insurer shall must make an application pursuant to Section 38-71-1390.
(2) The decision shall be is binding for a five-year period except that the initial decision shall be is binding for two years. The commissioner director or his designee may permit an insurer to modify its decision at any time for good cause shown.
(3) The commissioner director or his designee shall must establish an application process for small employer insurers seeking to change their status under this subsection. In the case of a small employer insurer that has been acquired by another such insurer, the commissioner director or his designee may waive or modify the time periods established in paragraph (2)."
SECTION 50. Section 38-71-1390 (A) of the 1976 Code, as added by Act 339 of 1994, is amended to read:
"(A) Any small employer insurer may elect to become a risk-assuming insurer upon application to and approval by the commissioner director or his designee. A small employer insurer shall must not be approved as a risk-assuming insurer if the commissioner director or his designee finds that the insurer is not capable of assuming that status pursuant to the criteria set forth in subsection (B) of this section. The insurer shall must provide public notice of its application to become a risk-assuming insurer. A small employer insurer's application to be a risk-assuming insurer shall must be approved unless disapproved by the commissioner director or his designee within sixty days after the insurer's application. A small employer insurer that has had its application to be a risk-assuming insurer disapproved may request and shall must be granted a public hearing before the Administrative Law Judge Division within sixty days after the disapproval."
SECTION 51. Section 38-71-1410 of the 1976 Code, as added by Act 339 of 1994, is amended to read:
"Section 38-71-1410. (A) There is hereby created a nonprofit entity to be known as the South Carolina Small Employer Insurer Reinsurance Program, which shall is to become operational on July 1, 1995.
(B)(1) The program shall must operate subject to the supervision and control of the board. Subject to the provisions of paragraph (2), the board shall must consist of eight members appointed by the commissioner director plus the commissioner director or his designated representative, who shall must serve as an ex officio member of the board.
(2) In selecting the members of the board, the commissioner director shall must include representatives of small employers and small employer insurers and such other individuals determined to be qualified by the commissioner director. At least five members of the board shall must be representatives of insurers, one of whom shall must be a licensed independent insurance agent who represents multiple health and accident insurance carriers, and shall must be selected from individuals nominated in this State pursuant to procedures and guidelines developed by the commissioner director or his designee.
(3) The initial board members shall must be appointed as follows: two of the members to serve a term of two years; three of the members to serve a term of four years; and three of the members to serve a term of six years. Subsequent board members shall must serve for a term of three years. A board member's term shall continue continues until his successor is appointed.
(4) A vacancy in the board shall must be filled by the commissioner director. A board member may be removed by the commissioner director for cause.
(C) Not later than September 1, 1994, each small employer insurer shall must make a filing with the commissioner director or his designee containing the insurer's net health insurance premium derived from health insurance plans delivered or issued for delivery to small employers in this State in the previous calendar year.
(D) Within one hundred eighty days after the appointment of the initial board, the board shall must submit to the commissioner director a plan of operation and thereafter any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the program. The commissioner director may, after notice and hearing, approve the plan of operation if the commissioner director determines it to be suitable to assure the fair, reasonable, and equitable administration of the program, and to provide for the sharing of program gains or losses on an equitable and proportionate basis in accordance with the provisions of this section. The plan of operation shall become becomes effective upon written approval by the commissioner director.
(E) If the board fails to submit a suitable plan of operation within one hundred eighty days after its appointment, the commissioner director shall must, after notice and hearing, adopt and promulgate a temporary plan of operation. The commissioner director shall must amend or rescind any plan adopted under this subsection at the time a plan of operation is submitted by the board and approved by the commissioner director.
(F) The plan of operation shall must:
(1) establish procedures for handling and accounting of program assets and monies and for an annual fiscal reporting to the commissioner director;
(2) establish procedures for selecting an administering insurer and setting forth the powers and duties of the administering insurer;
(3) establish procedures for reinsuring risks in accordance with the provisions of this section;
(4) establish procedures for collecting assessments from reinsuring insurers to fund claims and administrative expenses incurred or estimated to be incurred by the program;
(5) establish a methodology for applying the dollar thresholds contained in this section in the case of insurers that pay or reimburse health care providers though capitation or salary; and
(6) provide for any additional matters necessary for the implementation and administration of the program.
(G) The program shall have is given the general powers and authority granted under the laws of this State to insurance companies and health maintenance organizations licensed to transact business, except the power to issue health insurance plans directly to either groups or individuals. In addition, the program shall have is given the specific authority to:
(1) enter into contracts as are necessary or proper to carry out the provisions and purposes of this article, including the authority, with the approval of the commissioner director, to enter into contracts with similar programs of other states for the joint performance of common functions or with persons or other organizations for the performance of administrative functions;
(2) sue or be sued, including taking any legal actions necessary or proper to recover any assessments and penalties for, on behalf of, or against the program or any reinsuring insurers;
(3) take any legal action necessary to avoid the payment of improper claims against the program;
(4) define the health insurance plans for which reinsurance will be provided, and to issue reinsurance policies, in accordance with the requirements of this article;
(5) establish rules, conditions, and procedures for reinsuring risks under the program;
(6) establish actuarial functions as appropriate for the operation of the program;
(7) assess reinsuring insurers in accordance with the provisions of subsection (K), and make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses. Any interim assessments shall be credited as offsets against any regular assessments due following the close of the fiscal year;
(8) appoint appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the program, policy and other contract design, and any other function within the authority of the program;
(9) borrow money to effect the purposes of the program. Any notes or other evidence of indebtedness of the program not in default shall be legal investments for insurers and may be carried as admitted assets;
(H) A reinsuring insurer may reinsure with the program as provided for in this subsection:
(1) With respect to a basic health insurance plan or a standard health insurance plan, the program shall reinsure the level of coverage provided.
(2) A small employer insurer may reinsure an entire employer group within sixty days of the commencement of the group's coverage under a health insurance plan.
(3) A reinsuring insurer may reinsure an eligible employee or dependent within a period of sixty days following the commencement of the coverage with the small employer. A newly-eligible employee or dependent of the reinsured small employer may be reinsured within sixty days of the commencement of his coverage.
(4)(a) The program shall not reimburse a reinsuring insurer with respect to the claims of a reinsured employee or dependent until the insurer has incurred an initial level of claims for such employee or dependent of five thousand dollars in a calendar year for benefits covered by the program. In addition, the reinsuring insurer shall be responsible for ten percent of the next fifty thousand dollars of benefit payments during a calendar year and the program shall reinsure the remainder. A reinsuring insurers' liability under this subparagraph shall not exceed a maximum limit of ten thousand dollars in any one calendar year with respect to any reinsured individual.
