Current Status Bill Number:
452Ratification Number: 128Act Number: 68Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 19970304Primary Sponsor: McConnellAll Sponsors: McConnellDrafted Document Number: bbm\9192jm.97Date Bill Passed both Bodies: 19970527Date of Last Amendment: 19970520Governor's Action: SDate of Governor's Action: 19970610Subject: Insurance; rates, investments, records, certificate of authority, domestic mutual insurer, agent sales, counterclaims
Body Date Action Description Com Leg Involved ______ ________ _______________________________________ _______ ____________ ------ 19970630 Act No. A68 ------ 19970610 Signed by Governor ------ 19970604 Ratified R128 Senate 19970527 Concurred in House amendment, enrolled for ratification House 19970522 Read third time, returned to Senate with amendment House 19970521 Read second time House 19970520 Amended House 19970515 Committee report: Favorable with 26 HLCI amendment House 19970401 Introduced, read first time, 26 HLCI referred to Committee Senate 19970326 Read third time, sent to House Senate 19970325 Read second time, unanimous consent for third reading on Wednesday, 19970326 Senate 19970320 Committee report: Favorable 02 SBI Senate 19970304 Introduced, read first time, 02 SBI referred to CommitteeView additional legislative information at the LPITS web site.
(A68, R128, S452)
AN ACT TO AMEND SECTION 38-11-30, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURANCE, INVESTMENTS, AND THE DEFINITION OF "POLICYHOLDER OBLIGATIONS", SO AS TO DELETE THE REFERENCE TO "MANDATORY SECURITIES VALUATION RESERVE" AND SUBSTITUTE THEREFOR "ASSET VALUATION RESERVE"; TO AMEND SECTION 38-13-300, AS AMENDED, RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND CERTAIN REGULATIONS, SO AS TO, AMONG OTHER THINGS, DELETE THE REQUIREMENT UPON THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO PROMULGATE THESE REGULATIONS, AUTHORIZE, RATHER THAN REQUIRE, THE DIRECTOR TO HAVE CERTAIN INSURERS RECORD AND REPORT LOSS AND EXPENSE EXPERIENCE AND CERTAIN OTHER DATA, AND ALLOW THE DIRECTOR TO HAVE CERTAIN INSURERS SUBMIT A REPORT SHOWING DIRECT WRITINGS AND CERTAIN OTHER INFORMATION, RATHER THAN REQUIRING THE INSURERS TO DO THIS; TO AMEND SECTION 38-13-310, RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND THE SUPPLEMENTAL REPORT REQUIRED BY SECTION 38-13-300, SO AS TO PERMIT, RATHER THAN REQUIRE, THAT THE SUPPLEMENTAL REPORT INCLUDE CERTAIN SPECIFIED TYPES OF INSURANCE WRITTEN BY THE INSURER; TO AMEND SECTION 38-13-320, AS AMENDED, RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND THE DATA IN THE SUPPLEMENTAL REPORT, SO AS TO, AMONG OTHER THINGS, PERMIT, RATHER THAN REQUIRE, THAT THE SUPPLEMENTAL REPORT INCLUDE CERTAIN SPECIFIED DATA BOTH AS TO SOUTH CAROLINA AND THE UNITED STATES FOR THE PREVIOUS YEAR ENDING ON DECEMBER THIRTY-FIRST; TO AMEND SECTION 38-13-340, AS AMENDED, RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, AND REVIEW OF THE SUPPLEMENTAL REPORTS, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT THE INSURANCE DEPARTMENT'S ANNUAL COMPILATION AND REVIEW OF REPORTS SUBMITTED BY INSURERS BE IN ACCORDANCE WITH OR PURSUANT TO AN ORDER OF THE DIRECTOR OF THE DEPARTMENT OF INSURANCE; TO AMEND SECTION 38-19-50, AS AMENDED, RELATING TO DOMESTIC MUTUAL INSURERS, MEMBERS AND MEETINGS, AND USE OF PROXIES, SO AS TO PROVIDE THAT NO PROXY MAY BE USED BY A DOMESTIC MUTUAL INSURER UNLESS THE LANGUAGE AND FORM OF THE PROXY HAVE BEEN APPROVED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE, AND DELETE THE FIVE CONDITIONS SPECIFIED FOR THE USE OF THE PROXY; TO AMEND SECTION 