South Carolina General Assembly
125th Session, 2023-2024

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H. 5066

STATUS INFORMATION

General Bill
Sponsors: Reps. Elliott, G.M. Smith, W. Newton, Bailey, Wheeler, T. Moore, Taylor, Hixon, Oremus, Blackwell, Schuessler, Stavrinakis, Wetmore, Bradley and Erickson
Document Path: LC-0366DG24.docx

Introduced in the House on February 8, 2024
Currently residing in the House

Summary: Fair Access to Insurance Requirements

HISTORY OF LEGISLATIVE ACTIONS

Date Body Action Description with journal page number
2/8/2024 House Introduced and read first time (House Journal-page 3)
2/8/2024 House Referred to Committee on Judiciary (House Journal-page 3)
2/13/2024 House Member(s) request name added as sponsor: Taylor, Hixon, Oremus, Blackwell
2/14/2024 Scrivener's error corrected
2/27/2024 House Member(s) request name added as sponsor: Schuessler
2/28/2024 House Member(s) request name added as sponsor: Stavrinakis, Wetmore
2/28/2024 House Committee report: Favorable with amendment Judiciary (House Journal-page 12)
2/29/2024 House Member(s) request name added as sponsor: Bradley, Erickson

View the latest legislative information at the website

VERSIONS OF THIS BILL

02/08/2024
02/14/2024
02/28/2024



Indicates Matter Stricken

Indicates New Matter

 

Committee Report

February 28, 2024

 

H. 5066

 

Introduced by Reps. Elliott, G. M. Smith, W. Newton, Bailey, Wheeler, T. Moore, Taylor, Hixon, Oremus, Blackwell, Schuessler, Stavrinakis and Wetmore

 

S. Printed 02/28/24--H.

Read the first time February 08, 2024

 

________

 

The committee on House Judiciary

To whom was referred a Bill (H. 5066) to amend the South Carolina Code of Laws by adding Chapter 103 to Title 38 entitled the "Fair Access to Insurance Requirements" so as to provide an affordable option, etc., respectfully

Report:

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 all after the enacting words and inserting:

SECTION 1.  Section 38-90-20(A) of the S.C. Code is 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 provide any and all insurance, except workers' compensation insurance written on a direct basis, authorized by this title; including without limitation liquor liability insurance; however:

       (1) a pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated business, risks assumed from a risk pool for the purpose of risk sharing, 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) 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 written on a direct basis;

       (6) a captive insurance company may not accept or cede reinsurance except as provided in Section 38-90-110.

 

SECTION 2.  Section 61-2-60 of the S.C. Code is amended by adding:

 

(9) regulations governing the development, implementation, education, and enforcement of responsible alcohol server training positions.

 

SECTION 3.  Section 61-2-145 of the S.C. Code is amended to read:

 

    Section 61-2-145.  (A) In addition to all other requirements, a person licensed or permitted to sell alcoholic beverages for on-premises consumption, which remains open after five o'clock p.m. to sell alcoholic beverages for on-premises consumption, is required to maintain a liquor liability insurance policy or a general liability insurance policy with a liquor liability endorsement for a total coveragewith an annual aggregate limit of at least one million dollars during the period of the biennial permit or license, unless the person licensed or permitted to sell alcoholic beverages qualifies unde the terms of a liquor liability risk mitigation program pursuant to subsection (E). Failure to maintain this coverage during the period of the biennial permit or license constitutes grounds for suspension or revocation of the permit or license and is sufficient grounds for the department to seek an emergency revocation order as provided in Sections 12-60-1340 and 1-23-370(c). An insurance policy issued pursuant to this section must provide for minimum coverage of at least fifty percent of the total aggregate limit, per occurrence, given rise to the claim.

    (B) The department shall add this requirement to all applications and renewals for biennial permits or licenses to sell alcoholic beverages for on-premises consumption, in which the permittees and licensees remain open and sell alcoholic beverages for on-premises consumption after five o'clock p.m. Each applicant or person renewing its license or permit, to whom this requirement applies, shall provide the department with documentation of a liquor liability insurance policy or a general liability insurance policy with a liquor liability endorsement in the required amounts.

    (C) Each insurer writing liquor liability insurance policies or general liability insurance policies with a liquor liability endorsement to a person licensed or permitted to sell alcoholic beverages for on-premises consumption, in which the person so licensed or permitted remains open to sell alcoholic beverages for on-premises consumption after five o'clock p.m., must notify the department in a manner prescribed by department regulation of the lapse or termination of the liquor liability insurance policy or the general liability insurance policy with a liquor liability endorsement.