(b) The board annually shall must adjust the initial level of claims and the maximum limit to be retained by the insurer to reflect increases in costs and utilization within the standard market for health insurance plans within the State. The adjustment shall must not be less than the annual change in the medical component of the 'Consumer Price Index for All Urban Consumers' of the Department of Labor, Bureau of Labor Statistics, unless the board proposes and the commissioner director approves a lower adjustment factor.
(5) A small employer insurer may terminate reinsurance with the program for one or more of the reinsured employees or dependents of a small employer on any anniversary of the health insurance plan.
(6) A reinsuring insurer shall apply all managed care and claims handling techniques, including utilization review, individual case management, preferred provider provisions, and other managed care provisions or methods of operation consistently with respect to reinsured and nonreinsured business.
(I)(1) The board, as part of the plan of operation, shall must establish a methodology for determining premium rates to be charged by the program for reinsuring small employers and individuals pursuant to this section. The methodology must contain a provision surcharging the reinsurance premium rate of a small employer insurer which does not employ effective cost containment and managed care arrangements including, but not limited to:
(a) preferred provider organizations;
(b) utilization review;
(c) case management;
(d) other.
The methodology shall must include a system for classification of small employers that reflects the types of case characteristics commonly used by small employer insurers in the State. The methodology shall must provide for the development of base reinsurance premium rates which shall must be multiplied by the factors set forth in paragraph (2) to determine the premium rates for the program. The base reinsurance premium rates shall be established by the board, are subject to the approval of the commissioner director or his designee, and shall must be set at levels which reasonably approximate gross premiums charged to small employers by small employer insurers for health insurance plans with benefits similar to the standard health insurance plan.
(2) Premiums for the program shall be as follows:
(a) An entire small employer group may be reinsured for a rate that is one and one-half times the base reinsurance premium rate for the group established pursuant to this paragraph.
(b) An eligible employee or dependent may be reinsured for a rate that is five times the base reinsurance premium rate for the individual established pursuant to this paragraph.
(3) The board periodically shall must review the methodology established under paragraph (1), including the system of classification and any rating factors, to assure that it reasonably reflects the claims experience of the program. The board may propose changes to the methodology which shall be are subject to the approval of the commissioner director.
(J) If a health insurance plan for a small employer is entirely or partially reinsured with the program, the premium charged to the small employer for any rating period for the coverage issued shall meet the requirements relating to premium rates set forth in Section 38-71-910, et seq. of the 1976 Code.
(K)(1) Before March first of each year, the board shall must determine and report to the commissioner director the program net loss for the previous calendar year, including administrative expenses and incurred losses for the year, taking into account investment income and other appropriate gains and losses.
(2) Any net loss for the year shall be recouped by assessments of reinsuring insurers.
(a) The board shall establish, as part of the plan of operation, a formula by which to make assessments against reinsuring insurers. The assessment formula shall be based on:
(i) each reinsuring insurer's share of the total premiums earned in the preceding calendar year from health insurance plans delivered or issued for delivery to small employers in this State by reinsuring insurers; and
(ii) each reinsuring insurer's share of the premiums earned in the preceding calendar year from newly-issued health insurance plans delivered or issued for delivery during the calendar year to small employers in this State by reinsuring insurers.
(b) The formula established pursuant to subparagraph (a) shall not result in any reinsuring insurer having an assessment share that is less than fifty percent nor more than one hundred fifty percent of an amount which is based on the proportion of the reinsuring insurer's total premiums earned in the preceding calendar year from health insurance plans delivered or issued for delivery to small employers in this State by reinsuring insurers to the total premiums earned in the preceding calendar year from health insurance plans delivered or issued for delivery to small employers in this State by all reinsuring insurers.
(c) The board may, with approval of the commissioner director, change the assessment formula established pursuant to subparagraph (a) from time to time as appropriate. The board may provide for the shares of the assessment base attributable to total premium and to the previous year's premium to vary during a transition period.
(d) Subject to the approval of the commissioner director, the board shall must make an adjustment to the assessment formula for reinsuring insurers that are approved health maintenance organizations which are federally qualified under 42 U.S.C. Sections 300, et seq., to the extent, if any, that restrictions are placed on them that are not imposed on other small employer insurers.
(3)(a)Before March first of each year, the board shall must determine and file with the commissioner director an estimate of the assessments needed to fund the losses incurred by the program in the previous calendar year.
(b) If the board determines that the assessments needed to fund the losses incurred by the program in the previous calendar year will exceed the amount specified in subparagraph (c), the board shall must evaluate the operation of the program and report its findings, including any recommendations for changes to the plan of operation, to the commissioner director within ninety days following the end of the calendar year in which the losses were incurred. The evaluation shall must include an estimate of future assessments and consideration of the administrative costs of the program, the appropriateness of the premiums charged, the level of insurer retention under the program, and the costs of coverage for small employers. If the board fails to file a report with the commissioner director within ninety days following the end of the applicable calendar year, the commissioner director may evaluate the operations of the program and implement such amendments to the plan of operation the commissioner director considers necessary to reduce future losses and assessments.
(c) For any calendar year, the amount specified in this subparagraph is five percent of total premiums earned in the previous calendar year from health insurance plans delivered or issued for delivery to small employers in this State by reinsuring insurers.
(4) If assessments exceed net losses of the program, the excess shall be held at interest and used by the board to offset future losses or to reduce program premiums. As used in this paragraph, 'future losses' includes reserves for incurred but not reported claims.
(5) Each reinsuring insurer's proportion of the assessment shall be determined annually by the board based on annual statements and other reports considered necessary by the board and filed by the reinsuring insurers with the board.
(6) The plan of operation shall provide for the imposition of an interest penalty for late payment of assessments.
(7) A reinsuring insurer may seek from the commissioner director or his designee a deferment from all or part of an assessment imposed by the board. The commissioner director or his designee may defer all or part of the assessment of a reinsuring insurer if the commissioner director or his designee determines that the payment of the assessment would place the reinsuring insurer in a financially impaired condition. If all or part of an assessment against a reinsuring insurer is deferred, the amount deferred shall must be assessed against the other participating insurers in a manner consistent with the basis for assessment set forth in this subsection. The reinsuring insurer receiving the deferment shall remain remains liable to the program for the amount deferred and shall be prohibited from must not reinsuring reinsure any individuals or groups with the program until such time as it pays the assessments.
(L) Neither the participation in the program as reinsuring insurers, the establishment of rates, forms, or procedures, nor any other joint or collective action required by this article shall be the basis of any legal action, criminal or civil liability, or penalty against the program or any of its reinsuring insurers either jointly or separately.
