Current Status Introducing Body:Senate Bill Number:685 Primary Sponsor:Committee (02) Type of Legislation:GB Subject:Insurers, capital and surplus of stock Companion Bill Number:469 Date Tabled:Feb 26, 1991 Computer Document Number:BBM/9201.BD Introduced Date:Feb 19, 1991 Last History Body:Senate Last History Date:Feb 26, 1991 Last History Type:Tabled Scope of Legislation:Statewide Sponsor Committee:Banking and Insurance Sponsor Committee Number:02 Type of Legislation:General Bill
Bill Body Date Action Description CMN
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685 Senate Feb 26, 1991 Tabled
685 Senate Feb 19, 1991 Placed on Calendar without
reference
685 Senate Feb 19, 1991 Introduced, read first time
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INTRODUCED
February 19, 1991
S. 685
Introduced by Banking and Insurance Committee
S. Printed 2/19/91--S.
Read the first time February 19, 1991.
TO AMEND SECTION 38-9-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CAPITAL AND SURPLUS OF STOCK INSURERS, SO AS TO INCREASE THE REQUIRED AMOUNTS, AUTHORIZE THE CHIEF INSURANCE COMMISSIONER TO REQUIRE ADDITIONAL INITIAL CAPITAL AND SURPLUS AND PROVIDE FOR THE INITIAL CAPITAL AND SURPLUS; TO AMEND SECTION 38-9-20, RELATING TO SURPLUS OF MUTUAL INSURERS, SO AS TO INCREASE THE REQUIRED AMOUNTS, AUTHORIZE THE CHIEF INSURANCE COMMISSIONER TO REQUIRE ADDITIONAL INITIAL SURPLUS, AND PROVIDE FOR THE INITIAL SURPLUS; TO AMEND SECTION 38-9-30, RELATING TO CAPITAL AND SURPLUS OF INSURERS LICENSED ON JULY 1, 1988, SO AS TO CHANGE THE DATE TO JULY 1, 1991, CHANGE RELATED DATES DETERMINING APPLICATION OF THE SECTION, AND PROVIDE REQUIREMENTS FOR AN INSURER WHICH IS THE SUBJECT OF A CHANGE OF CONTROL; AND TO AMEND SECTION 38-33-100, RELATING TO CERTIFICATES OF AUTHORITY FOR HEALTH MAINTENANCE ORGANIZATIONS, SO AS TO PROVIDE FOR THE AMOUNT OF NET WORTH WHICH MUST BE CAPITAL FOR A STOCK HEALTH MAINTENANCE ORGANIZATION AND PROVIDE FOR ORGANIZATIONS IN COMPLIANCE WITH THE LAW ON DECEMBER 31, 1990.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-9-10 of the 1976 Code is amended to read:
"Section 38-9-10. (a)(A)(1) Before
licensing a stock insurer, the commissioner shall require the insurer to
be possessed of capital which must be maintained at all times and
surplus, twenty-five percent of which must be maintained at all times, in
amounts not less than the following:
If licensed to write: Capital Surplus
(a) life: $300,000 $300,000
600,000 600,000
(b) accident and
health: 300,000 300,000
600,000 600,000
(c) life, accident,
and health: 600,000 600,000
1,200,000 1,200,000
(d) property: 600,000 600,000
1,200,000 1,200.000
(e) casualty: 600,000 600,000
1,200,000 1,200,000
(f) surety: 600,000 600,000
1,200,000 1,200,000
(g) marine: 600,000 600,000
1,200,000 1,200,000
(h) title: 300,000 300,000
600,000 600,000
(i) multiple lines: 750,000 750,000
1,500,000 1,500,000
(2) The commissioner may require additional initial capital
and surplus based on the type or nature of business transacted, and the
initial capital and surplus of the insurer must consist of cash or
marketable securities which are eligible investments under Section 38-11-40.
(b)(B) If at any time the surplus of a stock insurer is less than twenty-five percent of the surplus initially required, as set forth in subsection (a)(A), the insurer is considered delinquent, and the commissioner may begin delinquency proceedings may be commenced by the Commissioner as provided by Chapter 27 of this title.
(c)(C) If at any time the capital of a stock insurer is impaired to any extent, the insurer is delinquent, and the commissioner shall commence begin delinquency proceedings."
SECTION 2. Section 38-9-20 of the 1976 Code is amended to read:
"Section 38-9-20. (a)(A)(1) Before licensing
a mutual insurer, the commissioner shall require the insurer to be
possessed of surplus of not less than the following amounts:
Surplus which must be
possessed at time
If licensed to write: of licensing
(a) life: $ 600,000 1,200,000
(b) accident and
health: 600,000 1,200,000
(c) life, accident,
and health: 1,200,000 2,400,000
(d) property: 1,200,000 2,400,000
(e) casualty: 1,200,000 2,400,000
(f) surety: 1,200,000 2,400,000
(g) marine: 1,200,000 2,400,000
(h) title: 600,000 1,200,000
(i) multiple lines: 1,500,000 3,000,000
(2)The commissioner may require additional initial surplus
based on the type or nature of business transacted, and the initial surplus
of the insurer must consist of cash or marketable securities which are
eligible investments under Section 38-11-40.