    (D) For the purposes of this section, the term "alcoholic beverages" means beer, wine, alcoholic liquors, and alcoholic liquor by the drink as defined in Chapter 4, Title 61, and Chapter 6, Title 61.

    (E) A person licensed or permitted to sell alcoholic beverages for on-premises consumption, which remains open after five o'clock p.m. to sell alcoholic beverages for on-premises consumption, may qualify for liquor liability risk mitigation. A person qualifies if the person:

       (1) stops serving alcohol by twelve o-clock a.m.. A person meeting the requirements of this item may reduce the required annual aggregate limit by one hundred thousand dollars, and an additional one hundred thousand dollars for each hour earlier until six o'clock p.m.;

       (2) completes an alcohol server training course pursuant to Title 61, Chapter 3;

       (3) has less than forty percent of its total sales deriving from alcohol sales; or

       (4) is a nonprofit organization which is exempt from taxation pursuant to Section 501(c) of Title 26 of United States Code, as amended, or the entity is engaging in a single event for which a Beer and Wine Special Event License or Liquor Special Event Permit is obtained.

       (5) A person meeting the requirements of items (2) or (3) may reduce the required annual aggregate limit by one hundred thousand dollars each. An entity meeting the requirements of item (4) may reduce the annual aggregate limit by five hundred thousand dollars. A person complying with any combination of items (1)-(4) must receive the permitted reduction in the required annual aggregate limit for each item the entity complies with provided a person licensed or permitted to sell alcoholic beverages for on-premises consumption, which remains open after five o'clock p.m. to sell alcoholic beverages for on-premises consumption, must at all times maintain coverage with an annual aggregate limit of at least two hundred fifty thousand dollars during the period of the biennial permit or license.

       (6) Insurers must establish liquor liability mitigation measures and offer premium discounts for compliance therewith that reduce the risk to the general public associated with the service of on-premises consumption of alcohol.

 

SECTION 4.  Title 61 of the S.C. Code is amended by adding:

 

CHAPTER 3

 

Alcohol Server Training

 

    Section 61-3-100.  For the purposes of this chapter, the following definitions apply:

    (1) "Alcohol" means beer, wine, alcoholic liquors, or any other type of alcoholic beverage that contains any amount of alcohol and is used as a beverage for human consumption.

    (2) "Alcohol server" means an individual who sells, serves, transfers, or dispenses alcohol for on-premises consumption at permitted or licensed premises and may include a permittee, licensee, manager, or other employee of a permittee or licensee. "Alcohol server" does not include an individual employed or volunteering on a temporary basis for a one-time special event, such as a banquet, or at an event that has a temporary permit to sell beer, wine, or alcoholic liquors by the drink and does not include an individual transferring alcohol from one location to another as a distributor, wholesaler, or as otherwise lawfully authorized to transfer alcohol from one location to another by this title; and does not include an individual who cannot lawfully serve or deliver alcohol pursuant to Sections 61-4-90(D) and 61-6-2200.

    (3) "Alcohol server certificate" means an authorization issued by the department for an individual to be employed or engaged as an alcohol server for on-premises consumption.

    (4) "DAODAS" means the South Carolina Department of Alcohol and Other Drug Abuse Services.

    (5) "Department" means the South Carolina Department of Revenue.

    (6) "Division" means the South Carolina Law Enforcement Division.

    (7) "Employee" means a person who is employed for at least ten hours a week by a permittee or a licensee.

    (8) "Licensee" means a person issued a license by the department pursuant to Title 61 to sell, serve, transfer, or dispense alcoholic liquors or alcoholic liquor by the drink for on-premises consumption.

    (9) "Manager" means an individual employed by a permittee or licensee who manages, directs, or controls the sale, service, transfer, or dispensing of alcoholic beverages for on-premises consumption at the permitted or licensed premises.

    (10) "Permittee" means a person issued a permit by the department pursuant to Title 61 to sell, serve, transfer, or dispense beer, wine, ale, porter, or other malted beverages for on-premises consumption.

    (11) "Program" means an alcohol server training and education course and examination approved by the department with input from DAODAS and the division that is administered by authorized providers.

    (12) "Provider" means an individual, partnership, corporation, or other legal entity authorized by the department that offers and administers a program.