(M) The board, as part of the plan of operation, shall develop standards setting forth the manner and levels of compensation, if any, to be paid to agents for the sale of basic and standard health insurance plans. In establishing such standards, the board shall take into consideration the need to assure the broad availability of coverages, the objectives of the program, the time and effort expended in placing the coverage, the need to provide on-going service to the small employer, the levels of compensation currently used in the industry, and the overall costs of coverage to small employers selecting these plans.
(N) The program shall be exempt from any and all taxes."
SECTION 52. Section 38-71-1420(A) and (B)(2) of the 1976 Code, as added by Act 339 of 1994, are amended to read:
"(A) The Governor shall must appoint an advisory committee to the commissioner director which shall to recommend the form and level of coverages to be made available by small employer insurers pursuant to Section 38-71-1360. At least one member of the committee shall must be a licensed independent insurance agent who represents multiple health and accident insurance carriers. In preparing its initial recommendations, the advisory committee shall must build on the work of the Governor's Committee on Basic Health Services.
(B)(2) The committee shall must submit the health insurance plans described in paragraphs (A) and (B) to the commissioner director for approval by January 1, 1995. If, for any reason, the committee does not provide the commissioner director with a recommendation as to the form and level of coverages to be made available pursuant to this article, the board shall must make such recommendation to the commissioner director. If, subsequent to the approval of the benefit levels of the basic and standard health insurance plans, amendments to the plans become necessary, the board shall must make such recommendations to the commissioner director for his approval."
SECTION 53. Section 38-71-1430 of the 1976 Code, as added by Act 339 of 1994, is amended to read:
"Section 38-71-1430. The board, in consultation with members of the committee, shall must study and make a public report each year to the commissioner director on the effectiveness of this article. The report shall must analyze the effectiveness of the act in promoting rate stability, product availability, and coverage affordability. The report shall must include the total number of basic and standard policies sold in the State noting whether these insureds have ever been denied coverage before July 1, 1995. The report shall must contain a detailed analysis of the financial condition of the reinsurance pool including losses and assessments by year. The report may contain recommendations for actions to improve the overall effectiveness, efficiency, and fairness of the small group health insurance marketplace. The report shall must address whether insurers and agents are fairly marketing or issuing health insurance plans to small employers in fulfillment of the purposes of this article. The report may contain recommendations for market conduct or other regulatory standards or action."
SECTION 54. Section 38-73-120 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-120. No penalty may be imposed and no license may be suspended or revoked pursuant to this chapter except upon a written order of the director or his designee, stating his findings, made after a hearing before the Administrative Law Judge Division held upon not less than thirty days' written notice to the person or organization specifying the alleged violation."
SECTION 55. Section 38-73-130 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-130. Any insurer or rating organization aggrieved by any order or decision of the director or his designee made without a hearing made pursuant to this chapter may, within thirty days after notice of the order to the insurer or organization, make written request to the Administrative Law Judge Division for a hearing. The Administrative Law Judge Division shall hear the party or parties within twenty days after receipt of the request and shall give not less than ten days' written notice of the time and place of the hearing. according to the rules of that agency. Within fifteen days after the hearing the Administrative Law Judge Division shall must affirm, reverse, or modify the previous action, specifying his reasons therefor. Pending the hearing and decision thereon the director or his designee may suspend or postpone the effective date of his previous action."
SECTION 56. Section 38-73-457 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-457. Notwithstanding Sections 38-73-920 and 38-73-1210, every automobile insurer and rating organization shall must, prior to October 1, 1987, file with the department a base rate, which is defined as a rate by coverage calculated solely upon the experience generated by the risk for each class and territory retained by the insurer in its voluntary book of business and which must not include experience generated by risks ceded or assumed from the Reinsurance Facility established under Section 38-73-1030. An objective standards rate by coverage must also be filed which is twenty-five percent above the base rate previously described for each class and territory. The base rate must be calculated by removing from the rate or premium charge, then in effect for the automobile insurer, that portion of the rate or premium charge attributable to the net gain or loss of the insurer as a result of participation in the operating results of the facility as required by Section 38-77-760. In determining the base rate and objective standards rate, by coverage, the director or his designee, in order that no extra premium revenue is generated by this section, shall must require that the insurer's average rate, by coverage, on October 1, 1987, (computed as a weighted average of the base rate and objective standards rate, by coverage, as determined by the Commissioner), not exceed the insurer's average rate, by coverage, prior to October 1, 1987, as determined by the director or his designee. The provisions of the Administrative Procedures Act apply to any appeal of a base rate or objective standards rate brought thereunder before the Administrative Law Judge Division as provided by law. The base rate or objective standards rate approved by the director or his designee may be put into effect under bond in a similar manner that a public utility may put a proposed rate increase into effect under bond as provided by law. No insurer may file a base rate for any class or territory which is higher than the rate or premium charge, exclusive of that portion required by Section 38-73-460, approved by the director or his designee for use on October 1, 1987. As a result of this section, no insured may receive an increase in rates for other than an increase in coverage or due to the provisions of Section Sections 38-77-280, 38-77-610, or 38-73-455, unless the insurer files additional rates in accordance with this title.
The base rate and objective standards rate filed by each insurer of automobile insurance are effective if they meet the requirements of this section, on or after July 1, 1988, for all eligible applicants and upon the renewal date, on or after July 1, 1988, for all eligible existing policyholders. If the base rate and objective standards rate filed by an automobile insurer do not meet the requirements of this section, the director or his designee shall must suspend the authority of that insurer to write automobile insurance until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the facility recoupment charge approved or established pursuant to Section 38-77-610 may be approved for an insurer of automobile insurance unless that rate or premium charge is calculated in accordance with this section and meets the other applicable requirements of this title pertaining to the approval of rates or premium charges.
The consumer advocate, upon request to the director or his designee, must be provided by him with a copy of any base rate filed with the director or his designee along with any supporting materials, documents, or studies utilized to support the filed base rate. In addition, every automobile insurer and rating organization shall must promptly respond to requests for information and data requested by the consumer advocate relating to the filed base rate. The consumer advocate must be afforded an opportunity for a hearing before the director or his designee Administrative Law Judge Division on any filed base rate before it takes effect that he believes does not meet the requirements of this section. Final decisions of the director or his designee regarding this hearing are subject to the provisions of the State Administrative Procedures Act and may be appealed to the Administrative Law Judge Division as provided by law."
SECTION 57. Section 38-73-465(B)8(c) of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"(c) The director or his designee may extend the provisions of this item to other lines of property and casualty insurance, by order, after public hearing, when the determination is made that to do so is in the public interest. An insurer may appeal the decision of the director or his designee to the circuit court of Richland County."