38-33-30, AS AMENDED, RELATING TO THE INSURANCE LAWS, HEALTH MAINTENANCE ORGANIZATIONS, THE NECESSITY OF A CERTIFICATE OF AUTHORITY, AND FOREIGN CORPORATIONS, SO AS TO DELETE THE REQUIREMENT THAT EACH APPLICATION FOR A CERTIFICATE OF AUTHORITY BE FILED "IN TRIPLICATE"; TO AMEND SECTION 38-73-1060, AS AMENDED, RELATING TO THE INSURANCE LAWS, RATES, RATE-MAKING, AND RATE-FILING, AND STATUTORY PERMISSION TO USE RATES IN EXCESS OF THOSE WHICH ARE FILED, SO AS TO DELETE THE TERM "RATE IN EXCESS OF THAT PROVIDED BY A FILING OTHERWISE APPLICABLE" AND SUBSTITUTE THEREFOR "RATE DIFFERENT FROM THAT PROVIDED BY A FILING OTHERWISE APPLICABLE", AND ADD PROVISIONS WHICH PROVIDE THAT, UPON THE WRITTEN APPLICATION OF AN INSURED HAVING AGGREGATE INSURANCE PREMIUMS, OTHER THAN LIFE, ACCIDENT, AND HEALTH, IN EXCESS OF ONE HUNDRED THOUSAND DOLLARS, A POLICY FORM DIFFERENT FROM THAT PROVIDED BY A FILING OTHERWISE APPLICABLE MAY BE USED ON ANY SPECIFIC RISK, UNDER CERTAIN CONDITIONS; TO REPEAL SECTIONS 38-13-330 AND 38-13-370 RELATING TO INSURANCE, EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS, REPORTS OF LOSS AND EXPENSE EXPERIENCE BY INSURERS, THE REQUIREMENT THAT, FOR THE FIRST YEAR ONLY IN WHICH THE INSURER IS REQUIRED TO FILE THE SUPPLEMENTAL REPORT, THE DATA REQUIRED BY CERTAIN ITEMS OF SECTION 38-13-320 SHALL INCLUDE THE PREVIOUS CALENDAR YEAR AND EACH OF THE PRECEDING TWO CALENDAR YEARS, AND THE REQUIREMENT THAT FIRST REPORTS REQUIRED UNDER SECTIONS 38-13-300 THROUGH 38-13-360 MUST BE FILED ON JULY 1, 1988, AND ON JULY FIRST OF EACH FOLLOWING YEAR; TO AMEND SECTION 38-19-30, RELATING TO DOMESTIC MUTUAL INSURERS AND THE GENERAL RIGHTS OF MEMBERS, SO AS TO DELETE THE EXISTING PROVISIONS OF THE SECTION AND TO PROVIDE, AMONG OTHER THINGS, THAT EXCEPT AS OTHERWISE PROVIDED BY LAW, EVERY DOMESTIC MUTUAL INSURER MUST BE ORGANIZED, GOVERNED, AND OPERATED AS A DOMESTIC BUSINESS CORPORATION UNDER, AND IN ACCORDANCE WITH, THE SOUTH CAROLINA BUSINESS CORPORATION ACT OF 1988, AND PROVIDE FOR AN EXCEPTION; TO AMEND SECTION 38-27-490, RELATING TO THE "INSURERS' REHABILITATION AND LIQUIDATION ACT", FORMAL PROCEEDINGS, AND SETOFFS AND COUNTERCLAIMS, SO AS TO DELETE "COUNTERCLAIM" FROM THE PROHIBITION ON ALLOWING THE SAME OR ANY SETOFF IN FAVOR OF A PERSON UNDER CERTAIN SPECIFIED CONDITIONS AND CIRCUMSTANCES, AND DELETE CERTAIN LANGUAGE; AND TO AMEND SECTION 38-57-160, RELATING TO INSURANCE TRADE PRACTICES AND THE ADVERTISING GIFTS, SO AS TO ADD A PROVISION THAT NOTHING IN THIS SECTION PRECLUDES ANY LICENSED INSURANCE AGENT FROM PROVIDING REFRESHMENTS DURING A SALES PRESENTATION WHICH DO NOT EXCEED TEN DOLLARS A PERSON IN COST.
Be it enacted by the General Assembly of the State of South Carolina:
"Asset Valuation Reserve" substituted
SECTION 1. Section 38-11-30 of the 1976 Code is amended to read:
"Section 38-11-30. As used in this chapter, unless the context requires otherwise, 'policyholder obligations' means those liabilities of the insurer to, or for, its policyholders arising out of its policies and to its creditors and includes the liabilities required to be included in the insurer's annual statement including, but not limited to, (a) the unearned premium reserve, (b) reserves required by applicable mortality or morbidity tables, and (c) claim or loss reserves including incurred but not reported claims. 'Policyholder obligations' does not include that portion of the insurer's capital or guaranty fund, or that portion of its surplus, in excess of the minimum capital, or guaranty fund, and surplus required by law for such insurer, or the Asset Valuation Reserve."
