This title may be cited and is known as "The Insurance Law".  HISTORY: 1947 (45) 322; 1952 Code Section 37-1; 1962 Code Section 37-1; 1976 Code Section 38-1-10; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 528.
 As used in this title, unless the context otherwise requires:  (1) "Accident and health insurance" means insurance of human beings against death or personal injury by accident, and each insurance of human beings against sickness, ailment, and any type of physical disability resulting from accident or disease, and prepaid dental service, but not including coverages required by the Workers' Compensation Law of this State.  (2) "Accommodation bondsman" means as defined in Section 38-53-10.  (3) "Adjuster" means an individual who determines the extent of insured losses and assists in settling or attempts to settle claims.  (4) "Admitted assets" means assets of an insurer considered admitted on the most recent statutory financial statement of the insurer filed with the department pursuant to Section 38-13-80.  (5) "Admitted insurer" means an insurer licensed to do business in this State.  (6) "Alien insurer" means an insurer incorporated or organized under the laws of a country other than the United States of America, its states, commonwealths, territories, or insular possessions.  (7) "Annuity" means each contract or agreement to make periodic payments, whether in fixed or variable dollar amounts, or both, at specified intervals.  (8)(a) "Appointment" means an individual designated by an official or authorized representative of an authorized insurer to act on its behalf as a producer.  (b) "General appointment" means an appointment of a person who, as a representative of an insurer or insurers, is vested with authority to supervise producers and to exercise this management authority as is delegated to him by the principal. A producer appointed as a general also may perform the duties of a producer who holds a local or special appointment.  (c) "Local appointment" means an appointment of a producer who has been authorized by an insurer to sell, solicit, or negotiate policies on an insurer's behalf.  (d) "Special appointment" means an individual designated by an insurer to supervise and assist other producers in the proper discharge of their duties under an insurer's policy contract. A special appointment grants no authority to sell, solicit, or negotiate policies of insurance on behalf of an insurer.  (9) "Bail bondsman" means as defined in Section 38-53-10.  (10) "By" means on or before.  (11) "Casualty insurance" means each insurance against legal liability of the insured for bodily injury to or death of another person, including workers' compensation insurance, and for damages to or loss or destruction of the property of another person; medical payments insurance when written in conjunction with insurance covering liability for the deaths or bodily injuries of another person; guaranteeing the fidelity of a person holding a position of public or private trust; loss of or damage to property caused by burglary, theft, larceny, robbery, fraud, or unlawful taking or secretion of property owned by or entrusted to the insured; loss of or damage to property of the insured resulting from the explosion of or damage to a fired or unfired boiler or other pressure vessel, engine, turbine, compressor, pump, wheel, or an apparatus generating, transmitting, or using electric power, and machinery or equipment connected with any of them; loss resulting from nonpayment of debts owed to merchants or another person extending credit.  (12) "Certificate of insurance" means a memorandum copy, complete or abbreviated, of an insurance contract.  (13) "Coinsurance" means a stipulation or requirement that the insured undertakes to be his own insurer to the extent that he fails to maintain insurance of a given percentage of the value of the property against loss or damage.  (14) "Commission" means the part of the premium paid to the producer as compensation for his services.  (15) "Company" includes a corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations.  (16) "Crop insurance" includes insurance providing protection against damage to crops from unfavorable weather conditions, fire, lightning, flood, hail, insect infestation, disease, or other yield-reducing conditions or perils provided by the private insurance market, or that is subsidized by the Federal Crop Insurance Corporation, including Multi-Peril Crop Insurance.  (17) "Department" means the Department of Insurance of South Carolina.  (18) "Designee or deputy director" means the person or persons appointed by the director, serving at the will and pleasure of the director as his designee, to supervise and carry out the functions and duties of the department as provided by law. A duty or function of the director to manage and supervise the department may be conferred by the director's authority upon his designee or deputy director.  (19) "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the department. The director has the authority to appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director a duty or function required of him by law to manage and supervise the department.  (20) "Domestic insurer" means an insurer incorporated or organized under the laws of this State.  (21) "Eligible surplus lines insurer" means a nonadmitted insurer with which a licensed broker, or a licensed producer as provided in Section 38-45-10(8)(b)(ii), may place surplus lines insurance.  (22) "Exempt commercial policies" means policies for commercial insureds as may be provided for in regulation issued by the director. Exempt commercial policies include all property and casualty coverages except for insurance related to credit transactions written through financial institutions.  (23) "Foreign insurer" means an insurer incorporated or organized under the laws of the United States or of any jurisdiction within the United States other than this State.  (24) "Home state" means the District of Columbia and a state or territory of the United States in which an insurance producer maintains his principal place of residence or principal place of business and is licensed to act as an insurance producer.  (25) "Insurance" means a contract where one undertakes to indemnify another or pay a specified amount upon determinable contingencies. The term "insurance" includes annuities.  (26) "Insurance agency" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity in which more than one person has a financial interest.  (27) "Insurance broker" means an individual licensed by the department to represent citizens of this State in placing their insurance. An insurance broker may place that insurance either with an eligible surplus lines insurer or with a licensed insurance producer in an insurance carrier licensed in this State.  (28) "Insurance company" means an "insurer".  (29) "Insurance premium service company" means a person engaged in the business of entering into insurance premium service agreements.  (30) "Insurance producer" or "producer" means a person who represents an insurance company and is required to be licensed pursuant to Section 38-43-10.  (31) "Insurance rate" means the price of insurance for each unit of exposure.  (32) "Insurance-support organization" means a person who regularly engages, in whole or in part, in the practice of assembling or collecting information about natural persons for the primary purpose of providing the information to an insurer or agent for insurance transactions, including: (i) the furnishing of consumer reports or investigative consumer reports to an insurer or agent for use in connection with an insurance transaction; or (ii) the collection of personal information from insurers, agents, or other insurance-support organizations for the purpose of detecting or preventing fraud, material misrepresentation, or material nondisclosure in connection with insurance underwriting or insurance claim activity. However, the following are not considered insurance-support organizations for purposes of this chapter: agents, governmental institutions, insurers, modeling organizations, consumer reporting agencies, medical care institutions, and medical professionals.  (33) "Insurer" includes a corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations.  (34) "License" means a document issued by the state's director or his designee authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance carrier.  (35) "Life insurance" means a contract of insurance upon the lives of human beings. The following contracts are considered to be contracts of life insurance within the meaning of this definition:  (a) a contract providing acceleration of life benefits, beginning on the contract's original effective date, in advance of the time they otherwise would be payable for long-term care as defined in Section 38-72-40;  (b) a contract providing acceleration of life benefits, beginning on the contract's original effective date, in advance of the time they otherwise would be payable for a life-threatening illness or a terminal illness as specified in the contract.  (36) "Limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, and another form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the director or his designee determines should be designated a form of limited line credit insurance.  (37) "Limited line credit insurance producer" means a person who sells, solicits, or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group, or individual policy.  (38) "Limited line insurance" includes crop, travel surety, Federal Crop Insurance Program, and any other form of insurance that the director considers necessary in order to ensure compliance with the reciprocal provisions of this chapter.  (39) "Limited line insurance producer" means a person authorized by the director or his designee to sell, solicit, or negotiate limited line insurance.  (40) "Marine insurance" means each insurance against loss or destruction of or damage to aircraft, vessels, or watercraft and their cargoes; insurance covering the risks or perils of navigation, transit, or transportation of all forms of property, including the liability of a carrier for hire for the loss of property of shippers delivered for transporting; marine builder's risks; bridges, tunnels, piers, wharves, docks and slips, dry docks, marine railways, and other aids to navigation and transportation, precious stones, precious metals, and jewelry, whether in the course of transportation or otherwise; coverage of personal property by all risk forms known as the "Personal Property Floater"; and coverage of mobile machinery and equipment. Inland marine insurance includes "travel insurance" as defined in Section 38-43-720(14).  (41) "Modeling organization" means a corporation, unincorporated association, partnership, or individual, whether located within or outside this State, that prepares a catastrophe model that is used by an insurer in a rate filing. A catastrophe model is a computer program that estimates losses from a potential upcoming disaster. Catastrophe modeling combines data on property exposures with information on hazards, such as storms or earthquakes, to generate estimates of potential losses.  (42) "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.  (43) "Nonadmitted insurer" means an insurer not licensed to do an insurance business in this State.  (44) "Person" means a corporation, agency, partnership, association, voluntary organization, individual, or another entity, organization, or aggregation of individuals.  (45) "Policy" means a contract of insurance.  (46) "Premium" means payment given in consideration of a contract of insurance.  (47) "Premium service agreement" means an agreement by which an insured or prospective insured promises to pay to an insurance premium service company the amount advanced or to be advanced under the agreement to an insurer or to an insurance producer or insurance broker in payment of premiums on an insurance contract together with a service charge as authorized by Chapter 39 of this title.  (48) "Probation" means allowing a licensed person the director has found to have violated South Carolina, any United States territory, or another state's laws to continue selling, soliciting, or negotiating insurance on behalf of an insurer. A person convicted of a felony or those crimes listed in 18 U.S.C. 1033 or 1034 does not qualify for probation.  (49) "Professional bondsman" means as defined in Section 38-53-10.  (50) "Property insurance" means each insurance against direct or indirect loss of or damage to a property resulting from fire, smoke, weather disturbances, climatic conditions, earthquake, volcanic eruption, rising waters, insects, blight, animals, war damage, riot, civil commotion, destruction by order of civil authority to prevent spread of conflagration or for other reason, water damage, vandalism, glass breakage, explosion of a water system, collision, theft of automobiles, and personal effects in them (but no other forms of theft insurance), loss of or damage to domestic or wild animals, and any other perils to property which in the discretion of the director or his designee form proper subjects of property insurance, if not specified in items (1), (7), (11), (35), (40), (54), or (59) of this section.  (51) "Runner" means as defined in Section 38-53-10.  (52) "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.  (53) "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.  (54) "Surety" includes insurance or a bond that covers obligations to pay the debts, or answer for the default, of another, including faithlessness in a position of public or private trust.  (55) "Surety bondsman" means as defined in Section 38-53-10.  (56) "Surplus lines insurance" means insurance in this State of risks located or to be performed in this State, permitted to be placed through a licensed broker, or a licensed broker as provided in Section 38-45-10(8)(b)(ii), with a nonadmitted insurer eligible to accept the insurance, other than reinsurance, wet marine and transportation insurance, insurance independently procured, and life and health insurance and annuities. Excess and stop-loss insurance coverage upon group life, accident, and health insurance or upon a self-insured's life, accident, and health benefits program, disability insurance in excess of any benefit limit available from an admitted insurer, and international major medical insurance may be approved as surplus lines insurance.  (57) "Surplus to policyholders" is the excess of total admitted assets over the liabilities of an insurer which is the sum of all capital and surplus accounts minus any impairment of them.  (58) "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance.  (59) "Title insurance" means insurance of the owners of real property and other persons lawfully interested in the title insurance against loss by reason of defective titles and undisclosed liens and encumbrances affecting the property.  (60) Reserved.  (61) "Uniform agency application" means the current version of the National Association of Insurance Commissioners Uniform Business Entity Application for resident and nonresident business entities.  (62) "Uniform application" means the current version of the National Association of Insurance Commissioners Uniform Application for resident and nonresident producer licensing.  (63) "International major medical insurance" means a temporary health insurance policy that covers the expenses associated with illnesses or accidents that occur while traveling or when temporarily residing outside of a person's home country.  HISTORY: Derived from 1976 Code Section 38-1-20 [1947 (45) 322, 1952 Code Section 37-2, 1960 (51) 1646, 1962 Code Section 37-2]; 1976 Code Section 38-1-30 [1947 (45) 322, 1952 Code Section 37-3, 1962 Code Section 37-3, 1968 (55) 2407], 1976 Code Section 38-5-20 [1962 Code Section 37-109, 1964 (53) 2051, 1968 (55) 2407, 1979 Act No. 40 Section 1, 1979 Act No. 120 Section 1], 1976 Code Section 38-27-10 [1962 Code Section 37-1302, 1967 (55) 273], recodified, 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 1; 1988 Act No. 624, Section 7; 1990 Act No. 348, Section 1; 1990 Act No. 365, Section 1; 1990 Act No. 416, Section 1; 1990 Act No. 524, Sections 1, 2; 1993 Act No. 181, Section 529; 2000 Act No. 235, Section 1; 2000 Act No. 328, Section 2; 2002 Act No. 300, Section 1, eff January 1, 2003; 2002 Act No. 323, Section 1, eff January 31, 2003; 2003 Act No. 73, Section 1, eff June 25, 2003; 2004 Act No. 290, Section 3, eff July 29, 2004; 2009 Act No. 69, Section 1, eff June 2, 2009; 2012 Act No. 137, Section 1, eff April 2, 2012; 2016 Act No. 137 (H.4660), Section 2, eff March 2, 2016; 2017 Act No. 55 (S.463), Section 1, eff May 19, 2017; 2018 Act No. 206 (S.1042), Sections 1.A and 1.B, eff May 15, 2018; 2021 Act No. 50 (S.435), Section 2, eff May 17, 2021.  Effect of Amendment  2016 Act No. 137, Section 2, in (21), inserted ", or a licensed producer as provided in Section 38-45-10(8)(b)(ii),"; and in (56), inserted ", or a licensed broker as provided in Section 38-45-10(8)(b)(ii),".  2017 Act No. 55, Section 1, in (56), inserted "and disability insurance in excess of any benefit limit available from an admitted insurer".  2018 Act No. 206, Section 1.A, added (63), relating tot the definition of "International major medical insurance".  2018 Act No. 206, Section 1.B, in (56), in the second sentence, substituted "health benefits program, disability insurance" for "health benefits program and disability insurance", and inserted ", and international major medical insurance" following "and admitted insurer".  2021 Act No. 50, Section 2, in (40), added the second sentence, and reserved (60), which related to the definition of "travel insurance".
 Wherever in any other chapter of Title 38 the term "Chief Insurance Commissioner" or "Commissioner" appears or is used, it shall be deemed to mean the Director of the Department of Insurance or his designee.  HISTORY: 1993 Act No. 181, Section 530.  
 This chapter is adopted to provide a basis for the creation of protected cells by a domestic insurer or captive insurer as defined in Chapter 90 as one means of accessing alternative sources of capital and achieving the benefits of insurance securitization. Investors in fully funded insurance securitization transactions provide funds that are available to pay the insurer's insurance obligations or to repay the investors, or both. The creation of protected cells is intended to be a means to achieve more efficiencies in conducting insurance securitizations.  HISTORY: 2000 Act No. 238, Section 2; 2001 Act No. 58, Section 15, eff May 29, 2001.
 For the purposes of this chapter:  (1) "Domestic insurer" means an insurer domiciled in the State of South Carolina.  (2) "Fully funded" means that, with respect to any exposure attributed to a protected cell, the market value of the protected cell assets, on the date on which the insurance securitization is effected, equals or exceeds the maximum possible exposure attributable to the protected cell with respect to such exposures.  (3) "General account" means the assets and liabilities of a protected cell company other than protected cell assets and protected cell liabilities.  (4) "Indemnity trigger" means a transaction term by which relief of the issuer's obligation to repay investors is triggered by its incurring a specified level of losses under its insurance or reinsurance contracts.  (5) "Market value" means:  (a) as to cash, the amount of cash; and  (b) as to a security as of any date, the price for the security on that date obtained from a generally recognized source or the most recent quotation from such a source or, to the extent no generally recognized sources exist, the price for the security as determined in good faith by the parties to the transaction, plus accrued but unpaid income on the security to the extent not included in the price as of that date.  (6) "Nonindemnity trigger" means a transaction term by which relief of the issuer's obligation to repay investors is triggered solely by some event or condition other than the individual protected cell company incurring a specified level of losses under its insurance or reinsurance contracts.  (7) "Protected cell" means an identified pool of assets and liabilities of a protected cell company segregated and insulated by means of this chapter from the remainder of the protected cell company's assets and liabilities.  (8) "Protected cell account" means a specifically identified bank or custodial account established by a protected cell company for the purpose of segregating the protected cell assets of one protected cell from the protected cell assets of other protected cells and from the assets of the protected cell company's general account.  (9) "Protected cell assets" means all assets, contract rights, and general intangibles, identified with and attributable to a specific protected cell of a protected cell company.  (10) "Protected cell company" means a domestic insurer or captive insurer that has one or more protected cells.  (11) "Protected cell company insurance securitization" means the issuance of debt instruments, the proceeds from which support the exposures attributed to the protected cell, by a protected cell company where repayment of principal or interest, or both, to investors pursuant to the transaction terms is contingent upon the occurrence or nonoccurrence of an event with respect to which the protected cell company is exposed to loss under insurance or reinsurance contracts it has issued.  (12) "Protected cell liabilities" means all liabilities and other obligations identified with and attributable to a specific protected cell of a protected cell company.  HISTORY: 2000 Act No. 238, Section 2; 2001 Act No. 58, Section 16, eff May 29, 2001.
 (A) A protected cell company may establish one or more protected cells with the prior written approval of the director of a plan of operation or amendments submitted by the protected cell company with respect to each protected cell in connection with an insurance securitization. Upon the written approval of the director of the plan of operation, which shall include, but is not limited to, the specific business objectives and investment guidelines of the protected cell, the protected cell company, in accordance with the approved plan of operation, may attribute to the protected cell insurance obligations with respect to its insurance business and obligations relating to the insurance securitization and assets to fund the obligations. A protected cell shall have its own distinct name or designation, which shall include the words "protected cell". The protected cell company shall transfer all assets attributable to a protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of that protected cell. Protected cell assets must be held in the protected cell accounts for the purpose of satisfying the obligations of that protected cell.  (B) All attributions of assets and liabilities between a protected cell and the general account must be in accordance with the plan of operation approved by the director. No other attribution of assets or liabilities may be made by a protected cell company between the protected cell company's general account and its protected cells. Any attribution of assets and liabilities between the general account and a protected cell, or from investors in the form of principal on a debt instrument issued by a protected cell company in connection with a protected cell company securitization, must be in cash or in readily marketable securities with established market values.  (C) The creation of a protected cell does not create, with respect to that protected cell, a legal person separate from the protected cell company . Amounts attributed to a protected cell under this chapter, including assets transferred to a protected cell account, are owned by the protected cell company, and the protected cell company may not be, or may not hold itself out to be, a trustee with respect to those protected cell assets of that protected cell account. Notwithstanding the provisions of this subsection, the protected cell company may allow for a security interest to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell and otherwise allowed under applicable law.  (D) This chapter may not be construed to prohibit the protected cell company from contracting with or arranging for an investment advisor, commodity trading advisor, or other third party to manage the protected cell assets of a protected cell, if all remuneration, expenses, and other compensation of the third party advisor or manager are payable from the protected cell assets of that protected cell and not from the protected cell assets of other protected cells or the assets of the protected cell company's general account.  (E) A protected cell company shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the protected cell company and the protected cell assets and protected cell liabilities attributable to the protected cells. The directors of a protected cell company shall keep protected cell assets and protected cell liabilities:  (1) separate and separately identifiable from the assets and liabilities of the protected cell company's general account and;  (2) attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.  Notwithstanding the provisions of this subsection, if this subsection is violated, the remedy of tracing is applicable to protected cell assets when commingled with protected cell assets of other protected cells or the assets of the protected cell company's general account. The remedy of tracing must not be construed as an exclusive remedy.  (F) When establishing a protected cell, the protected cell company shall attribute to the protected cell assets with a value at least equal to the reserves and other insurance liabilities attributed to that protected cell.  HISTORY: 2000 Act No. 238, Section 2.
 (A) The protected cell assets of a protected cell may not be charged with liabilities arising out of any other business the protected cell company may conduct. All contracts or other documentation reflecting protected cell liabilities shall clearly indicate that only the protected cell assets are available for the satisfaction of those protected cell liabilities.  (B) The income, gains and losses, realized or unrealized, from protected cell assets and protected cell liabilities must be credited to or charged against the protected cell without regard to other income, gains, or losses of the protected cell company, including income, gains, or losses of other protected cells. Amounts attributed to any protected cell and accumulations on the attributed amounts may be invested and reinvested without regard to any requirements or limitations of Chapter 12 of this title and the investments in a protected cell or cells may not be taken into account in applying the investment limitations otherwise applicable to the investments of the protected cell company.  (C) Assets attributed to a protected cell must be valued at their market value on the date of valuation or if there is no readily available market, as provided in the contract or the rules or other written documentation applicable to the protected cell.  (D) A protected cell company with respect to any of its protected cells, shall engage in fully funded indemnity triggered insurance securitization to support in full the protected cell exposures attributable to that protected cell. A protected cell company insurance securitization that is nonindemnity triggered shall qualify as an insurance securitization under the terms of this chapter only after the director promulgates regulations addressing the methods of funding of the portion of this risk that is not indemnity based and addressing accounting, disclosure, risk based capital treatment, and assessing risks associated with such securitizations. A protected cell company insurance securitization that is not fully funded, whether indemnity triggered or nonindemnity triggered, is prohibited. Protected cell assets may be used to pay interest or other consideration on any outstanding debt or other obligation attributable to that protected cell, and nothing in this subsection may be construed or interpreted to prevent a protected cell company from entering into a swap agreement or other transaction for the account of the protected cell that has the effect of guaranteeing interest or other consideration.  (E) In all protected cell company insurance securitizations, the contracts or other documentation effecting the transaction shall contain provisions identifying the protected cell to which the transaction will be attributed. In addition, the contracts or other documentation shall clearly disclose that the assets of that protected cell, and only those assets, are available to pay the obligations of that protected cell. Notwithstanding the provisions of this subsection and subject to the provisions of this chapter and any other applicable law or regulation, the failure to include such language in the contracts or other documentation may not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this chapter.  (F) A protected cell company only may attribute to a protected cell account the insurance obligations relating to the protected cell company's general account. Under no circumstances may a protected cell be authorized to issue insurance or reinsurance contracts directly to policyholders or reinsureds or have any obligation to the policyholders or reinsureds of the protected cell company's general account.  (G) At the cessation of business of a protected cell in accordance with the plan approved by the director, the protected cell company voluntarily shall close out the protected cell account.  HISTORY: 2000 Act No. 238, Section 2; 2012 Act No. 137, Section 5, eff April 2, 2012.
 (A) Protected cell assets are only available to the creditors of the protected cell company that are creditors with respect to that protected cell and, accordingly, are entitled, in conformity with this chapter, to have recourse to the protected cell assets attributable to that protected cell and are absolutely protected from the creditors of the protected cell company that are not creditors with respect to that protected cell and who, accordingly, are not entitled to have recourse to the protected cell assets attributable to that protected cell. Creditors with respect to a protected cell are not entitled to have recourse against the protected cell assets of other protected cells or the assets or the protected cell company's general account.  Protected cell assets are only available to creditors of a protected cell company after all protected cell liabilities have been extinguished or otherwise provided for in accordance with the plan of operation relating to that protected cell.  (B) When an obligation of a protected cell company to a person arises from a transaction, or is otherwise imposed, with respect to a protected cell:  (1) that obligation of the protected cell company extends only to the protected cell assets attributable to that protected cell, and the person, with respect to that obligation, is entitled to have recourse only to the protected cell assets attributable to that protected cell; and  (2) that obligation of the protected cell company does not extend to the protected cell assets of any other protected cell or the assets of the protected cell company's general account, and that person, with respect to that obligation, is not entitled to have recourse to the protected cell assets of any other protected cell or the assets of the protected cell company's general account.  (C) When an obligation of a protected cell company relates solely to the general account, the obligation of the protected cell company extends only to, and that creditor, with respect to that obligation, is entitled to have recourse only to the assets of the protected cell company's general account.  (D) The activities, assets, and obligations relating to a protected cell are not subject to the provisions of Chapters 29 and 31, and neither a protected cell nor a protected cell company may be assessed by, or otherwise be required to contribute to, any guaranty fund or guaranty association in this State with respect to the activities, assets, or obligations of a protected cell. Nothing in this subsection affects the activities or obligations of an insurer's general account.  (E) The establishment of one or more protected cells alone does not constitute, and may not be deemed to be, a fraudulent conveyance, an intent by the protected cell company to defraud creditors, or the carrying out of business by the protected cell company for any other fraudulent purpose.  HISTORY: 2000 Act No. 238, Section 2.
 (A) Notwithstanding any other provision of law or regulation, upon an order of conservation, rehabilitation, or liquidation of a protected cell company, the receiver shall deal with the protected cell company's assets and liabilities, including protected cell assets and protected cell liabilities, in accordance with the requirements set forth in this chapter.  (B) With respect to amounts recoverable under a protected cell company insurance securitization, the amount recoverable by the receiver may not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the protected cell company, notwithstanding any provisions to the contrary in the contracts or other documentation governing the protected cell company insurance securitization.  HISTORY: 2000 Act No. 238, Section 2.
 A protected cell company insurance securitization may not be deemed to be an insurance or reinsurance contract. An investor in a protected cell company insurance securitization, by sole means of this investment, may not be deemed to be conducting an insurance business in this State. The underwriters or selling agents and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors involved in a protected cell company insurance securitization may not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection with that business.  HISTORY: 2000 Act No. 238, Section 2.
 The director may promulgate regulations necessary to effectuate the purposes of this chapter.  HISTORY: 2000 Act No. 238, Section 2.  