SECTION 58. Section 38-73-750 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-750. Automobile insurers shall must file with the State Rating and Statistical Division their plans or systems for allocating expenses and profit as respects the various kinds or types of automobile insurance risks and the classes of risks thereunder. However, no plan or system may be filed which is inconsistent with the classification of risks promulgated by the department. No plan or system may be filed or approved if the purpose or effect is to discriminate unfairly or unreasonably in respect to the allocation of expenses or profit between classes of risks or if the purpose or effect is to impose a burden or detriment upon the South Carolina Reinsurance Facility or to secure to the insurer using the plan or system an unfair or unreasonable competitive advantage to the detriment of the South Carolina Reinsurance Facility or other insurers. The director or his designee after due notice and hearing, shall must disapprove and disallow the further use of an inconsistent, discriminatory, burdensome, or competitively unfair plan or system for the allocation of expenses and profit, and the insurer may have the disapproval reviewed by the Administrative Law Judge Division pursuant to Section 38-3-170."
SECTION 59. Section 38-73-775(C) of the 1976 Code, as added by Act 326 of 1996, is amended to read:
"(C) The governing board of the South Carolina Reinsurance Facility annually shall must review the automobile physical damage loss components to determine if they are actuarially sound and supported by statistical evidence. If rate changes are required, the governing board shall must submit appropriate filings for approval with the director. These rate filings are subject to public hearings before the Administrative Law Judge Division pursuant to applicable provisions of the Administrative Procedures Act."
SECTION 60. Section 38-73-910 of the 1976 Code, as last amended by Act 378 of 1996, is further amended to read:
"Section 38-73-910. No increase in the premium rates may be granted for automobile, workers' compensation, fire, allied lines, and homeowners' insurance, nor for any other line or type of insurance with respect to which the director or his designee has, by order, made a finding that (a) legal or other compulsion upon the part of the insured to purchase the insurance interferes with competition, or (b) under prevailing circumstances there does not exist substantial competition, unless notice is given in all newspapers of general, statewide circulation at least thirty days in advance of the insurer's proposed effective date of the increase in premium rates. The notice shall must state the amount of increase, the type and line of coverage, and the proposed effective date and shall must allow any insured or affected party to request within fifteen days a public hearing upon the propriety of the rate increase request before the Administrative Law Judge Division. A copy of the notice must be sent to the consumer advocate. If the director or his designee finds good cause, he may issue an order granting an additional fifteen days for the consumer advocate or any interested party before notifying the Administrative Law Judge Division of the request for hearing.
However, the requirements of public notices and public hearings in this section do not apply to applications for rate increases when the applicant insurer had earned premiums in this State in the previous calendar year of less than two million dollars for the line or type of insurance for which the rate increase is sought or, if the rate increase is sought by a rating organization, the earned premiums in this State for all members and subscribers of the organization for whom an increase is sought were less than two million dollars for the previous calendar year for the line or type of insurance for which the rate increase is sought. The two million dollars must be increased by a factor equal to the increase in the consumer price index, all items, every three years.
However, a private insurer licensed to underwrite essential property insurance as defined by Section 38-75-310(1), notwithstanding any limitations included within this title, may file and use, pursuant to the provisions of Section 38-73-1095, any rates which result in insurance premium rates of ninety percent, or less, of the insurance premium rates then approved for the South Carolina Wind and Hail Underwriting Association for use within the coastal area of South Carolina as defined by Section 38-75-310(5)."
SECTION 61. Section 38-73-915(B) of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"(B) The director or his designee may order an insurer or rating organization to reduce or increase its current rate levels as a result of recently passed legislation or recently rendered court decisions. The director or his designee shall must give the insurer or rating organization and the consumer advocate thirty days' notice of his intention to order a reduction or increase in an insurer's or rating organization's rate level. The insurer or rating organization or the consumer advocate may request a hearing before the director or his designee Administrative Law Judge Division under the Administrative Procedures Act to contest the proposed order. The consumer advocate may participate as a party in any such hearings."
SECTION 62. Section 38-73-990 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-990. If within the waiting period or any extension thereof as provided in Section 38-73-960 the director or his designee finds that a filing or a part of a filing does not meet the requirements of this chapter, he shall must send to the insurer or rating organization which made the filing written notice of disapproval of the filing or part of a filing specifying therein in what respects he finds the filing or part thereof fails to meet the requirements of this chapter and stating that the filing or the part may not become effective. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division for a review of the disapproval."
SECTION 63. Section 38-73-1000 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1000. If, within thirty days after a specific inland marine rate on a risk specially rated by a rating organization subject to Section 38-73-970 has become effective, the director or his designee finds that the filing does not meet the requirements of this chapter, he shall must send to the rating organization which made the filing written notice of disapproval of the filing specifying therein in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is no longer effective. This disapproval does not affect any contract made or issued prior to the expiration of the period set forth in the notice. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division for a review of the disapproval."
SECTION 64. Section 38-73-1010 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1010. If, within thirty days after a special surety or guaranty filing subject to Section 38-73-980 has become effective, the director or his designee finds that the filing does not meet the requirements of this chapter, he shall must send to the insurer or rating organization which made the filing written notice of disapproval of the filing specifying therein in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. This disapproval does not affect any contract made or issued prior to the expiration of the period set forth in the notice. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division for a review of the disapproval."
SECTION 65. Section 38-73-1020 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1020. If at any time after the applicable review period provided for in Sections 38-73-990 to 38-73-1010 the director or his designee finds that a filing does not meet the requirements of this chapter, he shall, after a hearing held upon not less than thirty days' written notice to every insurer and rating organization which made the filing, specifying the matters to be considered at the hearing, issue an order to every insurer and rating organization which made the filing, specifying in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. Copies of the order must be sent to every insurer and rating organization which made the filing. The order does not affect any contract or policy made or issued prior to the expiration of the period set forth in the order. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division for a review of the disapproval."
SECTION 66. Section 38-73-1030 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1030. Any person or organization aggrieved with respect to any filing which is in effect may make written application to the director or his designee Administrative Law Judge Division for a hearing thereon, except that the insurer or rating organization that made the filing may not proceed under this section. The application shall must specify the grounds to be relied upon by the applicant. If, within thirty days after receipt of the application, the director or his designee administrative law judge finds that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, and that the grounds otherwise justify holding a hearing, he shall must hold a hearing upon not less than thirty days' written notice to the applicant and to every insurer and rating organization which made the filing. Upon good cause shown, the Administrative Law Judge may permit any person to intervene, appear, and be heard at the hearing by counsel or in person. If, after the hearing, the director or his designee administrative law judge finds that the filing does not meet the requirements of this chapter, he shall must issue an order specifying in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. Copies of the order must be sent to the applicant and to every insurer and rating organization which made the filing. The order does not affect any contract or policy made or issued prior to the expiration of the period set forth in the order."
