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H. 4076
STATUS INFORMATION
General Bill
Sponsors: Reps. Cato and Tripp
Document Path: l:\council\bills\dka\3431dw03.doc
Companion/Similar bill(s): 602
Introduced in the House on April 24, 2003
Introduced in the Senate on May 13, 2003
Last Amended on May 8, 2003
Currently residing in the Senate Committee on Banking and Insurance
Summary: Insurance Law Revisions
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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4/24/2003 House Introduced and read first time HJ-71
4/24/2003 House Referred to Committee on Labor, Commerce and Industry
HJ-73
5/7/2003 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-2
5/8/2003 House Amended HJ-81
5/8/2003 House Read second time HJ-82
5/8/2003 House Unanimous consent for third reading on next legislative
day HJ-82
5/9/2003 House Read third time and sent to Senate HJ-2
5/13/2003 Senate Introduced and read first time SJ-8
5/13/2003 Senate Referred to Committee on Banking and Insurance SJ-8
5/22/2003 Senate Committee report: Favorable with amendment Banking and
Insurance SJ-14
5/27/2003 Scrivener's error corrected
5/28/2003 Senate Read second time SJ-41
5/28/2003 Senate Ordered to third reading with notice of amendments SJ-41
2/18/2004 Senate Recommitted to Committee on Banking and Insurance SJ-20
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
4/24/2003
5/7/2003
5/8/2003
5/22/2003
5/27/2003
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
May 22, 2003
H. 4076
S. Printed 5/22/03--S. [SEC 5/27/03 12:44 PM]
Read the first time May 13, 2003.
To whom was referred a Bill (H. 4076) to amend Section 38-1-20, as amended, Code of Laws of South Carolina, 1976, relating to definitions used in Title 38 pertaining to insurance, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by adding new SECTIONS to be appropriately numbered to read:
/ SECTION ____. (A) Section 38-74-10 of the 1976 Code, as last amended by Act 240 of 2002, is further amended by adding an appropriately numbered item to read:
"( ) 'Qualified TAA eligible individual' means an individual who is eligible for the credit for health insurance costs under Section 35 of the Internal Revenue Code of 1986."
(B) Section 38-74-30 of the 1976 Code, as last amended by Act 240 of 2002, is further amended to read:
"Section 38-74-30. (A) A person who is a resident of this State for thirty days, except that for a federally defined eligible individual or a Qualified TAA eligible individual, there shall not be a thirty-day requirement, and his newborn child is eligible for pool coverage:
(1) upon providing evidence of any of the following actions by an insurer on an application for health insurance comparable to that provided by the pool submitted on behalf of the person:
(a) a refusal to issue the insurance for health reasons;
(b) a refusal to issue the insurance except with a reduction or exclusion of coverage for a preexisting health condition for a period exceeding twelve months, unless it is determined that the person voluntarily terminated his or did not seek any health insurance coverage before being refused issuance except with a reduction or exclusion for a preexisting health condition, and then seeks to be eligible for pool coverage after the health condition develops. This determination must be made by the board;
(c) a refusal to issue insurance coverage comparable to that provided by the pool except at a rate exceeding one hundred fifty percent of the pool rate; or
(2) if the individual is a federally defined eligible individual or a Qualified TAA eligible individual, as defined in Section 38-74-10, who is and continues to be a resident of this State; or
(3) if the individual is covered under Medicare Parts A and B due to disability and is under age sixty-five.
(B) A person whose health insurance coverage is terminated involuntarily for any reason other than nonpayment of premium may apply for coverage under the plan but shall submit proof of eligibility according to subsection (A) of this section. If proof is supplied and if coverage is applied for within sixty days after the involuntary termination and if premiums are paid for the entire coverage period, the effective date of the coverage is the date of termination of the previous coverage. Waiting period and preexisting condition exclusions are waived to the extent to which similar exclusions, if any, have been satisfied under the prior health insurance coverage. The waiver does not apply to a person whose policy has been terminated or rescinded involuntarily because of a material misrepresentation.
(C) A person who is paying a premium for health insurance comparable to the pool plan in excess of one hundred fifty percent of the pool rate or who has received notice that the premium for a policy would be in excess of one hundred fifty percent of the pool rate may make application for coverage under the pool. The effective date of coverage is the date of the application, or the date that the premium is paid if later, and any waiting period or preexisting condition exclusion is waived to the extent to which similar exclusions, if any, were satisfied under the prior health insurance plan. Benefits payable under the pool plan are secondary to benefits payable by the previous plan. The board shall require an additional premium for coverage effected under the plan in this manner notwithstanding the premium limitation stated in Section 38-74-60.