 It is the intent of this chapter to foster innovative flood insurance coverages providing insurers the ability to test products in the market and consumers greater choice for flood insurance coverage.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 With respect to the regulation of private flood insurance written in this State by authorized insurers, this title controls if there is a conflict between this title and any other applicable state law.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 (A) An admitted insurer offering flood insurance may certify that a policy, contract, or endorsement provides coverage for the named peril of flood which equals or exceeds the flood coverage offered by the NFIP. To be eligible for certification, the policy, contract, or endorsement must contain a provision stating that it meets the private flood insurance requirements specified in 42 U.S.C. Section 4012a(b) and may not contain provisions that, when taken as a whole, are not in compliance with 42 U.S.C. Section 4012a(b).  (B) The admitted insurer or its agent may reference or include a certification pursuant to subsection (A) in advertising or communications with an agent, a lending institution, an insured, or a potential insured only for a policy, contract, or endorsement that is certified pursuant to this section. The admitted insurer may include a statement that notifies an insured of the certification on the declarations page or other policy documentation related to flood coverage certified pursuant to this section.  (C) An insurer or agency who knowingly:  (1) misrepresents that a flood policy, contract, or endorsement is certified pursuant to this chapter; or  (2) misrepresents the scope of the coverage of the flood insurance policy, contract, or endorsement commits an unfair or deceptive act pursuant to Section 38-57-10, et seq. and is subject to the penalties set forth in this chapter.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020; 2022 Act No. 195 (H.4832), Section 14, eff May 16, 2022.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."  Effect of Amendment  2022 Act No. 195, Section 14, in (A), in the first sentence, substituted "named peril" for "peril".
 (A) The insurer must give written notice ten days before cancellation due to nonpayment of premium or forty-five days before cancellation for a reason other than nonpayment of premium or nonrenewal of private flood insurance coverage to:  (1) the insured; and  (2) the federally supervised institution that made the designated loan secured by the property covered by the private flood insurance, or the servicer acting on its behalf, if any.  (B) The notice must:  (1) be filed with the director, or his designee, subject to the "use and file" requirements as set forth in Section 38-101-60;  (2) state the date no less than ten days before cancellation due to nonpayment of premium or forty-five days for any cancellation for a reason other than nonpayment of premium or nonrenewal; and  (3) inform the insured of its right to request a review by the South Carolina Department of Insurance.  (C)(1) An insurer may cancel or refuse to issue or renew a private flood insurance policy, except for the reasons set forth below:  (a) age;  (b) sex;  (c) race;  (d) color;  (e) creed;  (f) national origin;  (g) ancestry;  (h) marital status;  (i) income level; or  (j) lawful occupation, including the military service of the person seeking the coverage.  (2) Nothing in this section prohibits an insurer from limiting the issuance of private flood insurance policies covered in this chapter only to persons engaging in or who have engaged in a particular profession or occupation, or who are members of a particular religious sect.  (3) Nothing in this section prohibits an insurer from refusing to issue private flood insurance policies due to the exposure of flood.  (4) Notwithstanding the provisions of item (1), an insurer only may cancel a standard flood insurance policy in accordance with 42 U.S.C. Section 4012a(b).  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020; 2022 Act No. 195 (H.4832), Section 15, eff May 16, 2022.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."  Effect of Amendment  2022 Act No. 195, Section 15, rewrote (A); and in (B), in (1), made nonsubstantive changes, and in (2), substituted "ten days before cancellation due to nonpayment of premium or forty-five days for any cancellation for a reason other than nonpayment of premium" for "forty-five days for any cancellation".
 (A) If an insurer intends to renew a policy, the insurer shall furnish renewal terms and a statement of the amount of premium or estimated premium due for the renewal policy period in the manner required by this section.  (B) If the policy being renewed (original policy) is written for a term of one year or less, the renewal terms and statement of premium or estimated premium due must be furnished to the insured no less than forty-five days prior to the expiration date of the original policy.  (C) If the original policy is written for a term of more than one year or for an indefinite term, the renewal terms and statement of premium or estimated premium due must be furnished to the insured no less than forty-five days prior to the anniversary date of the original policy.  (D) The insurer may satisfy its obligation to furnish renewal terms and statement of premium or estimated premium due by either of the following methods:  (1) mailing or delivering renewal terms and statement to the insured via electronic delivery in accordance with South Carolina law, at the address shown in the policy or, if not reflected, at the last known address, no less than forty-five days prior to expiration or anniversary; or  (2) mailing or delivering renewal terms and statement to the producer or broker of record, if any, no less than sixty days prior to expiration or anniversary, along with instructions that the agent or broker furnish the renewal terms and statement to the insured no less than forty-five days prior to expiration or anniversary.  (E) If the insurer fails to furnish the renewal terms and statement of premium or estimated premium due in the manner required by this section, the insured may elect to cancel the renewal policy within the forty-five-day period following receipt of the renewal terms and statement of premium or estimated premium due. Earned premium for any period of coverage must be calculated pro rata based upon the premium applicable to the original policy and not the premium applicable to the renewal policy.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 The department is authorized to promulgate by bulletin, order, or regulation the requirements necessary to implement the requirements of this chapter.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."  
 For the purposes of this section:  (1) "Flood" means:  (a) a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties, at least one of which is the policyholder's property, from:  (i) overflow of inland or tidal waters;  (ii) unusual and rapid accumulation or runoff of surface waters from any source; or  (iii) mudflow; or  (b) collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in this section.  (2) "Mudflow" means a river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water. Other earth movements, such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are not mudflows.  (3) "Private flood insurance" means personal lines or commercial lines flood insurance policies or endorsements providing coverage for the named peril of flood issued directly by insurers.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020; 2022 Act No. 195 (H.4832), Section 11, eff May 16, 2022.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."  Effect of Amendment  2022 Act No. 195, Section 11, in (3), substituted "commercial lines" for "commercial" and "named peril" for "peril".
 An insurer may issue an insurance policy, contract, or endorsement providing commercial lines or personal lines coverage for the named peril of flood or excess coverage for the named peril of flood on any structure and on the contents of commercial or personal property contained therein, or to insure against indirect losses from the named peril of flood subject to the requirements of this chapter. Any reference to policy in this chapter also includes endorsements that provide private flood insurance coverage.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020; 2022 Act No. 195 (H.4832), Section 12, eff May 16, 2022.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."  Effect of Amendment  2022 Act No. 195, Section 12, in the first sentence, substituted "named peril" for "peril" in three places, and made a nonsubstantive change.
 (A) Private flood insurance policies issued pursuant to this chapter include:  (1) "Standard flood insurance", which means a private flood insurance policy which covers only losses from the named peril of flood at least equivalent, when taken as a whole, to that provided under a standard flood insurance policy under the National Flood Insurance Program (NFIP) including deductibles, exclusions, and other terms and conditions offered by the insurer. The policy form also must include:  (a) information about the availability of flood insurance coverage under the NFIP;  (b) a mortgage interest clause substantially similar to the clause contained in a standard flood insurance policy under the NFIP;  (c) a provision requiring an insured to file suit no later than one year after the date of a written denial of all or part of a claim under the policy; and  (d) cancellation provisions that are as restrictive as the provisions contained in a standard flood insurance policy under the NFIP.  (2) "Nonstandard flood insurance", which may, but is not required to, provide coverage designed to supplement a flood policy obtained from the NFIP or from an insurer issuing standard flood insurance pursuant to this section. This includes any other policy issued for the coverage of flood that does not meet the definition of a standard flood insurance policy as defined above. Nonstandard flood insurance also includes policies that have a broader definition of flood than that provided for in Section 38-101-20(1) and discretionary acceptance private flood insurance as provided for in 12 C.F.R. Part 208.25.  (B) Flood insurance deductibles and policy limits must be prominently noted on the policy declarations page or face page of the policy at issuance and renewal in at least ten-point font.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020; 2022 Act No. 195 (H.4832), Section 13, eff May 16, 2022.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."  Effect of Amendment  2022 Act No. 195, Section 13, in (A)(1), in the first sentence, substituted "named peril" for "peril".
 (A)(1) Every admitted insurer writing personal lines private flood insurance pursuant to this chapter shall file with the director all rates and supplementary rate information and all changes and amendments made by it for use in this State no later than ninety days after the effective date and such filing shall be considered a "use and file" filing. These filings are for informational purposes only.  (2) Commercial lines private flood insurance rates are subject to Regulation 69-64.  (3) Insurers shall establish rates based on actuarial data, methodologies, and standards and guidelines relating to flood insurance that produce rates that are not excessive, inadequate, or unfairly discriminatory.  (B)(1) A rating or advisory organization may file prospective loss cost and supplementary rate information on behalf of insurers. The loss cost and supplementary rate information are subject to the "use and file" provisions of this section, regardless of whether they are for commercial lines or personal lines private flood insurance.  (2) Each personal lines private flood insurer shall file its multiplier for expenses, assessments, profits, and contingencies to be applied to the loss cost and any information relied upon by the insurer to support the multiplier and any modifications to loss costs subject to the use and file provisions of this section.  (3) Licensees shall establish loss costs and multipliers for expenses based on actuarial data, methodologies, and standards and guidelines relating to flood insurance that produce rates that are not excessive, inadequate, or unfairly discriminatory. Filings pursuant to this subsection are for informational purposes only.  (C) All rate filings are confidential until final disposition by the director. Final disposition of rates and the filings are subject to public inspection in accordance with the provisions of the South Carolina Freedom of Information Act.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 (A) Every admitted insurer writing personal lines or commercial lines private flood insurance pursuant to this chapter shall file with the director all forms and all changes and amendments made by it for use in this State no later than ninety days after becoming effective. This form filing is considered a "use and file" filing.  (B) The director may at any time review a form, the pertinent records of the insurer, and market conditions. The director may at any time disapprove a form and shall notify the insurer. In reviewing the forms filed, the department may require the insurer to provide, at the insurer's expense, all information necessary to evaluate the filing. Upon notification, the insurer shall, within sixty days, file with the department all information which, in the belief of the insurer, establishes that the form is in compliance with this chapter and other applicable law. The insurer may appeal the final determination of the director or his designee to the South Carolina Administrative Law Court. The insurer shall carry the burden of proof by a preponderance of the evidence to show that the form complies with applicable South Carolina law.  (C) All form filings are confidential until final disposition by the director. Final form filings are subject to public inspection in accordance with the provisions of the South Carolina Freedom of Information Act.  (D) An advisory or rating organization may file forms on the behalf of insurers. These filings are subject to the "use and file" provisions of this section. If the director finds on a preliminary basis that a form does not comply with this chapter or other applicable law, the director shall disapprove the form and shall notify the rating or advisory organization. Upon notification, the rating or advisory organization shall, within sixty days, file with the department all information which, in the belief of the advisory or rating organization, establishes the form complies with this chapter and other applicable law. The advisory or rating organization may appeal the final determination of the director or his designee to the South Carolina Administrative Law Court. The advisory or rating organization shall carry the burden of proof by a preponderance of the evidence to show that the form complies with applicable South Carolina law.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 A surplus lines broker may place a policy or endorsement providing flood insurance coverage to an eligible surplus lines insurer without making a diligent effort to seek such coverage from one or more admitted insurers required pursuant to Section 38-45-90.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 (A) In addition to any other applicable requirements pursuant to this title, any admitted insurer providing private flood insurance coverage that is considered standard flood insurance coverage in this State shall:  (1) notify the director or his designee at least thirty days before writing flood insurance in this State; and  (2) file a plan of operation and financial projections or revisions to such plan, as applicable, with the director or his designee.  (B) Admitted insurers writing private flood insurance shall comply with the requirements of Chapter 13 and are subject to examination in accordance with Chapter 13. Brokers placing flood insurance policies are subject to examination in accordance with Section 38-45-80.  (C) Subsection (A) does not impose new requirements on any insurer currently writing private flood insurance coverage at the time of enactment of this chapter.  (D) Admitted insurers exiting the private flood insurance market shall notify the director or his designee within forty-five days of the market exit.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 (A) Before placing a personal lines private flood insurance policy with an admitted or surplus lines insurer, an insurance producer, broker, or the insurer shall provide a written notice to the applicant advising that if the applicant discontinues coverage under the NFIP, which is provided at a subsidized rate, the full risk rate for flood insurance may apply to the property if the applicant later seeks to reinstate coverage under the program.  (B) This section only applies if the applicant lives in a special flood hazard area. The producer, broker, or insurer shall retain this notice for three years. This section automatically sunsets if there is federal legislation that allows the insured to switch between private flood insurance and NFIP coverage without penalty.  HISTORY: 2020 Act No. 166 (S.882), Section 2, eff November 27, 2020.  Editor's Note  2020 Act No. 166, Section 3, provides as follows:  "SECTION 3. This act becomes effective sixty days following approval by the Governor. Insurers that are writing private flood insurance at the time of enactment have an additional one hundred twenty days to come into compliance with the requirements of this act."
 This chapter may be cited as the "Investments of Insurers Act".  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.  Editor's Note  2002 Act No. 319, Section 1, provides as follows:  "The legislative intent of this chapter is to protect the interests of the insured in this State by promoting insurer solvency and financial strength, to be accomplished through the application of investment standards that facilitate a reasonable balance of the following objectives:  "(1) preserving principal;  "(2) assuring reasonable diversification as to type of investment, issuer, and credit quality; and  "(3) allowing insurers to allocate investments in a manner consistent with principles of prudent investment management to achieve a return adequate to meeting obligations to insureds and financial strength sufficient to cover reasonably foreseeable contingencies."
 This chapter applies to all domestic insurers. Foreign insurers and United States branches of alien insurers transacting an insurance business in this State shall maintain investments of the same general type and character as specified for domestic insurers, except that investments of substantially the same quality as those specified in this chapter, authorized by the law of the insurer's state of domicile, or state of entry if an alien insurer, may be recognized as eligible investments for purposes of this chapter by the director or his designee in the sound exercise of his discretion. This chapter does not apply to separate accounts of an insurer except to the extent provided by Chapter 67 of this title.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 This article applies to the investments and investment practices of life and health insurers, and other companies whose investments and investment practices are regulated as if they were life and health insurers under this title, subject to the provisions of Section 38-12-20.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) Except as otherwise provided in this chapter, an insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to this chapter if as a result of and after giving effect to the investment the insurer holds more than three percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person.  (2) This three percent limitation does not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.  (3) Asset-backed securities are not subject to the limitations of item (1), however, except as permitted by item (4), an insurer may not acquire an asset-backed security if as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity then held by the insurer exceeds three percent of its admitted assets.  (4) An investment by an insurer in mortgage related securities, as defined by the Secondary Mortgage Market Enhancement Act of 1984 (United States Public Law 98-440) [12 U.S.C. Sections 24, 1451, 1454 et seq.], that is backed by a single pool of mortgages and made pursuant to the authority of that act, may not exceed five percent of its admitted assets.  (B) An insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to Section 38-12-230, 38-12-260, or 38-12-290 or counterparty exposure pursuant to Section 38-12-300(4) if as a result of and after giving effect to the investment the aggregate amount of:  (1) medium and lower grade investments then held by the insurer exceed twenty percent of its admitted assets;  (2) lower grade investments then held by the insurer exceed ten percent of its admitted assets;  (3) investments rated five or six by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO then held by the insurer exceed three percent of its admitted assets;  (4) investments rated six by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO then held by the insurer exceed one percent of its admitted assets; or  (5) medium and lower grade investments then held by the insurer that receive as cash income less than the equivalent yield for Treasury issues with a comparative average life, exceed one percent of its admitted assets;  (6) medium and lower grade investments issued, assumed, guaranteed, accepted, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer exceed one percent of its admitted assets; or  (7) lower grade investments issued, assumed, guaranteed, accepted, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer exceed one-half of one percent of its admitted assets.  (C) An insurer that attains or exceeds the limit of any one rating category in subsection (B) may acquire investments in other rating categories subject to the specific and multi-category limits applicable to those investments.  (D)(1) An insurer may not, directly or indirectly through an investment affiliate, acquire a Canadian investment or engage in a Canadian investment practice authorized by this chapter if as a result of and after giving effect to the investment the aggregate amount of these investments then held by the insurer exceeds forty percent of its admitted assets, or if the aggregate amount of Canadian investments not acquired pursuant to Section 38-12-230(A)(2) then held by the insurer exceeds twenty-five percent of its admitted assets.  (2) An insurer that is authorized to do business in Canada or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, is subject to the limitations of item (1) as increased by the greater of:  (a) the amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or  (b) one hundred fifteen percent of the amount of its reserves and other obligations pursuant to contracts on lives or risks resident or located in Canada.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer may acquire rated credit instruments, subject to the limitation of subsection (B) of this section, as follows:  (1) Subject to the limitation of Section 38-12-220(B),but not subject to the limitations of Section 38-12-220(A)(1), (2), and (3), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by the United States or a government-sponsored enterprise of the United States, if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States.  (2) Subject to the limitations of Section 38-12-220(B), but not subject to the limitations of Section 38-12-220(A), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by Canada or a government- sponsored enterprise of Canada, if the instruments of the government- sponsored enterprise are assumed, guaranteed, or insured by Canada or are backed or supported otherwise by the full faith and credit of Canada. An insurer may not acquire an instrument pursuant to this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this subsection exceeds forty percent of its admitted assets.  (3)(a) Subject to the limitations of Section 38-12-220(B), but not subject to the limitations of Section 38-12-220(A), an insurer may acquire rated credit instruments, excluding asset-backed securities:  (i) issued by a government money market mutual fund, a class one money market mutual fund, a class one bond mutual fund, or a multilateral development bank; or  (ii) issued, assumed, guaranteed, or insured by a government-sponsored enterprise of the United States other than those eligible pursuant to subsection (A)(1) of this section, or a state, if the instruments are general obligations of the state;  (b) An insurer may not acquire an instrument of any one fund, enterprise, entity, or state pursuant to this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer in any one fund, enterprise, entity, or state pursuant to this subsection exceeds ten percent of its admitted assets.  (4) Subject to the limitations of Section 38-12-220, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if as a result of and after giving effect to the investment, the aggregate amount of preferred stocks then held by the insurer pursuant to this subsection:  (a) does not exceed twenty percent of its admitted assets; and  (b) that are not sinking fund stocks or rated P1 or P2 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO does not exceed ten percent of its admitted assets.  (5) Subject to the limitations of Section 38-12-220, in addition to those investments eligible pursuant to items (1), (2), (3), and (4) of this subsection, an insurer may acquire rated credit instruments that are not foreign investments.  (B) An insurer may not acquire special rated credit instruments pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of special rated credit instruments then held by the insurer exceeds five percent of its admitted assets. The director may identify, by regulation, certain special rated credit instruments that are exempt from the provisions of this subsection.  (C) Obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and other mortgage-backed or mortgage-related securities as defined in Section 106 of Title I of SMMEA (15 U.S.C. Section 77r-1) may be invested in to the same extent as permitted pursuant to subsection (A)(1), whether or not they are rated credit instruments authorized in that subsection.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer may acquire investments in investment pools that invest only in:  (1) obligations that are rated 1 or 2 by the SVO or have an equivalent of a SVO 1 or 2 rating, or in the absence of a 1 or 2 rating or equivalent rating the issuer has outstanding obligations with a SVO 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO and have a remaining maturity of:  (a) three hundred ninety-seven days or less or a put which entitles the holder to receive the principal amount of the obligation that may be exercised through maturity at specified intervals not exceeding three hundred ninety-seven days; or  (b) three years or less and a floating interest rate that resets no less frequently than quarterly on the basis of a current short-term index, such as federal funds, prime rate, Treasury bills, London InterBank Offered Rate (LIBOR) or commercial paper, and is subject to no maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes;  (2) government money market mutual funds or class one money market mutual funds; or  (3) securities lending, repurchase transactions, and reverse repurchase transactions that meet all the requirements of Section 38-12-280, except the quantitative limitations of Section 38-12-280(4); or  (4) invest only in investments that an insurer may acquire pursuant to this chapter, if the insurer's proportionate interest in the amount invested in these investments, when combined with the amounts of the investments made directly or indirectly through an investment affiliate or other insurer investment pool permitted pursuant to this item does not exceed the applicable limits of this chapter for those investments.  (B) For an investment in an investment pool to be qualified pursuant to this chapter, the investment pool may not:  (1) acquire securities issued, assumed, guaranteed, or insured by the insurer or an affiliate of the insurer;  (2) borrow or incur indebtedness for borrowed money, except for securities lending and reverse repurchase transactions that meet the requirements of Section 38-12-280, except the quantitative limitations of Section 38-12-280(4); or  (3) acquire an investment if as a result of and after giving effect to the transaction the aggregate value of securities then loaned or sold to, purchased from, or invested in any one business entity pursuant to this section exceed ten percent of the total assets of the investment pool.  (C) The limitations of Section 38-12-220(A) do not apply to an investment by an insurer in an investment pool, except that an insurer may not acquire an investment in an investment pool pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this section:  (a) in all investment pools that invest in investments permitted pursuant to subsection (A)(4) exceeds twenty-five percent of its admitted assets; or  (b) in all investment pools exceeds thirty-five percent of its admitted assets.  (D) For an investment in an investment pool to be qualified pursuant to this chapter, the manager of the investment pool must:  (1) be organized under the laws of the United States or one of its states or the District of Columbia and designated as the pool manager in a pooling agreement;  (2) be the insurer, an affiliated insurer, or a business entity affiliated with the insurer, a qualified bank, a business entity registered under the Investment Advisors Act of 1940 (15 U.S.C. Sections 80a-1 et seq., as amended), or any other similar applicable state statute, or, in the case of a reciprocal insurer or interinsurance exchange, its attorney-in-fact, or in the case of a United States branch of an alien insurer, its United States manager or an affiliate or subsidiary of its United States manager;  (3) compile and maintain, or cause to be compiled and maintained, detailed accounting records including:  (a) the cash receipts and disbursements reflecting the proportionate investment of each participant in the investment pool;  (b) a complete description of all underlying assets of the investment pool including amount, interest rate, maturity date, if any, and other appropriate designations; and  (c) other records that allow third parties to verify the investment of each participant in the investment pool on a daily basis; and  (4) maintain the assets of the investment pool in one or more accounts, in the name of or on behalf of the investment pool either under a custody agreement or a trust agreement with a qualified bank or at the principal office of the pool manager. The applicable agreement must:  (a) state and recognize the claims and rights of each participant;  (b) acknowledge that the underlying assets of the investment pool are held for the sole benefit of each participant in proportion to the aggregate amount of its investments in the investment pool; and  (c) contain an agreement that the underlying assets of the investment pool must not be commingled with the general assets of the qualified bank or any other person.  (E) The pooling agreement for each investment pool must be in writing and must provide that:  (1) an insurer and its affiliated insurers or, in the case of an investment pool investing only in investments permitted under subsections (A)(1), (2), and (3) the insurer and its subsidiaries, affiliates, or any pension or profit sharing plan of the insurer, its subsidiaries and affiliates, or, in the case of a United States branch of an alien insurer, affiliates or subsidiaries of its United States manager, shall hold one hundred percent of the interests in the investment pool at all times;  (2) the underlying assets of the investment pool must not be commingled with the general assets of the pool manager or any other person;  (3) in proportion to the aggregate amount of the interest of each participant in the investment pool:  (a) each participant owns an undivided interest in the underlying assets or the investment pool; and  (b) the underlying assets of the investment pool are held for the sole benefit of each participant;  (4) a participant, or his trustee, receiver, conservator, or other successor-in-interest, if a participant is insolvent, bankrupt, or in receivership, may withdraw all or a portion of its investment from the investment pool pursuant to the terms of the pooling agreement;  (5) withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds must occur within a reasonable and customary period after the date on which the withdrawal is made, not to exceed ten business days. Distributions pursuant to this item must be calculated in each case net of all fees and expenses of the investment pool then applicable. The pooling agreement must provide that the pool manager shall distribute to a participant, at the discretion of the pool manager:  (a) the then fair market value of the participant's pro rata share of each underlying asset of the investment pool, in cash;  (b) a pro rata share of each underlying asset, in kind; or  (c) a pro rata share in each underlying asset, in a combination of cash and in-kind distributions; and  (6) the pool manager shall make the records of the investment pool available for inspection by the director.  (F) Except for the formation of an investment pool, transactions between a domestic insurer and an affiliated insurer investment pool are not subject to the requirements of Section 38-21-250.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Subject to the limitations of Section 38-12-220, an insurer may acquire directly, or through an investment affiliate, equity interests in business entities organized pursuant to the laws of any domestic jurisdiction.  (B) An insurer may not acquire directly, or through an investment affiliate, an investment pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this section exceeds twenty percent of its admitted assets, or, except for mutual funds, the amount of equity interests then held by the insurer that are not listed on a qualified exchange exceeds five percent of its admitted assets. An accident and health insurer is not subject to this section but is subject to the same aggregate limitation on equity interests as a property and casualty insurer pursuant to Section 38-12-460 and also to the provisions of Section 38-12-420.  (C) An insurer may not acquire pursuant to this section investments that the insurer may acquire pursuant to Section 38-12-270 or pursuant to Chapter 21 of this title.  (D) An insurer may not short sell an equity interest unless the insurer covers the short sale by owning the equity interest or an unrestricted right to the equity interest exercisable within six months of the short sale.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) Subject to the limitations of Section 38-12-220, an insurer may acquire tangible personal property or equity interests in tangible personal property, located or used wholly or in part within a domestic jurisdiction, directly or indirectly through:  (a) limited partnership interests or general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (b) joint ventures;  (c) stock of an investment affiliate;  (d) membership interests in a limited liability company;  (e) trust certificates; or  (f) other similar instruments.  (2) Investments acquired pursuant to item (1) are eligible only if:  (a) the property is subject to a lease or other agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could then acquire pursuant to Section 38-12-230; and  (b) the lease or other agreement provides the insurer the right to receive rental, purchase, or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property, are adequate to return the cost of the insurer's investment in the property plus a return considered adequate by the insurer.  (B) The insurer shall compute the amount of each investment pursuant to this section on the basis of the out-of-pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price and expenses to the extent the borrowing is without recourse to the insurer.  (C) An insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of all investments then held by the insurer pursuant to this section exceeds:  (1) two percent of its admitted assets; or  (2) one-half of one percent of its admitted assets as to a single item of tangible personal property.  (D) For purposes of determining compliance with the limitations of Section 38-12-220, investments acquired by an insurer pursuant to this section must be aggregated with those acquired pursuant to Section 38-12-230, and each lessee of the property pursuant to a lease referred to in this section is considered the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in subsection (B).  (E) Nothing in this section applies to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates pursuant to a cost sharing arrangement or agreement permitted pursuant to Chapter 21 of this title.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) In connection with mortgage loans, an insurer:  (a) may acquire obligations secured by mortgages on real estate situated within a domestic jurisdiction, subject to the limitations of Section 38-12-220, either directly or indirectly through:  (i) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (ii) joint ventures;  (iii) stock of an investment affiliate;  (iv) membership interests in a limited liability company;  (v) trust certificates; or  (vi) other similar instruments; and  (b) may not acquire a mortgage loan secured by other than a first lien pursuant to this item unless the insurer is the holder of the first lien. The obligations held by the insurer and obligations with an equal lien priority, at the time of acquisition of the obligation, may not exceed:  (i) ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;  (ii) eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest over an amortization period of thirty years or less, and periodic payments are required at least annually. Each periodic payment must be sufficient to ensure that at all times the outstanding principal balance of the mortgage loan is not greater than the outstanding principal balance that would be outstanding pursuant to a mortgage loan with the same original principal balance and the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans that otherwise are permitted pursuant to this subsection may provide for a payment of the principal balance before the end of the period of amortization of the loan. For residential mortgage loans, the eighty percent limitation may be increased to ninety-seven percent if acceptable private mortgage insurance has been obtained; or  (iii) seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of subsubitems (i) or (ii).  (2) For purposes of item (1), the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.  (3)(a) Subject to the limitations of Section 38-12-220, an insurer may acquire obligations secured by a second mortgage on real estate situated within a domestic jurisdiction, in addition to that which is authorized under item (1), either directly or indirectly through:  (i) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (ii) joint ventures;  (iii) stock of an investment affiliate;  (iv) membership interests in a limited liability company;  (v) trust certificates; or  (vi) other similar instruments.  (b) The obligation held by the insurer must be the sole second lien priority obligation and, at the time of acquisition of the obligation, may not exceed seventy percent of the amount by which the fair market value of the real estate exceeds the amount outstanding under the first mortgage.  (4) A mortgage loan that is held by an insurer pursuant to Section 38-12-40(F) or acquired pursuant to this section and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC accounting manual continues to qualify as a mortgage loan pursuant to this chapter.  (5) Subject to the limitations of Section 38-12-220, a credit lease transaction that does not qualify for investment pursuant to Section 38-12-230 is exempt from the provisions of item (1) if:  (a) the loan amortizes over the initial fixed lease term in an amount at least sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;  (b) the lease payments cover or exceed the total debt service over the life of the loan;  (c) a tenant or its affiliated entity whose rated credit instruments have a SVO 1 or 2 designation or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO has a full faith and credit obligation to make the lease payments;  (d) the insurer holds or is the beneficial holder of a first lien mortgage on the real estate;  (e) the expenses of the real estate are passed through to the tenant, excluding exterior, structural, parking, and heating, ventilation, and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and  (f) there is a perfected assignment of the rents due pursuant to the lease to or for the benefit of the insurer.  (B)(1) Subject to the limitations of Section 38-12-220 an insurer may acquire, manage, and dispose of real estate situated in a domestic jurisdiction, either directly or indirectly, through:  (a) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (b) joint ventures;  (c) stock of an investment affiliate;  (d) membership interests in a limited liability company;  (e) trust certificates; or  (f) other similar instruments.  (2) The real estate must be income producing or intended for improvement or development for investment purposes under an existing program, in which case the real estate is considered to be income producing. The real estate may be subject to mortgages, liens, or other encumbrances, the amount of which must be deducted from the amount of the investment of the insurer in the real estate to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer for purposes of determining compliance with items (2) and (3) of subsection (D).  (C) An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the business operations, including home office, branch office, and field office operations of the insurer or its affiliates.  (1) Real estate acquired pursuant to this subsection may include excess space for rent to others, if the excess space when valued at its fair market value, would otherwise be a permitted investment pursuant to subsection (B) and is so qualified by the insurer.  (2) The real estate acquired pursuant to this subsection may be subject to one or more mortgages, liens, or other encumbrances, the amount of which must be deducted from the amount of the investment of the insurer in the real estate to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer for purposes of determining compliance with subsection (D)(4).  (3) For purposes of this subsection, business operations do not include that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds, other than employees of the insurer and its affiliates and their families. An insurer may acquire real estate used for these purposes pursuant to subsection (B).  (D) An insurer may not acquire:  (1) an investment pursuant to subsection (A) if as a result of and after giving effect to the investment the aggregate amount of all investments then held by the insurer pursuant to subsection (A) exceeds:  (a) one percent of its admitted assets in mortgage loans covering any one secured location;  (b) one quarter of one percent of its admitted assets in construction loans covering any one secured location; or  (c) two percent of its admitted assets in construction loans in the aggregate;  (2) an investment pursuant to subsection (B) if as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment the aggregate amount of investments then held by the insurer pursuant to subsection (B), plus the guarantees then outstanding, exceeds:  (a) one percent of its admitted assets in any one parcel or group of contiguous parcels of real estate, except that this limitation does not apply to that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds, such as hospitals, medical clinics, medical professional buildings, or other health facilities used for the purpose of providing health services; or  (b) fifteen percent of its admitted assets in the aggregate, but not more than five percent of its admitted assets as to properties that are to be improved or developed;  (3) an investment pursuant to subsection (A) or (B) if as a result of and after giving effect to the investment and any guarantees made by the insurer in connection with the investment the aggregate amount of all investments then held by the insurer pursuant to subsections (A) and (B), plus the guarantees then outstanding, exceeds forty-five percent of its admitted assets. An insurer may exceed this limitation by not more than thirty percent of its admitted assets if:  (a) this increased amount is invested only in residential mortgage loans;  (b) the insurer has no more than ten percent of its admitted assets invested in mortgage loans other than residential mortgage loans;  (c) the loan-to-value ratio of each residential mortgage loan does not exceed sixty percent at the time the mortgage loan is qualified pursuant to this increased authority and the fair market value is supported by an independent appraisal no more than two years old;  (d) a single mortgage loan qualified pursuant to this increased authority may not exceed one-half of one percent of its admitted assets;  (e) the insurer files with the director, and receives approval for, a plan that is designed to result in a portfolio of residential mortgage loans that is sufficiently geographically diversified; and  (f) the insurer agrees to file annually with the director records that demonstrate that its portfolio of residential mortgage loans is geographically diversified in accordance with the plan; or  (4) real estate pursuant to subsection (C) if as a result of and after giving effect to the acquisition the aggregate amount of real estate then held by the insurer pursuant to subsection (C) exceeds ten percent of its admitted assets. Additional amounts of real estate may be acquired, with the permission of the director, pursuant to subsection (C). The limitations of Section 38-12-220 do not apply to an insurer's acquisition of real estate pursuant to subsection (C).  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 An insurer may enter, directly or indirectly through an investment affiliate, into securities lending transactions that are conducted directly, through a custodian bank that is a qualified bank, or through an agent, and may enter into repurchase transactions, reverse repurchase transactions, and dollar roll transactions, subject to the following conditions:  (1) the insurer's board of directors must adopt a written plan that specifies guidelines and objectives regarding such transactions, including:  (a) a description of how cash may be invested or used for general corporate purposes of the insurer;  (b) operational procedures to manage interest rate risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business, and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and  (c) the extent to which the insurer may engage in these transactions;  (2) the insurer must enter into a written agreement for all transactions authorized in this subsection other than dollar roll transactions. The written agreement must:  (a) require each transaction to terminate no more than one year from its inception;  (b) be made with the counterparty, except that for securities lending transactions, the agreement may be:  (i) through a custodian bank that is a qualified bank; or  (ii) with an agent acting on behalf of the insurer if the:  (A) agent or the guarantor of the agent's obligations pursuant to the agreement is a qualified bank or a qualified business entity; and  (B) agreement with the agent requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this subsection and prohibits securities lending transactions pursuant to the agreement with the agent or its affiliates;  (3) cash received in a transaction pursuant to this subsection, if not used by the insurer for its general corporate purposes in accordance with the plan adopted by the board of directors pursuant to item (1), must be invested in accordance with this chapter and in a manner that recognizes the liquidity needs of the transaction. For so long as any transaction pursuant to this subsection remains outstanding, the insurer, its agent, or custodian, either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, or other securities depositories approved by the director, shall maintain:  (a) possession of acceptable collateral for the transaction in at least the amount required pursuant to the provisions of the SVO procedures manual;  (b) a perfected security interest in the acceptable collateral; or  (c) in the case of a foreign jurisdiction, title to or rights of a secured creditor to the acceptable collateral;  (4) the limitations of Sections 38-12-220 and 38-12-290 do not apply to the counterparty exposure created by transactions pursuant to this section. For purposes of calculations made to determine compliance with this item, the insurer's future obligation to resell securities in the case of a repurchase transaction, or to repurchase securities in the case of a reverse repurchase transaction, must not be counted. An insurer may not enter into a transaction pursuant to this subsection if as a result of and after giving effect to the transaction, the aggregate amount of:  (a) securities then loaned to, sold to, or purchased from any counterparty pursuant to this subsection exceeds five percent of its admitted assets. In calculating the amount sold to or purchased from a counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions pursuant to a written master agreement; or  (b) all securities then loaned to, sold to, or purchased from all counterparties pursuant to this subsection exceeds forty percent of its admitted assets;  (5) in a dollar roll transaction, the insurer must receive cash in an amount at least equal to the market value of the securities transferred by the insurer in the transaction as of the transaction date.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Subject to the limitations of Section 38-12-220, an insurer may acquire, directly or indirectly through an investment affiliate, foreign investments or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same types as those that an insurer is permitted to acquire pursuant to this chapter, other than the type permitted pursuant to Section 38-12-240, if as a result and after giving effect to the investment the aggregate amount of foreign investments then held and foreign investment practices then engaged in by the insurer pursuant to this subsection:  (1) does not exceed twenty percent of its admitted assets; and  (2) in a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or three percent of its admitted assets as to any other foreign jurisdiction.  (B) Subject to the limitations of Section 38-12-220, an insurer may acquire investments and engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired or foreign investment practices engaged in pursuant to subsection (A), or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency, if as a result of and after giving effect to the transaction the aggregate amount of investments then held by the insurer and investment practices then engaged in by the insurer pursuant to this subsection:  (1) denominated in foreign currencies does not exceed ten percent of its admitted assets; and  (2) denominated in foreign currency of a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or three percent of its admitted assets as to any other foreign jurisdiction.  An investment is not considered denominated in a foreign currency if the acquiring insurer enters into one or more hedging transactions permitted pursuant to Section 38-12-300 to hedge the foreign currency exchange rate risk associated with the investment or investment practice.  (C) In addition to investments permitted by subsections (A) and (B), an insurer that is authorized to do business in a foreign jurisdiction and that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments and engage in foreign investment practices respecting that foreign jurisdiction, and may acquire investments and engage in investment practices denominated in the currency of that jurisdiction, subject to the limitations of Section 38-12-220. Investments made pursuant to this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises are not subject to the limitations of Section 38-12-220 if those investments carry an SVO rating of 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. The aggregate amount of investments acquired and investment practices engaged in by the insurer pursuant to this subsection may not exceed the greater of:  (1) the amount the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction; or  (2) one hundred fifteen percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.  (D) In addition to investments permitted pursuant to subsections (A), (B), and (C), an insurer that is not authorized to do business in a foreign jurisdiction but that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments and engage in foreign investment practices respecting that foreign jurisdiction, and may acquire investments and engage in investment practices denominated in the currency of that jurisdiction, subject to the limitations of Section 38-12-220. Investments made and investment practices engaged in pursuant to this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises are not subject to the limitations of Section 38-12-220 if those investments and investment practices carry a SVO rating of 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. The aggregate amount of investments acquired and investment practices then engaged in by the insurer pursuant to this subsection may not exceed one hundred five percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.  (E) Investments acquired and investment practices engaged in by an insurer pursuant to this section must be aggregated with investments of the same types made pursuant to all other sections of this chapter, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in other sections. Investments in and investment practices engaged in with respect to obligations of foreign governments, their political subdivisions, and government sponsored enterprises of these persons, except for those exempted pursuant to subsections (C) and (D), are subject to the limitations of Section 38-12-220.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 As used in this chapter:  (1) "Acceptable collateral" means:  (a) cash, cash equivalents, letters of credit, or direct obligations of, or securities that are fully guaranteed as to principal and interest by the government of the United States, an agency of the United States, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation in respect to securities lending transactions, repurchase transactions, and reverse repurchase transactions and for the purpose of calculating counterparty exposure amount; and  (b) sovereign debt rated 1 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO as to foreign securities lending transactions.  (2) "Acceptable private mortgage insurance" means insurance written by a private insurer protecting a mortgage lender against loss occasioned by a mortgage loan default and issued by a licensed mortgage insurance company, with a SVO 1 designation or a rating issued by a nationally recognized statistical rating organization equivalent to a SVO 1 designation, that covers losses to an eighty percent loan-to-value ratio.  (3) "Accident and health insurance" means protection that provides payment of benefits for covered sickness or accidental injury, excluding credit insurance, disability insurance, accidental death and dismemberment insurance, and long-term care insurance.  (4) "Accident and health insurer" means a licensed life or health insurer or health service corporation whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively.  (5) "Admitted asset" means an asset that is identified specifically as an admitted asset within the NAIC accounting manual or is not identified specifically as a nonadmitted asset within the NAIC accounting manual, excluding assets of separate accounts because the investments and investment practices of separate accounts are not subject to the provisions of this chapter.  (6) "Affiliate" means, in respect to a person, another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person.  (7) "Asset-backed security" means a security or other instrument, excluding a mutual fund, evidencing an interest in or the right to receive payments from or payable from distributions on an asset, a pool of assets, or specifically divisible cash flows that are transferred legally to a trust or another special purpose bankruptcy-remote business entity, on the following conditions:  (a) the trust or other business entity is established for the sole purpose of acquiring specific types of assets or rights to cash flows, issuing securities and other instruments representing an interest in or right to receive cash flows from those assets or rights, and engaging in activities required to service the assets or rights and any credit enhancement or support features held by the trust or other business entity; and  (b) the sole assets of the trust or other business entity are interest bearing obligations or other contractual obligations representing the right to receive payment from the cash flows from the assets or rights. The existence of credit enhancements such as letters of credit or guarantees or support features such as swap agreements do not cause a security or other instrument to be ineligible as an asset-backed security.  (8) "Business entity" means a sole proprietorship, corporation, limited liability company, association, general or limited partnership, joint stock company, joint venture, mutual fund, bank, trust, real estate investment trust, joint tenancy, or other similar form of business organization, whether organized for-profit or not-for-profit.  (9) "Cap" means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interests exceeds a predetermined number, sometimes called the "strike rate" or "strike price".  (10) "Capital and surplus" means the sum of the capital and surplus of the insurer required to be shown on the statutory financial statement of the insurer filed most recently with the director.  (11) "Cash equivalents" means highly rated, highly liquid, and readily marketable obligations that are convertible readily into known amounts of cash without penalty and have a remaining term to maturity of one year or less. For purposes of this definition, "highly rated" means an investment rated "P-1" by Moody's Investors Service, Incorporated, or "A-1" by the Standard and Poor's Division of The McGraw Hill Companies, Incorporated, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.  (12) "Class one bond mutual fund" means a mutual fund that is qualified for investment using the bond class one reserve factor of the SVO procedures manual.  (13) "Class one money market mutual fund" means a money market mutual fund that is qualified for investment using the bond class one reserve factor of the SVO procedures manual.  (14) "Collar" means an agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor.  (15) "Commercial mortgage loan" means a mortgage loan other than a residential mortgage loan.  (16) "Construction loan" means a loan of less than three years in term, made for financing the cost of construction of a building or other improvement to real estate, that is secured by the real estate.  (17) "Control" means the possession, directly or indirectly, by a person of the power to direct or cause the direction of the management and policies of another person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if a person, directly or indirectly, owns, controls, or holds with the power to vote or holds proxies representing ten percent or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist in fact. The director may determine, after furnishing all interested persons notice and an opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.  (18) "Counterparty" means the business entity that is the other party to an investment practices transaction with the insurer or, as to a securities lending transaction, the custodian bank or agent, if any, acting on behalf of the insurer.  (19)(a) "Counterparty exposure" or "counterparty exposure amount" means for an over-the-counter derivative instrument:  (i) not entered into pursuant to a written master agreement that provides for netting of payments owed by the respective parties:  (A) the market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer; or  (B) zero if the liquidation of the derivative instrument would not result in a final cash payment to the insurer; and  (ii) entered into pursuant to a written master agreement that provides for netting of payments owed by the respective parties, if the domiciliary jurisdiction of the counterparty is either within the United States or within a foreign jurisdiction listed as eligible for netting in the SVO procedures manual, the greater of:  (A) zero; and  (B) the net sum payable to the insurer in connection with all derivative instruments subject to the written master agreement upon their liquidation if the counterparty defaults pursuant to the master agreement, assuming there are no conditions precedent to the obligations of the counterparty to make the payment and no setoff of amounts payable pursuant to any other instrument or agreement.  (b) For purposes of this definition, "market value" or the "net sum payable" is determined at the end of the most recent quarter of the fiscal year of the insurer and must be reduced by the market value of acceptable collateral held by the insurer or a custodian or escrow agent on behalf of the insurer.  (20) "Credit tenant loan" has the same meaning as it has in the SVO procedures manual.  (21)(a) "Derivative instrument" means an agreement, option, or instrument, or a series or combination of any of them:  (i) to make or take delivery of, assume, or relinquish a specified amount of one or more underlying interests, or to make a cash settlement instead of it; or  (ii) that has a price, performance, value, or cash flow based primarily upon the actual or expected price, yield, level, performance, value, or cash flow of one or more underlying interests.  (b) For purposes of this definition "derivative instrument" includes options, warrants not attached to another financial instrument purchased by the insurer, caps, floors, collars, swaps, forwards, futures, and other substantially similar agreements, options, or instruments, or a series or combination of any of them. "Derivative instrument" does not include collateralized mortgage obligations, other asset-backed securities, principal-protected structured securities, floating rate securities, or instruments in which an insurer otherwise is authorized to invest or that an insurer otherwise is authorized to receive pursuant to this chapter, other than pursuant to Section 38-12-300 or 38-12-510, and any debt obligations of the insurer.  (22) "Derivative transaction" means a transaction involving the use of one or more derivative instruments. For purposes of Sections 38-12-300 and 38-12-510, dollar roll transactions, repurchase transactions, reverse repurchase transactions, and securities lending transactions are not considered derivative transactions.  (23) "Direct" or "directly," when used in connection with an obligation, means that the designated obligor is primarily liable on the instrument representing the obligation.  (24) "Dollar roll transaction" means two simultaneous transactions with different settlement dates no more than ninety-six days apart, so that in the transaction with the earlier settlement date an insurer sells to a counterparty, and in the other transaction the insurer is obligated to purchase from the same counterparty, substantially similar securities of the following types:  (a) asset-backed securities issued, assumed, or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, or their respective successors; and  (b) other asset-backed securities referred to in Section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. Section 77r-1), as amended.  (25) "Domestic jurisdiction" means the United States, Canada, or a state, province, or political subdivision of them.  (26) "Equity interest" means any of the following that are not rated credit instruments:  (a) common stock;  (b) preferred stock;  (c) trust certificate;  (d) equity investment in an investment company other than a money market mutual fund or a class one bond mutual fund;  (e) investment in a common trust fund of a bank regulated by a federal or state agency;  (f) an ownership interest in minerals, oil, or gas, the rights to which have been separated from the underlying fee interest in the real estate where the minerals, oil, or gas are located;  (g) instruments which are mandatorily, or at the option of the issuer, convertible to equity;  (h) limited partnership interests and those general partnership interests authorized by Section 38-12-60(A)(4);  (i) member interests in limited liability companies;  (j) warrants or other rights to acquire equity interests that are created by the owner or issuer of the equity to be acquired; or  (k) instruments that would be rated credit instruments except for the provisions of item (73)(b).  (27) "Equivalent securities" means securities that are identical to the:  (a) loaned securities in all features including the amount of the loaned securities, except as to certificate number if held in physical form, but if a different security is exchanged for a loaned security by recapitalization, merger, consolidation, or other corporate action, the different security is considered to be the loaned security, in a securities lending transaction;  (b) purchased securities in all features including the amount of the purchased securities, except as to the certificate number if held in physical form, in a repurchase transaction; or  (c) sold securities in all features including the amount of the sold securities, except as to the certificate number if held in physical form, in a reverse repurchase transaction.  (28) "Floor" means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance, or value of one or more underlying interests.  (29) "Foreign currency" means a currency other than that of a domestic jurisdiction.  (30)(a) "Foreign investment" or "foreign investment practice" means an investment or investment practice in a foreign jurisdiction, an investment practice with a person domiciled in a foreign jurisdiction, or an investment in a person, real estate, or asset domiciled in a foreign jurisdiction. An investment or investment practice is not considered to be foreign if the issuing person, counterparty, qualified primary credit source, or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless the:  (i) counterparty or the issuing person is a shell business entity; and  (ii) investment or investment practice is not assumed, accepted, guaranteed, or insured or otherwise backed by a domestic jurisdiction or a person domiciled in a domestic jurisdiction that is not a shell business entity.  (b) For purposes of this definition:  (i) "Shell business entity" means a business entity having no economic substance, except as a vehicle for owning interests in assets issued, owned, or previously owned by a person domiciled in a foreign jurisdiction.  (ii) "Qualified guarantor" means a guarantor against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action may be brought in a domestic jurisdiction.  (iii) "Qualified primary credit source" means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action may be brought in a domestic jurisdiction.  (31) "Foreign jurisdiction" means a jurisdiction other than a domestic jurisdiction.  (32) "Forward" means an agreement, other than a future, to make or take delivery in the future of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests. "Forward" does not mean spot transactions effected within customary settlement periods, when issued purchases, or other similar cash market transactions.  (33) "Future" means an agreement traded on a qualified exchange or qualified foreign exchange to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests. "Future" includes an insurance future.  (34) "Futures exchange" means a qualified foreign exchange or an exchange, contract market, or board of trade on which trading in futures is conducted that the Commodities Futures Trading Commission or its successor has authorized for futures trading in the United States.  (35) "Government money market mutual fund" means a money market mutual fund that at all times:  (a) invests only in obligations issued, guaranteed, or insured by the federal government of the United States or collateralized repurchase agreements composed of these obligations; and  (b) qualifies for investment without a reserve pursuant to the SVO procedures manual.  (36) "Government sponsored enterprise" means a:  (a) governmental agency; or  (b) corporation, limited liability company, association, partnership, joint stock company, joint venture, trust, or other entity or instrumentality organized pursuant to the laws of a domestic jurisdiction to accomplish a public policy or other governmental purpose.  (37) "Guaranteed or insured", when used in connection with an obligation acquired pursuant to this chapter, means that the guarantor or insurer has agreed to:  (a) perform or insure the obligation of the obligor or purchase the obligation; or  (b) be obligated unconditionally until the obligation is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, stockholders' equity, or sufficient liquidity to enable the obligor to pay the obligation in full.  (38) "Hedging transaction" means a derivative transaction that is entered into and maintained to reduce the:  (a) risk of a change in the value, yield, price, cash flow, or quantity of assets or liabilities, or a portfolio of assets or liabilities or both, that an insurer has acquired or incurred or anticipates acquiring or incurring; or  (b) currency exchange rate risk related to assets or liabilities, or a portfolio of assets or liabilities, or both of them, that an insurer has acquired or incurred or anticipates acquiring or incurring.  (39) "High grade investment" means a rated credit instrument rated 1, 2, P1, P2, PFS1, or PFS2 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.  (40) "Income", as to a security, means interest, accrual of discount, dividends, or other distributions, such as rights, tax credits, assessment credits, warrants, and distributions in kind.  (41) "Income generation transaction" means a derivative transaction that is intended to generate income or enhance return. A derivative transaction that is entered into as a hedging transaction or a replication transaction is not an income generation transaction.  (42) "Initial margin" means the amount of cash, securities, or other consideration initially required to be deposited to establish a futures position.  (43) "Insurance future" means a future relating to an index or pool that is based on insurance-related items.  (44) "Insurance futures option" means an option on an insurance future.  (45) "Investment company" means an investment company as defined in Section 3(a) of the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, and a person described in Section 3(c) of that act.  (46) "Investment company series" means an investment portfolio of an investment company organized as a series company to which portfolio assets of the investment company have been allocated specifically.  (47) "Investment practices" means transactions of the types described in Sections 38-12-280, 38-12-300, 38-12-490, and 38-12-510.  (48) "Investment affiliate" means a subsidiary of an insurer or a direct or indirect subsidiary of the insurer's parent company (parent) that is engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer, if the affiliate agrees to limit its investment in any asset so that its investments will not cause the amount of the total investment of the insurer to exceed the investment limitations or avoid other provisions of this chapter applicable to the insurer. As used in this item, the total investment of the insurer includes:  (a) direct investment by the insurer in an asset;  (b) the insurer's proportionate share of an investment in an asset by an investment affiliate of the insurer, calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership interest in the subsidiary; and  (c) the insurer's proportionate share of an investment in an asset by an investment affiliate of the insurer other than a subsidiary of the insurer, calculated by multiplying the amount of the investment affiliate's investment by a fraction, the numerator of which must be the aggregate amount of investments held and investment practices engaged in by the investment affiliate on behalf of the insurer and the denominator of which must be the aggregate amount of investments held and investment practices engaged in by the investment affiliate on behalf of all insurance company subsidiaries of the parent.  (49) "Investment strategy" means the techniques and methods used by an insurer to meet its investment objectives, such as active bond portfolio management, passive bond portfolio management, interest rate anticipation, growth investing, and value investing.  (50) "Letter of credit" means a clean, irrevocable, and unconditional letter of credit issued or confirmed by, and payable and presentable at, a financial institution on the list of financial institutions meeting the standards for issuing letters of credit pursuant to the SVO procedures manual. A letter of credit must have an expiration date beyond the term of the subject transaction to constitute acceptable collateral for the purposes of Sections 38-12-280 and 38-12-490.  (51) "Limited liability company" means a business organization, excluding partnerships and ordinary business corporations, organized or operating pursuant to the laws of the United States or a state of the United States that limits the personal liability of investors to the equity investment of the investor in the business entity.  (52) "Lower grade investment" means a rated credit instrument rated 4, 5, 6, P4, P5, P6, PFS4, PFS5, or PFS6 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.  (53) "Market value" means:  (a) the amount of cash or a letter of credit; or  (b) the price of a security or derivative instrument on any date obtained from a generally recognized source or the most recent quotation from the source or, to the extent no generally recognized source exists, the price for the security or derivative instrument as determined pursuant to the terms of the instrument or in good faith by the parties to a transaction, plus accrued but unpaid income on the security or derivative instrument to the extent that income is not included in the price as of the date that market value is determined.  (54) "Medium grade investment" means a rated credit instrument that at the time of acquisition by the insurer is rated 3, P3 or PSF3 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.  (55) "Money market mutual fund" means a mutual fund that meets the conditions of 17 Code of Federal Regulations Par. 270.2a-7, pursuant to the Investment Company Act of 1940 (15 U.S.C. Sections 80a-1 et seq.) as amended.  (56) "Mortgage loan" means an obligation secured by a mortgage, deed of trust, trust deed, or other consensual lien on real estate.  (57) "Multilateral development bank" means an international development organization of which the United States is a member.  (58) "Mutual fund" means an investment company or, in the case of an investment company that is organized as a series company, an investment company series, that, in either case, is registered with the United States Securities and Exchange Commission pursuant to the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), as amended.  (59) "NAIC" means the National Association of Insurance Commissioners.  (60) "NAIC accounting manual" means the NAIC "Accounting Practices and Procedures Manual", as amended, or any successor publication.  (61) "Obligation" means a bond, note, debenture, trust certificate including an equipment trust certificate, production payment, negotiable bank certificate of deposit, bankers' acceptance, asset-backed security, credit tenant loan, loan secured by financing a net lease or net leases, and other evidence of indebtedness for the payment of money, or participations, certificates, or other evidences of an interest in any of them, whether constituting a general obligation of the issuer or payable only out of certain revenues or certain funds pledged or otherwise dedicated for payment.  (62) "Option" means an agreement giving the buyer the right to buy or receive, (a "call option"), sell or deliver, (a "put option"), enter into, extend, or terminate or effect a cash settlement based on the actual or expected price, spread, level, performance, or value of one or more underlying interests, including without limitation, an option to purchase or sell a swap at a given price and time or at a series of prices and times. "Option" includes an insurance futures option.  (63) "Over-the-counter derivative instrument" means a derivative instrument entered into with a counterparty other than through a qualified exchange or futures exchange or cleared through a qualified clearinghouse.  (64) "Person" means an individual, a business entity, a multilateral development bank, or a government or quasi-governmental body, such as a political subdivision or a government sponsored enterprise.  (65) "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, the unearned premium reserve, reserves required by applicable mortality or morbidity tables, and 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 the insurer, or the Asset Valuation Reserve.  (66) "Potential exposure" means:  (a) the amount of initial margin required for a futures position; or  (b) as to swaps, collars, and forwards, one-half of one percent times the notional amount times the square root of the remaining years to maturity.  (67) "Preferred stock" means preferred, preference, or guaranteed stock of a business entity authorized to issue the stock, that has a preference in liquidation over the common stock of the business entity.  (68) "Qualified bank" means:  (a) a national bank, state-chartered bank, or trust company that is at all times capitalized adequately as determined by standards adopted by United States banking regulators and that is either regulated by state banking laws or is a member of the Federal Reserve System; or  (b) a bank or trust company incorporated or organized pursuant to the laws of a country other than the United States that is regulated as a bank or trust company by that country's government or an agency of it and that is at all times capitalized adequately as determined by the standards adopted by international banking authorities.  (69) "Qualified business entity" means a business entity that is:  (a) an issuer of obligations or preferred stock that are rated 1 or 2 by the SVO or an issuer of obligations, preferred stock, or derivative instruments that are rated the equivalent of 1 or 2 by the SVO or by a nationally recognized statistical rating organization recognized by the SVO;  (b) a primary dealer in United States government securities, that is recognized by the Federal Reserve Bank of New York; or  (c) with respect to investment practices under Section 38-12-280, an affiliate of an entity that is a qualified business entity pursuant to this item, provided that the affiliate's obligation pursuant to its agreement with the insurer are guaranteed by a qualified business entity that meets the requirements of subitem (a) or (b).  (70) "Qualified clearinghouse" means a clearinghouse subject to the rules of a qualified exchange or a qualified foreign exchange that provides clearing services, including acting as a counterparty to each of the parties to a transaction so that the parties no longer have credit risk to each other.  (71) "Qualified exchange" means:  (a) a securities exchange registered as a national securities exchange, or a securities market regulated pursuant to the Securities Exchange Act of 1934 (15 U.S.C. Section 78 et seq.);  (b) a board of trade or commodities exchange designated as a contract market by the Commodity Futures Trading Commission (CFTC) or a successor of it;  (c) Private Offerings, Resales and Trading through Automated Linkages (PORTAL);  (d) a designated offshore securities market as defined in Securities Exchange Commission Regulation S, 17 C.F.R. Part 230, as amended; or  (e) a qualified foreign exchange.  (72) "Qualified foreign exchange" means a foreign exchange, board of trade, or contract market located outside the United States, its territories, or possessions:  (a) that has received regulatory comparability relief pursuant to CFTC Rule 30.10, as provided in Appendix C to Part 30 of the CFTC's Regulations, 17 C.F.R. Part 30;  (b) that is, or its members are, subject to the jurisdiction of a foreign futures authority that has received regulatory comparability relief under CFTC Rule 30.10, as provided in Appendix C to Part 30 of the CFTC's Regulations, 17 C.F.R. Part 30, as to futures transactions in the jurisdiction where the exchange, board of trade, or contract market is located; or  (c) upon which foreign stock index futures contracts are listed that are the subject of no-action relief issued by the CFTC's Office of General Counsel, provided that an exchange, board of trade, or contract market that qualifies as a "qualified foreign exchange" pursuant to this item only is a "qualified foreign exchange" only as to foreign stock index futures contracts that are the subject of no-action relief.  (73)(a) "Rated credit instrument" means an obligation or other instrument that gives its holder a contractual right to receive cash or another rated credit instrument from another entity, and that:  (i) is rated by the SVO or a nationally recognized statistical rating organization recognized by the SVO;  (ii) is issued, guaranteed, or insured by an entity that is rated by, or another obligation or other instrument of such entity is rated by, the SVO or a nationally recognized statistical rating organization recognized by the SVO, in the case of an obligation or other instrument with a maturity of three hundred ninety-seven days or less;  (iii) has been issued, assumed, accepted, guaranteed, or insured by a qualified bank, in the case of an obligation or other instrument with a maturity of ninety days or less;  (iv) is a share of a class one bond mutual fund; or  (v) is a share of a money market mutual fund.  (b) "Rated credit instrument" does not mean:  (i) an obligation or other instrument that is mandatorily, or at the option of the issuer, convertible to an equity interest; or  (ii) a security that has a par value and whose terms provide that the issuer's net obligation to repay all or part of the par value is determined by reference to the performance of an equity, a commodity, a foreign currency, or an index of equities, commodities, foreign currencies, or combinations of them.  (74)(a) "Real estate" means:  (i) real property;  (ii) interests in real property, such as leaseholds, minerals, and oil and gas that have not been separated from the underlying fee interest;  (iii) improvements and fixtures located on or in real property; and  (iv) the seller's equity in a contract providing for a deed of real estate.  (b) As to a mortgage on a leasehold estate, "real estate" includes the leasehold estate only if it has an unexpired term, including renewal options exercisable at the option of the lessee, extending beyond the scheduled maturity date of the obligation that is secured by a mortgage on the leasehold estate by a period equal to at least twenty percent of the original term of the obligation or ten years, whichever is greater.  (75) "Replication transaction" means a derivative transaction or combination of derivative transactions that is entered into separately or in conjunction with other permissible investments held or acquired by the insurer in order to replicate the investment characteristics of otherwise permissible investments or operate as a substitute for cash market transactions, or for both reasons. A derivative transaction that is entered into by the insurer as a hedging transaction or an income generation transaction authorized pursuant to this chapter is not a replication transaction.  (76) "Repurchase transaction" means a transaction in which an insurer purchases securities from a counterparty that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, within a specified period of time or upon demand.  (77) "Required liabilities" means total liabilities required to be reported on the statutory financial statement of the insurer most recently required to be filed with the director.  (78) "Residential mortgage loan" means a loan primarily secured by a mortgage on real estate improved with a one-to-four family residence.  (79) "Reverse repurchase transaction" means a transaction in which an insurer sells securities to a qualified bank or a qualified business entity or a bank or a business entity whose obligations with respect to the transaction are guaranteed by a qualified bank or a qualified business entity and the insurer is obligated to repurchase the sold securities or equivalent securities from the bank or business entity at a specified price, within a specified period of time or upon demand.  (80) "Secured location" means the contiguous real estate owned by one person.  (81) "Securities lending transaction" means a transaction in which securities are loaned by an insurer or its custodian bank or agent to a qualified bank or a qualified business entity or a bank or a business entity whose obligations with respect to the transaction are guaranteed by a qualified bank or a qualified business entity that is obligated to return the loaned securities or equivalent securities to the insurer, its custodian bank, or agent, within a specified period of time or upon demand.  (82) "Series company" means an investment company that is organized as a series company, as defined in Rule 18f-2(a) adopted under the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq., as amended).  (83) "Sinking fund stock" means preferred stock that:  (a) is subject to a mandatory sinking fund or similar arrangement that provides for the redemption, or open market purchase, of the entire issue over a period not longer than forty years from the date of acquisition; and  (b) provides for mandatory sinking fund installments, or open market purchases, commencing not more than ten and one-half years from the date of issue, with the sinking fund installments providing for the purchase or redemption, on a cumulative basis commencing ten years from the date of issue, of at least two and one-half percent each year of the original number of shares of that issue of preferred stock.  (84)(A) "Special rated credit instrument" means a rated credit instrument that is:  (1) an instrument that is structured so that, if it is held until retired by or on behalf of the issuer, its rate of return based on its purchase cost and any cash flow stream possible under the structure of the transaction may become negative due to reasons other than the credit risk associated with the issuer of the instrument. However, a rated credit instrument is not a special rated credit instrument pursuant to this item if it is:  (a) a share in a class one bond mutual fund;  (b) an instrument, other than an asset-backed security, with payments of par value fixed as to amount and timing, or callable but payable only at par or greater, and interest or dividend cash flows that are based on either a fixed or variable rate determined by reference to a specified rate or index;  (c) an instrument, other than an asset-backed security, that has a par value and is purchased at a price not greater than one hundred ten percent of par;  (d) an instrument, including an asset-backed security, whose rate of return would become negative only as a result of a prepayment due to casualty, condemnation, or economic obsolescence of collateral or change of law;  (e) an asset-backed security that relies on collateral that meets the requirements of subsubsubitem (b), the par value of which collateral may:  (i) not be paid sooner than one-half of the remaining term to maturity from the date of acquisition;  (ii) be paid before maturity only at a premium sufficient to provide a yield to maturity for the investment, considering the amount prepaid and reinvestment rates at the time of early repayment, at least equal to the yield to maturity of the initial investment; or  (iii) be paid before maturity at a premium at least equal to the yield of a Treasury issue of comparable remaining life; or  (f) an asset-backed security that relies on cash flows from assets that are not prepayable at any time at par, but is not governed otherwise by subsubsubitem (e), if the asset-backed security has a par value reflecting principal payments to be received if held until retired by or on behalf of the issuer and is purchased at a price not greater than one hundred five percent of the par amount;  (2) An asset-backed security that:  (a) relies on cash flows from assets that are prepayable at par at any time;  (b) does not make payments of par that are fixed as to amount and timing; and  (c) has a negative rate of return at the time of acquisition if a prepayment threshold assumption is used with the prepayment threshold assumption defined as:  (i) two times the prepayment expectation reported by a recognized, publicly available source as being the median of expectations contributed by broker dealers or other entities, except insurers, engaged in the business of selling or evaluating those securities or assets. The prepayment expectation used in this calculation must be, at the insurer's election, the prepayment expectation for pass-through securities of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or for other assets of the same type as the assets that underlie the asset-backed security, in either case with a gross weighted average coupon comparable to the gross weighted average coupon of the assets that underlie the asset-backed security; or  (ii) another prepayment threshold assumption specified by the director by regulation promulgated pursuant to Section 12-38-90.  (B) For purposes of subsubitem (2), if the asset-backed security is purchased in combination with one or more other asset-backed securities that are supported by identical underlying collateral, the insurer may calculate the rate of return for these specific combined asset-backed securities in combination. The insurer shall maintain documentation demonstrating that the securities were acquired and continue to be held in combination.  (85) "State" means a state, territory, or possession of the United States of America, the District of Columbia, or the Commonwealth of Puerto Rico.  (86) "Substantially similar securities" means securities that meet all criteria for substantially similar securities specified in the NAIC accounting manual, and in an amount that constitutes good delivery form as determined by "The Bond Market Association".  (87) "SVO" means the Securities Valuation Office of the NAIC or any successor office established by the NAIC.  (88) "SVO procedures manual" means the "Purposes and Procedures of the Securities Valuation Office", as amended, or any successor publication.  (89) "Swap" means an agreement to exchange or to net payments at one or more times based on the actual or expected price, yield, level, performance or value of one or more underlying interests.  (90) "Underlying interest" means the assets, liabilities, or other interests, or a combination of them, underlying a derivative instrument such as any one or more securities, currencies, rates, indices, commodities, or derivative instruments that are or relate to investments or investment practices that an insurer is permitted to acquire or engage in pursuant to this chapter.  (91) "Unrestricted surplus" means the amount by which total admitted assets exceed one hundred twenty-five percent of the insurer's required liabilities.  (92) "Warrant" means an instrument that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer may engage, directly or indirectly through an investment affiliate, in derivative transactions including, without limitation, hedging transactions, income generation transactions, and replication transactions pursuant to this section, subject to the following conditions:  (1) before entering into any derivative transaction, the board of directors of the insurer must determine that the insurer directly or through an investment management subsidiary or affiliate has adequate professional personnel, technical expertise, and systems to implement investment practices involving derivative transactions and approve a derivative instruments use plan that:  (a) describes investment objectives and risk constraints, such as counterparty exposure amounts;  (b) defines permissible transactions including identification of the risks that may be hedged, the assets or liabilities that may be replicated, and permissible types of income generation transactions; and  (c) requires compliance with internal control procedures;  (2) the insurer must establish written internal control procedures that provide for:  (a) a quarterly report to the board of directors, reviewing:  (i) all derivative transactions entered into, outstanding, or closed out;  (ii) the results and effectiveness of the insurer's implementation of its derivative instruments use plan; and  (iii) the credit risk exposure to each counterparty for over-the-counter derivative transactions based upon the counterparty exposure amount;  (b) a system for determining whether hedging, income generation, or replication strategies used by the insurer have been effective;  (c) a system of regular, but at least monthly, reports to management that include:  (i) a description of all derivative transactions entered into, outstanding, or closed out during the period since the last report;  (ii) the purpose of each outstanding derivative transaction;  (iii) a performance review of the derivative instruments program; and  (iv) the counterparty exposure amounts for over-the-counter derivative transactions;  (d) written authorizations identifying the responsibilities and limitations of authority of persons authorized to effect and maintain derivative transactions; and  (e) documentation for each transaction including:  (i) the purpose of the transaction;  (ii) the assets or liabilities to which the transaction relates;  (iii) the specific derivative instrument used in the transaction;  (iv) for over-the-counter derivative instrument transactions, the name of the counterparty and the counterparty exposure amount; and  (v) for exchange-traded derivative instruments, the name of the exchange and the name of the firm that handled the transaction;  (3) whenever the derivative transactions entered into pursuant to this section are not in compliance with this section or, if continued, may create a hazardous financial condition of the insurer that affects its policyholders, creditors, or the general public, the director, after notice and an opportunity for a hearing, may order the insurer to take action that is reasonably necessary to rectify the noncompliance or hazardous financial condition or to prevent the impending hazardous financial condition from occurring;  (4) with respect to hedging transactions, an insurer shall demonstrate to the director upon request the intended hedging characteristics and effectiveness of the hedging transaction or combination of hedging transactions through cash-flow testing, duration analysis, or other appropriate analysis. An insurer may enter into hedging transactions pursuant to this item if as a result of and after giving effect to each hedging transaction, the aggregate:  (a) statutory financial statement value of all outstanding caps, floors, warrants not attached to another financial instrument, and options other than collars purchased by the insurer pursuant to this item does not exceed seven and one-half percent of its admitted assets;  (b) statutory financial statement value of all outstanding warrants, caps, floors, and options other than collars written by the insurer pursuant to this item does not exceed three percent of its admitted assets; and  (c) potential exposure of all outstanding collars, swaps, forwards, and futures entered into or acquired by the insurer pursuant to this item does not exceed six and one-half percent of its admitted assets;  (5) an insurer may enter into an income generation transaction if:  (a) as a result of and after giving effect to the transaction, the aggregate statutory financial statement value of admitted assets that are then subject to call or that generate the cash flows for payments required to be made by the insurer under caps and floors sold by the insurer and then outstanding pursuant to this item, plus the statutory financial statement value of admitted assets underlying derivative instruments then subject to call sold by the insurer and outstanding pursuant to this item, plus the purchase price of assets subject to puts then outstanding pursuant to this item, does not exceed ten percent of its admitted assets; and  (b) the transaction is one of the following types and meets the other requirements specified in this subitem that are applicable to that type of transaction:  (i) sales of call options on assets, if the insurer holds or has a currently exercisable right to acquire the underlying assets during the entire period that the option is outstanding;  (ii) sales of put options on assets, if the insurer holds sufficient cash, cash equivalents, or interests in a short-term investment pool to purchase the underlying assets upon exercise during the entire period that the option is outstanding, and has the ability to hold the underlying assets in its portfolio. If the total market value of all put options sold by the insurer exceeds two percent of the insurer's admitted assets, the insurer shall set aside, pursuant to a custodial or escrow agreement, cash or cash equivalents having a market value equal to the amount of its put option obligations in excess of two percent of the insurer's admitted assets during the entire period the option is outstanding;  (iii) sales of call options on derivative instruments if the insurer holds, or has a currently exercisable right to acquire, assets generating the cash flow to make any payments for which the insurer is liable pursuant to the underlying derivative instruments during the entire period that the call options are outstanding and has the ability to enter into the underlying derivative transactions for its portfolio; or  (iv) sales of caps and floors, if the insurer holds, or has a currently exercisable right to acquire, assets generating the cash flow to make any payments for which the insurer is liable pursuant to the caps and floors during the entire period that the caps and floors are outstanding;  (6) an insurer may enter into a replication transaction that complies with the requirements of the SVO procedures manual concerning replication transactions, provided that:  (a) the insurer would be authorized to invest its funds pursuant to this chapter in the asset being replicated;  (b) the asset being replicated is subject to all provisions and limitations, including quantitative limitations, on the making of the investment as specified in this chapter, as if the replication transaction constituted a direct investment by the insurer in the asset being replicated; and  (c) as a result of and after giving effect to the replication transaction, the aggregate statement value of all assets being replicated does not exceed ten percent of its admitted assets;  (7) an insurer may purchase or sell one or more derivative instruments to offset in whole or in part a derivative instrument previously purchased or sold, without regard to the quantitative limitations of this section, provided that the transaction may be recognized as an offsetting transaction in accordance with generally accepted accounting principles;  (8) each derivative instrument must be:  (a) traded on a qualified exchange;  (b) entered into with or guaranteed by a qualified bank or a qualified business entity;  (c) issued or written by or entered into with the issuer of the underlying interest on which the derivative instrument is based; or  (d) in the case of futures, traded through a broker that is registered as a futures commission merchant under the federal Commodity Exchange Act or that has received exemptive relief from registration pursuant to rule 30.10 promulgated under that act; and  (9) an insurer must include all counterparty exposure amounts in determining compliance with the limitations of Section 38-12-220;  (B) Pursuant to regulations promulgated pursuant to Section 38-12-90, the director may approve additional transactions involving the use of derivative instruments in excess of the limits of items (4), (5), and (6) or for other risk management purposes.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 A life insurer may lend to a policyholder on the security of the cash surrender value of the policyholder's policy a sum not exceeding the legal reserve the insurer is required to maintain on the policy.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) Pursuant to this subsection, an insurer may acquire an investment of any kind, or engage in a securities lending transaction, repurchase transaction, reverse repurchase transaction, or dollar roll transaction, that is not prohibited specifically by this chapter, without regard to the categories, conditions, standards, or other limitations of Sections 38-12-220 through 38-12-290 if, as a result of and after giving effect to the transaction, the aggregate amount of investments then held and securities lending transactions, repurchase transactions, reverse repurchase transactions, and dollar roll transactions then engaged in pursuant to this subsection does not exceed the lesser of:  (a) ten percent of its admitted assets; or  (b) seventy-five percent of its capital and surplus;  (2) An insurer may not acquire an investment or engage in an investment practice pursuant to this subsection if as a result of and after giving effect to the transaction the aggregate amount of all investments then held by the insurer under this subsection in any one person exceeds three percent of its admitted assets.  (B) In addition to the investments acquired pursuant to subsection (A) of this section, an insurer may acquire an investment of any kind, or engage in investment practices described in Section 38-12-280, that are not prohibited by this chapter without regard to any limitations of Sections 38-12-220 through 38-12-290 if:  (1) the director grants prior approval;  (2) the insurer demonstrates that its investments are made in a prudent manner and that the additional amounts will be invested in a prudent manner; and  (3) as a result of and after giving effect to the transaction, the aggregate amount of investments then held by the insurer pursuant to this subsection does not exceed the greater of:  (a) twenty-five percent of its capital and surplus; or  (b) one hundred percent of capital and surplus less ten percent of its admitted assets.  (C) This section does not permit an insurer to acquire an investment or engage in an investment practice that is prohibited pursuant to Section 38-12-60, or that is a derivative transaction.  (D) If any investment made or transaction entered into pursuant to any other section of this chapter exceeds the limits specified in that section, the excess portion of the investment or transaction is considered to be an investment or transaction pursuant to this section. Any loan, investment, or transaction originally made pursuant to this section which subsequently, if it were then being made, would qualify as an authorized investment or transaction pursuant to another subsection of this section or another section of this chapter shall thereafter be considered an authorized investment or transaction pursuant to that subsection or section.  (E) This chapter does not prohibit the acquisition by an insurer of additional obligations, securities, or other assets if received as a dividend or as a distribution of assets, nor does this chapter apply to securities, obligations, or other assets accepted incident to the workout, adjustment, restructuring, or similar realization of an investment or transaction when the insurer's board of directors or a committee appointed by the board of directors considers it to be in the best interests of the insurer, if the investment or transaction had been authorized previously. This chapter does not apply to assets acquired pursuant to a lawful agreement of bulk reinsurance if the assets constituted legal and authorized investments for the ceding company. No obligation, security, or other asset acquired as authorized by this subsection is required to be qualified pursuant to any other subsection of this section or other section of this chapter, provided that all assets acquired pursuant to this subsection are subject to the applicable accounting and valuation requirements contained in this chapter.  (F) Subject to the provisions of subsection (G), if a domestic life insurance company, pursuant to a merger or consolidation, acquires an investment or transaction that was an authorized investment or transaction of the company that was merged or consolidated with the domestic life insurance company but that does not qualify as an authorized investment or transaction pursuant to this chapter at the time the merger or consolidation occurs, regardless of whether or not the investment or transaction would be authorized pursuant to any of subsections (A) through (C), then the investment or transaction is considered an authorized investment or transaction pursuant to this subsection and is not required to be applied toward the limitations contained in any of subsections (A) through (C), for a period of five years after the date on which the merger or consolidation occurs. After that period it shall no longer be an authorized investment or transaction pursuant to this subsection, unless within the five-year period:  (1) the investment or transaction qualifies as an authorized investment or transaction pursuant to another subsection of this section or another section of this chapter including without limitation, subsections (A), (B), and (C), if the domestic life insurance company so elects; or  (2) the director authorizes the investment or transaction in the plan of merger or consolidation approved by the director; or  (3) upon request of the insurer, the director authorizes an extension of the five-year time period; or  (4) the director approves the investment or transaction pursuant to this subsection.  The aggregate amount of a domestic life insurance company's investments and transactions pursuant to this subsection, excluding investments and transactions authorized pursuant to items (1), (2), and (4), may not exceed twenty-five percent of the domestic life insurance company's capital and surplus after giving effect to such merger or consolidation.  (G) If a domestic life insurance company, pursuant to a merger or consolidation, acquires a mortgage loan, or a participation in a mortgage loan, that would have been authorized pursuant to Section 38-12-270, and pursuant to subsection (D) of this section as to the portion that exceeded seventy-five percent of the value of the property, at the time the company that was merged or consolidated with such domestic life insurance company invested in the mortgage loan or the participation in the mortgage loan, then such mortgage loan or participation in the mortgage loan is authorized pursuant to Section 38-12-270, and pursuant to subsection (D) of this section as to the portion that exceeded seventy-five percent of the value of the property.  (H) The director has full discretion in selecting a method for calculating values of investments and transactions that an insurer acquires through a merger or consolidation, provided that the method is consistent with any applicable provisions of this chapter and any applicable valuation method that the NAIC is currently using at the time with respect to investments and transactions. If there is a conflict between a provision of this chapter and the NAIC valuation method being used, the provision of this chapter controls.  (I) The qualification or disqualification of an investment pursuant to one subsection of this section or one section of this chapter does not prevent its qualification in whole or in part pursuant to another provision of this chapter. An investment authorized by more than one provision of this chapter is authorized pursuant to the provision the insurer elects. An investment or transaction qualified pursuant to any provision of this chapter at the time it was acquired or entered into by the insurer shall continue to be qualified pursuant to that provision. An investment or transaction may be transferred in whole or in part at the election of the insurer to the authority of any provision of this chapter pursuant to which it then qualifies, whether or not it originally qualified pursuant to that provision.  (J) Notwithstanding the provisions of the other subsections of this section or the other sections of this chapter, an insurer may acquire an investment in or enter into a transaction with a business entity in which the insurer already holds one or more investments or with which the insurer has entered into one or more transactions if the investment is acquired or the transaction is entered into in order to protect an investment or transaction previously made in or with the business entity, provided that the aggregate amount of investments and transactions so acquired and entered into may not exceed five percent of the insurer's capital and surplus.  (K)(1) The percentage authorizations and limitations contained in any provision of this chapter apply only at the time of the original acquisition of an investment or at the time a transaction is entered into and are not applicable to the insurer or the investment or transaction after that time except as provided in subsection (I). Once any investment or transaction is qualified pursuant to any provision of this chapter, it shall remain qualified notwithstanding any refinancing, restructuring, or modification of the investment or transaction, provided that the insurer does not engage in the refinancing, restructuring, or modification of the investment or transaction for the purposes of circumventing the requirements or limitations of this chapter.  (2) The director has full discretion to value investments and transactions that an insurer holds at the time of an examination of the insurer using a method of calculating the values that the director selects in his discretion, provided that the method must be consistent with any applicable provisions of this chapter and any applicable valuation method that the NAIC is using at the time with respect to investments and transactions. If there is a conflict between such a provision of this chapter and an applicable NAIC valuation method that the NAIC is using at the time, the provision of this chapter controls.  (3) Notwithstanding items (1) and (2), if the director determines that the continued operation of an insurer may be hazardous to its policyholders, its creditors, or the general public, the director may issue an order consistent with applicable statutes requiring the insurer to limit or withdraw from certain investments or transactions or discontinue certain practices as to investments or transactions to the extent the director considers necessary.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Insurers may acquire, hold, or invest in investments or engage in investment practices as provided in this chapter or as is not prohibited otherwise by this title including, without limitation, investments permitted pursuant to Chapter 21 of this title. Investments not conforming to this chapter are not admitted assets unless they are acquired pursuant to other authority of this title.  (B) Subject to subsection (C), an insurer may not acquire or hold an investment as an admitted asset unless at the time of acquisition it is:  (1) eligible for the payment or accrual of interest or discount, whether in cash, securities, or other forms of income, or eligible to receive dividends or other distributions, or is otherwise income producing; or  (2) acquired pursuant to Sections 38-12-270(C), 38-12-280, 38-12-300, 38-12-320, 38-12-480(C), 38-12-490, 38-12-510, 38-12-520, or other sections of this title.  (C) An insurer may acquire or hold as admitted assets investments that otherwise do not qualify as provided in this chapter if the insurer has not acquired them for the purpose of circumventing a limitation contained in this chapter, if the insurer complies with the provisions of Sections 38-12-60 and 38-12-80 as to the investments and the insurer acquires the investments:  (1) as payment on account of existing indebtedness or in connection with the refinancing, restructuring, or workout of existing indebtedness, if taken to protect the insurer's interest in that investment;  (2) as realization on collateral for an obligation;  (3) in connection with an otherwise qualified investment or investment practice, as interest on or a dividend or other distribution related to the investment or investment practice, or in connection with the refinancing of the investment, in each case for no additional or only nominal consideration;  (4) under a lawful and bona fide agreement of recapitalization or voluntary or involuntary reorganization in connection with an investment held by the insurer; or  (5) under a bulk reinsurance, merger, or consolidation transaction approved by the director if the assets constitute admissible investments for the ceding, merged, or consolidated companies.  (D) An investment or portion of an investment acquired by an insurer pursuant to subsection (C) becomes a nonadmitted asset three years, or five years in the case of mortgage loans and real estate, from the date of its acquisition, unless within that period the investment has become a qualified investment pursuant to a provision of this chapter other than subsection (C). An investment acquired pursuant to an agreement of bulk reinsurance, merger, or consolidation may be qualified for a longer period if provided in the plan for reinsurance, merger, or consolidation as approved by the director. The director may extend the period for admissibility for an additional reasonable period, upon application by the insurer and a showing that the nonadmission of an asset held pursuant to subsection (C) would injure materially the interests of the insurer.  (E) Except as otherwise provided in subsections (F) and (H), an investment qualifies pursuant to this chapter if, on the date the insurer committed to acquire the investment or on the date of its acquisition, it would have qualified pursuant to this chapter. For purposes of determining its compliance with the limitations contained in this chapter, an insurer shall give appropriate recognition to any commitments to acquire investments.  (F)(1) An investment held as an admitted asset by an insurer on the effective date of this chapter which qualified as an admitted asset immediately before the effective date of this chapter remains qualified as an admitted asset pursuant to this chapter.  (2) Each specific transaction constituting an investment practice of the type described in this chapter that lawfully was entered into by an insurer and was in effect on the effective date of this chapter continues to be permitted by this chapter until its expiration or termination under its terms.  (G) Unless otherwise specified, an investment limitation computed on the basis of the admitted assets or capital and surplus of an insurer must relate to the amount required to be shown on the statutory balance sheet most recently required to be filed by the insurer with the director. For purposes of determining its compliance with any limitation pursuant to this chapter based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on the statutory balance sheet for:  (1) the return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;  (2) cash received in a dollar roll transaction; and  (3) the amount reported as borrowed money in the most recently filed financial statement to the extent not included in items (1) and (2).  (H) An investment qualified, in whole or in part, for acquisition or holding as an admitted asset may be qualified or requalified at the time of acquisition or a later date, in whole or in part, pursuant to another section, if the relevant conditions contained in the other section are satisfied at the time of qualification or requalification.  (I) An insurer shall maintain documentation demonstrating that the insurer acquired investments and engaged in investment practices in accordance with this chapter, and specifying the section of this chapter pursuant to which the insurer acquired the investments or engaged in the investment practices.  (J) An insurer may not enter into an agreement to purchase securities in advance of their issuance for resale to the public as part of a distribution of the securities by the issuer or otherwise guarantee the distribution, except that an insurer may acquire privately placed securities with registration rights.  (K) Notwithstanding the provisions of this chapter, the director, for good cause, may require an insurer to nonadmit, limit, dispose of, withdraw from, or discontinue an investment or investment practice. The authority of the director under this subsection is in addition to any other authority of the director.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 This article applies to the investments and investment practices of property and casualty, financial guaranty, and mortgage guaranty insurers, subject to the provisions of Section 38-12-20.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Each property and casualty, financial guaranty, mortgage guaranty, or accident and health insurer shall have and maintain investments and engage in investment practices of the classes described in Sections 38-12-430 through 38-12-520 subject to the limitations contained in those sections to the extent of policyholder obligations and minimum capital, or guaranty fund, and surplus less an amount equal to thirty percent of its surplus as regards policyholders. In no event may a property and casualty, financial guaranty, mortgage guaranty, or accident and health insurer have and maintain investments and investment practices of the types described in the immediately preceding sentence in an amount less than seventy percent of policyholder obligations and one hundred percent of the minimum required capital, or guaranty fund, and surplus. A property and casualty, financial guaranty, mortgage guaranty, or accident and health insurer may invest its assets in excess of those required pursuant to the two immediately preceding sentences at the discretion of the insurer without regard to any of the limitations contained in Sections 38-12-430 through 38-12-520.  (B) If a property and casualty, financial guaranty, mortgage guaranty, or accident and health insurer's assets and reserves do not comply with subsection (A), the insurer shall notify the director immediately of the amount by which the reserve requirements exceed the annual statement value of the qualifying assets and explain the reason for the deficiency. Within thirty days of the date of the notice, the insurer shall propose a plan of action to remedy the deficiency.  (C)(1) If the director determines that a property and casualty, financial guaranty, mortgage guaranty, or accident and health insurer is not in compliance with subsection (A), the director shall require the insurer to eliminate the noncompliance within a specified time from the date the notice of the requirement is delivered to the insurer.  (2) If an insurer fails to comply with the director's requirement described in item (1), the insurer is considered to be in hazardous financial condition, the director shall take action as authorized by law as to an insurer in hazardous financial condition.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) Except as otherwise provided in this chapter, an insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to this chapter if as a result of and after giving effect to the investment the insurer holds more than five percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person.  (2) This five percent limitation does not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.  (3) Asset-backed securities are not subject to the limitations of item (1), however, except as permitted by item (4), an insurer may not acquire an asset-backed security if as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity then held by the insurer exceeds five percent of its admitted assets.  (4) An investment by an insurer in mortgage related securities, as defined by the Secondary Mortgage Market Enhancement Act of 1984 (United States Public Law 98-440) [12 U.S.C. Sections 24, 1451, 1454 et seq.], that is backed by a single pool of mortgages and made pursuant to the authority of that act, may not exceed five percent of its admitted assets.  (B) An insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to Section 38-12-440, 38-12-470, or 38-12-500 or counterparty exposure pursuant to Section 38-12-510(4) if as a result of and after giving effect to the investment the aggregate amount of:  (1) medium and lower grade investments then held by the insurer exceeds twenty percent of its admitted assets;  (2) lower grade investments then held by the insurer exceeds ten percent of its admitted assets;  (3) investments rated five or six by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO then held by the insurer exceeds five percent of its admitted assets;  (4) investments rated six by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO then held by the insurer exceeds one percent of its admitted assets;  (5) medium and lower grade investments then held by the insurer that receive as cash income less than the equivalent yield for Treasury issues with a comparative average life, exceeds one percent of its admitted assets;  (6) medium and lower grade investments issued, assumed, guaranteed, accepted, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer exceeds one percent of its admitted assets; or  (7) lower grade investments issued, assumed, guaranteed, accepted, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer exceeds one-half of one percent of its admitted assets.  (C) An insurer that attains or exceeds the limit of any one rating category in subsection (B) may acquire investments in other rating categories subject to the specific and multi-category limits applicable to those investments.  (D)(1) An insurer may not, directly or indirectly through an investment affiliate, acquire a Canadian investment or engage in a Canadian investment practice authorized by this chapter if as a result of and after giving effect to the investment the aggregate amount of these investments then held by the insurer exceeds forty percent of its admitted assets, or if the aggregate amount of Canadian investments not acquired pursuant to Section 38-12-440(A)(2) then held by the insurer exceeds twenty-five percent of its admitted assets.  (2) An insurer that is authorized to do business in Canada or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, is subject to the limitations of item (1) as increased by the greater of:  (a) the amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or  (b) one hundred twenty-five percent of the amount of its reserves and other obligations pursuant to contracts on lives or risks resident or located in Canada.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer may acquire rated credit instruments, subject to the limitation of subsection (B) of this section, as follows:  (1) Subject to the limitation of Section 38-12-430(B),but not subject to the limitations of Section 38-12-430(A)(1), (2), and (3), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by the United States or a government-sponsored enterprise of the United States, if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States.  (2) Subject to the limitations of Section 38-12-430(B), but not subject to the limitations of Section 38-12-430(A), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by Canada or a government- sponsored enterprise of Canada, if the instruments of the government- sponsored enterprise are assumed, guaranteed, or insured by Canada or are backed or supported otherwise by the full faith and credit of Canada. An insurer may not acquire an instrument pursuant to this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this subsection exceeds forty percent of its admitted assets.  (3)(a) Subject to the limitations of Section 38-12-430(B), but not subject to the limitations of Section 38-12-430(A), an insurer may acquire rated credit instruments, excluding asset-backed securities:  (i) issued by a government money market mutual fund, a class one money market mutual fund, a class one bond mutual fund, or a multilateral development bank; or  (ii) issued, assumed, guaranteed, or insured by a government-sponsored enterprise of the United States other than those eligible pursuant to subsection (A) of this section, or a state, if the instruments are general obligations of the state;  (b) An insurer may not acquire an instrument of any one fund, enterprise, entity, or state pursuant to this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer in any one fund, enterprise, entity, or state pursuant to this subsection exceeds ten percent of its admitted assets.  (4) Subject to the limitations of Section 38-12-430, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if as a result of and after giving effect to the investment, the aggregate amount of preferred stocks then held by the insurer pursuant to this subsection:  (a) does not exceed twenty percent of its admitted assets; and  (b) that are not sinking fund stocks or rated P1 or P2 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO does not exceed ten percent of its admitted assets.  (5) Subject to the limitations of Section 38-12-430, in addition to those investments eligible pursuant to items (1), (2), (3), and (4) of this subsection, an insurer may acquire rated credit instruments that are not foreign investments.  (B) An insurer may not acquire special rated credit instruments pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of special rated credit instruments then held by the insurer exceeds five percent of its admitted assets. The director may identify, by regulation, certain special rated credit instruments that are exempt from the provisions of this subsection.  (C) Obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and other mortgage-backed or mortgage related securities as defined in Section 106 of Title I of SMMEA (15 U.S.C. Section 77r-1) may be invested in to the same extent as permitted pursuant to subsection (A)(1), whether or not they are rated credit instruments authorized in that subsection.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer may acquire investments in investment pools that invest only in:  (1) obligations that are rated 1 or 2 by the SVO or have an equivalent of an SVO 1 or 2 rating, or in the absence of a 1 or 2 rating or equivalent rating the issuer has outstanding obligations with a SVO 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO and have a remaining maturity of:  (a) three hundred ninety-seven days or less or a put which entitles the holder to receive the principal amount of the obligation that may be exercised through maturity at specified intervals not exceeding three hundred ninety-seven days; or  (b) three years or less and a floating interest rate that resets no less frequently than quarterly on the basis of a current short-term index, such as federal funds, prime rate, Treasury bills, London InterBank Offered Rate (LIBOR) or commercial paper, and is subject to no maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes;  (2) government money market mutual funds or class one money market mutual funds;  (3) securities lending, repurchase transactions, and reverse repurchase transactions that meet all the requirements of Section 38-12-490, except the quantitative limitations of Section 38-12-490(4); or  (4) invest only in investments that an insurer may acquire pursuant to this chapter, if the insurer's proportionate interest in the amount invested in these investments, when combined with the amounts of the investments made directly or indirectly through an investment affiliate or other insurer investment pool permitted pursuant to this item does not exceed the applicable limits of this chapter for those investments.  (B) For an investment in an investment pool to be qualified pursuant to this chapter, the investment pool may not:  (1) acquire securities issued, assumed, guaranteed, or insured by the insurer or an affiliate of the insurer;  (2) borrow or incur indebtedness for borrowed money, except for securities lending and reverse repurchase transactions that meet the requirements of Section 38-12-490, except the quantitative limitations of Section 38-12-490(4); or  (3) acquire an investment if as a result of and after giving effect to the transaction the aggregate value of securities then loaned or sold to, purchased from, or invested in any one business entity pursuant to this section exceed ten percent of the total assets of the investment pool.  (C) The limitations of Section 38-12-430(A) do not apply to an investment by an insurer in an investment pool, except that an insurer may not acquire an investment in an investment pool pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this section:  (a) in all investment pools that invest in investments permitted pursuant to subsection (A)(4) exceeds twenty-five percent of its admitted assets; or  (b) in all investment pools exceeds forty percent of its admitted assets.  (D) For an investment in an investment pool to be qualified pursuant to this chapter, the manager of the investment pool must:  (1) be organized under the laws of the United States or one of its states or the District of Columbia and designated as the pool manager in a pooling agreement;  (2) be the insurer, an affiliated insurer, or a business entity affiliated with the insurer, a qualified bank, a business entity registered under the Investment Advisors Act of 1940 (15 U.S.C. Sections 80a-1 et seq., as amended), or any other similar applicable state statute, or, in the case of a reciprocal insurer or interinsurance exchange, its attorney-in-fact, or in the case of a United States branch of an alien insurer, its United States manager or an affiliate or subsidiary of its United States manager;  (3) compile and maintain, or cause to be compiled and maintained, detailed accounting records including:  (a) the cash receipts and disbursements reflecting the proportionate investment of each participant in the investment pool;  (b) a complete description of all underlying assets of the investment pool including amount, interest rate, maturity date, if any, and other appropriate designations; and  (c) other records that allow third parties to verify the investment of each participant in the investment pool on a daily basis; and  (4) maintain the assets of the investment pool in one or more accounts, in the name of or on behalf of the investment pool either under a custody agreement or a trust agreement with a qualified bank or at the principal office of the pool manager. The applicable agreement must:  (a) state and recognize the claims and rights of each participant;  (b) acknowledge that the underlying assets of the investment pool are held for the sole benefit of each participant in proportion to the aggregate amount of its investments in the investment pool; and  (c) contain an agreement that the underlying assets of the investment pool must not be commingled with the general assets of the qualified bank or any other person.  (E) The pooling agreement for each investment pool must be in writing and must provide that:  (1) an insurer and its affiliated insurers or, in the case of an investment pool investing only in investments permitted under subsections (A)(1), (2) and (3) the insurer and its subsidiaries, affiliates, or any pension or profit sharing plan of the insurer, its subsidiaries and affiliates, or, in the case of a United States branch of an alien insurer, affiliates or subsidiaries of its United States manager, shall hold one hundred percent of the interests in the investment pool at all times;  (2) the underlying assets of the investment pool must not be commingled with the general assets of the pool manager or any other person;  (3) in proportion to the aggregate amount of the interest of each participant in the investment pool:  (a) each participant owns an undivided interest in the underlying assets or the investment pool; and  (b) the underlying assets of the investment pool are held for the sole benefit of each participant;  (4) a participant, or his trustee, receiver, conservator, or other successor-in-interest, if a participant is insolvent, bankrupt, or in receivership, may withdraw all or a portion of its investment from the investment pool pursuant to the terms of the pooling agreement;  (5) withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds must occur within a reasonable and customary period after the date on which the withdrawal is made, not to exceed ten business days. Distributions pursuant to this item must be calculated in each case net of all fees and expenses of the investment pool then applicable. The pooling agreement must provide that the pool manager shall distribute to a participant, at the discretion of the pool manager:  (a) the then fair market value of the participant's pro rata share of each underlying asset of the investment pool, in cash;  (b) a pro rata share of each underlying asset, in kind; or  (c) a pro rata share in each underlying asset, in a combination of cash and in-kind distributions; and  (6) the pool manager shall make the records of the investment pool available for inspection by the director.  (F) Except for the formation of an investment pool, transactions between a domestic insurer and an affiliated insurer investment pool are not subject to the requirements of Section 38-21-250.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Subject to the limitations of Section 38-12-430, an insurer may acquire directly, or through an investment affiliate, equity interests in business entities organized pursuant to the laws of any domestic jurisdiction.  (B) An insurer may not acquire directly, or through an investment affiliate, an investment pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this section exceeds the greater of twenty-five percent of its admitted assets, or one hundred percent of its surplus as regards policyholders.  (C) An insurer may not acquire pursuant to this section investments that the insurer may acquire pursuant to Section 38-12-480 or pursuant to Chapter 21 of this title.  (D) An insurer may not short sell an equity interest unless the insurer covers the short sale by owning the equity interest or an unrestricted right to the equity interest exercisable within six months of the short sale.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) Subject to the limitations of Section 38-12-430, an insurer may acquire tangible personal property or equity interests in tangible personal property, located or used wholly or in part within a domestic jurisdiction, directly or indirectly through:  (a) limited partnership interests or general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (b) joint ventures;  (c) stock of an investment affiliate;  (d) membership interests in a limited liability company;  (e) trust certificates; or  (f) other similar instruments.  (2) Investments acquired pursuant to item (1) are eligible only if:  (a) the property is subject to a lease or other agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could then acquire pursuant to Section 38-12-440; and  (b) the lease or other agreement provides the insurer the right to receive rental, purchase, or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property, are adequate to return the cost of the insurer's investment in the property plus a return considered adequate by the insurer.  (B) The insurer shall compute the amount of each investment pursuant to this section on the basis of the out-of-pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price and expenses to the extent the borrowing is without recourse to the insurer.  (C) An insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of all investments then held by the insurer pursuant to this section exceeds:  (1) two percent of its admitted assets; or  (2) one-half of one percent of its admitted assets as to a single item of tangible personal property.  (D) For purposes of determining compliance with the limitations of Section 38-12-430, investments acquired by an insurer pursuant to this section must be aggregated with those acquired pursuant to Section 38-12-440, and each lessee of the property pursuant to a lease referred to in this section is considered the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in subsection (B).  (E) Nothing in this section applies to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates pursuant to a cost sharing arrangement or agreement permitted pursuant to Chapter 21 of this title.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) In connection with mortgage loans, an insurer:  (a) may acquire obligations secured by mortgages on real estate situated within a domestic jurisdiction, subject to the limitations of Section 38-12-430, either directly or indirectly through:  (i) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (ii) joint ventures;  (iii) stock of an investment affiliate;  (iv) membership interests in a limited liability company;  (v) trust certificates; or  (vi) other similar instruments; and  (b) may not acquire a mortgage loan secured by other than a first lien pursuant to this item unless the insurer is the holder of the first lien. The obligations held by the insurer and obligations with an equal lien priority, at the time of acquisition of the obligation, may not exceed:  (i) ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;  (ii) eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest over an amortization period of thirty years or less, and periodic payments are required at least annually. Each periodic payment must be sufficient to ensure that at all times the outstanding principal balance of the mortgage loan is not greater than the outstanding principal balance that would be outstanding pursuant to a mortgage loan with the same original principal balance and the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans that otherwise are permitted pursuant to this subsection may provide for a payment of the principal balance before the end of the period of amortization of the loan. For residential mortgage loans, the eighty percent limitation may be increased to ninety-seven percent if acceptable private mortgage insurance has been obtained; or  (iii) seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of subsubitem (i) or (ii).  (2) For purposes of item (1), the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.  (3)(a) Subject to the limitations of Section 38-12-430, an insurer may acquire obligations secured by a second mortgage on real estate situated within a domestic jurisdiction, in addition to that which is authorized under item (1), either directly or indirectly through:  (i) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (ii) joint ventures;  (iii) stock of an investment affiliate;  (iv) membership interests in a limited liability company;  (v) trust certificates; or  (vi) other similar instruments.  (b) The obligation held by the insurer must be the sole second lien priority obligation and, at the time of acquisition of the obligation, may not exceed seventy percent of the amount by which the fair market value of the real estate exceeds the amount outstanding under the first mortgage.  (4) A mortgage loan that is held by an insurer pursuant to Section 38-12-40(F) or acquired pursuant to this section and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC accounting manual continues to qualify as a mortgage loan pursuant to this chapter.  (5) Subject to the limitations of Section 38-12-430, a credit lease transaction that does not qualify for investment pursuant to Section 38-12-440 is exempt from the provisions of item (1) if:  (a) the loan amortizes over the initial fixed lease term in an amount at least sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;  (b) the lease payments cover or exceed the total debt service over the life of the loan;  (c) a tenant or its affiliated entity whose rated credit instruments have a SVO 1 or 2 designation or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO has a full faith and credit obligation to make the lease payments;  (d) the insurer holds or is the beneficial holder of a first lien mortgage on the real estate;  (e) the expenses of the real estate are passed through to the tenant, excluding exterior, structural, parking, and heating, ventilation, and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and  (f) there is a perfected assignment of the rents due pursuant to the lease to or for the benefit of the insurer.  (B)(1) Subject to the limitations of Section 38-12-430, an insurer may acquire, manage, and dispose of real estate situated in a domestic jurisdiction, either directly or indirectly, through:  (a) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);  (b) joint ventures;  (c) stock of an investment affiliate;  (d) membership interests in a limited liability company;  (e) trust certificates; or  (f) other similar instruments.  (2) The real estate must be income producing or intended for improvement or development for investment purposes under an existing program, in which case the real estate is considered to be income producing. The real estate may be subject to mortgages, liens, or other encumbrances, the amount of which must be deducted from the amount of the investment of the insurer in the real estate to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer for purposes of determining compliance with items (2) and (3) of subsection (D).  (C) An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the business operations, including home office, branch office, and field office operations of the insurer or its affiliates.  (1) Real estate acquired pursuant to this subsection may include excess space for rent to others, if the excess space when valued at its fair market value, would otherwise be a permitted investment pursuant to subsection (B) and is so qualified by the insurer.  (2) The real estate acquired pursuant to this subsection may be subject to one or more mortgages, liens, or other encumbrances, the amount of which must be deducted from the amount of the investment of the insurer in the real estate to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer for purposes of determining compliance with subsection (D)(4).  (3) For purposes of this subsection, business operations do not include that portion of real estate used for the direct provision of health care services for its insureds, other than employees of the insurer and its affiliates and their families, by an insurer whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively. An insurer may acquire real estate used for these purposes pursuant to subsection (B).  (D) An insurer may not acquire:  (1) an investment pursuant to subsection (A) if as a result of and after giving effect to the investment the aggregate amount of all investments then held by the insurer pursuant to subsection (A) exceeds:  (a) one percent of its admitted assets in mortgage loans covering any one secured location;  (b) one quarter of one percent of its admitted assets in construction loans covering any one secured location; or  (c) one percent of its admitted assets in construction loans in the aggregate;  (2) an investment pursuant to subsection (B) if as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment the aggregate amount of investments then held by the insurer pursuant to subsection (B), plus the guarantees then outstanding, exceeds:  (a) one percent of its admitted assets in any one parcel or group of contiguous parcels of real estate, except that this limitation does not apply to that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively, such as hospitals, medical clinics, medical professional buildings, or other health facilities used for the purpose of providing health services; or  (b) the lesser of ten percent of its admitted assets or forty percent of its surplus as regards policyholders in the aggregate, except that for an insurer whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively, this limitation must be increased to fifteen percent of its admitted assets in the aggregate;  (3) an investment pursuant to subsection (A) or (B) if as a result of and after giving effect to the investment and any guarantees made by the insurer in connection with the investment the aggregate amount of all investments then held by the insurer pursuant to subsections (A) and (B), plus the guarantees then outstanding, exceeds twenty-five percent of its admitted assets; or  (4) real estate pursuant to subsection (C) if as a result of and after giving effect to the acquisition the aggregate amount of real estate then held by the insurer pursuant to subsection (C) exceeds ten percent of its admitted assets. Additional amounts of real estate may be acquired, with the permission of the director, pursuant to subsection (C). The limitations of Section 38-12-430 do not apply to an insurer's acquisition of real estate pursuant to subsection (C).  