SECTION 67. Section 38-73-1080 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
Section 38-73-1080. Every rating organization and every insurer which makes its own rates shall must, within a reasonable time after receiving written request therefor and upon payment of such reasonable charge as it may make, furnish to any insured affected by a rate made by it or to the authorized representative of the insured all pertinent information as to the rate. Every rating organization and every insurer which makes its own rates shall must provide within this State reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which the rating system has been applied in connection with the insurance afforded him. If the rating organization or insurer fails to grant or reject the request within thirty days after it is made, the applicant may proceed in the same manner as if his application had been rejected. Any party affected by the action of the rating organization or the insurer on the request may, within thirty days after written notice of the action, appeal to the director or his designee, who, after a hearing held upon not less than thirty days' written notice to the appellant and to the rating organization or insurer, may affirm or reverse the action. The insurer or rating organization may then request a public hearing before the Administrative Law Judge Division."
SECTION 68. Section 38-73-1090 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1090. The director or his designee, upon his own motion, or upon written complaint, has the power in the first instance to determine whether or not any rate fixed by any individual, bureau, or insurer is unfairly discriminatory. If he concludes, after careful and diligent inquiry and a full hearing and investigation, that there is unfair discrimination, he shall must order the discrimination removed and require the individual rate maker, bureau, or insurer to promulgate a rate which is not unfairly discriminatory. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division to review this decision."
SECTION 69. Section 38-73-1095(A) of the 1976 Code, as added by Act 360 of 1996, is amended to read:
"(A) Any private insurer licensed to underwrite 'essential property insurance' as defined by Section 38-75-310(1), not withstanding any limitations included with this title, may file and use any rates for the coverages detailed within Section 38-75-310(l) which result in insurance premium rates of ninety percent, or less, of the insurance premium rates then approved for the South Carolina Wind and Hail Underwriting Association for use within the coastal area of South Carolina as defined by Section 38-75-310(5). Filings for these insurance premium rates must be made upon forms prescribed by the director or his designee and must apply only to essential property insurance premium rates for the coastal area. Within thirty days after the filing of the rates, the director or his designee must notify the insurer or rating organization filing the rates of his approval or his disapproval of those rates. If the rates are disapproved, then the director or his designee must notify the insurer or the rating organization of the specific reason for disapproval. The director or his designee may extend for up to an additional thirty days the period within which he must approve or disapprove the rates. The insurer or rating organization may then request a public hearing before the Administrative Law Judge Division to review a disapproval. Any rates received, which are neither approved nor disapproved by the director, must be deemed approved at the expiration of the thirty-day period or, if that period has been extended, at the expiration of the extended period. However, no insurer or rating organization may use rates considered approved under the provisions of this section unless and until the insurer or rating organization has filed a written notice of its intent to use the rates. The notice must be filed with the director or his designee at least ten days before the insurer's or rating organization's use of the deemed rates."
SECTION 70. Section 38-73-1100 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1100. If at any time it appears to the director or his designee that rates charged for property, casualty, surety, marine, title, or allied lines of insurance in this State are excessive or unreasonable, in that the results of the business of the insurer in this State during the five years immediately preceding the year in which the investigation is made, as indicated by the insurer's annual statements and any supplements to them, show an aggregate operating profit in excess of a reasonable amount, then the director or his designee may order a general reduction in rates which will reduce the operating profit to a reasonable amount. Any reduction ordered by the director or his designee must be applied to the class or classes of risks as the insurer or rating bureau may elect, and they may not be compelled to reduce rates on classes which have not produced a reasonable operating profit for the five-year period. In addition to ordering a general reduction in rates, the director or his designee may also order a pro rata refund of any excessive or unreasonable profits found to have been realized by the insurer, together with interest. The director or his designee shall must determine the rate of interest which must be the insurer's average rate of return for the five-year period. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division to review this decision. Any refund which is ordered must be equitably apportioned among the policyholders entitled to it, and may be given either in the form of a cash refund or as a credit toward future premiums or a combination of these two methods. In determining the question of a reasonable operating profit under this section, the director or his designee as a protection to policyholders shall must give proper and reasonable consideration to conflagration liabilities, both within and without this State."
SECTION 71. Section 38-73-1240 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1240. Licenses issued pursuant to Section 38-73-1230 may be suspended or revoked by the director or his designee, after hearing before the Administrative Law Judge Division, in the event the rating organization ceases to meet the requirements of this article."
SECTION 72. Section 38-73-1260 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1260. Subject to rules and regulations which have been approved by the department as reasonable, each rating organization shall must permit any insurer, not a member, to be a subscriber to its rating services for any kind of insurance, subdivision, or class of risk or part or combination thereof for which it is authorized to act as a rating organization. If the rating organization refuses to admit an insurer as a subscriber or fails to grant or reject an insurer's application for subscribership within thirty days after it was made, the insurer may request a review by the director or his designee Administrative Law Judge Division. Upon review the failure to act must be treated as a rejection of the application. If the director or his designee administrative law judge finds at a hearing, held upon at least thirty days' written notice to the rating organization, that the insurer has been refused admittance to the rating organization as a subscriber without justification, he shall must order the rating organization to admit the insurer as a subscriber. If he finds that the action of the rating organization was justified, the director or his designee shall must make an order affirming its action.
Each rating organization shall must furnish its rating services without discrimination to its members and subscribers."
SECTION 73. Section 38-73-1270 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1270. Notice of proposed changes in the rules and regulations referred to in Section 38-73-1260 must be given to subscribers.
The reasonableness of any rule or regulation in its application to subscribers must, at the request of any subscriber or any insurer, be reviewed by the director or his designee at a hearing held upon at least thirty days' written notice to the rating organization and to the subscriber or insurer. If the director or his designee finds that the rule or regulation is unreasonable in its application to subscribers, he shall must order that the rule or regulation is not applicable to subscribers. The insurer or rating organization may request a public hearing before the Administrative Law Judge Division for a de novo review of this decision."
