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TO AMEND SECTION 38-90-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE LICENSING OF A CAPTIVE INSURANCE COMPANY, SO AS TO PROVIDE THAT AN EMPLOYER WHO MAY SELF-FUND WORKERS' COMPENSATION COVERAGE IS AUTHORIZED TO WRITE WORKERS' COMPENSATION COVERAGE DIRECTLY THROUGH A CAPTIVE INSURANCE COMPANY; AND TO AMEND SECTION 42-5-20, AS AMENDED, RELATING TO INSURANCE OR PROOF OF FINANCIAL ABILITY TO PAY, SO AS TO AUTHORIZE A CAPTIVE INSURANCE COMPANY, WHICH MAY PAY DIRECTLY COMPENSATION, THE ABILITY TO WRITE WORKERS' COMPENSATION INSURANCE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-90-20(A) of the 1976 Code, as last amended by Act 73 of 2003, is further amended to read:
"(A) A captive insurance company, when permitted by its articles of incorporation, articles of organization, operating agreement, or charter, may apply to the director for a license to do any and all insurance
, except workers' compensation insurance, authorized by this title; however:
(1) a pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated business, or a combination of them;
(2) an association captive insurance company may not insure any risks other than those of the member organizations of its association and their affiliated companies;
(3) an industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies;
(4) in general, a special purpose captive insurance company only may insure the risks of its parent. Notwithstanding any other provisions of this chapter, a special purpose captive insurance company may provide insurance or reinsurance, or both, for risks as approved by the director;
(5) a captive insurance company may not provide personal motor vehicle or homeowner's insurance coverage or any component of these coverages;
(6) a captive insurance company may not accept or cede reinsurance except as provided in Section 38-90-110
(7) a captive insurance company may offer workers' compensation coverage, or any component of them, only as follows:
(a) coverage that reimburses its parent or affiliated companies, or both, for payments under the deductible or self-insured retention of the parent or affiliated companies workers' compensation coverage, or both;
(b) reinsurance coverage for workers' compensation risks of its parent, affiliated companies, controlled unaffiliated business, or any combination of them;
(c) direct workers' compensation coverage to its parent or affiliated companies, or both, only if its parent or affiliated companies, or both, qualified to self-insure workers' compensation risk pursuant to Section 42-5-20;
(d) direct workers' compensation coverage to two or more employers who qualify as a group self-insurer pursuant to Section 42-5-20;
(e) before granting a license provided by subitems (c) and (d), the prospective captive insurance company shall deposit with the Department of Insurance an acceptable security, indemnity, or bond in an amount as determined by the Workers' Compensation Commission, and reviewed annually by the commission, to secure the payment of the compensation liabilities as they are incurred, and the director shall certify to the South Carolina Workers' Compensation Commission that the prospective captive insurance company meets all criteria necessary to qualify as a self-insurer pursuant to the provisions of the Workers' Compensation Act and submit to the Workers' Compensation Commission pertinent information to support that certification. All information shared with the Workers' Compensation Commission pursuant to this subsection is kept confidential in accordance with the provisions of this chapter and regulations promulgated by the Workers' Compensation Commission for self-insured entities."
SECTION 2. Section 42-5-20 of the 1976 Code, as last amended by Act 459 of 1994, is further amended to read:
"Section 42-5-20. (A)
Every Each employer who accepts the provisions of this title relative to the payment of compensation shall insure and keep insured his liability thereunder pursuant to the provisions of this title in any authorized corporation, association, organization, captive insurance company formed pursuant to Section 38-90-20(A)(7), or mutual insurance association formed by a group of employers so authorized or shall furnish to the commission satisfactory proof of his financial ability to pay directly the compensation in the amount and manner and when due as provided for in this title. The commission may, under such rules and regulations as it may prescribe prescribes, may permit two or more employers in businesses of a similar nature to enter into agreements to pool their liabilities under the Workers' Compensation Law pursuant to the provisions of this title for the purpose of qualifying as self-insurers. In the case of self-insurers, the commission shall require the deposit of an acceptable security, indemnity, or bond to secure the payment of the compensation liabilities as they are incurred. The Industrial Workers' Compensation Commission shall have exclusive jurisdiction of group self-insurers under provided by this section, and such the group self-insurers shall may not be deemed considered to be insurance companies and shall are not be regulated by the Department of Insurance, unless the group self-insurer has established a captive insurance company pursuant to Section 38-90-20(A)(7) for purposes of funding its workers' compensation risks. Provided, further, that If any a provision is made for the recognition of reinsurance of the self-insured fund, such the provision shall expressly provide provides that the reinsurance agreement or treaty must recognize the right of the claimant to recover directly from the reinsurer and that such the agreement shall provide provides for privity between the reinsurer and the workers' compensation claimant.
In lieu Instead of submitting audited financial statements when an employer makes an application to self-insure with the commission, the commission shall accept the sworn statement or affidavit of an independent auditor verifying the financial condition of the employer according to the required financial ratios and guidelines established by regulation of the commission. The independent auditor must be a certified public accountant using generally acceptable accounting principles in the preparation of the financial statements of the employer."
SECTION 3. This act takes effect upon approval by the Governor.
This web page was last updated on Monday, June 22, 2009 at 3:03 P.M.