(D) (1) The waiting period and preexisting condition exclusions are waived for a federally defined eligible individual.
(2) The waiting period and preexisting condition exclusions are waived for a Qualified TAA eligible individual if the individual maintained creditable coverage for an aggregate period of three months as of the date on which the individual seeks to enroll in pool coverage, not counting any period prior to a sixty-three-day break in coverage.
(E) A person not eligible for pool coverage is one who meets any one of the following criteria:
(1) a person who has coverage under health insurance comparable to that offered by the pool from an insurer or any other source except a person who would be eligible under subsection (C) of this section;
(2) a person who is eligible for health insurance comparable to that offered by the pool from an insurer or any other source except a person who would be eligible for pool coverage under Section 38-74-30(A)(1)(b), 38-74-30(A)(1)(c), 38-74-30(A)(2), or 38-74-30(A)(3);
(3) a person who at the time of pool application is eligible for health care benefits under state Medicaid or eligible for health care benefits under Medicare and age sixty-five or older;
(4) a person having terminated coverage in the pool unless twelve months have lapsed since termination unless termination was because of ineligibility, except that this item shall not apply with respect to an applicant who is a federally defined eligible individual;
(5) a person on whose behalf the pool has paid out one million dollars in benefits;
(6) inmates of public institutions and persons eligible for public programs, except that this item shall not apply with respect to an applicant who is a federally defined eligible individual;
(7) a person who fails to maintain South Carolina residency.
(F) A person who ceases to meet the eligibility requirements of this section may be terminated at the end of the policy period."
SECTION ____. Section 38-75-460 of the 1976 Code is amended to read:
"Section 38-75-460. The director or his designee may, by written order, temporarily may expand the area in which the association must shall provide essential property insurance. The area may not be expanded further inland than east of the west bank of the intracoastal waterway and may not be expanded to cover the area for more than twelve months. The director or his designee shall find and declare the existence of an emergency because of the unavailability of coastal property insurance or other unavailability of coastal property insurance on a reasonable basis through normal channels. The order must include the surveys of the market conducted in order to make the determination. The director or his designee may expand the area in which the association shall provide essential property insurance to the whole area or just part of the area. The director may expand the area by construction type or age of construction. The area may not be expanded further than the seacoast territory as defined in Section 38-75-310(7) and may not be expanded to cover the area for more than twenty-four months. If the director or his designee issues an order that expands the area in which the association provides essential property insurance, he shall notify the General Assembly of that order and he shall recommend, through the Director of the Department of Insurance, to the General Assembly any appropriate statutory changes in the law concerning the definition of 'coastal area' which he believes needs to be enacted." /
Renumber sections to conform.
Amend title to conform.
DAVID L. THOMAS for Committee.
EXPLANATION OF IMPACT:
Department of Insurance
The Department of Insurance states that this bill would have no impact on the General Fund of the State or on federal and/or other funds.
Patients' Compensation Fund
The Patients' Compensation Fund notes that there would be some small cost savings to the fund stemming from Section 17 of the bill which raises the threshold at which the fund assumes responsibility for medical malpractice claims. Savings would result from decreased claims (other funds) expenses.
During a 12-month period of time starting with March of 2002, the fund closed 238 cases, of which approximately 15 were settled between the current limit of $100,000 and the proposed limit under the bill of $200,000. It is unknown how many of those 15 claims would have counted towards the aggregate yearly limits of $300,000 under current law and $600,000 as proposed in this bill. However, assuming that all 15 claims did not count towards the aggregate yearly limit, the maximum savings that could have been achieved under this bill would be $1.5 million ($200,000 - $100,000 x 15 claims). The fund would retain unlimited liability for any settlement above $200,000.