SECTION 74. Section 38-73-1320 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1320. Upon the filing of an application under either Section 38-73-1300 or Section 38-73-1310 the director or his designee shall must set a time and place for a hearing at which the insurer and the rating organization may be heard and shall must not give them not less than thirty days' written notice thereof. In the event the director or his designee is advised by the rating organization that it does not desire a hearing he may, upon the consent of the applicant, waive the hearing. In considering an application under Section 38-73-1300 for permission to file a deviation the director or his designee shall must give consideration to the available statistics and the principles for rate making as provided in Section 38-73-330. The director or his designee shall must issue an order permitting the deviation or modification for the insurer to be filed if he finds it to be justified. Upon issuance of the order the deviation or modification becomes effective. The director or his designee shall must issue an order denying the application if he finds that the resulting premiums would be excessive, inadequate, or unfairly discriminatory or, in the case of an application filed under Section 38-73-1310, if he finds the modification requested is not justified. Each deviation permitted to be filed, which, when approved, would result in a uniform percentage decrease, remains effective until disapproved by the director or his designee. Each deviation permitted to be filed, which, when approved, would result in a uniform percentage increase, is effective for a period of one year from the date of the permission unless terminated sooner with the approval of the director or his designee."
SECTION 75. Section 38-73-1340 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1340. Any member of or subscriber to a rating organization may appeal to the Administrative Law Judge Division from the action or decision of the rating organization in approving or rejecting any proposed change in or addition to the filings of the rating organization. The Administrative Law Judge Division shall must, after a hearing held before it upon not less than thirty days' written notice to the appellant and to the rating organization, issue an order approving the action or decision of the rating organization or directing it to give further consideration to the proposal, or, if the appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, the Administrative Law Judge Division may, in the event it finds that the action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings on behalf of its members and subscribers in a manner consistent with its findings, within a reasonable time after the issuance of the order.
If the appeal in the case of an insurer to whom the provisions of Article 5 of this chapter are applicable is based upon the failure of the rating organization to make a filing on behalf of the member or subscriber which is based on a system of expense provisions which differs, in accordance with the right granted in item (2) of Section 38-73-430, from the system of expense provisions included in a filing made by the rating organization, the Administrative Law Judge Division shall must, if it grants the appeal, order the rating organization to make the requested filing for use by the appellant. In deciding the appeal the Administrative Law Judge Division shall must apply the standards set forth in Section 38-73-430.
The actual cost to the Administrative Law Judge Division, and the Department of Insurance provided it participates in the hearing, in connection with the appeal may be charged by the Administrative Law Judge Division to the parties making the appeal in any proportion he considers proper and must be immediately paid by the respective parties."
SECTION 76. Section 38-73-1350 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1350. Notwithstanding the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410, 38-73-1420, and 38-73-1430, after public hearing the director or his designee may prohibit cooperation among or within property/casualty rating or advisory organizations by insurers or among or within these rating or advisory organizations and insurers in rate making or in other matters within the scope of this chapter, except to the extent that these organizations may compile and disseminate only historic loss data with no mathematical trending or analytical methodologies, upon a finding by the director or his designee that the anti-competitive effects of this cooperation outweigh practical constraints of prohibitions. All property/casualty filings are subject to prior approval by the director or his designee. The provisions of Title 1, Chapter 23 (Administrative Procedures Act) apply to all property/casualty rate filings."
SECTION 77. Section 38-73-1370 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1370. After June 30, 1989, no rating organization may file a rate increase with the department for any previously approved final rate or premium charge for any private passenger automobile insurance coverage. A rating organization may file the pure loss component of the rate or premium charge for any private passenger automobile insurance coverage, by class and territory, for the approval of the director or his designee pursuant to Section 38-73-910. After a public hearing, the director or his designee may approve the pure loss component of the rate or premium charge for use by the members or subscribers of the rating organization. No member or subscriber may use the approved pure loss component of the rate or premium charge unless and until the expense component of the rate or premium charge has also been filed with the department and approved by the director or his designee pursuant to Section 38-73-1380."
SECTION 78. Section 38-73-1380 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1380. After June 30, 1989, No member or subscriber of a rating organization may utilize a rate or premium charge for any private passenger automobile insurance coverage unless and until the final rate or premium charge has been filed with the Division and approved by the director or his designee. After the effective date of this section, the final rate or premium charge is the pure loss component filed and approved by a rating organization on behalf of its members or subscribers added to the expense component of the rate or premium charge, filed with the department and approved by the director or his designee, by each member or subscriber of a rating organization independently.
No expense component filed by a member or subscriber of a rating organization may be approved by the director or his designee unless it has been the subject of a public hearing before the Administrative Law Judge Division, if that member's or subscriber's total written private passenger automobile insurance premium during the previous calendar year equaled or exceeded one percent of the total written private passenger automobile insurance premium in this State during the previous calendar year.
For other lines of insurance the requirements of this section are not activated unless the members' or subscribers' total written premium during the previous calendar year equaled or exceeded three percent of the total written insurance premium for that specific line of insurance in this State during the previous calendar year."
SECTION 79. Section 38-73-1420 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1420. After June 30, 1989, The Board of Governors of the South Carolina Reinsurance Facility shall must file an expense component for private passenger automobile insurance rate or premium charges after the rating organization with the largest number of members or subscribers has filed a pure loss component for private passenger automobile insurance with the director or his designee. Upon the approval of such component by the director or his designee, those automobile insurers designated pursuant to Section 38-77-590(A), for risks written by them through producers designated pursuant to that same section, shall must utilize these final rate or premium charges. Automobile insurers designated pursuant to Section 38-77-590(A) are not required to use those same final rates or premium charges for risks written through their agents not appointed pursuant to Section 38-77-590."
SECTION 80. Section 38-73-1430 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1430. After June 30, 1989, The director or his designee may extend the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, and 38-73-1410 to other lines of property and casualty insurance, by order, after public hearing when the determination is made that to do so is in the public interest. The insurer or rating organization may appeal the decision of the director or his designee to the circuit court of Richland County."
SECTION 81. Section 38-73-1530 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1530. If, after a hearing, the director or his designee finds that the furnishing of information or assistance involves any act or practice which is unfair, unreasonable, or otherwise inconsistent with the provisions of this chapter, he may issue a written order specifying in what respects the act or practice is unfair, unreasonable, or otherwise inconsistent with the provisions of this chapter and requiring the discontinuance of the act or practice. The director or his designee may also impose the penalties in Section 38-2-10. The order may be subject to a hearing before the Administrative Law Judge Division pursuant to Section 38-3-170."
SECTION 82. Section 38-73-1720 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1720. If, after a hearing, the director or his designee finds that any activity or practice of any such group, association, or other organization is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, he may issue a written order specifying in what respects the activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter and requiring the discontinuance of the activity or practice. The director or his designee may also impose the penalties in Section 38-2-10. The order may be subject to a hearing before the Administrative Law Judge Division pursuant to Section 38-3-170."