 

    Section 61-3-110.  (A) An entity may not qualify for the liquor liability mitigation program pursuant to Section 61-2-145(E)(2) unless all employees who are employed as an alcohol server or a manager on permitted or licensed premises obtain, within one hundred twenty calendar days of employment, an alcohol server certificate pursuant to the provisions of this chapter. If a permittee or licensee functions or is employed as an alcohol server or manager on the permitted or licensed premises, then the permittee or licensee must also complete training on responsible alcohol server training and obtain an alcohol server certificate pursuant to the provisions of this chapter. An alcohol server shall not be mentally or physically impaired by alcohol, drugs, or controlled substances while serving alcohol.

    (B) Each permittee or licensee shall maintain at all times on its permitted or licensed premises copies of the alcohol server certificates of the permittee or licensee, if applicable, and the alcohol server certificates of each manager and each alcohol server then employed by the permittee or licensee. Copies of the alcohol server certificate must be made available, upon request, to the department, the division, or the agents and employees of each. For the purposes of enforcement of the provisions of this chapter, a permittee or licensee must also make available to the department or the division, when requested, the hire date of an alcohol server.

    (C) Failure to produce a copy of an alcohol server certificate when an alcohol server has been employed for one hundred twenty calendar days subjects the permittee or licensee to noncompliance with Section 61-2-145(E).

 

    Section 61-3-120.  (A)(1) The department, in collaboration with DAODAS and the division, is authorized to approve alcohol server training programs, based on best evidence practice standards, offered by providers. A program that has not received approval within sixty days from submission shall be considered denied. A provider may appeal denial pursuant to Section 61-2-260 and the South Carolina Administrative Procedures Act.

       (2) A provider must provide alcohol server training programs to all applicable individuals free of charge.

    (B) The curricula of each program must include the following subjects:

       (1) state laws and regulations pertaining to:

           (a) the sale and service of alcoholic beverages;

           (b) the permitting and licensing of sellers of alcoholic beverages;

           (c) impaired driving or driving under the influence of alcohol or drugs;

           (d) liquor liability issues;

           (e) the carrying of concealed weapons by authorized permit holders into businesses selling and serving alcoholic beverages; and

           (f) life consequences, such as the loss of education scholarships, to minors relating to the unlawful use, transfer, or sale of alcoholic beverages;

       (2) the effect that alcohol has on the body and human behavior including, but not limited to, its effect on an individual's ability to operate a motor vehicle when intoxicated;

       (3) information on blood alcohol concentration and factors that change or alter blood alcohol concentration;

       (4) the effect that alcohol has on an individual when taken in combination with commonly used prescription or nonprescription drugs or with illegal drugs;

       (5) information on recognizing the signs of intoxication and methods for preventing intoxication;

       (6) methods of recognizing problem drinkers and techniques for intervening with and refusing to serve problem drinkers;

       (7) methods of identifying and refusing to serve or sell alcoholic beverages to individuals under twenty-one years of age and intoxicated individuals;

       (8) methods for properly and effectively checking the identification of an individual, for identifying illegal identification, and for handling situations involving individuals who have provided illegal identification;

       (9) South Carolina law enforcement information; and

       (10) other topics related to alcohol server education and training designated by the department, in collaboration with DAODAS and the division, to be included.

    (C) The department shall approve only online designed training programs that meet each of the following criteria:

       (1) a program must cover the content specified in subsection (B);

       (2) the content in a program must clearly identify and focus on the knowledge, skills, and abilities needed to responsibly serve alcoholic beverages and must be developed using best practices in instructional design and exam development to ensure that the program is fair and legally defensible;

       (3) a program shall be offered online;

       (4) online training must be at least four hours, be available in English and Spanish, and include a test;

       (5) online or computer-based training programs must use linear navigation that requires the completion of a module before the course proceeds to the next module, with no content omitted; be interactive; have audio for content; and include a test;

       (6) training and testing must be conducted online. All tests must be monitored by an online proctor. A passing grade for a test, as provided by the program, is required; and

       (7) training certificates are issued by the provider only after training is complete and a test has been passed successfully.

       (8) Within ten business days after a training is completed, each provider must give to the department a report of all individuals who have successfully completed the training and testing. The provider must also maintain these records for at least five years following the end of the training program for purposes of verifying certification validity by the department or the division.

    (D) The department, in collaboration with DAODAS and the division, may suspend or revoke the authorization of a provider that the department determines has violated the provisions of this chapter. If a provider's authorization is suspended or revoked, then that provider must cease operations in this State immediately and refund any money paid to it by individuals enrolled in that provider's program at the time of the suspension or revocation.

