Bill 979

                    Current Status

Bill Number:               979
Ratification Number:       473
Act Number:                429
Introducing Body:          Senate
Subject:                   Relating to deposits required of
                           insurance companies, to circumstances under
                           which foreign insurers are not required to
                           make deposits in this state, and to the filing
                           of surety bonds or deposits of securities by
                           surety companies

(A429, R473, S979)

AN ACT TO AMEND SECTIONS 38-5-680, 38-5-700, AND 38-13-50, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEPOSITS REQUIRED OF INSURANCE COMPANIES, TO CIRCUMSTANCES UNDER WHICH FOREIGN INSURERS ARE NOT REQUIRED TO MAKE DEPOSITS IN THIS STATE, AND TO THE FILING OF SURETY BONDS OR DEPOSITS OF SECURITIES BY SURETY COMPANIES, SO AS TO DELETE SURETY BONDS AS ACCEPTABLE SECURITY, TO INCREASE THE AMOUNT WHICH MUST BE DEPOSITED IN ANOTHER STATE FROM THREE HUNDRED THOUSAND DOLLARS TO ONE MILLION DOLLARS AND TO DEFINE AN "INSURANCE COMPANY" AS A LICENSED STOCK INSURER POSSESSED OF AT LEAST TEN MILLION DOLLARS INSTEAD OF THREE MILLION DOLLARS OF CAPITAL OR SURPLUS, TO INCREASE THE AMOUNT OF THE DEPOSIT REQUIRED OF SURETY COMPANIES FROM FIFTY THOUSAND DOLLARS TO ONE HUNDRED THOUSAND DOLLARS, AND TO DELETE THE REQUIREMENT THAT THE SURETY BOND BE APPROVED BY THE ATTORNEY GENERAL.

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

Deposits

SECTION 1. Section 38-5-680 of the 1976 Code is amended to read:

"Section 38-5-680. The Commissioner shall require every domestic, foreign, or alien insurance company, other than fraternal benefit societies, transacting, or desiring to transact, business in this State to deposit with him certificates of deposit of building and loan associations chartered by the State of South Carolina or federal savings and loan associations located within the State in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount covered by insurance, or of national banks located within the State or banks chartered by the State of South Carolina in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount covered by insurance; or other securities which (1) qualify as legal investments under the laws of this State for public sinking funds; (2) are not in default as to principal or interest; and; (3) have a current market value of not less than ten thousand dollars nor more than two hundred thousand dollars, as determined by the Commissioner pursuant to the standards promulgated by him.

The Commissioner shall prescribe the amount, within the limits of this section, of the securities required, and he may subsequently increase or decrease the amount required."

Deposits

SECTION 2. Section 38-5-700 of the 1976 Code is amended to read:

"Section 38-5-700. If any insurance company, as hereinafter defined, deposits with an officer or official body of any other state for the protection of all its policyholders, or all its policyholders and creditors, acceptable securities, as hereinafter defined, not in default as to principal or interest and of a current market value of not less than one million dollars, and delivers to the Commissioner a certificate to that effect, duly authenticated by the appropriate state official holding the deposit, then the company is relieved of making the deposit required by Section 38-5-680. For the purpose of this section, an 'insurance company' is a licensed stock insurer possessed of at least ten million dollars of capital and surplus or a licensed mutual, fraternal, or reciprocal insurer possessed of at least ten million dollars of surplus, according to its most recent annual statement filed with the Commissioner, and may, in the discretion of the Commissioner, include designated nonadmitted insurers in these categories which meet capital and surplus requirements.

For the purpose of this section, 'acceptable securities' means bonds of the United States or of any state of the United States, or of any municipality or county thereof, upon which is pledged the full faith and credit of the appropriate political division, or bonds or notes secured by mortgages or deeds of trust on otherwise unencumbered real estate of a market value of not less than double the amount loaned, or other securities as are approved by the Commissioner."

Deposits

SECTION 3. Section 38-13-50 of the 1976 Code is amended to read:

"Section 38-13-50. Companies doing business in this State who offer or undertake to become surety upon any bond or other surety contract must, in addition to any other deposit required by the laws of this State, deposit with the Commissioner bonds of the United States or of any state of the United States in the market value of one hundred thousand dollars which are receipted for by the Commissioner and held by him. The securities must be held to pay any final judgment entered up against any company in any court of competent jurisdiction in this State requiring it to pay any loss or liability arising during the term of the bond or while the securities are held, and any judgment obtained is a lien upon such securities. Whenever a company ceases to do business in this State, has settled all claims against it, and has been released from all bonds upon which it has been taken as surety, any securities deposited are delivered to the proper party on presentation of the Commissioner's receipt for the securities. While the securities are deposited with the Commissioner, the owner is entitled to collect the interest on them. The faith of the State is pledged for the return of the securities deposited to the person entitled to receive them.

Any company which has complied with the provisions required of insurance companies in Section 38-5-700 is relieved of making the deposit required by this section and, subject to the provisions of Section 38-5-480, is entitled to the return of the deposit filed or deposited by it under this section.

Any domestic company making a voluntary deposit provided by Section 38-5-710 is relieved of making this deposit if the company meets the definition of an insurance company as defined in Section 38-5-700 and if the voluntary deposit meets the requirements of the section."

Time effective

SECTION 4. This act shall take effect upon approval by the Governor.