Requirement to promulgate certain regulations deleted; etc.
SECTION 2. Section 38-13-300 of the 1976 Code, as last amended by Section 537 of Act 181 of 1993, is further amended to read:
"Section 38-13-300. The director may require insurers licensed to write property or casualty insurance in the State to record and report loss and expense experience and any other data necessary to determine whether rates are excessive, inadequate, or unfairly discriminatory. The director or his designee may designate one or more statistical agents, organizations, or advisory organizations to gather and compile this experience and data. In addition, the director may require each insurer licensed to write property and casualty insurance in this State, as a supplement to its annual statement, to submit a report on a form furnished by the department showing the insurer's direct writings in this State and the United States and any information required by Sections 38-13-310 and 38-13-320.
The director may adopt data disclosure requirements developed by the National Association of Insurance Commissioners. If adopted, the NAIC disclosure requirements must be deemed to be in full compliance with the reporting requirements of Sections 38-13-300 through 38-13-360."
Action now permitted, rather than required; etc.
SECTION 3. Section 38-13-310 of the 1976 Code is amended to read:
"Section 38-13-310. The supplemental report required by Section 38-13-300 may include, but is not limited to, the following types of insurance written by the insurer:
(a) political subdivision liability insurance reported separately in the following categories:
(2) school districts;
(3) other political subdivisions;
(b) public official liability insurance;
(c) dram shop liability insurance;
(d) day care center liability insurance;
(e) labor, fraternal, or religious organizations liability insurance;
(f) errors and omissions liability insurance;
(g) officers and directors liability insurance reported separately as follows:
(1) nonprofit entities;
(2) for-profit entities;
(h) products liability insurance;
(i) medical malpractice insurance;
(j) attorney malpractice insurance;
(k) architects and engineers malpractice insurance; and
(l) motor vehicle insurance reported separately for commercial and private passenger vehicles as follows:
(1) motor vehicle liability insurance first-party benefits;
(2) motor vehicle bodily injury liability insurance;
(3) motor vehicle property liability insurance;
(4) uninsured motorist insurance; and
(5) underinsured motorist insurance."
Action now permitted, rather than required; etc
SECTION 4. Section 38-13-320 of the 1976 Code, as last amended by Section 537 of Act 181 of 1993, is further amended to read:
"Section 38-13-320. The supplemental report may include, but is not limited to, the following data both as to this State and the United States for the previous year ending on December thirty-first:
(a) direct premiums written,
(b) direct premiums earned,
(c) net investment income, including net realized capital gains and losses, using appropriate estimates where necessary,
(d) incurred claims, developed as the sum of the following (the report shall include data for each of the following categories used to develop the sum of incurred claims):
(1) dollar amount of claims closed with payment, plus
(2) dollar amount of payments on claims still open, plus
(3) reserves for reported claims at the end of the current year, minus
(4) reserves for reported claims at the end of the previous year, plus
(5) reserves for incurred but not reported claims at the end of the current year, minus
(6) reserves for incurred but not reported claims at the end of the previous year, plus
(7) loss adjustment expenses for claims closed, plus
(8) reserves for loss adjustment expense at the end of the current year, minus
(e) actual incurred expenses allocated separately to loss adjustment, commissions, other acquisition costs, advertising, general office expenses, taxes, licenses and fees, and all other expenses;
(f) net underwriting gain or loss;
(g) net operation gain or loss, including net investment income;
(h) the number and dollar amount of claims closed with payment, by year incurred and the amount reserved for them;
(i) the number of claims closed without payment and the dollar amount reserved for those claims;
(j) federal income tax recoverable; and
(k) any other information requested by the director or his designee."
Order of the director of the Department of Insurance; etc.
SECTION 5. Section 38-13-340 of the 1976 Code, as last amended by Section 537 of Act 181 of 1993, is further amended to read:
"Section 38-13-340. The department shall annually compile and review reports submitted by insurers pursuant to this article by order of the director to determine the appropriateness of premium rates for property and casualty insurance in this State. Any findings and filings of the department must be published, provided to the General Assembly, and made available to any interested insured or citizen, subject to the cost of copying. If the director or his designee finds at any time that any rate is excessive, inadequate, or unfairly discriminatory, he shall issue an order withdrawing its approval. The order shall specify reasons for withdrawal of approval and must be furnished to each affected insurer and rating organization. Any such order is effective not less than sixty days from its issuance unless an affected insurer meets the burden of showing that the rate is fair and appropriate."