 

    Section 61-3-130.  (A) The provider of a program that is authorized by the department must pay a fee, in an amount to be determined by the department, not to exceed five hundred dollars per year, renewable each year. State agency providers are exempt from payment. Each fee shall be deposited into the Responsible Alcohol Server Training Fund to assist with the costs associated with implementation and enforcement of the provisions of this chapter.

    (B) The Responsible Alcohol Server Training Fund is a revolving fund, and no funds deposited therein shall revert to the general fund of the state treasury.

    (C) On or before the second Tuesday of each year, the department, with the assistance of the division, must make a report of all income and expenditures made from the Responsible Alcohol Server Training Fund as of December thirty-first of the previous year. A copy of the report shall be given to the Governor, the Speaker of the House of Representatives, and the President of the Senate; posted on the websites of the department and the division; and recorded in the journals of each body of the General Assembly at the beginning of each legislative year.

 

    Section 61-3-140.  (A)(1) The department must issue an alcohol server certificate to each applicant who completes an approved program or a recertification program and who provides other information as may be required by the department in an application form that is available on the department's website. A person must apply for an alcohol server certificate within six months of completing a program. The department, if circumstances warrant the issuance of a temporary alcohol server certificate, may issue a temporary alcohol server certificate that is valid for a period of not more than thirty calendar days.

       (2) The department, in collaboration with DAODAS and the division, may issue an alcohol server certificate to an individual from out of the State who applies for an alcohol server certificate if the individual has an alcohol server certificate from a nationally recognized or comparable, state-recognized alcohol server certification program that the department, DAODAS, and the division find meets or exceeds the programs offered in this State.

    (B) Alcohol server certificates shall not be issued to graduates of programs that are not approved by the department.

    (C) An alcohol server certificate is the property of the individual to whom it is issued and is transferrable among employers.

    (D) Alcohol server certificates are valid for a period of five years from the date that the alcohol server certificate was issued. After the five-year period, a new or recertified alcohol server certificate must be obtained pursuant to the provisions of this chapter.

    (E) Upon expiration of an alcohol server certificate, the individual to whom the alcohol server certificate was issued may obtain recertification in accordance with regulations promulgated by the department and approved by the General Assembly.

    (F) The department must issue and renew alcohol server certificates for all qualifying applicants free of charge.

    (G) An applicant must be deemed to be a qualifying applicant for the purpose of alcohol server certificate issuance and renewal if they have successfully completed all training and testing requirements as found in Section 61-3-120.

    Section 61-3-150.  As a requirement for application or renewal of a permit or license for on-premises consumption under Chapter 4, Title 61 or Chapter 6, Title 61, a permittee or licensee for on-premises consumption seeking to utilize Section 61-2-145(E) must submit to the department proof that the permittee or licensee, if applicable, and each manager and alcohol server employed by the permittee or licensee during the upcoming or prior permit or license period have or have held valid alcohol server certificates at all times that alcoholic beverages were sold, served, or dispensed.

 

    Section 61-3-160.  The division and the department are responsible for enforcement of the provisions of this chapter. The department is responsible for bringing administrative actions for violations of the provisions of this chapter or related regulations, and those actions shall proceed according to the provisions of Section 61-2-260 and the South Carolina Administrative Procedures Act.

 

SECTION 5.  This act takes effect upon approval by the Governor and the first insurance policy therefrom may be issued ninety days after the Governor's approval.

 

Renumber sections to conform.

Amend title to conform.

 

W. NEWTON for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill establishes a program within DOI to aid businesses in purchasing liquor liability insurance, whereby expenses of the program are funded by the newly created Fair Access to Insurance Requirements Fund. This fund will be separate from the General Fund and all other funds. The fund may be used to administer the program, maintain reserve balances, and repay any start-up loan. DOI may contract with a private insurance company to administer the fund.

 

The program will be governed by a board, which will consult with the director of DOI and the administrator of the fund to develop a plan of operation for the program. The board will be comprised of the following members:

a member appointed by the Governor to represent the public;

a member appointed by the Governor to represent the private insurance sector;

a member appointed by the Governor to represent businesses that purchase liquor liability insurance;

the President of the Senate or his designee;

the Speaker of the House or his designee;

the chairman of the Senate Judiciary committee or his designee;

the chairman of the House Judiciary committee or his designee;

the Director of DOI or his designee;

the Chief of SLED or his designee.