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 An insurer may enter, directly or indirectly through an investment affiliate, into securities lending transactions that are conducted directly, through a custodian bank that is a qualified bank, or through an agent, and may enter into repurchase transactions, reverse repurchase transactions, and dollar roll transactions, subject to the following conditions:  (1) the insurer's board of directors must adopt a written plan that specifies guidelines and objectives regarding such transactions, including:  (a) a description of how cash may be invested or used for general corporate purposes of the insurer;  (b) operational procedures to manage interest rate risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business, and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and  (c) the extent to which the insurer may engage in these transactions;  (2) the insurer must enter into a written agreement for all transactions authorized in this subsection other than dollar roll transactions. The written agreement must:  (a) require each transaction to terminate no more than one year from its inception;  (b) be made with the counterparty, except that for securities lending transactions, the agreement may be:  (i) through a custodian bank that is a qualified bank; or  (ii) with an agent acting on behalf of the insurer if the:  (A) agent or the guarantor of the agent's obligations pursuant to the agreement is a qualified bank or a qualified business entity; and  (B) agreement with the agent requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this subsection and prohibits securities lending transactions pursuant to the agreement with the agent or its affiliates;  (3) cash received in a transaction pursuant to this subsection, if not used by the insurer for its general corporate purposes in accordance with the plan adopted by the board of directors pursuant to item (1), must be invested in accordance with this chapter and in a manner that recognizes the liquidity needs of the transaction. For so long as any transaction pursuant to this subsection remains outstanding, the insurer, its agent, or custodian, either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, or other securities depositories approved by the director, shall maintain:  (a) possession of acceptable collateral for the transaction in at least the amount required pursuant to the provisions of the SVO procedures manual;  (b) a perfected security interest in the acceptable collateral; or  (c) in the case of a foreign jurisdiction, title to or rights of a secured creditor to the acceptable collateral;  (4) the limitations of Sections 38-12-430 and 38-12-500 do not apply to the counterparty exposure created by transactions pursuant to this section. For purposes of calculations made to determine compliance with this item, the insurer's future obligation to resell securities in the case of a repurchase transaction, or to repurchase securities in the case of a reverse repurchase transaction, must not be counted. An insurer may not enter into a transaction pursuant to this subsection if as a result of and after giving effect to the transaction, the aggregate amount of:  (a) securities then loaned to, sold to, or purchased from any counterparty pursuant to this subsection exceed five percent of its admitted assets. In calculating the amount sold to or purchased from a counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions pursuant to a written master agreement; or  (b) all securities then loaned to, sold to, or purchased from all counterparties pursuant to this subsection exceed forty percent of its admitted assets, except this limitation does not apply to a repurchase transaction so long as the borrowing is used to meet operational liquidity requirements resulting from an officially declared catastrophe and subject to a plan approved by the director;  (5) in a dollar roll transaction, the insurer must receive cash in an amount at least equal to the market value of the securities transferred by the insurer in the transaction as of the transaction date.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Within three months after the effective date of this chapter, the board of directors of an insurer shall adopt a written plan for acquiring and holding investments and for engaging in investment practices that specifies guidelines as to the quality, maturity, and diversification of investments and other specifications including investment strategies intended to assure that the investments and investment practices are appropriate for the business conducted by the insurer, its liquidity needs and its capital and surplus. The board shall review and assess the insurer's technical investment and administrative capabilities and expertise before adopting a written plan concerning an investment strategy or investment practice.  (B) Investments acquired and held and investment practices engaged in pursuant to this chapter must be acquired and held under the supervision and direction of the board of directors of the insurer or a committee of the board charged with the responsibility to direct its investments. The board of directors or a committee of the board charged with the responsibility to direct its investments shall evidence by formal resolution, at least annually, that it has determined whether all investments have been made in accordance with delegations, standards, limitations, and investment objectives prescribed by the board or a committee of the board charged with the responsibility to direct its investments.  (C) On not less than a quarterly basis, and more often if considered appropriate, the board of directors or committee of the board of directors of an insurer shall:  (1) receive and review a summary report on the insurer's investment portfolio, its investment activities, and investment practices engaged in pursuant to delegated authority so as to determine whether the investment activity of the insurer is consistent with its written plan; and  (2) review and revise, as appropriate, the written plan.  (D) In discharging its duties pursuant to this section, the board of directors shall require that records of authorizations or approvals, other documentation as the board may require, and reports of action taken pursuant to authority delegated under the plan referred to in subsection (A) must be made available on a regular basis to the board of directors.  (E) The directors of an insurer shall perform their duties pursuant to this section in good faith and with that degree of care that ordinarily prudent individuals in like positions would use under similar circumstances.  (F) If an insurer does not have a board of directors, all references to the board of directors in this chapter are considered to be references to the governing body of the insurer having authority equivalent to that of a board of directors.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Subject to the limitations of Section 38-12-430, an insurer may acquire, directly or indirectly through an investment affiliate, foreign investments or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same types as those that an insurer is permitted to acquire pursuant to this chapter, other than the type permitted pursuant to Section 38-12-450, if as a result and after giving effect to the investment the aggregate amount of foreign investments then held and foreign investment practices then engaged in by the insurer pursuant to this subsection:  (1) does not exceed twenty percent of its admitted assets; and  (2) in a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or five percent of its admitted assets as to any other foreign jurisdiction.  (B) Subject to the limitations of Section 38-12-430, an insurer may acquire investments and engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired or foreign investment practices engaged in pursuant to subsection (A), or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency, if as a result of and after giving effect to the transaction the aggregate amount of investments then held by the insurer and investment practices then engaged in by the insurer pursuant to this subsection:  (1) denominated in foreign currencies does not exceed fifteen percent of its admitted assets; and  (2) denominated in foreign currency of a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or five percent of its admitted assets as to any other foreign jurisdiction.  An investment is not considered denominated in a foreign currency if the acquiring insurer enters into one or more hedging transactions permitted pursuant to Section 38-12-510 to hedge the foreign currency exchange rate risk associated with the investment or investment practice.  (C) In addition to investments permitted by subsections (A) and (B), an insurer that is authorized to do business in a foreign jurisdiction and that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments and engage in foreign investment practices respecting that foreign jurisdiction, and may acquire investments and engage in investment practices denominated in the currency of that jurisdiction, subject to the limitations of Section 38-12-430. Investments made pursuant to this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises are not subject to the limitations of Section 38-12-430 if those investments carry an SVO rating of 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. The aggregate amount of investments acquired and investment practices engaged in by the insurer pursuant to this subsection may not exceed the greater of:  (1) the amount the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction; or  (2) one hundred twenty-five percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.  (D) In addition to investments permitted pursuant to subsections (A), (B), and (C), an insurer that is not authorized to do business in a foreign jurisdiction but that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments and engage in foreign investment practices respecting that foreign jurisdiction, and may acquire investments and engage in investment practices denominated in the currency of that jurisdiction, subject to the limitations of Section 38-12-430. Investments made and investment practices engaged in pursuant to this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises are not subject to the limitations of Section 38-12-430 if those investments and investment practices carry a SVO rating of 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. The aggregate amount of investments acquired and investment practices then engaged in by the insurer pursuant to this subsection may not exceed one hundred five percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.  (E) Investments acquired and investment practices engaged in by an insurer pursuant to this section must be aggregated with investments of the same types made pursuant to all other sections of this chapter, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in other sections. Investments in and investment practices engaged in with respect to obligations of foreign governments, their political subdivisions, and government sponsored enterprises of these persons, except for those exempted pursuant to subsections (C) and (D), are subject to the limitations of Section 38-12-430.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer may engage, directly or indirectly through an investment affiliate, in derivative transactions including, without limitation, hedging transactions, income generation transactions, and replication transactions pursuant to this section, subject to the following conditions:  (1) before entering into any derivative transaction, the board of directors of the insurer must determine that the insurer directly or through an investment management subsidiary or affiliate has adequate professional personnel, technical expertise, and systems to implement investment practices involving derivative transactions and approve a derivative instruments use plan that:  (a) describes investment objectives and risk constraints, such as counterparty exposure amounts;  (b) defines permissible transactions including identification of the risks that may be hedged, the assets or liabilities that may be replicated, and permissible types of income generation transactions; and  (c) requires compliance with internal control procedures;  (2) the insurer must establish written internal control procedures that provide for:  (a) a quarterly report to the board of directors, reviewing:  (i) all derivative transactions entered into, outstanding, or closed out;  (ii) the results and effectiveness of the insurer's implementation of its derivative instruments use plan; and  (iii) the credit risk exposure to each counterparty for over-the-counter derivative transactions based upon the counterparty exposure amount;  (b) a system for determining whether hedging, income generation, or replication strategies used by the insurer have been effective;  (c) a system of regular, but at least monthly, reports to management that include:  (i) a description of all derivative transactions entered into, outstanding, or closed out during the period since the last report;  (ii) the purpose of each outstanding derivative transaction;  (iii) a performance review of the derivative instruments program; and  (iv) the counterparty exposure amounts for over-the-counter derivative transactions;  (d) written authorizations identifying the responsibilities and limitations of authority of persons authorized to effect and maintain derivative transactions; and  (e) documentation for each transaction including:  (i) the purpose of the transaction;  (ii) the assets or liabilities to which the transaction relates;  (iii) the specific derivative instrument used in the transaction;  (iv) for over-the-counter derivative instrument transactions, the name of the counterparty and the counterparty exposure amount; and  (v) for exchange-traded derivative instruments, the name of the exchange and the name of the firm that handled the transaction;  (3) whenever the derivative transactions entered into pursuant to this section are not in compliance with this section or, if continued, may create a hazardous financial condition of the insurer that affects its policyholders, creditors, or the general public, the director, after notice and an opportunity for a hearing, may order the insurer to take action that is reasonably necessary to rectify the noncompliance or hazardous financial condition or to prevent the impending hazardous financial condition from occurring;  (4) with respect to hedging transactions, an insurer shall demonstrate to the director, upon request, the intended hedging characteristics and effectiveness of the hedging transaction or combination of hedging transactions through cash-flow testing, duration analysis, or other appropriate analysis. An insurer may enter into hedging transactions pursuant to this item if as a result of and after giving effect to each hedging transaction, the aggregate:  (a) statutory financial statement value of all outstanding caps, floors, warrants not attached to another financial instrument, and options other than collars purchased by the insurer pursuant to this item does not exceed seven and one-half percent of its admitted assets;  (b) statutory financial statement value of all outstanding warrants, caps, floors, and options other than collars written by the insurer pursuant to this item does not exceed three percent of its admitted assets; and  (c) potential exposure of all outstanding collars, swaps, forwards, and futures entered into or acquired by the insurer pursuant to this item does not exceed six and one-half percent of its admitted assets;  (5) an insurer may enter into an income generation transaction if:  (a) as a result of and after giving effect to the transaction, the aggregate statutory financial statement value of admitted assets that are then subject to call or that generate the cash flows for payments required to be made by the insurer under caps and floors sold by the insurer and then outstanding pursuant to this item, plus the statutory financial statement value of admitted assets underlying derivative instruments then subject to call sold by the insurer and outstanding pursuant to this item, plus the purchase price of assets subject to puts then outstanding pursuant to this item, does not exceed ten percent of its admitted assets; and  (b) the transaction is one of the following types and meets the other requirements specified in this subitem that are applicable to that type of transaction:  (i) sales of call options on assets, if the insurer holds or has a currently exercisable right to acquire the underlying assets during the entire period that the option is outstanding;  (ii) sales of put options on assets, if the insurer holds sufficient cash, cash equivalents, or interests in a short-term investment pool to purchase the underlying assets upon exercise during the entire period that the option is outstanding, and has the ability to hold the underlying assets in its portfolio. If the total market value of all put options sold by the insurer exceeds two percent of the insurer's admitted assets, the insurer shall set aside, pursuant to a custodial or escrow agreement, cash or cash equivalents having a market value equal to the amount of its put option obligations in excess of two percent of the insurer's admitted assets during the entire period the option is outstanding;  (iii) sales of call options on derivative instruments if the insurer holds, or has a currently exercisable right to acquire, assets generating the cash flow to make any payments for which the insurer is liable pursuant to the underlying derivative instruments during the entire period that the call options are outstanding and has the ability to enter into the underlying derivative transactions for its portfolio; or  (iv) sales of caps and floors, if the insurer holds, or has a currently exercisable right to acquire, assets generating the cash flow to make any payments for which the insurer is liable pursuant to the caps and floors during the entire period that the caps and floors are outstanding;  (6) an insurer may enter into a replication transaction that complies with the requirements of the SVO procedures manual concerning replication transactions, provided that:  (a) the insurer would be authorized to invest its funds pursuant to this chapter in the asset being replicated;  (b) the asset being replicated is subject to all provisions and limitations, including quantitative limitations, on the making of the investment as specified in this chapter, as if the replication transaction constituted a direct investment by the insurer in the asset being replicated; and  (c) as a result of and after giving effect to the replication transaction, the aggregate statement value of all assets being replicated does not exceed ten percent of its admitted assets;  (7) an insurer may purchase or sell one or more derivative instruments to offset in whole or in part a derivative instrument previously purchased or sold, without regard to the quantitative limitations of this section, provided that the transaction may be recognized as an offsetting transaction in accordance with generally accepted accounting principles;  (8) each derivative instrument must be:  (a) traded on a qualified exchange;  (b) entered into with or guaranteed by a qualified bank or a qualified business entity;  (c) issued or written by or entered into with the issuer of the underlying interest on which the derivative instrument is based; or  (d) in the case of futures, traded through a broker that is registered as a futures commission merchant under the federal Commodity Exchange Act or that has received exemptive relief from registration pursuant to rule 30.10 promulgated under that act; and  (9) an insurer must include all counterparty exposure amounts in determining compliance with the limitations of Section 38-12-430.  (B) Pursuant to regulations promulgated pursuant to Section 38-12-90, the director may approve additional transactions involving the use of derivative instruments in excess of the limits of items (4), (5), and (6) or for other risk management purposes.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) Pursuant to this subsection, an insurer may acquire an investment of any kind, or engage in a securities lending transaction, repurchase transaction, reverse repurchase transaction, or dollar roll transaction, that is not prohibited specifically by this chapter, without regard to the categories, conditions, standards, or other limitation of Sections 38-12-430 through 38-12-500 if, as a result of and after giving effect to the transaction, the aggregate amount of investments then held and securities lending transactions, repurchase transactions, reverse repurchase transactions, and dollar roll transactions then engaged in pursuant to this subsection does not exceed the greater of:  (1) its unrestricted surplus; or  (2) ten percent of its admitted assets or fifty percent of its surplus as regards policyholders, whichever is less.  (B) An insurer may not acquire an investment or engage in an investment practice pursuant to this subsection if as a result of and after giving effect to the transaction the aggregate amount of all investments then held by the insurer under this subsection in any one person exceed five percent of its admitted assets.  (C) If any investment made or transaction entered into pursuant to any other section of this chapter exceeds the limits specified in that section, the excess portion of the investment or transaction is considered to be an investment or transaction pursuant to this section. Any loan, investment, or transaction originally made pursuant to this section which subsequently, if it were then being made, would qualify as an authorized investment or transaction pursuant to another subsection of this section or another section of this chapter shall thereafter be considered an authorized investment or transaction pursuant to that subsection or section.  (D) This chapter does not prohibit the acquisition by an insurer of additional obligations, securities, or other assets if received as a dividend or as a distribution of assets, nor does this chapter apply to securities, obligations, or other assets accepted incident to the workout, adjustment, restructuring, or similar realization of an investment or transaction when the insurer's board of directors or a committee appointed by the board of directors considers it to be in the best interests of the insurer, if the investment or transaction had been authorized previously. This chapter does not apply to assets acquired pursuant to a lawful agreement of bulk reinsurance if the assets constituted legal and authorized investments for the ceding company. No obligation, security, or other asset acquired as authorized by this subsection is required to be qualified pursuant to any other subsection of this section or other section of this chapter, provided that all assets acquired pursuant to this subsection are subject to the applicable accounting and valuation requirements contained in this chapter.  (E) Subject to the provisions of subsection (F), if a domestic property and casualty insurance company, pursuant to a merger or consolidation, acquires an investment or transaction that was an authorized investment or transaction of the company that was merged or consolidated with the domestic property and casualty insurance company but that does not qualify as an authorized investment or transaction pursuant to this chapter at the time the merger or consolidation occurs, regardless of whether or not the investment or transaction would be authorized pursuant to subsection (A) or (B), then the investment or transaction is considered an authorized investment or transaction pursuant to this subsection and is not required to be applied toward the limitations contained in subsection (A) or (B), for a period of five years after the date on which the merger or consolidation occurs. After that period it shall no longer be an authorized investment or transaction pursuant to this subsection, unless within the five-year period:  (1) the investment or transaction qualifies as an authorized investment or transaction pursuant to another subsection of this section or another section of this chapter including without limitation, subsections (A) and (B), if the domestic property and casualty insurance company so elects; or  (2) the director authorizes the investment or transaction in the plan of merger or consolidation approved by the director; or  (3) upon request of the insurer, the director authorizes an extension of the five-year time period; or  (4) the director approves the investment or transaction pursuant to this subsection.  The aggregate amount of a domestic insurance company's investments and transactions pursuant to this subsection, excluding investments and transactions authorized pursuant to items (1), (2), and (4), may not exceed twenty-five percent of the domestic insurance company's capital and surplus after giving effect to such merger or consolidation.  (F) If a domestic insurance company, pursuant to a merger or consolidation, acquires a mortgage loan, or a participation in a mortgage loan, that would have been authorized pursuant to Section 38-12-480, and pursuant to subsection (C) of this section as to the portion that exceeded seventy-five percent of the value of the property, at the time the company that was merged or consolidated with the domestic insurance company invested in the mortgage loan or participation in the mortgage loan, then such mortgage loan or participation in the mortgage loan is authorized pursuant to Section 38-12-480, and pursuant to subsection (C) of this section as to the portion that exceeded seventy-five percent of the value of the property.  (G) The director has full discretion in selecting a method for calculating values of investments and transactions that an insurer acquires through a merger or consolidation, provided that the method is consistent with any applicable provisions of this chapter and any applicable valuation method that the NAIC is currently using at the time with respect to investments and transactions. If there is a conflict between a provision of this chapter and the NAIC valuation method being used, the provision of this chapter controls.  (H) The qualification or disqualification of an investment pursuant to one subsection of this section or one section of this chapter does not prevent its qualification in whole or in part pursuant to another provision of this chapter. An investment authorized by more than one provision of this chapter is authorized pursuant to the provision the insurer elects. An investment or transaction qualified pursuant to any provision of this chapter at the time it was acquired or entered into by the insurer shall continue to be qualified pursuant to that provision. An investment or transaction may be transferred in whole or in part at the election of the insurer to the authority of any provision of this chapter pursuant to which it then qualifies, whether or not it originally qualified pursuant to that provision.  (I) Notwithstanding the provisions of the other subsections of this section or other sections of this chapter, an insurer may acquire an investment in or enter into a transaction with a business entity in which the insurer already holds one or more investments or with which the insurer has entered into one or more transactions if the investment is acquired or the transaction is entered into in order to protect an investment or transaction previously made in or with the business entity, provided that the aggregate amount of investments and transactions so acquired and entered into may not exceed five percent of the insurer's capital and surplus.  (J)(1) The percentage authorizations and limitations contained in any provision of this chapter apply only at the time of the original acquisition of an investment or at the time a transaction is entered into and are not applicable to the insurer or the investment or transaction after that time except as provided in subsection (H). Once any investment or transaction is qualified pursuant to any provision of this chapter, it shall remain qualified notwithstanding any refinancing, restructuring, or modification of the investment or transaction, provided that the insurer does not engage in the refinancing, restructuring, or modification of the investment or transaction for the purposes of circumventing the requirements or limitations of this chapter.  (2) The director has full discretion to value investments and transactions that an insurer holds at the time of an examination of the insurer using a method of calculating the values that the director selects in his discretion, provided that the method must be consistent with any applicable provisions of this chapter and any applicable valuation method that the NAIC is using at the time with respect to investments and transactions. If there is a conflict between such a provision of this chapter and an applicable NAIC valuation method that the NAIC is using at the time, the provision of this chapter controls.  (3) Notwithstanding items (1) and (2), if the director determines that the continued operation of an insurer may be hazardous to its policyholders, its creditors, or the general public, the director may issue an order consistent with applicable statutes requiring the insurer to limit or withdraw from certain investments or transactions or discontinue certain practices as to investments or transactions to the extent the director considers necessary.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) An insurer, directly or indirectly, may not:  (1) invest in an obligation or security or make a guarantee for the benefit of or in favor of an officer or director of the insurer, except as provided in Section 38-12-70;  (2) invest in an obligation or security, make a guarantee for the benefit of or in favor of, or make other investments in a business entity of which ten percent or more of the voting securities or equity interests are owned directly or indirectly by or for the benefit of one or more officers or directors of the insurer, except as authorized in Chapter 21 of this title or as provided in Section 38-12-70;  (3) engage on its own behalf or through one or more affiliates in a transaction or series of transactions designed to evade the prohibitions of this chapter;  (4) invest in a partnership as a general partner, except that an insurer may make an investment as a general partner:  (a) if all other partners in the partnership are subsidiaries or other insurance company affiliates of the insurer;  (b) for the purpose of:  (i) meeting cash calls committed to before the effective date of this chapter;  (ii) completing those specific projects or activities of the partnership in which the insurer was a general partner as of the effective date of this chapter that had been undertaken as of that date; or  (iii) making capital improvements to property owned by the partnership on the effective date of this chapter if the insurer was a general partner as of that date; or  (c) in accordance with Section 38-12-40(C); or  (5) invest in or lend its funds upon the security of shares of its own stock, except as authorized by other provisions of this title, except that those shares must not be admitted assets of the insurer.  (B) This section does not prohibit a subsidiary or other affiliate of the insurer from becoming a general partner.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A)(1) Except as provided in subsection (B), unless an insurer has notified the director in writing of its intention to enter into the transaction at least thirty days before entering into it, or a shorter period as the director may permit, and the director has not disapproved the transaction within the time period, the insurer may not, directly or indirectly:  (a) make a loan to or other investment in an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest;  (b) make a guarantee for the benefit of or in favor of an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest; or  (c) enter into an agreement for the purchase or sale of property from or to an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest.  (2) For purposes of this section, an officer or director is not considered to have a financial interest by reason of an interest that is held directly or indirectly through the ownership of equity interests representing less than two percent of all outstanding equity interests issued by a person that is a party to the transaction, or for the sole reason of the position of that individual as a director or officer of a person that is a party to the transaction.  (3) This subsection does not permit an investment that is prohibited by Section 38-12-60.  (4) This subsection does not apply to a transaction between an insurer and its subsidiaries or affiliates that is entered into in compliance with Chapter 21 of this title other than a transaction between an insurer and its officer or director.  (B) An insurer, without the previous written approval of the director, may make:  (1) policy loans in accordance with the terms of the policy or contract and Section 38-12-310;  (2) advances to officers or directors for expenses reasonably expected to be incurred in the ordinary course of the insurer's business or guarantees associated with credit or charge cards issued or credit extended for the purpose of financing these expenses;  (3) loans secured by the principal residence of an existing or new officer of the insurer made in connection with the officer's relocation at the request of the insurer, if the loans comply with the requirements of Section 38-12-270 or 38-12-480 and the terms and conditions otherwise are the same as those generally available from unaffiliated third parties;  (4) secured loans to an existing or new officer of the insurer made in connection with the officer's relocation at the request of the insurer, if the loans:  (a) do not have a term exceeding two years;  (b) are required to finance mortgage loans outstanding at the same time on the previous and new residences of the officer;  (c) do not exceed an amount equal to the equity of the officer in the previous residence; and  (d) are required to be fully repaid upon the earlier of the end of the two- year period or the sale of the previous residence; and  (5) loans and advances to officers or directors made in compliance with state or federal law specifically related to the loans and advances by a regulated noninsurance subsidiary or affiliate of the insurer in the ordinary course of business and on terms no more favorable than available to other customers of the entity.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 For purposes of this chapter, the value or amount of an investment acquired or held, or an investment practice engaged in pursuant to this chapter, unless otherwise specified in this title, must be the value at which assets of an insurer are required to be reported for statutory accounting purposes as determined in accordance with procedures prescribed in published accounting and valuation standards of the NAIC.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 The director, in accordance with Section 38-3-110, may promulgate regulations implementing the provisions of this chapter.  HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.