Approved By:
Don Addy
Office of State Budget
TO AMEND SECTION 38-1-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS USED IN TITLE 38 PERTAINING TO INSURANCE, SO AS TO CHANGE THE DEFINITION OF "EXEMPT COMMERCIAL POLICIES" TO DELETE THE REQUIREMENT THAT THE DEFINITION INCLUDE POLICIES FOR WHICH PREMIUMS FOR ONE INSURED IS GREATER THAN FIFTY THOUSAND DOLLARS ANNUALLY; TO AMEND SECTION 38-7-20, RELATING TO INSURANCE PREMIUM TAXES, SO AS TO CHANGE THE BASIS ON WHICH THESE TAXES ARE ASSESSED ON PREMIUMS FROM WRITTEN RATHER THAN COLLECTED; TO AMEND SECTION 38-21-170, AS AMENDED, RELATING TO REPORTING DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS TO THE DEPARTMENT, SO AS TO INCREASE FROM TEN TO FIFTEEN THE NUMBER OF DAYS BEFORE PAYMENT THE REPORT MUST BE GIVEN; TO AMEND SECTION 38-21-270, AS AMENDED, RELATING TO THE PAYMENT OF AN EXTRAORDINARY DIVIDEND OR DISTRIBUTION TO THE SHAREHOLDERS OF A DOMESTIC INSURER, SO AS TO CLARIFY THE DEPARTMENT OF INSURANCE REVIEW OF THIS TYPE OF DISTRIBUTION; TO AMEND SECTION 38-41-60, RELATING TO HOLDING IN TRUST FUNDS COLLECTED FROM PARTICIPATING EMPLOYERS UNDER MULTIPLE EMPLOYER SELF-INSURED HEALTH PLANS, SO AS TO CORRECT AN INTERNAL CODE CITATION; TO AMEND SECTION 38-43-10, AS AMENDED, RELATING TO PERSONS CONSIDERED AS INSURANCE AGENTS, SO AS TO CORRECT AN INTERNAL CODE CITATION; TO AMEND SECTION 38-43-40, AS AMENDED, RELATING TO THE RIGHT TO APPOINT PRODUCERS BY A LICENSED INSURER, SO AS TO REMOVE PROVISIONS WHICH REQUIRE THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO APPROVE THE APPOINTMENT OF PRODUCERS BEFORE THEY TAKE RISK OR TRANSACT BUSINESS; TO AMEND SECTION 38-43-50, AS AMENDED, RELATING TO THE REQUIREMENT THAT APPLICANTS FOR A LIMITED LINE OR SPECIAL PRODUCER'S LICENSE MUST BE VOUCHED FOR BY AN OFFICIAL OR LICENSED REPRESENTATIVE OF THE INSURER FOR WHICH THE APPLICANT PROPOSES TO ACT, SO AS TO DELETE PROVISIONS REQUIRING THE APPLICANT TO BE APPOINTED BY AN OFFICIAL OR AUTHORIZED REPRESENTATIVE OF THE INSURER BEFORE THE APPLICANT CAN ACT AS A PRODUCER; TO AMEND SECTION 38-43-70, AS AMENDED, RELATING TO LICENSING OF A NONRESIDENT PRODUCER BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, SO AS TO CORRECT AN INTERNAL CODE CITATION; TO AMEND SECTION 38-43-100, AS AMENDED, RELATING TO THE APPLICATION FOR AND ISSUANCE OF A PRODUCERS' LICENSE BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, SO AS TO DELETE CONFLICTING PROVISIONS WHICH AUTHORIZE THE DIRECTOR TO WAIVE THE EXAMINATION AND ISSUE TEMPORARY LICENSES FOR A PERIOD NOT TO EXCEED NINETY DAYS; TO AMEND SECTION 38-43-105, AS AMENDED, RELATING TO EDUCATION REQUIREMENTS FOR LOCAL AND GENERAL INSURANCE AGENTS, SO AS TO DELETE CONFLICTING PROVISIONS AND CLARIFY WHO MUST COMPLY WITH PRE-LICENSING REQUIREMENTS; TO AMEND SECTION 38-43-106, AS AMENDED, RELATING TO CONTINUING EDUCATION REQUIREMENTS FOR INSURANCE AGENTS, SO AS TO SUBSTITUTE HOME STATE FOR RESIDENT STATE AS THE REQUIREMENT FOR SATISFYING RECIPROCAL CONTINUING INSURANCE EDUCATION REQUIREMENTS FOR NONRESIDENT PRODUCERS; TO AMEND SECTION 38-45-20, RELATING TO REQUIREMENTS FOR A RESIDENT TO BE LICENSED AS AN INSURANCE BROKER, SO AS TO DELETE THE TWO-YEAR WAITING PERIOD FOR RESIDENT SURPLUS LINES INSURANCE BROKERS; TO AMEND SECTION 38-45-30, RELATING TO REQUIREMENTS FOR A NONRESIDENT INSURANCE BROKER, SO AS TO DELETE THE REQUIREMENT FOR NONRESIDENT BROKERS TO FURNISH A TEN THOUSAND DOLLAR SURETY BOND; TO AMEND SECTION 38-71-880, AS AMENDED, RELATING TO MEDICAL, SURGICAL, AND MENTAL HEALTH BENEFITS OFFERED IN CONNECTION WITH A GROUP HEALTH INSURANCE PLAN, SO AS TO EXTEND THE SUNSET PROVISION TO DECEMBER 31, 2003, TO COMPLY WITH FEDERAL LAW; TO AMEND SECTION 38-77-870, RELATING TO THE AVAILABILITY OF ASSIGNMENT OF RISKS TO NONRESIDENTS, SO AS TO PROVIDE AN EXCEPTION FOR MILITARY RISKS THAT ARE PRINCIPALLY GARAGED IN THIS STATE TO BE ASSIGNED BY THE PLAN; TO AMEND SECTION 38-79-420, RELATING TO THE CREATION OF THE SOUTH CAROLINA PATIENTS' COMPENSATION FUND, SO AS TO INCREASE FROM ONE TO TWO HUNDRED THOUSAND DOLLARS THE AMOUNT THE FUND PAYS IN EXCESS OF FOR EACH INCIDENT AND INCREASES FROM THREE TO SIX HUNDRED THOUSAND DOLLARS THE AMOUNT THE FUND PAYS IN EXCESS OF IN THE AGGREGATE FOR ONE YEAR; AND TO AMEND SECTION 56-9-20, AS AMENDED, RELATING TO DEFINITIONS USED IN CONNECTION WITH MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT, SO AS TO INCREASE THE MINIMUM LIMITS FOR PROPERTY DAMAGE FROM FIVE TO TEN THOUSAND DOLLARS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-1-20(40) of the 1976 Code, as last amended by Act 300 of 2002, is further amended to read:
"(40) 'Exempt commercial policies' means policies for large commercial insureds where the total combined premiums to be paid for these policies for one insured is greater than fifty thousand dollars annually and as may be further provided for in regulation or in bulletins issued by the director. Exempt commercial policies include all property and casualty coverages except for commercial property and insurance related to credit transactions written through financial institutions."
SECTION 2. Section 38-7-20 of the 1976 Code is amended to read:
"Section 38-7-20. (A) In addition to all license fees and taxes otherwise provided by law, there is levied upon each insurance company licensed by the director or his designee an insurance premium tax based upon total premiums, other than workers' compensation insurance premiums, and annuity considerations, collected written by the company in the State during each calendar year ending on the thirty-first day of December. For life insurance, the insurance premium tax levied herein is equal to three-fourths of one percent of the total premiums collected written. For all other types of insurance, the insurance premium tax levied herein in this section is equal to one and one-fourth percent of the total premiums collected written. In computing total premiums, return premiums on risks and dividends paid or credited to policyholders are excluded.
(B) The insurance premium taxes collected by the director or his designee pursuant to this section must be deposited by him in the general fund of the State."
SECTION 3. Section 38-21-170(A) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(A) Subject to Section 38-21-270, each registered insurer shall report to the department all dividends and other distributions to shareholders within five business days following the declaration thereof of it and at least ten fifteen days prior to before the payment thereof of it. The department shall promptly shall consider this report as information, and such these considerations shall must include the factors as set forth provided in Section 38-21-260. If an insurer's surplus as regards policyholders is determined by the department not to be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the department shall have the authority, within the ten-day fifteen-day period prior to before payment thereof of it, to limit the amount of such the dividends or distributions."
SECTION 4. Section 38-21-270(B) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(B)(1) For purposes of this section, an extraordinary dividend or distribution includes a dividend or distribution of cash or other property whose fair market value together with that of other dividends or distributions made within the preceding twelve months exceeds the lesser of:
(a) when paid from other than earned surplus exceeds the lesser of:
(a)(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement,; or
(b)(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement.;
(b) when paid from earned surplus exceeds the greater of:
(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement; or
(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement.
(2) It does not include pro rata distributions of a class of the insurer's own securities."
SECTION 5. Section 38-41-60(c) of the 1976 Code is amended to read:
"(c) Investment of plan funds is subject to the same restrictions which are applicable to insurers pursuant to Sections 38-11-40 and 38-11-50 38-12-10 through 38-12-320. All investments must be managed by a bank or other investment organization licensed to operate in South Carolina."
SECTION 6. Section 38-43-10(B) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(B) This chapter does not apply to excess and surplus lines brokers licensed pursuant to Section 38-45-20 38-45-30 except as provided in Section 38-43-70."