 

The plan of operation developed by the board must include certain provisions and must specify the manner in which monies will be deposited or withdrawn from the fund and the manner and timeliness in which monies in the fund may be invested. Any rate increase on policy holders must be approved by the director before taking effect.

 

The bill specifies that the assets of the fund must be maintained at an actuarially sound level based upon the fund's deposits and withdrawals. There is no information available currently to determine the revenues, expenses, or an actuarially sound funding level. Further, the bill does not specify who performs the actuarial analysis or determines if the fund balance is insufficient. If a determination is made that the fund balance is insufficient, STO must notify DOR and beginning with the first day of the next month, all revenue collected from the excise tax imposed on alcoholic liquor by the drink must be credited to the fund until the assets of the fund are sufficient.

 

The bill also requires the administrator of the fund to file an annual financial statement with the board and DOI detailing its transactions, financial condition, operations, and affairs during the previous calendar year. The board may also require the administrator to file quarterly financial statements with DOI each year. The director of DOI will use this information to conduct an annual audit of the administrator. Every five years, the director must conduct an examination into the financial condition and affairs of the administrator and file a report with the board, the Governor, and the General Assembly, the expenses of which must be paid by the administrator. OSA is required to audit or cause the fund to be audited each year.

 

The bill also authorizes the IRF of SFAA to lend funds to DOI to be deposited into the fund to administer the program on a one-time basis. The loan must be repaid from the fund. If the loan from the IRF is not repaid within the prescribed time, the payment must be made from the General Fund.

 

Department of Insurance. This bill establishes a board that will consult with the director of DOI and the administrator of the fund to develop a plan of operation for the liquor liability fund program. The board will be comprised of three members appointed by the Governor, the President of the Senate, the Speaker of the House, the chairman of the Senate Judiciary, the chairman of the House Judiciary committee, and the Chief of SLED, or their designees. Pursuant to Proviso 117.19 of the FY 2023-24 Appropriations Act, each member of the board who is not a sitting House or Senate member or a full-time officer or employee of the State of South Carolina will receive per diem of $50 per day. A board member who is also a sitting House or Senate member will receive per diem of $50 per day if the committee meets on a non-session day. Proviso 117.20 of the FY 2023-24 Appropriations Act sets mileage reimbursement rates applicable to state committees equal to the standard business mileage rate as established by the Internal Revenue Service of 67 cents per mile. Subsistence is to be no more than $35 per day for travel within the State of South Carolina, and $42 per day for board members not employed by the State of South Carolina. Subsistence increases to $231.73 on non-session days for an appointed member who is also a sitting House or Senate member.

 

This bill will have an undetermined impact on Other Funds (Fair Access to Insurance Requirements Fund) of DOI. DOI anticipates no impact on its operations as all expenses of the program will be managed by the fund. However, the expenses of the program are undetermined at this time.

 

State Treasurer's Office. STO indicates that this bill requires the agency to perform duties that will be conducted within the normal course of business and can be managed with existing resources. Therefore, this bill will have result in no expenditure impact for STO.

 

Department of Revenue. This bill will have no expenditure impact on DOR. The department indicates that any costs to implement the provisions of the bill will be minimal and can be managed with existing appropriations.

 

Office of the State Auditor. OSA reports that if it contracts with an outside firm to conduct an audit of the fund, it will cost approximately $25,000. However, the agency indicates that it intends to utilize existing resources and staff within the State Audit Division to complete the audit. Therefore, this bill will have no expenditure impact on OSA.

 

State Fiscal Accountability Authority. This bill will have no expenditure impact on SFAA. The agency indicates that the bill authorizes a one-time loan of funds from the IRF to the fund with interest, which can be managed with existing staff and resources.

 

State Revenue

This bill specifies that if the Fair Access to Insurance Requirements Fund balance is determined to be insufficient, all revenue collected from the excise tax imposed on alcoholic liquor by the drink for on-premises consumption must be credited to the fund until the assets of the fund are sufficient. For FY 2024-25, this revenue is estimated to be $53,871,000 in total. Currently, 11 percent of the revenue generated by the alcoholic liquor by the drink excise tax must allocated to counties on a per capita basis, with the remaining proceeds deposited in the General Fund. Therefore, the bill may reduce General Fund revenue by an amount up to $47,945,000 in FY 2024-25 for 89 percent of the revenue generated by the alcoholic liquor by the drink excise tax that may be re-allocated to the fund. The amount will depend on whether the balance of the fund is determined to be insufficient at any time.