SECTION 83. Section 38-74-20(D) of the 1976 Code, as last amended by Section 789 of Act 181 of 1993, is further amended to read:
"(D) The board shall must submit to the director or his designee a plan of operation for the pool and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the pool. The director or his designee shall must approve the plan of operation provided it is determined to be suitable to assure the fair, reasonable, and equitable administration of the pool and provides for the sharing of pool gains or losses on an equitable basis. The plan of operation is effective upon approval in writing by the director or his designee consistent with the date on which the coverage under this chapter must be made available. If the board fails to submit a suitable plan of operation within one hundred twenty days after the appointment of the board of directors, or at any time thereafter fails to submit suitable amendments to the plan, the department director, after notice and hearing, shall must promulgate reasonable regulations orders necessary to effectuate the provisions of this chapter. The orders are subject to review by the Administrative Law Judge Division. The regulations orders shall otherwise continue in force until modified by the department director or superseded by a plan submitted by the board and approved by the director or his designee."
SECTION 84. Section 38-75-370 of the 1976 Code, as last amended by Section 793 of Act 181 of 1993, is further amended to read:
"Section 38-75-370. All members of the association shall must participate in its writings, expenses, profits, and losses in the proportion that the net direct premium of the member written in this State during the preceding calendar year bears to the aggregate net direct premiums written in this State by all members of the association, as certified to the association by the department after review of annual statements, other reports, and other statistics which the department considers necessary to provide the information required and which the department is authorized to obtain from a member of the association. After certification by the department, the association may rely on the member company's annual statement in determining the company's participation in profits and losses for each year.
Each member's participation in the association must be determined annually in the same manner as the initial determination. An insurer authorized to write and engage in writing insurance, the writing of which requires the insurer to be a member of the association pursuant to Section 38-75-330, becomes a member of the association on January first immediately following the authorization. The determination of the insurer's participation in the association must be made as of the date of the membership in the same manner as for all other members of the association. Member insurers shall must receive credit annually for essential property insurance voluntarily written in the coastal area and their participation in the writings of the association must be reduced accordingly. The board of directors shall must authorize the method of determining the credit. In order to receive credit for essential property voluntarily written in the coastal area, each member company shall must submit its requests by March thirty-first of the year for which credit is sought.
The director or his designee may order the assessment of a member insurer after hearing may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the director or his designee after conducting a hearing, payment of the assessment would render the insurer insolvent or in danger of insolvency or would otherwise leave the insurer in a condition so that further transaction of the insurer's business would be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. The director or his designee may hold a hearing before issuing his order. The order may be appealed as provided in Section 38-3-210. If payment of an assessment against a member insurer is deferred by order of the director or his designee in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In its his order of deferral, or in necessary subsequent orders, the director or his designee shall must prescribe a plan by which the assessment so deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled must not be distributed to the impaired insurer but must be applied toward repayment of an assessment until the obligation has been satisfied. The association shall must distribute the repayments, including interest, to the other member insurers on the basis at which assessments were made."
SECTION 85. Section 38-75-410(A) of the 1976 Code, as last amended by Section 793 of Act 181 of 1993, is further amended to read:
"(A) A person insured pursuant to this article or his representative or a member company who is aggrieved by an act, ruling, or decision of the association:
(1) regarding rates, classification of risks, assessments, voluntary credits, cancellation or termination of policies, or underwriting shall must appeal to the director or his designee within sixty days after the association's act, ruling, or decision;. The director or his designee may, in his discretion, hold a hearing on the matter before issuing an order. The order of the director or his designee is subject to review by the Administrative Law Judge Division.
(2) other than those specified in item (1), may appeal to the director or his designee within thirty days after the act, ruling, or decision."
SECTION 86. Section 38-75-980 of the 1976 Code, as last amended by Section 800 of Act 181 of 1993, is further amended to read:
"Section 38-75-980. (A) A title insurer shall must file with the director or his designee the premium rate schedules it proposes to use in this State. If the director or his designee finds in his review of a filing that it does not violate Section 38-75-970, he shall must approve the schedule within sixty days of filing. Before the approval, the director or his designee may conduct public hearings with respect to the filing. Filings that the director or his designee has failed to approve or disapprove within sixty days of filing is are considered approved. The insurer may request a hearing before the Administrative Law Judge Division for a review of the disapproval. Upon notice to the title insurer, the period for review of the rate filing may be extended for an additional sixty days.
(B) If after the approval of filing the director or his designee believes that the filing does not meet the requirements of this section or is otherwise contrary to law, or if any party having an interest in the filing makes a written complaint to the director or his designee setting forth specific and reasonable grounds for the complaint, he may disapprove the filing. or if Any insurer, upon within thirty days of receiving notice of disapproval by the director or his designee of a filing pursuant to this section, should so may request, the director or his designee shall hold a hearing within thirty days and give written notice of the hearing to all parties in interest before the Administrative Law Judge Division to review the disapproval. The director or his designee administrative law judge may confirm, modify, change, or rescind any previous action the decision of the director or his designee if warranted by the facts shown at the hearing."
SECTION 87. Section 38-77-115 of the 1976 Code, as last amended by Section 805 of Act 181 of 1993, is further amended to read:
"Section 38-77-115. The authorized agents for every insurer covered by the provisions of Section 38-77-110 shall must post in a conspicuous location in their office or place of business a sign containing language to be required by regulation of the department, after notice and hearing before the Administrative Law Judge Division order of the director or his designee, that stipulates that insurer and agent may not refuse to write or renew that type of insurance, that tactics designed to avoid writing or renewing that type of insurance are not permissible including unreasonable delays in meeting with applicants, and that violations of the above should be reported to the director or his designee for appropriate action."