 (A) The director or his examiners may conduct an examination under this chapter of an insurer as often as the director or his designee consider appropriate but, at a minimum, shall conduct an examination of every insurer licensed in this State not less frequently than once every five years. When the director or his designee considers it prudent for the protection of policyholders in this State, he may examine or have examined an insurer applying for admission in this State. In scheduling and determining the nature, scope, and frequency of the examinations, the director or his designee shall consider compliance with relevant South Carolina laws and regulations, the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants, and other criteria set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners and in effect when the director or his designee exercises his authority under this subsection.  (B) For purposes of completing an examination of an insurer under this chapter, the director or his designee may examine or investigate a person or his business in a manner considered necessary or material by the director or his designee.  (C) In lieu of an examination under this section of a foreign or an alien insurer licensed in this State, the director or his designee may accept an examination report on the insurer prepared by the insurance department for the insurer's state of domicile or port-of-entry state until January 1, 1994. After that time, the reports may be accepted only if one or both of the following apply:  (1) The insurance department at the time of the examination was accredited under the National Association of Insurance Commissioners' Financial Regulation Standards and Accreditation Program;  (2) The examination is performed with the participation of one or more examiners who are employed by the accredited insurance department, and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their department.  HISTORY: Former 1976 Code Section 38-13-10 [1947 (45) 322; 1952 Code Section 37-601; 1962 Code Section 37-601] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-1220 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-281; 1957 (50) 282; 1960 (51) 1646; 1962 Code Section 37-281] recodified as Section 38-13-10 by 1987 Act No. 155, Section 1; 1988 Act No. 357, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537.  Editor's Note  2005 Act No. 27, Section 10, provides as follows:  "The Department of Insurance shall review data reported on annual statements by liability insurers including, but not limited to, paid claims, reserves, loss adjustment expenses, and such additional data as the department may require by promulgation of bulletin, to determine savings related to a decrease in litigation and claims paid pursuant to litigation after the effective date of this act. The department may require special reports from insurers to determine if savings are realized as a result of the provisions of this act. The department shall compile a report of savings realized and submit it for General Assembly review upon request. Costs or expenses associated with the compilation of this report of savings shall be paid by the insurers pursuant to the provisions of Chapter 13 of Title 38. The Department of Insurance shall review premium and losses by line of insurance to determine if appropriate adjustments have been made based upon the department estimates of savings realized pursuant to the provisions of this act."  2005 Act No. 32, Section 14, provides as follows:  "The Department of Insurance shall review data reported on annual statements by liability insurers, including, but not limited to, paid claims, reserves, loss adjustment expenses, and such additional data as the department may require by promulgation of bulletin, to determine savings related to a decrease in litigation and claims paid pursuant to litigation after the effective date of this act. The department may require special reports from insurers to determine if savings are realized as a result of the provisions of this act. The department shall compile a report of savings realized and submit it for General Assembly review upon request. Costs or expenses associated with the compilation of this report of savings shall be paid by the insurers pursuant to the provisions of Chapter 13 of Title 38. The Department of Insurance shall review premium and losses by line of insurance to determine if appropriate adjustments have been made based upon the department estimates of savings realized pursuant to the provisions of this act."
 In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include:  (1) The amount of its capital stock outstanding, if any;  (2) The amount, estimated consistent with provisions of the law and rulings of the director or his designee, necessary to pay all its unpaid losses and claims incurred on or prior to the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement;  (3) With reference to life and accident and health insurance and annuity contracts:  (a) the amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to Section 38-9-180 which are applicable,  (b) reserves for disability benefits, for both active and disabled lives,  (c) reserves for accidental death benefits, and  (d) any additional reserves which may be reasonably required by the director or his designee;  (4) With reference to insurance other than specified in the law and rulings of the director or his designee, the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with the law and rulings of the director or his designee; and  (5) Taxes, expenses, and other obligations due or accrued at the date of the statement.  HISTORY: Former 1976 Code Section 38-13-100 [1947 (45) 322; 1952 Code Section 37-610; 1962 Code Section 37-610] recodified as Section 38-15-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1320 [1958 (50) 1608; 1962 Code Section 37-289.1] recodified as Section 38-13-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537.
 (A) The purpose of this article is to:  (1) provide the director a summary of an insurer's or insurance group's corporate governance structure, policies, and practices to permit the director to gain and maintain an understanding of the insurer's corporate governance framework;  (2) outline the requirements for completing a corporate governance annual disclosure and submitting the disclosure to the director; and  (3) provide for the confidential treatment of the corporate governance annual disclosure and related information that will contain confidential and sensitive information related to an insurer or insurance group's internal operations and proprietary and trade secret information which, if made public, could potentially cause the insurer or insurance group competitive harm or disadvantage.  (B) Nothing in this article may be construed to prescribe or impose corporate governance standards and internal procedures beyond what is required under applicable state corporate law. Notwithstanding the foregoing, nothing in this article may be construed to limit the director's authority or the rights or obligations of third parties, pursuant to Section 38-13-10, et seq.  (C) The requirements of this article apply to all insurers domiciled in this State and do not apply to risk retention groups or captive insurance companies.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 For the purposes of this article:  (1) "Corporate Governance Annual Disclosure" or "CGAD" means a confidential report filed by an insurer or insurance group made in accordance with the requirements of this article.  (2) "Director" means the Director of the Department of Insurance or his designee.  (3) "Insurance group" means insurers and affiliates included within an insurance holding company system as defined in Section 38-21-10.  (4) "Insurer" has the same meaning as set forth in Section 38-1-20, except the term does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.  (5) "NAIC" means the National Association of Insurance Commissioners.  (6) "ORSA summary report" means the report filed in accordance with Article 8 of this chapter.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 (A) An insurer or the insurance group of which the insurer is a member must submit to the director a Corporate Governance Annual Disclosure (CGAD) that contains the information required pursuant to the provisions of this article no later than June first of each calendar year. Notwithstanding a request from the director, if the insurer is a member of an insurance group, the insurer shall submit the report to the director of the lead state for the insurance group in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC.  (B) The CGAD must include a signature of the insurer's or insurance group's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer's board of directors of the appropriate committee thereof.  (C) An insurer not required to submit a CGAD under this section shall do so upon the director's request.  (D) For purposes of completing the CGAD, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level and the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer's or insurance group's risk appetite is determined, or at the level at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in the level of reporting.  (E) The review of the CGAD and any additional requests for information must be made through the lead state as determined by the procedures within the most recent Financial Analysis Handbook.  (F) Insurers providing information substantially similar to the information required by this article in other documents provided to the director, including proxy statements filed in conjunction with Form B requirements or other state or federal filings provided to this department, are not required to duplicate that information in the CGAD, but are required to cross reference the document in which the information is included.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 The director may, upon notice and opportunity for all interested persons to be heard, issue such rules, regulations, and orders necessary to carry out the provisions of this article.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 (A) The insurer or insurance group has discretion over the responses to the CGAD inquiries, provided the CGAD shall contain the material information necessary to permit the director to gain an understanding of the insurer's or group's corporate governance structure, policies, and practices. The director may request additional information that he deems material and necessary to provide him with a clear understanding of the corporate governance policies the reporting or information system or controls implementing those policies.  (B) The CGAD must be prepared consistent with the Corporate Governance Annual Disclosure Model Regulation, Regulation 69-80. Documentation and supporting information must be maintained and made available upon examination or upon request of the director.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 (A) Documents, materials, or other information including the CGAD in the possession or control of the Department of Insurance that are obtained by, created by, or disclosed to the director or any other person under this article, are recognized by this State as being proprietary and containing trade secrets. All such documents, materials, or other information are confidential by law and privileged, are not subject to disclosure under the South Carolina Freedom of Information Act, Section 30-4-10, et seq. and are not subject to subpoena, to discovery or admissible into evidence in a private civil action. However, the director is authorized to use the documents, materials, or other information in furtherance of regulatory or legal action brought as a part of the director's official duties. The director shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. Nothing in this section may be construed to require written consent of the insurer before the director may share or receive confidential documents, materials, or other CGAD-related information to assist in the performance of the director's duties.  (B) Neither the director nor any person who received documents, materials, or other CGAD-related information, through examination or otherwise, while acting under the authority of the director, or with whom such documents, materials, or other information are shared may be permitted or required to testify in a private civil action covering any confidential documents, materials, or information submitted pursuant to this article.  (C) In order to assist in the performance of the director's regulatory duties the director may:  (1) upon request, share documents, materials, or other CGAD-related information including the confidential and privileged documents, materials, or information, including proprietary and trade secret documents and materials with other state, federal, and international financial regulatory agencies including members of any supervisory college as defined in Section 38-21-285 with the NAIC and with third-party consultants pursuant to Section 38-13-1060, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, material, or other information and has certified in writing the legal authority to maintain confidentiality; and  (2) receive documents, materials, or other CGAD-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade secret information or documents, from regulatory officials of other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in Section 38-21-285 and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or information received with notice of the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the documents, materials, or information.  (D) The sharing of information and documents by the director pursuant to the provisions of this article do not constitute a delegation of regulatory authority or rulemaking and the director is solely responsible for the administration, execution, and enforcement of the provisions of this article.  (E) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade secret materials, or other CGAD-related information may occur as a result of disclosure of the CGAD-related information or documents to the director under this section or as a result of sharing as authorized pursuant to this section.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 (A) The director may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants, and other experts not otherwise a part of the director's staff as may be reasonably necessary to assist the director in reviewing the CGAD and related information or the insurer's compliance.  (B) Any persons retained are under the direction and control of the director and shall act in a purely advisory capacity.  (C) The NAIC and third-party consultants are subject to the same confidentiality standards and requirements as the director.  (D) As part of the retention process, a third-party consultant shall verify to the director, with notice to the insurer, that it is free of a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this article.  (E) A written agreement with the NAIC or a third-party consultant governing sharing and the use of information provided pursuant to this article shall contain the following provisions and expressly require the written consent of the insurer prior to making public information provided pursuant to this article:  (1) specific procedures and protocols for maintaining the confidentiality and security of CGAD-related information shared with the NAIC or a third-party consultant;  (2) procedures and protocols for sharing by the NAIC only with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials, or other information and has certified in writing the legal authority to maintain confidentiality;  (3) a provision specifying that ownership of the CGAD-related information shared with other NAIC or a third-party consultant remains with the Department of Insurance and the NAIC's or third-party consultant's use of the information is subject to the direction of the director;  (4) a provision that prohibits the NAIC or a third-party consultant from storing the information shared pursuant to this article in a permanent database after the underlying analysis is completed;  (5) a provision requiring the NAIC or third-party consultant to provide prompt notice to the director and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer's CGAD-related information; and  (6) a requirement that the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 Any insurer who, without just cause, fails to timely file the CGAD shall, after notice and an opportunity for a hearing, pay a penalty of one thousand dollars for each day's delay, to be recovered by the director. The penalty funds recovered must be paid into the general fund of this State. The maximum penalty under this section is twenty thousand dollars. The director may reduce the penalty if the insurer demonstrates to the director that the imposition of the penalty would constitute a financial hardship to the insurer.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 The requirements of this article become effective on January 1, 2020. The first filing of the corporate governance annual disclosure must take place on June 1, 2020.  HISTORY: 2019 Act No. 3 (S.75), Section 1, eff March 20, 2019.
 Contingent debts or liabilities of domestic insurers must be set forth in financial statements in the following manner:  (1) in the event a contingent liability or surplus certificate liability is in the form of certain borrowings provided for under Section 38-19-610 and the borrowings are made by a domestic mutual insurer insuring properties only, then the obligation of the corporation or association must be shown as a footnote on any published financial statement of the corporation or association;  (2) in the event a contingent liability or surplus certificate liability of the corporation is in connection with a domestic mutual assessment association or other form of domestic mutual insurer having issued and in force policies containing an assessment provision for either life insurance or property insurance, then the liability must be set forth as a footnote on any published financial statement of the corporation or association;  (3) in the event that a domestic mutual insurer has outstanding or is issuing a contract that does not contain an assessment provision, then the statement of assets and liabilities shall show as a part of the liabilities the face amount of the liability, with a footnote explaining that payment of the liability must be made out of the surplus earnings of the insurer and, in the event of dissolution of the corporation or association, is a junior liability to the claims of the policyholders but a senior liability to the distribution of any remaining assets to policyholders; and  (4) in the event there is a contingent liability or a surplus certificate liability outstanding in connection with any domestic capital stock insurance corporation, the full face amount of the liability must be separately stated as a part of the surplus of the insurer and is considered to be a junior liability to policyholders' reserves and claimants' liabilities but is considered a senior liability, either in the event of dissolution or for statement purposes, to that which otherwise would be a liability to the stockholders.  HISTORY: Former 1976 Code Section 38-13-110 [1947 (45) 322; 1952 Code Section 37-611; 1962 Code Section 37-611] recodified as Section 38-15-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1330 [1958 (50) 1611; 1962 Code Section 37-289.2] recodified as Section 38-13-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537.
 All companies doing any kind of insurance business in this State shall make and keep a full and correct record of the business done by them, showing the number, date, term, amount insured, premiums, and the person to whom issued of every policy or certificate of renewal. This information must be furnished to the director or his designee on demand, and the original books or record must be open to the inspection of the director or his designee on demand. These records must be kept for a minimum of five years.  HISTORY: Former 1976 Code Section 38-13-120 [1947 (45) 322; 1952 Code Section 37-612; 1962 Code Section 37-612] recodified as Section 38-15-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1210 [1947 (45) 322; 1952 Code Section 37-290; 1962 Code Section 37-290] recodified as Section 38-13-120 by 1987 Act No. 155, Section 1; 1988 Act No. 357, Section 2; 1993 Act No. 181, Section 537.
 Every insurer doing business in this State shall maintain a record of losses paid under its policies and notices as provided in its policies which may normally result in claim or loss. The records must be maintained until the next regular examination by an insurance department or for a period of five years from the date of payment of the loss or receipt of the notice.  HISTORY: Former 1976 Code Section 38-13-130 [1947 (45) 322; 1952 Code Section 37-613; 1962 Code Section 37-613] recodified as Section 38-15-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1340 [1956 (49) 1740; 1962 Code Section 37-290.1] recodified as Section 38-13-130 by 1987 Act No. 155, Section 1; 1988 Act No. 357, Section 3; 1993 Act No. 181, Section 537.
 A person who has in his possession or control any books, accounts, or papers of a company licensed under this title shall exhibit them to the director or to any deputy, actuary, accountant, or person acting with or for the director. A person who refuses, on demand, to exhibit any books, accounts, or papers or knowingly or wilfully makes a false statement in regard to them is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned for not more than three years, or both. All replies are strictly confidential except for the purposes of prosecution for any false or fraudulent statement made to the director or his designee.  HISTORY: Former 1976 Code Section 38-13-140 [1947 (45) 322; 1952 Code Section 37-614; 1962 Code Section 37-614] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-1370 [1947 (45) 322; 1952 Code Section 37-291; 1962 Code Section 37-291] recodified as Section 38-13-140 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 210; 1993 Act No. 181, Section 537.
 Every insurer shall file a return, on a form and at times prescribed by the director or his designee, showing all reinsurance or cessions of risk or liability contracted for or effected by it, whether by issue of policy, entry, or bordereau, general participation agreement, excess loss reinsurance, or in any manner whatsoever, upon property located in this State or covering, whether specified or otherwise, any risk or liability upon property so located. The return must be certified by the oath of its president and secretary, if a company of the United States, and, if a company of a foreign country, by the oath of its managers in the United States as to reinsurance or cessions effected through its branch office in the United States and by the oath of its president and secretary or by officers corresponding thereto, at its home office, wherever located, as to reinsurance or cessions contracted for or effected through the foreign office. The refusal of an insurer to file the required return is presumptive evidence that it is guilty of violating the provisions of Section 38-9-190.  HISTORY: Former 1976 Code Section 38-13-150 [1947 (45) 322; 1952 Code Section 37-615; 1962 Code Section 37-615] has no comparable provision in 1987 Act No. 155; Former 1976 Code Section 38-5-1350 [1947 (45) 322; 1952 Code Section 37-292; 1962 Code Section 37-292] recodified as Section 38-13-150 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 7; 1993 Act No. 181, Section 537.
 The director or his designee may require any authorized insurer or its officers to answer any inquiry in relation to its transactions, condition, or any connected matter necessary to the administration of the insurance laws of the State. Every corporation or person must reply in writing to the inquiry promptly and truthfully, and the reply must be verified, if required by the director or his designee, by the individual or by the officer or officers of a corporation as he designates. These replies are strictly confidential.  HISTORY: Former 1976 Code Section 38-13-160 [1947 (45) 322; 1952 Code Section 37-616; 1962 Code Section 37-616] has no comparable provisions in 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1360 [1947 (45) 322; 1952 Code Section 37-294; 1962 Code Section 37-294] recodified as Section 38-13-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537.
 If an insurer, in its annual or other statement required by law, wilfully misstates the facts, the insurer and the person signing the statement and any person aiding, abetting, or participating in the making of the statement are guilty of a felony, and upon conviction, must be fined not more than two thousand dollars or imprisoned not more than five years, or both. The insurer, upon conviction, forfeits its right to do business in this State.  HISTORY: Former 1976 Code Section 38-13-170 [1947 (45) 322; 1952 Code Section 37-617; 1962 Code Section 37-617] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-1380 [1947 (45) 322; 1952 Code Section 37-295; 1956 (49) 1834; 1962 Code Section 37-295] recodified as Section 38-13-170 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 66; 1993 Act No. 181, Section 537.
 For purposes of Sections 38-13-190 and 38-13-200, "insurance reserve fund" or "funds" means the insurance reserve funds administered by the State Fiscal Accountability Authority to provide liability and property insurance, as authorized under Section 1-11-140, Chapter 7 of Title 10, and the regulations prescribed by the State Fiscal Accountability Authority.  HISTORY: Former 1976 Code Section 38-5-840 [En, 1983 Act No. 151, Part II, Section 55] recodified as Section 38-13-180 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537.  Code Commissioner's Note  At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1), effective July 1, 2015.
 (1) At the end of each three years of operation, and at any other time considered prudent, the director or his designee shall examine the affairs of the insurance reserve funds and make findings and recommendations as provided by this section. For purposes of examination, the director or person making the examination has free access to all relevant records, books, and papers in the possession of any person or entity and may summon, administer oaths to, and examine as witnesses any persons in relation to matters relevant to the examination.  (2) The director or his designee shall examine all methods of operation of the insurance reserve funds to determine whether the funds are being administered in accordance with sound insurance practices and in the best interest of the State. Following the examination, the director or his designee shall prepare a report for submission, through the State Fiscal Accountability Authority, to the Office of the Governor, the Speaker of the House of Representatives, and the President of the Senate containing his findings and conclusions and any recommendations to improve the efficiency, effectiveness, and overall operation of the funds.  HISTORY: Former 1976 Code Section 38-5-850 [1983 Act No. 151, Part II, Section 55] recodified as Section 38-13-190 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537.  Code Commissioner's Note  At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1), effective July 1, 2015.
 (A) Upon determining that an examination must be conducted, the director or his designee shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe South Carolina laws and regulations and those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners. The director also may employ other guidelines or procedures he considers appropriate.  (B) Every person or insurer and his or its officers, directors, and agents from whom information is sought shall provide to the examiners appointed under subsection (A) timely, convenient, and free access at all reasonable hours at his or its offices to all books, records, accounts, papers, documents, and all computer or other recordings relating to the property, assets, business, and affairs of the person or insurer being examined. If the director or his designee considers it necessary to the conduct of the examination, he may require that the person or insurer or his or its agents or affiliated or subsidiary corporations or partnerships furnish the original books and records. The officers, directors, employees, and agents of the insurer or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a person or an insurer by his or its officers, directors, employees, or agents to submit to examination or to comply with a reasonable written request of the examiners is grounds for suspension or revocation of the person's or insurer's certificate of authority to engage in the business of insurance in this State. The director or his designee may make the suspension or revocation and the reasons for it public. Proceedings for revocation must be conducted pursuant to Section 38-5-140.  (C) The director or his examiners may issue subpoenas, administer oaths, and examine under oath a person as to matters pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the director or his designee may petition a court of competent jurisdiction, and upon proper showing the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court.  (D) When making an examination under Section 38-13-10, the director or his designee may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners. The cost of the retainment must be borne by the insurer which is the subject of the examination together with the expenses of the director or his designee and the expenses and compensation of the director's assistants. If a domestic insurer has less than one million dollars total capital and surplus as of December 31, 1993, and thereafter, then it must not be assessed the actual examination costs but shall instead pay in accordance with the examination fee schedule in effect as of July 1, 1993. If an insurer determines that its examination fees have not been assessed as provided in this section or that the fees assessed are unreasonable in relation to the examination performed, the insurer may appeal the assessments to the Administrative Law Court. Examination fees must be retained by the department and are considered "other funds".  (E) Nothing contained in Section 38-13-10 limits the authority of the director or his designee to:  (1) terminate or suspend an examination to pursue other legal or regulatory action pursuant to the insurance laws of this State. Findings of fact and conclusions made pursuant to an examination are prima facie evidence in a legal or regulatory action;  (2) use and, if appropriate, make public a final or preliminary examination report, examiner or insurer work papers or other documents, or other information discovered or developed during the course of an examination in the furtherance of a legal or regulatory action which the director or his designee, in his sole discretion, considers appropriate.  HISTORY: Former 1976 Code Section 38-13-20 [1947 (45) 322; 1952 Code Section 37-602; 1962 Code Section 37-602] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-1230 [1947 (45) 322; 1952 Code Section 37-282; 1960 (51) 1646; 1962 Code Section 37-282] recodified as Section 38-13-20 by 1987 Act No. 155, Section 1; 1990 Act No. 363, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537; 1994 Act No 497, Section 16.
 Any person or entity having possession or control of any records, books, or papers relevant to an insurance reserve fund examination who fails or refuses to be examined under oath is guilty of a misdemeanor and upon conviction must be punished by a fine of not more than ten thousand dollars or imprisonment for not more than one year and is subject to suspension or revocation of any insurance licenses issued by the director or his designee.  HISTORY: Former 1976 Code Section 38-5-860 [En, 1983 Act No. 151, Part II, Section 55] recodified as Section 38-13-200 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537.
 (A) Examination reports must be comprised of only facts appearing upon the books, records, or other documents of the insurer, its agents, or other persons examined or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs and the conclusions and recommendations the examiners find reasonably warranted from the facts.  (B) No later than sixty days following completion of the examination, the examiner in charge shall file with the department a verified written report of examination under oath. Upon receipt of the verified report, the department shall transmit the report to the insurer examined with a notice which affords the insurer a reasonable opportunity of not more than thirty days to make a written submission or rebuttal with respect to matters contained in the examination report.  (C) After the expiration of the thirty-day period allowed for the receipt of written submissions or rebuttals, the director or his designee shall consider and review the report fully with written submissions or rebuttals and relevant portions of the examiner's work papers and enter an order:  (1) adopting the examination report as filed or with modification or corrections. If the examination report reveals that the insurer is operating in violation of law, regulation, or prior order of the director or his designee, he may order the insurer to take action the director or his designee considers necessary and appropriate to cure the violation;  (2) rejecting the examination report with directions to the examiners to reopen the examination to obtain additional data, documentation, or information and refiling pursuant to subsection (A); or  (3) calling for an investigatory hearing with no less than twenty days' notice to the insurer to obtain additional documentation, data, information, and testimony.  (D)(1) Orders entered pursuant to subsection (C)(1) must be accompanied by findings and conclusions resulting from the director's or his designee's consideration and review of the examination report, relevant examiner work papers, and written submissions or rebuttals. The order must be considered a final administrative decision and may be appealed to the Administrative Law Court as provided by law. The order may be served upon the insurer by certified mail or electronic mail, with a copy of the adopted examination report. Within thirty days of the issuance of the adopted report, the insurer shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.  (2) A hearing conducted under subsection (C)(3) by the director or his authorized representative must be conducted as a nonadversarial, confidential investigatory proceeding as necessary for the resolution of inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the director's or his designee's review of relevant work papers or by the written submission or rebuttal of the insurer. Within twenty days of the conclusion of the hearing, the director or his designee shall enter an order pursuant to subsection (C)(1).  (a) The director may not appoint an examiner as an authorized representative to conduct the hearing. The hearing shall proceed expeditiously with discovery by the insurer limited to the examiner's work papers which tend to substantiate assertions set forth in a written submission or rebuttal. The director or his representative may issue subpoenas for the attendance of witnesses or the production of documents considered relevant to the investigation whether under the control of the department, the insurer, or other persons. The documents produced must be included in the record, and testimony taken by the director or his representative must be under oath and preserved for the record. Nothing contained in this section requires the department to disclose information or records which indicate or show the existence or content of an investigation or activity of a criminal justice agency.  (b) The hearing shall proceed with the director or his representative posing questions to the person subpoenaed. After the questions the insurer and the department may present testimony relevant to the investigation. Cross examination may be conducted only by the director or his representative. The insurer and the department may make closing statements and be represented by counsel of their choice.  (E)(1) Upon completion of the examination report under subsection (C)(1), the director or his designee shall hold the content of the examination report as private and confidential information for the thirty-day period provided for written submissions or rebuttals. Thirty days after the examination report has been submitted to it if the insurer examined has neither notified the director or his designee of its acceptance and approval of the report nor requested to be heard on it, the report must be filed as a public document and is open to public inspection, as long as no court of competent jurisdiction has stayed its publication.  (2) This section does not prohibit the director or his designee from disclosing the content of an examination report, preliminary examination report, or results or related matters to the insurance department of this or another state or country, or law enforcement officials of this or another state or agency of the federal government so long as the agency or office receiving the reports, results, or related matters agrees in writing to hold them confidential and in a manner consistent with Sections 38-13-10 through 38-13-60.  (3) If the director or his designee determines that regulatory action is appropriate as a result of an examination, he may initiate proceedings or actions provided by law.  (F) All work papers, recorded information, documents, and their copies produced by, obtained by, or disclosed to the director, his designee, or other persons in the course of an examination made under this chapter must be given confidential treatment, are not subject to subpoena, and must not be made public by the director, or other persons, except to the extent provided in subsection (E). Access also may be granted to the National Association of Insurance Commissioners. The parties shall agree in writing before receiving the information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the insurer to which it pertains has been obtained or unless ordered by a court of competent jurisdiction. The information may be provided to the consumer advocate as provided in Section 37-6-605 pursuant to an appropriate proprietary agreement to ensure confidentiality.  HISTORY: Former 1976 Code Section 38-13-30 [1947 (45) 322; 1952 Code Section 37-603; 1962 Code Section 37-603] recodified as Section 38-15-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1260 [1947 (45) 322; 1952 Code Section 37-283; 1962 Code Section 37-283] recodified as Section 38-13-30 by 1987 Act No. 155, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537; 2021 Act No. 13 (H.3585), Section 3, eff April 12, 2021.  Effect of Amendment  2021 Act No. 13, Section 3, in (D)(1), in the third sentence, substituted "The order may be served upon the insurer by certified mail or electronic mail" for "The order must be served upon the insurer by certified mail".