 

This bill also authorizes the IRF to lend funds to DOI to be deposited into the fund to administer the program on a one-time basis. The loan must be repaid from the fund in an agreed upon term with interest at a specified rate. The bill specifies that if the loan payment to the IRF is not made within the prescribed time, the payment must be made from the General Fund. This provision of the bill may result in a transfer of an undetermined amount of revenue from the General Fund to the IRF, depending upon the amount of the loan and whether it is repaid within the prescribed time.

 

This bill may also impact Other Funds (Insurance Reserve Fund) of SFAA, depending on the interest rate specified for the loan. SFAA reports that if the interest rate is close to the annual rate of return on the IRF asset portfolio, there should be no fiscal impact.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

________


 

 

 

 

 

 

 

 

 

A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING CHAPTER 103 TO TITLE 38 ENTITLED THE "FAIR ACCESS TO INSURANCE REQUIREMENTS" SO AS TO PROVIDE AN AFFORDABLE OPTION TO PROVIDE LIQUOR LIABILITY INSURANCE TO ANY PERSON OR BUSINESS REQUIRED TO MAINTAIN SUCH A POLICY, TO CREATE THE AFFORDABLE LIQUOR LIABILITY FUND TO AID IN THE FUNDING OF THE PROGRAM, AND TO PROVIDE THAT THE EXCISE TAX ON ALCOHOLIC LIQUOR BY THE DRINK MUST BE CREDITED TO THE FUND IN CERTAIN CIRCUMSTANCES; TO AMEND SECTION 12-33-245, RELATING TO THE EXCISE TAX, SO AS TO MAKE A CONFORMING CHANGE; BY AMENDING SECTION 61-2-145, RELATING TO LIABILITY INSURANCE COVERAGE REQUIREMENTS, SO AS TO PROVIDE FOR A LIQUOR LIABILITY RISK MITIGATION PROGRAM; AND TO PROVIDE THAT THE INSURANCE RESERVE FUND IS AUTHORIZED TO PROVIDE A START-UP LOAN TO THE FUND.

 

Whereas, private insurers are increasingly unwilling or unable to provide affordable liquor liability insurance coverage in this State; and

 

Whereas, the absence of affordable liquor liability insurance threatens the livelihood of certain businesses in this State and thus the economic health of the State; and

 

Whereas, the State therefore has a compelling public interest and a public purpose to assist in assuring that businesses in this State can affordably purchase liquor liability insurance; and

 

Whereas, the General Assembly intends to aid the businesses in this State in acquiring affordable liquor liability insurance while achieving efficiencies and economies, and while providing service to policyholders, applicants, and agents which is no less than the quality generally provided in the private market, for the achievement of the foregoing public purposes.  Now, therefore,

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Title 38 of the S.C. Code is amended by adding:

 

CHAPTER 103

 

Fair Access to Insurance Requirements

 

    Section 38-103-10.     (A)  It is the purpose of this chapter to aid in providing an affordable option to provide liquor liability insurance to any person or business required to maintain such a policy pursuant to Section 61-2-145.

    (B)  For purposes of this chapter, "liquor liability insurance" means any type of liability insurance that would satisfy the requirements set forth in Section 61-2-145.

 

    Section 38-103-20. (A) There is created in the State Treasury the Fair Access to Insurance Requirements Fund. The fund is separate and distinct from the general fund of the State and all other funds.  Earnings and interest on this fund must be credited to it and any balance in the fund at the end of a fiscal year carries forward in the fund in the succeeding year. This fund only may be used to administer the program created in this chapter, to maintain reserve balances, and to repay any start-up loan.

    (B)  The State Treasurer may invest the monies in the fund, in the matter provided by law, upon request of the board established pursuant to Section 38-103-30. If the assets of the fund are insufficient, the State Treasurer shall notify the Department of Revenue to utilize the provisions of Section 38-103-50.

 

    Section 38-103-30. (A) There is established within the Department of Insurance a program whereby the department aids a business in purchasing liquor liability insurance whereby the insurance policy is backed by the fund. The department may contract with a private insurance company to serve as the administrator of the program.

