Bill 589

                    Current Status

Bill Number:               589
Ratification Number:       196
Act Number                 129
Introducing Body:          Senate
Subject:                   Participation by medical malpractice
                           insurers in joint underwriting
                           associations

(A129, R196, S589)

AN ACT TO AMEND SECTIONS 38-79-230, 38-81-340, AND 38-83-130, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURER PARTICIPATION IN THE EXPENSES, PROFITS, AND LOSSES OF THE JOINT UNDERWRITING ASSOCIATIONS FOR THE WRITING OF PROFESSIONAL LIABILITY INSURANCE, MEDICAL MALPRACTICE LIABILITY INSURANCE, AND LEGAL PROFESSIONAL LIABILITY INSURANCE, SO AS TO ELIMINATE THE CAPPING PROVISIONS ON PARTICIPATION BY AN INDIVIDUAL INSURER AT ONE PERCENT OF ITS SURPLUS TO POLICYHOLDERS AND TO PROVIDE FOR DEFERRAL OF PAYMENTS OF ASSESSMENTS UNDER CERTAIN CONDITIONS.

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

Participation by medical malpractice insurers in Joint Underwriting Associations

SECTION 1. Section 38-79-230 of the 1976 Code is amended to read:

"Section 38-79-230. All insurers which are members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premiums of each member (excluding that portion of premiums attributable to the operation of the association) written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."

Participation by legal malpractice insurers in Joint Underwriting Associations

SECTION 2. Section 38-81-340 of the 1976 Code is amended to read:

"Section 38-81-340. All insurers which are members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."

Participation by professional liability insurers in Joint Underwriting Associations

SECTION 3. Section 38-83-130 of the 1976 Code is amended to read:

"Section 38-83-130. All insurers which are members of the association shall participate in its writings, expenses, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer, after hearing, may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment may render the insurer insolvent or in danger of insolvency or otherwise may leave the insurer in a condition that further transaction of the insurer's business may be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In the order of deferral or in subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest on them, to the other member insurers on the basis on which assessments were made."

Time effective

SECTION 4. This act takes effect upon approval by the Governor.