SECTION 88. Section 38-77-580 of the 1976 Code, as last amended by Section 820 of Act 181 of 1993, is further amended to read:
"Section 38-77-580. The operations and affairs of the facility are under the direction and control of a governing board of nineteen persons of whom four must be residents of South Carolina appointed by the Governor of South Carolina to represent consumers. The director shall must appoint eight persons to represent the insurance industry; in appointing these persons, the director shall must select two from a list of not less than five nominated by the American Insurance Association from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall must select two from a list of not less than five persons nominated by the American Mutual Insurance Alliance from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall must select two from a list of not less than five persons nominated by the National Association of Independent Insurers from the officers or employees of insurers licensed in South Carolina and which are members or subscribers of that organization; he shall must select two persons, one of whom must be an officer or employee of a stock insurer licensed in South Carolina and not a member or subscriber of any of these organizations, and one of whom must be an officer or employee of a nonstock insurer licensed in South Carolina and not a member or subscriber of any of these organizations; however, of the eight persons appointed to represent the insurance industry, not less than five must be residents of South Carolina and those who are not residents of South Carolina must have job responsibilities that include the supervision over South Carolina operations; not less than two must be officers or employees of insurers licensed to transact automobile insurance in South Carolina and domiciled therein. The director shall must appoint four persons to represent producers, all of whom must be residents of South Carolina; he shall must select two such persons from a list of not less than five nominated by the stock agents' association and two from a list of not less than five persons nominated by the mutual agents' association. The director shall must appoint two persons to represent the designated agents, one of whom must be an officer of a premium service finance company and the other of whom must be a designated agent and both of whom must be residents of South Carolina. In addition the consumer advocate is an ex-officio member of the governing board of the Reinsurance Facility. No person who is associated with any business within the meaning of Section 8-13-20, which is either subject to regulation by the Department of Insurance or which provides goods or services to the facility for compensation, is eligible for appointment to the board to represent consumers, except that any person serving on the board representing consumers on the effective date of this provision who would otherwise be disqualified from serving based on this provision may continue to serve for the remainder of his current term.
The director is chairman of the board, ex officio, but has no vote except in the case of a tie. The director, or his designated representative, shall preside presides over all meetings which must be held not less than quarterly in South Carolina at the times and places the director designates. However, upon the filing with the director of a request for a meeting signed by not fewer than five members of the board and specifying the subjects to be discussed at the proposed meeting, the director shall must call a special meeting of the board to be held not less than fifteen nor more than thirty days after receipt of the request. Notice, in writing, of the special meeting must be provided members of the board.
Members of the board shall must serve one year or until their successors are appointed and have qualified.
Amendment of the plan of operation may be made only at the annual meeting of the board or at a special meeting called by the director for that purpose and so specified in the notice of meeting. Amendments of the plan require the affirmative vote of two-thirds of all the board members and are subject to the approval of the director or his designee. The director or his designee may approve amendments only if they are consistent with the purposes of this chapter. If the consumer-representative members of the board unanimously dissent from a proposed amendment and specify their reasons for dissent in writing, the director or his designee may not approve the amendment until after he has held a public hearing addressed to the reasons for the dissent.
The director may make provision for voting by proxy at meetings.
The director or his designee, through the department, may propose to the board any amendment to or modification of the plan that the director or his designee considers to be necessary to render the plan reasonable or consistent with the purposes of this chapter, specifying in writing the reasons for any proposed amendment or modification. In the event that the board fails to adopt his proposed amendment or modification, the director or his designee may, after giving notice and conducting a public hearing addressed to the reasons for the proposed amendment or modification, promulgate the amendment or modification considered necessary to render the plan reasonable or consistent with the purposes of this chapter."
SECTION 89. Section 38-77-610 of the 1976 Code, as last amended by Section 827 of Act 181 of 1993, is further amended to read:
"Section 38-77-610. Before December second of each year, the governing board of the facility shall must file the facility recoupment charges calculated pursuant to Section 38-77-600 with the director or his designee. The director or his designee the Administrative Law Judge Division shall must then hold a public hearing subject to the provisions of the Administrative Procedures Act to determine if the facility recoupment charges were calculated in accordance with the provisions of Section 38-77-600. The facility recoupment charges must be approved if it is determined that they were properly calculated. If it is determined that the facility recoupment charges were improperly calculated, the director or his designee shall must then establish the appropriate charges. The provisions of the Administrative Procedures Act apply to any court appeal brought thereunder and the charges approved by the director or his designee the Administrative Law Judge Division may be put into effect under bond in a similar manner that a public utility may put a proposed rate increase into effect under bond as provided by law."
SECTION 90. Section 38-79-140(4) of the 1976 Code, as last amended by Section 830 of Act 181 of 1993, is further amended to read:
"(4) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after due notice and public hearing. The directors of the association may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee must review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year. After review of the plan the director or his designee may amend the plan upon approval of the directors of the association."
SECTION 91. Section 38-79-230 of the 1976 Code, as last amended by Section 830 of Act 181 of 1993, is further amended to read:
"Section 38-79-230. All insurers which are members of the association shall must participate in its writings, expenses, profits, and losses in the proportion that the net direct premiums of each member (excluding that portion of premiums attributable to the operation of the association) written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the department. The director or his designee may order the assessment of a member insurer after hearing may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the director or his designee, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition so that further transaction of the insurer's business would be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. The director or his designee may hold a hearing before issuing his order. The order may be appealed as provided in Section 38-3-210. If payment of an assessment against a member insurer is deferred by order of the director or his designee in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the director or his designee shall must prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall must distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."
SECTION 92. Section 38-81-250(D) of the 1976 Code, as last amended by Section 832 of Act 181 of 1993, is further amended to read:
"(D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing. The directors of the association may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee must review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year. After review of the plan the director or his designee may amend the plan upon approval of the directors of the association."
SECTION 93. Section 38-81-340 of the 1976 Code, as last amended by Section 832 of Act 181 of 1993, is further amended to read:
"Section 38-81-340. All insurers which are members of the association shall must participate in its writings, expenses, profits, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the department. The director or his designee may order the assessment of a member insurer after hearing may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the director or his designee after conducting a hearing, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition so that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. The director or his designee may hold a hearing before issuing his order. The order may be appealed as provided in Section 38-3-210. If payment of an assessment against a member insurer is deferred by order of the director or his designee in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the director or his designee shall must prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall must distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."
SECTION 94. Section 38-83-40(D) of the 1976 Code, as last amended by Section 833 of Act 181 of 1993, is further amended to read:
"(D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing. The directors of the association may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee must review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year. After review of the plan the director or his designee may amend the plan upon approval of the directors of the association."
SECTION 95. Section 38-83-130 of the 1976 Code, as last amended by Section 833 of Act 181 of 1993, is further amended to read:
"Section 38-83-130. All insurers which are members of the association shall must participate in its writings, expenses, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the Department of Insurance. The director or his designee may order the assessment of a member insurer after hearing may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the director or his designee after conducting a hearing, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition so that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. The director or his designee may hold a hearing before issuing his order. The order may be appealed as provided in Section 38-3-210. If payment of an assessment against a member insurer is deferred by order of the director or his designee in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the director or his designee shall must prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall must distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."
SECTION 96. Section 38-89-40(D) of the 1976 Code, as last amended by Section 845 of Act 181 of 1993, is further amended to read:
"(D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing. The directors of the association may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee must review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year. After review of the plan the director or his designee may amend the plan upon approval of the directors of the association."
SECTION 97. Except as otherwise may be specifically provided in this act, this act takes effect upon approval by the Governor.