    (B) The program is governed by a board of directors. The board shall consist of nine directors, one of whom is appointed by the Governor to represent the general public, one of whom is appointed by the Governor to represent the private insurance sector, and one of whom is appointed by the Governor to represent the businesses that purchase liquor liability insurance. Four directors are the President of the Senate or his designee, the Speaker of the House of Representatives or his designee, the Chairman of the Senate Judiciary Committee or his designee, and the Chairman of the House Judiciary Committee or his designee, all of whom shall serve ex officio. Two directors are the Director of the Department of Insurance or his designee and the Chief of the State Law Enforcement Division or his designee, both of whom shall serve ex officio. All appointees to the board shall serve at the pleasure of the appointing authority.

    (C)(1) The board, with consultation from the director and the administrator, shall develop a plan of operation for the program consistent with the provisions of this chapter. The plan of operation shall provide for economic, fair and nondiscriminatory administration, and for the prompt and efficient provision of liquor legal liability insurance, and shall contain other provisions including, but not limited to, establishment of necessary facilities, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers and procedures for determining amounts of insurance to be provided. The plan of operation shall establish specific limits of coverage based upon type of license, gross volume of liquor sales or service, employee participation in alcohol awareness training programs, and such other criteria. The plan also shall provide for the offering of an installment payment plan for each policy which either gives the insured the option to pay the annual premium in a minimum of six monthly installments or gives the insured the option to pay the annual premium in four quarterly installments. Amendments to the plan of operation may be made by and at the discretion of the director.

       (2) The plan of operation shall specify the manner in which funds will be deposited and withdrawn from the fund. The plan shall specify the manner and timeliness in which the monies in the fund may be invested.

    (D)(1) The administrator shall submit, for the approval of the board, all policy forms, classifications, rates, rating plans, or rules applicable to its insurance product offerings pursuant to this chapter. Such filings must be submitted for approval to the board no less than sixty days prior to their intended effective date.  The board may extend the time for his review by an additional sixty days to allow the board and the department sufficient time to evaluate the proposed form, classification, rate, rating plan, or rule to be used by the administrator. Rates must be actuarially sound, self supporting, and may not be excessive, inadequate, or unfairly discriminatory.

       (2) Any rate increase on policyholders must be approved by the director before taking effect.

 

    Section 38-103-40. It is the intent of the General Assembly that policyholders, applicants, and agents of the administrator receive service and treatment of the highest possible level but never less than that generally provided in the private market. It is also intended that the administrator be held to service standards no less than those applied to insurers in the private market by the office with respect to responsiveness, timeliness, customer courtesy, and overall dealings with policyholders, applicants, or agents of the administrator.

 

    Section 38-103-50. The assets of the Fair Access to Insurance Requirements Fund must be maintained at an actuarially sound level based upon the fund's deposits and withdrawals. Upon determination that the fund balance is insufficient, the State Treasurer shall notify the Department of Revenue. Beginning with the first day of the next month, all revenue collected from the excise tax imposed on alcoholic liquor by the drink for on-premises consumption pursuant to Section 12-33-245 for that month must be credited to the fund. The revenue of each month's collection shall continue to be credited to the fund until the first day of the next month after the State Treasurer notifies the Department of Revenue the assets of the fund are sufficient.

 

    Section 38-103-60. (A)(1) The administrator shall file a financial statement with the board and the department by March first of each year detailing its transactions, financial condition, operations, and affairs during the previous calendar year. In addition, the board may require the administrator to file quarterly financial statements with the department on the fifteenth of May, August, and November of each year. The statement shall contain such matters and information as are prescribed by the board and must be in the form the department directs and prepared in the format the department prescribes. The board may, at any reasonable time, require the administrator to furnish additional information with respect to its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation, and experience of the administrator.

       (2) The director shall utilize such information to conduct an annual audit of the administrator.  The director may accept an audit of the administrator performed by a qualified public accounting firm in lieu of conducting his own examination.

    (B) Every five years, the director shall conduct a financial examination into the financial condition and affairs of the administrator and shall file a report thereon with the board, the Governor, and the General Assembly. The expenses of the examination must be paid by the administrator. The director may accept an examination of the administrator performed by a qualified public accounting firm in lieu of conducting his own examination.

    (C) Annually, the State Auditor shall audit or cause to be audited the Affordable Liquor Liability Fund.

 

    Section 38-103-70. The department may promulgate regulations and adopt rules necessary to implement the provisions of this chapter.

