Bill 2503

                    Current Status

Bill Number:               2503
Ratification Number:       475
Act Number                 434
Introducing Body:          House
Subject:                   Security instruments required -
                           waivers

(A434, R475, H2503)

AN ACT TO AMEND SECTION 38-51-30, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO FIDELITY BONDS, SO AS TO PROVIDE THAT AN ADMINISTRATOR'S BOND IS A SURETY BOND, TO PROVIDE THAT ALTERNATIVE FORMS OF SECURITY MAY BE FURNISHED, THAT THE SECURITY INSTRUMENTS MUST BE IN THE AMOUNT OF SEVENTY-FIVE THOUSAND DOLLARS, AND TO PROVIDE CONDITIONS UNDER WHICH BONDING REQUIREMENTS HAY BE WAIVED.

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

Security instruments required - waivers

Section 1. Section 38-51-30 of the 1976 Code is amended to read:

"Section 38-51-30. Every administrator shall file and maintain with the Commissioner a surety bond in favor of the State executed by a surety company authorized to transact business in this State. In lieu of bond, the administrator may file with the Commissioner letters of credit, certificates of deposit of building and loan associations 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 of insurance, or of banks located within the State in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount covered by insurance or any other financial instrument that the Commissioner deems appropriate. The Commissioner may also in his sole discretion accept in lieu of a bond or certificates of deposit or letter of credit a corporate guaranty by an insurer licensed to transact business in this State. The corporate guaranty must meet any requirements the Commissioner requires. The Commissioner may withdraw his acceptance of a corporate guaranty in lieu of bonds or certificates of deposit at any time. The amount of the bond, certificates of deposit, corporate guaranty letter of credit, or any other instrument the Commissioner deems appropriate, filed with the Commissioner must be in the amount of seventy-five thousand dollars. The bond must be on a form approved by the Commissioner. Any of the above-described financial instruments must be conditioned to pay any person who sustains a loss as a result of (a) the administrator's violation of or failure to comply with any requirement of this chapter; (b) the administrator's failure to transmit properly any payment received by it for transmission to an insurer or other person; (c) the administrator's misapplication or misappropriation of funds received by it; or (d) any act of fraud or dishonesty committed by the administrator in the administration of an insurance benefit plan. Any aggrieved person may institute an action in the county of his residence against the administrator or his surety, or both, to recover on the bond or to recover from the certificates of deposit or corporate guaranty or letters of credit. Nothing in this section may be construed to prohibit agreements between administrators and insurers providing for additional bonds. The Commissioner may waive the bonding requirements of this section in whole or in part to the extent that funds handled by the administrator are handled on behalf of a licensed insurance company, if the administrator has furnished a bond or other security to the insurance company which meets the purposes of this section. Under no circumstances may the Commissioner waive the bonding requirements of this section with respect to funds handled by the administrator on behalf of self-insured persons, groups, or entities."

Time effective

SECTION 2. This act takes effect upon approval by the Governor.