(b)(B) If at any time the surplus of a licensed mutual insurer is less than the sum of the capital and minimum surplus required to be maintained by a stock insurer licensed to write the same kind or kinds of business, the mutual insurer is considered delinquent, and the commissioner may begin delinquency proceedings may be commenced by the Commissioner as provided by Chapter 27 of this title.
(c)(C) If at any time the surplus of a licensed mutual insurer is less than the minimum capital required to be possessed by a stock insurer licensed to write the same kind or kinds of business, the mutual insurer is delinquent, and the commissioner shall commence begin delinquency proceedings."
SECTION 3. Section 38-9-30 of the 1976 Code is amended to read:
"Section 38-9-30. Sections 38-9-10 and 38-9-20 do not apply to an insurer that is licensed to do business in this State on July 1, 1988 1991, if the insurer continues to remain licensed in this State and continues to maintain at least the following minimum capital and surplus amounts if a stock insurer, or minimum surplus if a mutual insurer:
(a)(1) An insurer, if possessed of capital and surplus amounts on December 31, 1987 1990, that were in compliance with the law at that time, but which are less than the minimums required to be maintained by Section 38-9-10, must shall maintain not less than the amount of capital stated in its 1987 1990 annual statement and, in addition, must maintain surplus of not less than twenty-five percent of that amount of capital. If at any time the surplus of the insurer is reduced to less than twenty-five percent of this minimum amount of required capital, the insurer is considered delinquent, and the commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. If at any time the minimum capital required to be maintained by this section by the insurer becomes impaired to any extent, the insurer is delinquent, and the commissioner shall begin delinquency proceedings. If at any time the capital is increased to an amount greater than the amount possessed on December 31, 1987 1990, the amount of surplus that must be maintained after the increase is twenty-five percent of that greater amount of capital, and if this amount is not maintained, the commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. This increased amount of capital must not be reduced to an amount less than the amount required by Section 38-9-10, and if it becomes reduced or impaired to any extent, the insurer is delinquent, and the commissioner shall begin delinquency proceedings.
(b)(2) A mutual insurer, if possessed of surplus on December 31, 1987 1990, that was in compliance with the law at that time but is less than the minimum required to be maintained by Section 38-9-20, shall maintain not less than the amount of surplus stated in its 1987 1990 annual statement. If at any time the surplus of the insurer is reduced to less than eighty percent of the amount shown in its 1987 1990 annual statement, the insurer is considered delinquent, and the commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. If at any time the surplus of the insurer is increased to an amount greater than the amount possessed on December 31, 1987 1990, eighty percent of that greater amount of surplus, or the minimum amount required to be maintained by Section 38-9-20, whichever amount is the lesser, must be maintained after the increase, and if it is not maintained, the insurer is considered delinquent, and the commissioner may begin delinquency proceedings as provided by Chapter 27 of this title.
(3) A domestic stock insurer possessed of the minimum capital and surplus required by item (1) or a domestic mutual insurer possessed of the minimum surplus required by item (2), which is the subject of a change of control defined in Chapter 21 of this title, the Insurance Holding Company Regulatory Act, immediately shall increase its minimum capital and surplus if a stock insurer, or its minimum surplus if a mutual insurer, to comply with the minimums in Section 38-9-10 or 39-9-20, whichever is applicable."
SECTION 4. Section 38-33-100 of the 1976 Code is amended to read:
"Section 38-33-100. (A) No health maintenance organization may be issued a certificate of authority unless it is possessed of net worth of at least one million, two hundred thousand dollars, six hundred thousand dollars of which must be capital if it is a stock health maintenance organization. Thereafter, the health maintenance organization shall at all times maintain a net worth of not less than six one million, two hundred thousand dollars. Net worth means total assets less total liabilities. Instruments acceptable to the commissioner may be utilized in determining net worth. If the commissioner determines that the number of enrollees in the health maintenance organization is excessive or may become excessive in relation to the organization's net worth as specified herein, the commissioner may require that future enrollment be limited until such time as the limitation it is no longer necessary.
(B) After the expiration of a transition period of one hundred eighty days, every health maintenance organization previously licensed as of the effective date of this chapter must be possessed of a net worth of not less than six hundred thousand dollars. A health maintenance organization, if possessed of net worth on December 31, 1990, that was in compliance with the law at that time but is less than the minimum required to be maintained by this section, shall maintain not less than the amount of net worth stated in its 1990 annual statement. If the net worth of the health maintenance organization is reduced to less than eighty percent of the amount shown in its 1990 annual statement, the organization is considered delinquent, and the commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. If the net worth of the health maintenance organization is increased to an amount greater than the amount possessed on December 31, 1990, eighty percent of that greater amount of net worth, or the minimum amount required to be maintained by this section whichever amount is the lesser, must be maintained after the increase. If it is not maintained, the health maintenance organization is considered delinquent, and the commissioner may begin delinquency proceedings as provided by Chapter 27 of this title."
SECTION 5. This act takes effect upon approval by the Governor.