 

SECTION 2.  Section 12-33-245(B) of the S.C. Code is amended to read:

 

    (B) Eleven Except as required by Section 38-103-50, eleven percent of the revenue generated by the excise tax provided for in subsection (A) must be placed on deposit with the State Treasurer and credited to a fund separate and distinct from the general fund of the State. On a quarterly basis, the State Treasurer shall allocate this revenue to counties on a per capita basis according to the most recent United States Census. The State Treasurer must notify each county of the allocation pursuant to this subsection in addition to the funds allocated pursuant to Section 6-27-40(B), and the combination of these funds must be used by counties for educational purposes relating to the use of alcoholic liquors and for the rehabilitation of alcoholics and drug addicts. A county may pool these funds with other counties and may combine these funds with other funds for the same purpose.

 

SECTION 3.  Section 61-2-145 of the S.C. Code is amended to read:

 

    Section 61-2-145.  (A) In addition to all other requirements, a person licensed or permitted to sell alcoholic beverages for on-premises consumption, which remains open after five o'clock p.m. to sell alcoholic beverages for on-premises consumption, is required to maintain a liquor liability insurance policy or a general liability insurance policy with a liquor liability endorsement for a total coverage with an annual aggregate limit of at least one million dollars during the period of the biennial permit or license, unless the person licensed or permitted to sell alcoholic beverages qualifies under the terms of a liquor liability risk mitigation program pursuant to subsection (E). Failure to maintain this coverage during the period of the biennial permit or license constitutes grounds for suspension or revocation of the permit or license and is sufficient grounds for the department to seek an emergency revocation order as provided in Sections 12-60-1340 and 1-23-370(c).

    (B) The department shall add this requirement to all applications and renewals for biennial permits or licenses to sell alcoholic beverages for on-premises consumption, in which the permittees and licensees remain open and sell alcoholic beverages for on-premises consumption after five o'clock p.m. Each applicant or person renewing its license or permit, to whom this requirement applies, shall provide the department with documentation of a liquor liability insurance policy or a general liability insurance policy with a liquor liability endorsement in the required amounts.

    (C) Each insurer writing liquor liability insurance policies or general liability insurance policies with a liquor liability endorsement to a person licensed or permitted to sell alcoholic beverages for on-premises consumption, in which the person so licensed or permitted remains open to sell alcoholic beverages for on-premises consumption after five o'clock p.m., must notify the department in a manner prescribed by department regulation of the lapse or termination of the liquor liability insurance policy or the general liability insurance policy with a liquor liability endorsement.

    (D) For the purposes of this section, the term "alcoholic beverages" means beer, wine, alcoholic liquors, and alcoholic liquor by the drink as defined in Chapter 4, Title 61, and Chapter 6, Title 61.

    (E) A person licensed or permitted to sell alcoholic beverages for on-premises consumption, which remains open after five o'clock p.m. to sell alcoholic beverages for on-premises consumption, may qualify for liquor liability risk mitigation if such entity:

       (1) closes by ten o'clock pm.  A person meeting the requirements of this item may reduce the required annual aggregate limit by one hundred thousand dollars, and an additional one hundred thousand dollars for each hour earlier until six o'clock p.m.; or

       (2)(a) completes an alcohol server training course approved by the Department of Insurance;

           (b) meets the requirements set by the Department of Insurance to limit the risk to the public, which may include identification scanners, cameras, and limits on drink specials;

           (c) closes by ten o'clock p.m.; and

           (d) has less than thirty percent of its total sales deriving from alcohol sales; or

       (3) is a nonprofit organization, or the entity is engaging in a single event for which a Beer & Wine Special Event License or Liquor Special Event Permit is obtained.

    A person meeting the requirements of items (2) or (3) may reduce the required annual aggregate limit by five hundred thousand dollars.

 

SECTION 4.  The Insurance Reserve Fund of the State Fiscal Accountability Authority, on a one-time basis, is authorized to lend funds to the Department of Insurance to be deposited into the Affordable Liquor Liability Fund to administer the program established pursuant to Chapter 103, Title 38, and to pay such claims therefrom. The loan is to be repaid from monies from the Affordable Liquor Liability Fund in an agreed upon term with interest at the rate provided in Section 34-31-20(A). In the event any such loan payment to the Insurance Reserve Fund is not made within the prescribed time, the payment must be paid from the state general fund. The participants in the loan shall execute a document approved by the State Treasurer severally guaranteeing the loan. The Insurance Reserve Fund shall prepare a written loan agreement which must be executed by the Department of Insurance prior to entering into the loan authorized by this section.

 

SECTION 5.  This act takes effect upon approval by the Governor and the first insurance policy therefrom may be issued ninety days after the Governor's approval.

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This web page was last updated on February 28, 2024 at 8:42 PM