Proxy not to be used, exception; etc.
SECTION 6. Section 38-19-50(C) of the 1976 Code, as last amended by Section 552 of Act 181 of 1993, is further amended to read:
"(C) No proxy may be utilized by a domestic mutual insurer subject to the provisions of this chapter unless the language and form of the proxy have been approved by the director or his designee."
Requirement of filing application in triplicate deleted
SECTION 7. The initial paragraph of Section 38-33-30(B) of the 1976 Code, as last amended by Section 633 of Act 181 of 1993, is further amended to read:
"Each application for a certificate of authority must be verified by an officer or authorized representative of the applicant, must be filed in a form prescribed by the director or his designee, and must set forth the following:"
Different policy form allowed; etc.
SECTION 8. Section 38-73-1060 of the 1976 Code, as last amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1060. (A) Upon the written application of the insured, stating his reasons therefor, filed with the department and approved by the director or his designee, a rate different from that provided by a filing otherwise applicable may be used on any specific risk.
(B) Upon the written application of an insured which has aggregate insurance premiums, other than life, accident, and health, in excess of one hundred thousand dollars, stating the reasons therefor, filed with the department, and approved by the director or his designee, a policy form different from that provided by a filing otherwise applicable may be used on any specific risk. Any policy form filed with the department pursuant to this subsection must be considered approved if not approved or disapproved within thirty days of receipt by the department. However, the consent-to-form does not apply to policy forms providing private passenger automobile insurance coverage subject to the mandate-to-write, workers' compensation insurance coverage, or employer's liability insurance coverage and policy forms underwritten by joint underwriting transactions or joint insurance transactions."
Provisions deleted, added; domestic mutual insurers are domestic business corporations; etc.
SECTION 9. Section 38-19-30 of the 1976 Code is amended to read:
"Section 38-19-30. (A) Except as otherwise provided by law, every domestic mutual insurer must be organized, governed, and operated as a domestic business corporation under and in accordance with the South Carolina Business Corporation Act of 1988, (the 'Business Corporation Act'). Without limiting the generality of the foregoing, the provisions of the Business Corporation Act concerning the rights and duties of a stock corporation and its shareholders in respect of one another shall apply to a domestic mutual insurer and its members as if the insurer were a stock corporation and its members were shareholders therein.
(B) Notwithstanding subsection (A), as to any domestic mutual insurer existing on the effective date of this subsection and organized prior to that date under any South Carolina statute other than the Business Corporation Act, such domestic mutual insurer shall continue to be organized under such statute, and the Business Corporation Act applies to the governance and operation of that domestic mutual insurer only to the extent the Business Corporation Act does not conflict with the statute under which that domestic mutual insurer was organized or with any other insurance law of this State.
(C) A corporation organized under Chapter 13 or Chapter 14 of Title 37 of the South Carolina Code of Laws (1962), or any predecessor statutes, and subsequently licensed as a domestic mutual insurer under the laws of this State, as of the date of the licensure and for all purposes, must be deemed to have been reconstituted as a domestic mutual insurer under the insurance laws of this State as then in effect and rechartered as a domestic business corporation under the business corporation law then in effect."
"Counterclaim" deleted from prohibition; etc.
SECTION 10. Section 38-27-490(b) of the 1976 Code is amended to read:
"(b) No setoff is allowed in favor of any person where:
(1) the obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer;
(2) the obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; or
(3) the obligation of the person is to pay an assessment levied against the members or subscribers of the insurer or is to pay a balance upon a subscription to the capital stock of the insurer or is in any other way in the nature of a capital contribution."
Refreshments allowed; monetary limitation
SECTION 11. Section 38-57-160 of the 1976 Code is amended to read:
"Sections 38-57-130, 38-57-140, and 38-57-150 do not prohibit a licensed agent from giving to insureds, prospective insureds, and to others, for the purpose of advertising, any article of merchandise having a value of not more than five dollars and having an advertisement for the insurer or agent printed on it. Nothing within this section precludes any licensed agent from providing refreshments during a sales presentation which do not exceed ten dollars a person in cost."
SECTION 12. Sections 38-13-330 and 38-13-370 of the 1976 Code are repealed.
SECTION 13. This act takes effect upon approval by the Governor.
Approved the 10th day of June, 1997.