SECTION 7. Section 38-43-40 of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"Section 38-43-40. A license issued by the director or his designee pursuant to Chapter 5 of this title gives to the insurer obtaining it the right to appoint any number of producers to take risks or transact any business of insurance in the State. However, the director or his designee must approve the appointment before the producer takes any risk or transacts any business. The notification to the director or his designee shall must give both the business address and residence addresses of the producer."
SECTION 8. Section 38-43-50(B) of the 1976 Code, as added by Act 323 of 2002, is amended to read:
"(B) Before an applicant can act as a producer for an authorized insurer he must be appointed by an official or authorized representative of the insurer for which the applicant proposes to act, who When appointing a producer, the insurer shall certify on a form prescribed by the director whether the applicant has been appointed a producer to represent it and that it has duly investigated the character and record of the applicant and has satisfied itself that he is trustworthy and qualified to act as its producer and intends to hold himself out in good faith as an insurance producer. An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed."
SECTION 9. Section 38-43-70(D) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(D) Notwithstanding any other provision of this section, a person licensed as a surplus lines broker in his home state shall receive a nonresident surplus lines broker license pursuant to subsection (A) of this section. Except as to subsection (A) of this section, nothing in this section otherwise amends or supersedes any provision of Section 38-45-20 38-45-30."
SECTION 10. Section 38-43-100(A) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(A) No Business may not be done by the applicant except following issuance of a producer's license, and the license may not be issued until the director or his designee has determined that the applicant is qualified as an insurance producer, generally, and is particularly qualified for the line of business in which the applicant proposes to engage. The department shall promulgate regulations setting forth qualifying standards of producers as to all lines of business and shall require the producer applicant to stand a written examination. For the purpose of interstate reciprocity, the department shall identify by bulletin which limited lines or limited lines credit insurance are approved in South Carolina and which are exempt from examination. The director or his designee may waive the examination with respect to applicants who have achieved the designations of Chartered Property and Casualty Underwriter (CPCU) or Chartered Life Underwriter (CLU). The director or his designee may also, at his discretion, waive the examination and issue temporary licenses for a period not to exceed ninety days, upon demonstrated need. A bank, finance company, or other company handling credit transactions operating in this State and utilizing one or more credit life or accident and health or credit property producers in a particular geographical area who are licensed without having taken the written examination is required to have readily available at least one credit life or accident and health or credit property producer to answer customers' questions concerning credit life, credit accident and health insurance, or credit property, or any combination of these."
SECTION 11. Section 38-43-105(E) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(E) This section applies to residents applying for a license to engage in the sale of insurance except those persons who have previously been licensed for a period of five years or more and those persons applying for a license in limited lines or limited lines credit insurance approved by the director or his designee in order to satisfy the reciprocity provisions outlined under this chapter. Each course sponsor is required to submit a nonrefundable filing fee established by the department."
SECTION 12. Section 38-43-106(E) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(E) This section also applies to nonresident producers unless otherwise provided herein in this section. However, any a nonresident producer who successfully satisfies continuing insurance education requirements of his resident home state and certifies this information to the continuing education administrator as specified in subsection (C) is deemed considered to have satisfied the requirements of this section regardless of the requirements of that other state."
SECTION 13. Section 38-45-20 of the 1976 Code is amended to read:
"Section 38-45-20. A resident may be licensed as an insurance broker by the director or his designee if the following requirements are met:
(1) licensure of the resident as an insurance agent producer and having at least one appointment for the same lines of insurance for which he proposes to apply as a broker of this State for at least two years;
(2) successful completion of classroom insurance courses approved by the director or his designee consisting of no less than twelve classroom hours, which must be in addition to the requirements for a producer license contained in Section 38-43-105. The course subjects must be related to broker or surplus lines activities as approved by the director or his designee;
(3) payment of a biennial license fee of two hundred dollars which is earned fully when received, not refundable;
(3)(4) filing of a bond with the department in a form approved by the Attorney General in favor of South Carolina of ten thousand dollars executed by a corporate surety licensed to transact surety insurance in this State and personally countersigned by a licensed resident agent of the surety. The bond must be conditioned to pay a person insured or seeking insurance through the broker who sustains loss as a result of:
(a) the broker's violation of or failure to comply with an insurance law or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him, cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance transaction. In lieu Instead of a bond, the broker may file with the department certificates of deposit of ten thousand dollars 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 of insurance. An aggrieved person may institute an action in the county of his residence against the broker or his surety, or both, to recover on the bond or against the broker to recover from the certificates of deposit, and a copy of the summons and complaint in the action must be served on the director, who is not required to be made a party to the action;
(4)(5) payment to the department, within thirty days after March thirty-first, June thirtieth, September thirtieth, and December thirty-first each year, of a broker's premium tax of four percent upon premiums for policies of insurers not licensed in this State. Credit may be taken for tax on policies canceled flat within forty-five days of the effective policy date as long as the business was placed in good faith and the policy was canceled at the request of the insured."
