Bill 154

                    Current Status

Bill Number:               154
Ratification Number:       376
Act Number                 345
Introducing Body:          Senate
Subject:                   S.C. Life and Health Guaranty
                           Association included

(A345, R376, S154)

AN ACT TO AMEND SECTIONS 38-5-1670 AND 38-17-80, CODE OF LAWS OF SOUTH CAROLINA, 1976, AS AMENDED, RELATING TO THE PRIORITIES OF DISTRIBUTION OF GENERAL ASSETS OF AN INSOLVENT INSURANCE COMPANY AND TO THE ASSESSMENTS AGAINST MEMBER INSURANCE COMPANIES FOR THE PURPOSE OF MAINTAINING THE SOUTH CAROLINA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION, SO AS TO INCLUDE SOUTH CAROLINA LIFE AND HEALTH GUARANTY ASSOCIATION WITHIN THE PROVISIONS OF SECTION 38-5-1670 AND TO PROVIDE THAT CLASS A ASSESSMENTS BE DIVIDED EQUALLY AMONG THE MEMBERS OF THE LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION.

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

S.C. Life and Health Guaranty Association included

Section 1. Section 38-5-1670 of the 1976 Code, as last amended by Act 554 of 1976, is further amended to read:

"Section 38-5-1670. (1) The priorities of distribution of general assets from the company estate shall be as follows:

(a) the costs and expenses of administration, including the claims handling expenses of the South Carolina Insurance Guaranty Association, the South Carolina Life and Health Insurance Guaranty Association and of any similar guaranty fund or association in any other state;

(b) Wages actually owing to employees for services rendered within three months prior to the date of the filing of the delinquency petition, not exceeding three hundred dollars to each such employee;

(c) Secured claims, including claims for taxes and debts due the federal or any state or local government which are secured by liens perfected prior to the commencement of delinquency proceedings;

(d) Claims by policyholders, beneficiaries, insureds and inability claims against insureds covered under insurance policies and insurance contracts issued by the company;

(e) Claims of the South Carolina Insurance Guaranty Association, the South Carolina Life and Health Insurance Guaranty Association and any similar association or fund in another state;

(f) All other claims of general creditors not falling within any other priority under this section including claims for taxes and debts due the federal government or any state or local government which are not secured claims;

(g) Claims of guarantee association certificate holders, guarantee capital shareholders and surplus note holders;

(h) Proprietary claims of shareholders, members, or other owners.

(2) Upon the issuance of an order of liquidation with a finding of insolvency against a domestic company, the Commissioner, on the presentation to him of evidence that such disbursements have been made by the South Carolina Insurance Guaranty Association and the South Carolina Life and Health Insurance Guaranty Association shall make application to the court requesting authority to disburse funds to the petitioning association from time to time out of the company's marshalled assets as such assets become available for disbursement by the association for claim handling expenses and covered claim obligations of the association. Such application shall request authority for the Commissioner to make disbursements to similar associations or funds in other states provided the South Carolina Insurance Guaranty Association and the South Carolina Life and Health Insurance Guaranty Association are entitled to like payment under the laws of the association's or fund's state of domicile in respect to insolvent companies domiciled in that state.

The Commissioner in determining the amounts available for disbursements to the South Carolina Insurance Guaranty Association, the South Carolina Life and Health Insurance Guaranty Association and similar associations or funds in other states shall reserve sufficient assets for the payment of the expenses of administration. The Commissioner shall establish procedures for the ratable allocation of disbursements to the South Carolina Insurance Guaranty Association, the South Carolina Life and Health Insurance Guaranty Association and similar associations or funds in other states, and shall secure from the South Carolina Insurance Guaranty Association, the South Carolina Life and Health Insurance Guaranty Association and each eligible similar association or fund in other states as a condition to advances in reimbursement of covered claims obligations an agreement to return to the Commissioner on demand funds previously advanced as may be required to pay claims of secured creditors and claims falling within the priorities established in items (I)(a) through (1)(d) of this section in accordance with such priorities.

The South Carolina Insurance Guaranty Association and the South Carolina Life and Health Insurance Guaranty Association shall make a full report to the Commissioner and to the court accounting for all assets disbursed by the associations, any interest earned by the associations on such assets, and any other matter the Commissioner or court may direct."

Assessments divided equally among members

Section 2. Item (3) (b) of Section 38-17-80 of the 1976 Code is amended to read:

"(b) Class A assessments shall be divided equally among all members not to exceed one hundred dollars per assessment. Class C assessments against member insurers for each account shall be in the proportion that the premiums received on business in this State by each assessed member insurer on policies covered by each account bears to such premiums received on business in this State by all assessed member insurers."

Time effective

SECTION 3. This act shall take effect upon approval by the Governor.