SECTION 14. Section 38-45-30(5) of the 1976 Code is amended to read:
"(5) filing of a bond with the department in a form approved by the Attorney General in favor of South Carolina of ten thousand dollars executed by a corporate surety licensed to transact surety insurance in this State. The bond must be conditioned to pay a person insured or seeking insurance through the broker who sustains loss as a result of:
(a) the broker's violation of or failure to comply with an insurance law or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him, cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance transaction. In lieu of a bond, the broker may file with the department certificates of deposit of ten thousand dollars 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 of insurance. An aggrieved person may institute an action in the county of his residence against the broker or his surety, or both, to recover damages on the bond or against the broker to recover from the certificates of deposit, and. A copy of the summons and complaint in the action must be served on the director, who is not required to be made a party to the action."
SECTION 15. Section 38-71-880(F) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(F) This section shall not apply to benefits for services furnished on or after December 31, 2002 2003."
SECTION 16. Section 38-77-870 of the 1976 Code is amended to read:
"Section 38-77-870. The provisions of this chapter relevant to the assignment of risks must be available to nonresidents who are unable to obtain a policy of motor vehicle liability, physical damage, and medical payments insurance with respect only to motor vehicles registered and used in the State. Provided, however, that assignment through the South Carolina Automobile Insurance Plan also must be available to personnel of the Armed Forces of the United States who are on active duty and who officially are stationed in this State if they possess a valid motor vehicle driver's license issued by another state or territory of the United States or by the District of Columbia, regardless of the state of registration of their motor vehicle, if their motor vehicle is garaged principally in this State."
SECTION 17. Section 38-79-420 of the 1976 Code is amended to read:
"Section 38-79-420. There is created the South Carolina Patients' Compensation Fund (fund) for the purpose of paying that portion of a medical malpractice or general liability claim, settlement, or judgment which is in excess of one two hundred thousand dollars for each incident or in excess of three six hundred thousand dollars in the aggregate for one year. The fund is liable only for payment of claims against licensed health care providers (providers) in compliance with the provisions of this article and includes reasonable and necessary expenses incurred in payment of claims and the fund's administrative expense."
SECTION 18. Section 56-9-20(11) of the 1976 Code, as last amended by Act 459 of 1996, is further amended to read:
"(11) 'Proof of financial responsibility': Proof of ability to respond to damages for liability, as provided in Section 38-77-150, or, on account of accidents occurring after the effective date of such this proof, arising out of the ownership, maintenance, or use of a motor vehicle in the amount of fifteen thousand dollars because of bodily injury to or death of one person in any one accident and, subject to such this limit for one person, in the amount of thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident and in the amount of five ten thousand dollars because of injury to or destruction of property of others in any one accident;"
SECTION 19. The first paragraph of Section 2 of Act 313 of 2002 is amended to read:
"Notwithstanding the interest rate provisions of Section 38-69-240(a) of the 1976 Code, for prospective sales of contracts entered into pursuant to Section 38-69-240 from this act's effective date through January 1, 2004 June 30, 2005, the following applies:"
SECTION 20. Section 38-71-40 of the 1976 Code is amended to read:
"Section 38-71-40. (A) The falsity of any statement related to insurability in the application for any individual policy covered by this chapter does not bar the right to recovery thereunder under it during the first two years from the issue date unless:
(1) the false statement was made with actual intent to deceive; or unless it
(2) the false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.
(B) If either criteria provided in item (1) or (2) of subsection (A) is met, the insured is barred from recovery under the policy, and the policy is void. It is not necessary for both provisions in items (1) and (2) of subsection (A) of subsection (A) to be met in order for the right of recovery to be barred. This section does not repeal, supercede, or preempt any other provisions of Title 38 related to the falsity of statements in an application."
SECTION 21. This act takes effect upon approval by the Governor, except SECTION 13 takes effect January 31, 2004.
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