 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.  HISTORY: 1987 Act No. 166, Section 11; 1993 Act No. 181, Section 537; 1997 Act No. 68, Section 2.
 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:  (1) municipalities;  (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.  HISTORY: 1987 Act No. 166, Section 12; 1993 Act No. 181, Section 537; 1997 Act No. 68, Section 3.
 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.  HISTORY: 1987 Act No. 166, Section 13; 1993 Act No. 181, Section 537; 1997 Act No. 68, Section 4.
 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.  HISTORY: 1987 Act No. 166, Section 15; 1993 Act No. 181, Section 537; 1997 Act No. 68, Section 5.
 Each insurance company shall file all of the information required under Sections 38-13-300 through 38-13-360 with the department as a prerequisite to obtaining permission to write coverage, to continue to do business, or to file for rate increases.  HISTORY: 1987 Act No. 166, Section 16; 1993 Act No. 181, Section 537.
 Each insurer who fails to comply with the terms of Sections 38-13-300 through 38-13-350 shall pay a civil penalty of a fine of twenty thousand dollars and thereafter a fine of one thousand dollars daily until the named sections of the article are complied with.  HISTORY: 1987 Act No. 166, Section 17; 1993 Act No. 181, Section 537.
 (A) No examiner may be appointed by the director if the examiner, directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in a person subject to examination under Section 38-13-10. This section does not preclude automatically an examiner from being:  (1) a policyholder or claimant under an insurance policy;  (2) a grantor of a mortgage or similar instrument on the examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business;  (3) an investment owner in shares of regulated diversified investment companies; or  (4) a settlor or beneficiary or a 'blind trust' into which otherwise impermissible holdings have been placed.  (B) Notwithstanding the requirements of this section, the director may retain on an individual basis qualified actuaries, certified public accountants, or other similar individuals who are practicing their professions independently, even though the persons may be employed or retained similarly by persons subject to examination under Section 38-13-10.  HISTORY: Former 1976 Code Section 38-13-40 [1947 (45) 322; 1952 Code Section 37-604; 1962 Code Section 37-604] recodified as Section 38-15-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1270 [1947 (45) 322; 1952 Code Section 37-284; 1962 Code Section 37-284] recodified as Section 38-13-40 by 1987 Act No. 155, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537.
 (A) Effective January 1, 1995, each insurer domiciled in this State and, effective July 1, 2006, each health maintenance organization domiciled in this State, shall file a report with the director or his designee disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements, unless these acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements have been submitted to the director or his designee for review, approval, or information purposes pursuant to other provisions of the insurance laws, regulations, or other requirements.  (B) The report required in subsection (A) is due within fifteen days after the end of the calendar month in which any of the foregoing transactions occur.  (C) All reports obtained by or disclosed to the director or his designee, pursuant to this section or Section 38-13-410 or 38-13-420 must be given confidential treatment and are not subject to subpoena and may not be made public by the director, his designee, or any other person, except to insurance departments of other states, without the prior written consent of the insurer or health maintenance organization to which it pertains, unless the director or his designee, after giving the insurer or health maintenance organization that is affected notice and an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public is best served by the publication of the reports, then the director or his designee may publish all or any part of them in the manner as the director or his designee considers appropriate.  HISTORY: 1994 Act No. 372, Section 1; 2006 Act No. 332, Section 3, eff June 1, 2006.
 (A) Acquisitions or dispositions of assets may not be reported pursuant to Section 38-13-400 if the acquisitions or dispositions are not material. For purposes of this section and Sections 38-13-400 and 38-13-420, a material acquisition or the aggregate of any series of related acquisitions during any thirty-day period, or disposition or the aggregate of any series of related dispositions during any thirty-day period is one that is nonrecurring and not in the ordinary course of business and involves more than five percent of the total admitted assets as reported in the most recent annual statement of the insurer or health maintenance organization as filed with the director or his designee.  (B)(1) Asset acquisitions subject to this section and Sections 38-13-400 and 38-13-420 include each purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the construction or development of real property by or for the reporting insurer or health maintenance organization or the acquisition of materials for that purpose.  (2) Asset dispositions subject to this section and Sections 38-13-400 and 38-13-420 include each sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction, or other disposition.  (C)(1) The following information must be disclosed in any report of a material acquisition or disposition of assets:  (a) date of the transaction;  (b) manner of acquisition or disposition;  (c) description of the assets involved;  (d) nature and amount of the consideration given or received;  (e) purpose of, or reason for, the transaction;  (f) manner by which the amount of consideration was determined;  (g) gain or loss recognized or realized as a result of the transaction; and  (h) names of the persons from whom the assets were acquired or to whom they were disposed.  (2) An insurer and a health maintenance organization shall report material acquisitions and dispositions on a nonconsolidated basis unless the insurer or health maintenance organization is part of a consolidated group of insurers or health maintenance organizations which utilize a pooling arrangement or one hundred percent reinsurance agreement that affects the solvency and integrity of the insurer's or health maintenance organization's reserves and the insurer or health maintenance organization ceded substantially all of its direct and assumed business to the pool. An insurer or a health maintenance organization is considered to have ceded substantially all of its direct and assumed business to a pool if the insurer or a health maintenance organization has less than one million dollars total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer's or health maintenance organization's capital and surplus.  HISTORY: 1994 Act No. 372, Section 1; 2006 Act No. 332, Section 4, eff June 1, 2006.
 (A) Nonrenewals, cancellations, or revisions of ceded reinsurance agreements may not be reported pursuant to Section 38-13-400 if the nonrenewals, cancellations, or revisions are not material. For purposes of this section and Sections 38-13-400 and 38-13-410, a material nonrenewal, cancellation, or revision is one that affects, for property and casualty business, including accident and health business when written as such, more than fifty percent of an insurer's or health maintenance organization's ceded written premium, or, for life, annuity, and accident and health business, more than fifty percent of the total reserve credit taken for business ceded, on an annualized basis as indicated in the insurer's or health maintenance organization's most recently filed annual statement. However, a filing is not required if the insurer's or health maintenance organization's ceded written premium or the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent of direct plus assumed written premium or ten percent of the statutory reserve requirement before any cession, respectively.  (B) Subject to the criteria outlined in subsection (A) of this section, a report must be filed without regard to which party has initiated the nonrenewal, cancellation, or revision of ceded reinsurance whenever one or more of the following conditions exist:  (1) the entire cession has been canceled, nonrenewed, or revised and ceded indemnity and loss adjustment expense reserves after any nonrenewal, cancellation, or revision represent less than fifty percent of the comparable reserves that would have been ceded had the nonrenewal, cancellation, or revision not occurred;  (2) an authorized or accredited reinsurer has been replaced on an existing cession by an unauthorized reinsurer; or  (3) collateral requirements previously established for unauthorized reinsurers have been reduced; e.g., the requirement to collateralize incurred but not reported (IBNR) claim reserves has been waived with respect to one or more unauthorized reinsurers newly participating in an existing cession.  Subject to the materiality criteria outlined in subsection (A) of this section, for purposes of items (2) and (3), a report must be filed if the result of the revision affects more than ten percent of the cession.  (C)(1) The following information must be disclosed in any report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements:  (a) effective date of the nonrenewal, cancellation, or revision;  (b) the description of the transaction with an identification of the initiator of the transaction;  (c) purpose of, or reason for, the transaction; and  (d) if applicable, the identity of the replacement reinsurers.  (2) An insurer and a health maintenance organization are required to report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer or health maintenance organization is part of a consolidated group of insurers or health maintenance organizations which utilizes a pooling arrangement or one hundred percent reinsurance agreement that affects the solvency and integrity of the insurer's or health maintenance organization's reserves and the insurer or health maintenance organization ceded substantially all of its direct and assumed business to the pool. An insurer or a health maintenance organization is considered to have ceded substantially all of its direct and assumed business to a pool if the insurer or health maintenance organization has less than one million dollars total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer's or health maintenance organization's capital and surplus.  HISTORY: 1994 Act No. 372, Section 1; 2006 Act No. 332, Section 5, eff June 1, 2006.
 The insurer shall pay the charges incurred in the examination, including the expenses of the director or his designee and the expenses and compensation of his examiners and assistants. The director or his designee promptly shall institute a civil action to recover the expenses of examination against an insurer which refuses or fails to pay.  HISTORY: Former 1976 Code Section 38-13-50 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1952 Code Section 37-605; 1962 Code Section 37-605; 1966 (54) 2141; 1975 (59) 318; 1986 Act No. 429, Section 3] recodified as Section 38-15-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1280 [1947 (45) 322; 1952 Code Section 37-285; 1962 Code Section 37-285] recodified as Section 38-13-50 by 1987 Act No. 155, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537.
 (A) No cause of action may arise nor may liability be imposed against:  (1) the director, the director's authorized representatives or his designees, or an examiner appointed by the director for statements made or conduct performed in good faith while carrying out Sections 38-13-10 through 38-13-40;  (2) a person for communicating or delivering information or data to the director or the director's authorized representative or examiner pursuant to an examination made under Sections 38-13-10 through 38-13-40 if the communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive.  (B) This section does not abrogate or modify common law or statutory privilege or immunity enjoyed by a person identified in subsection (A).  (C) A person identified in subsection (A) may receive attorney's fees and costs if he is the prevailing party in a civil cause of action for libel, slander, or another relevant tort arising out of his activities in carrying out Sections 38-13-10 through 38-13-40 and the party bringing the action was not justified substantially in doing so. For purposes of this section a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.  HISTORY: Former 1976 Code Section 38-13-60 [1947 (45) 322; 1952 Code Section 37-606; 1962 Code Section 37-606] recodified as Section 38-15-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1290 [1947 (45) 322; 1952 Code Section 37-286; 1962 Code Section 37-286] recodified as Section 38-13-60 by 1987 Act No. 155, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537.
 Upon his own motion or upon written complaint filed by a citizen of this State that an insurer, health maintenance organization, or other person licensed or authorized to transact business in this State has violated this title, the director or his designee shall investigate the matter and, if necessary, examine under oath the president and other officers or agents of the insurer, health maintenance organization, or other person and all books, records, and papers of the insurer, health maintenance organization, or other person. The insurer, health maintenance organization, or other person and its representatives shall respond to the department's inquiries, requests for information, or investigations within seven calendar days or within a larger timeframe granted by the director or his designee. If the director or his designee finds upon substantial evidence that a complaint is justified, the insurer, health maintenance organization, or other person, in addition to the penalties imposed for violation of this title, is liable for the expenses of the investigation, and the director or his designee shall promptly present the insurer with a statement of the expenses. If the insurer, health maintenance organization, or other person refuses or neglects to pay, the director or his designee is authorized to revoke its license and to bring civil action for the collection of the expenses.  HISTORY: Former 1976 Code Section 38-13-70 [1947 (45) 322; 1952 Code Section 37-607; 1962 Code Section 37-607] recodified as Section 38-15-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1240 [1947 (45) 322; 1952 Code Section 37-287; 1962 Code Section 37-287] recodified as Section 38-13-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 537; 2018 Act No. 219 (H.4657), Section 2, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 2, rewrote the section, authorizing the department to respond to motions and complaints against health maintenance organizations and persons licensed to transact the business of insurance in the State.
 (A) At least every five years, or upon request pursuant to Section 38-13-710, the director must conduct an examination of the unemployment compensation fund administered by the Department of Employment and Workforce. Examinations scheduled by the director must include at least a detailed accounting of the revenue and expenditures of the fund and an analysis of the current and future solvency of the fund.  (B) In scheduling and determining the nature, scope, and frequency of examinations, the director shall consider compliance with relevant federal and South Carolina laws and regulations, the results of previous examinations, changes in management, and reports of the audits performed by the Legislative Audit Council.  (C) For purposes of completing an examination of an insurer under this article, the director may examine or investigate the Department of Employment and Workforce in a manner considered necessary or material by the director.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 (A) An examination of the unemployment compensation fund may be initiated upon the request of either:  (1) the Chairman of the Senate Labor, Commerce and Industry Committee or the Chairman of the Senate Finance Committee and the President of the Senate; or  (2) the Chairman of the House of Representatives Labor, Commerce and Industry Committee or the Chairman of the House of Representatives Ways and Means Committee and the Speaker of the House of Representatives.  (B) The request must describe the issues upon which the requestor would like for the examination to focus.  (C) The director must consult with the requestors to determine the appropriate scope of the examination.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.  Editor's Note  2019 Act No. 1, Section 97, provides as follows:  "SECTION 97. The Code Commissioner is directed to change all references to 'President Pro Tempore', 'President Pro Tempore of the Senate', or 'President of the Senate Pro Tempore' not specifically addressed in this act to 'President of the Senate'."
 (A) The Department of Employment and Workforce must provide timely, convenient, and free access to all books, records, accounts, papers, documents, and computer or other recordings relating to the subject of the examination. If the director considers it necessary to the conduct of the examination, he may require that the Department of Employment and Workforce furnish the original books and records. The Executive Director of the Department of Employment and Workforce shall facilitate the examination and aid in the examination.  (B) The director may issue subpoenas, administer oaths, and examine under oath a person as to matters pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the director may petition a court of competent jurisdiction, and upon proper showing the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court.  (C) When making an examination pursuant to this article, the director may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners. The cost of the retainment must be borne by the Department of Employment and Workforce. Examination fees must be retained by the department and are considered "other funds".  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 In addition to any other recognized and appropriate examination methodologies, when conducting an examination, the department must utilize sample data testing to verify the accuracy of information provided by the Department of Employment and Workforce.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 The results of each examination must be compiled in a report. Examination reports must be comprised of only facts appearing on the books, records, or other documents maintained by the Department of Employment and Workforce and as ascertained from the testimony of the executive director and any other employees examined concerning the subject of the examination, and the conclusions and recommendations of the director that he finds warranted from the facts. The reports must be submitted to the General Assembly, the Review Committee, and the Governor, and made available on the Internet websites maintained by the Department of Insurance and the Department of Employment and Workforce.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 The director may not assign an examiner that has a conflict of interest.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 The Department of Employment and Workforce shall pay the charges incurred in the examination, including the expenses of the director and the expenses and compensation of his examiners and assistants.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 The director may require the Department of Employment and Workforce to answer any inquiry in relation to the administration of the unemployment compensation fund. The Executive Director of the Department of Employment and Workforce must promptly reply in writing.  HISTORY: 2010 Act No. 146, Section 117, eff March 30, 2010.
 (A) Every insurer must file annually with the department by March first and quarterly as required by this title, a statement showing the business standing and financial condition of the insurer on December thirty-first of the preceding year. The filing must be submitted in an electronic format acceptable to the National Association of Insurance Commissioners or in the form and detail the director, or his designee, prescribes. Upon timely written request by the chief managing agent or officer setting forth reasons why the statement cannot be filed within the time provided, the director, or his designee, may grant in writing an extension of filing time for not more than thirty days. This statement must conform substantially to the form of statement adopted by the National Association of Insurance Commissioners. Unless the director, or his designee, provides otherwise, the annual statement is to be prepared in accordance with the annual statement instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners. The annual statement must be verified by at least two of its principal officers, at least one of whom prepared or supervised the preparation of the annual statement.  (B) The director or his designee may require every insurer to file quarterly reports and additional information considered necessary to enable the director or his designee to carry out his duties under this chapter. The reports and information must be furnished in the time and manner prescribed by the director or his designee.  HISTORY: Former 1976 Code Section 38-13-80 [1947 (45) 322; 1952 Code Section 37-608; 1962 Code Section 37-608] recodified as Section 38-15-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1300 [1947 (45) 322; 1952 Code Section 37-293; 1962 Code Section 37-293; 1964 (53) 2054; 1972 (57) 2529; 1979 Act No. 25] recodified as Section 38-13-80 by 1987 Act No. 155, Section 1; 1988 Act No. 324; 1990 Act No. 367, Section 1; 1993 Act No. 181, Section 537; 2000 Act No. 312, Section 5; 2022 Act No. 195 (H.4832), Section 5, eff May 16, 2022.  Effect of Amendment  2022 Act No. 195, Section 5, rewrote (A).
 (A) The purpose of this article is to provide the requirements for maintaining a risk management framework and completing an Own Risk and Solvency Assessment (ORSA) and provide guidance and instructions for filing an ORSA Summary Report with the insurance director of this State.  (B) The requirements of this article apply to all insurers domiciled in this State unless exempt pursuant to Section 38-13-860.  (C) The General Assembly finds and declares that an ORSA Summary Report contains confidential and sensitive information related to an insurer or insurance group's identification of risks material and relevant to the insurer or insurance group filing the report. This information includes proprietary and trade secret information that has the potential for harm and competitive disadvantage to the insurer or insurance group if the information is made public. It is the intent of the General Assembly that:  (1) an ORSA Summary Report, including all documents, materials, or other information related to its preparation, is a confidential document filed with the director and only may be shared as stated in this article;  (2) an ORSA Summary Report will be used to assist the director in the performance of his duties; and  (3) in no event may an ORSA Summary Report and its accompanying documents be subject to public disclosure.  (D) Nothing in this section prohibits an order from a court of competent jurisdiction requiring an insurance company that is subject to this article to produce an ORSA Summary Report.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.  Code Commissioner's Note  At the direction of the Code Commissioner in 2017, in (A), "this article" was substituted for "this act" to correct a clerical error.
 For purposes of this article, the term:  (1) "Director" means the Director of the Department of Insurance.  (2) "Insurance group" means insurers and affiliates included within an insurance holding company system.  (3) "Insurer" has the same meaning as set forth in Section 38-1-20, except the term does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.  (4) "Own Risk and Solvency Assessment" or "ORSA" means a confidential internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer or insurance group's current business plan, and the sufficiency of capital resources to support those risks.  (5) "ORSA Guidance Manual" means the current version of the Own Risk and Solvency Assessment Guidance Manual developed and adopted by the National Association of Insurance Commissioners (NAIC) and as amended from time to time. A change in the ORSA Guidance Manual is effective on January first of the following calendar year in which the changes have been adopted by the NAIC.  (6) "ORSA Summary Report" means a confidential high-level summary of an insurer or insurance group's ORSA.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 Subject to Section 38-13-860, an insurer, or the insurance group of which the insurer is a member, regularly shall conduct an ORSA consistent with a process comparable to the ORSA Guidance Manual. The ORSA must be conducted no less than annually but also when significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member occur.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 (a) Every insurer who is authorized to write insurance in this State must file annually with the National Association of Insurance Commissioners by March first a copy of its annual statement convention blank and any quarterly statements required by this title along with any additional filings prescribed by the director, or his designee, for the preceding year in an electronic format acceptable to the National Association of Insurance Commissioners. The information filed with the National Association of Insurance Commissioners must be in the same format and scope as that required by the director, or his designee, and must include the signed jurat page and the actuarial certification. Any amendments and addenda to the annual statement filing subsequently filed with the director, or his designee, also must be filed with the National Association of Insurance Commissioners in an electronic format acceptable to the National Association of Insurance Commissioners. Foreign insurers domiciled in a state which has a law substantially similar to this subsection are considered in compliance with this subsection.  (b) In the absence of actual malice, members of the National Association of Insurance Commissioners, their authorized committees, subcommittees, and task forces, their delegates, National Association of Insurance Commissioners' employees, and all others charged with the responsibility of collecting, reviewing, analyzing, and disseminating the information developed from the filing of the annual statement convention blanks are acting as agents of the director or his designee under the authority of this section and are not subject to civil liability for libel, slander, or any other cause of action by virtue of their collection, review, and analysis or dissemination of the data and information collected from the filings required by this subsection.  (c) All financial analysis ratios and examination synopses concerning insurers submitted to the department by the National Association of Insurance Commissioners' Insurance Regulatory Information System are confidential and may not be disclosed by the department.  HISTORY: 1988 Act No. 332; 1993 Act No. 181, Section 537; 2022 Act No. 195 (H.4832), Section 6, eff May 16, 2022.  Effect of Amendment  2022 Act No. 195, Section 6, rewrote (a).
 (A) Upon the director's request, and no more than once each year, an insurer shall submit to the director an ORSA Summary Report or a combination of reports that contain the information described in the ORSA Guidance Manual, applicable to the insurer and/or the insurance group of which it is a member. Notwithstanding a request from the director, if the insurer is a member of an insurance group, the insurer shall submit the reports required by this subsection if the director is the lead state director of the insurance group as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.  (B) The reports must include a signature of the insurer or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process attesting to the best of his belief and knowledge that the insurer applies the enterprise risk management process described in the ORSA Summary Report and that a copy of the report has been provided to the insurer's board of directors or other appropriate committees.  (C) An insurer may comply with subsection (A) by providing the most recent and substantially similar reports provided by the insurer or another member of an insurance group of which the insurer is a member to the commissioner of another state or to a supervisor or regulator of a foreign jurisdiction, if that report provides information that is comparable to the information described in the ORSA Guidance Manual. A report in a language other than English must be accompanied by a translation of that report into the English language.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 (A) An insurer is exempt from the requirements of this article if the:  (1) insurer has annual direct written and unaffiliated assumed premiums, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than five hundred million dollars; and  (2) insurance group of which the insurer is a member has annual direct written and unaffiliated assumed premiums including international direct and assumed premiums, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than one billion dollars.  (B) If an insurer qualifies for exemption pursuant to item (1) of subsection (A), but the insurance group of which the insurer is a member does not qualify for exemption pursuant to item (2) of subsection (A), the ORSA Summary Report that is required pursuant to Section 38-13-850 must include every insurer within the insurance group. This requirement may be satisfied by the submission of more than one ORSA Summary Report for a combination of insurers provided the combination of reports includes every insurer within the insurance group.  (C) If an insurer does not qualify for exemption pursuant to item (1) of subsection (A), but the insurance group of which it is a member qualifies for exemption pursuant to item (2) of subsection (A), the only ORSA Summary Report that may be required pursuant Section 38-13-850 is the report applicable to that insurer.  (D) An insurer that does not qualify for exemption pursuant to subsection (A) may apply to the director for a waiver from the requirements of this article based upon unique circumstances. In deciding whether to grant the insurer's request for waiver, the director may consider the type and volume of business written, ownership and organizational structure, and any other factor the director considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the director shall coordinate with the lead state commissioner and with the other domiciliary commissioners in considering whether to grant the insurer's request for a waiver.  (E) Notwithstanding the exemptions stated in this section, the director may require an insurer to maintain a risk management framework, conduct an ORSA, and file an ORSA Summary Report:  (1) based on unique circumstances including, but not limited to, the type and volume of business written, ownership, and organizational structure, federal agency requests, and international supervisor requests;  (2) if the insurer has risk-based capital for a company action level event as set forth in Section 38-9-330, meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Section 38-5-120 or otherwise exhibits qualities of a troubled insurer as determined by the director.  (F) If an insurer that qualifies for an exemption pursuant to subsection (A) subsequently no longer qualifies for that exemption due to premium changes as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer has one year following the year the threshold is exceeded to comply with the requirements of this article.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 (A) The ORSA Summary Report must be prepared consistent with the ORSA Guidance Manual, subject to the requirements of subsection (B). Documentation and supporting information must be maintained and made available upon examination or upon request by the director.  (B) The review of the ORSA Summary Report and additional requests for information must be made using similar procedures currently used in the analysis and examination of multistate or global insurers and insurance groups.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 (A) Documents, materials, or other information, including the ORSA Summary Report, in the possession or control of the department that are obtained by, created by, or disclosed to the director or another person under this article, are recognized by this State as being proprietary and to contain trade secrets. All such documents, materials, or other information are confidential by law and privileged, are not subject to Section 30-4-10, subpoena, discovery, and are not admissible as evidence in a private civil action. However, the director is authorized to use the documents, materials, or other information in furtherance of a regulatory or legal action brought as a part of the director's official duties. The director may not otherwise make the documents, materials, or other information public without the prior written consent of the insurer.  (B) The director or a person who received documents, materials, or other ORSA-related information, through examination or otherwise, while acting under the authority of the director or with whom such documents, materials, or other information are shared pursuant to this article may not be permitted or required to testify in a private civil action concerning confidential documents, materials, or information subject to subsection (A).  (C) To assist in the performance of his regulatory duties, the director:  (1) may, upon request, share documents, materials, or other ORSA-related information, including the confidential and privileged documents, materials, or information subject to subsection (A), including proprietary and trade secret documents and materials with other state, federal, and international financial regulatory agencies, including members of a supervisory college as defined in Section 38-21-10(10), with the NAIC and with any third-party consultants designated by the director, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality;  (2) may receive documents, materials, or other ORSA-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade-secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of a supervisory college as defined in Section 38-21-10(10) and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and  (3) shall enter into a written agreement with the NAIC or a third-party consultant governing sharing and use of information provided pursuant to this article, consistent with this subsection that:  (a) specifies procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant pursuant to this article, including procedures and protocols for sharing by the NAIC with other state regulators from states in which the insurance group has domiciled insurers, provided, the agreement must provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality;  (b) specifies that ownership of information shared with the NAIC or a third-party consultant pursuant to this article remains with the director and that the NAIC's or a third-party consultant's use of the information is subject to the direction of the director;  (c) prohibits the NAIC or third-party consultant from storing the information in a permanent database after the underlying analysis is completed;  (d) requires prompt notice to be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant pursuant to this article is subject to a request or subpoena to the NAIC or a third-party consultant for disclosure or production;  (e) requires the NAIC or a third-party consultant to consent to intervention by an insurer in a judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this article; and  (f) provides for the insurer's written consent in the case of an agreement involving a third-party consultant.  (D) The sharing of information and documents by the director pursuant to this article does not constitute a delegation of regulatory authority or rulemaking. The director is solely responsible for the administration, execution, and enforcement of the provisions of this article.  (E) No waiver of an applicable privilege or claim of confidentiality in the documents, proprietary, and trade-secret materials or other ORSA-related information may occur as a result of disclosure of this ORSA-related information or documents to the director under this section or as a result of sharing authorized in this article.  (F) Documents, materials, or other information in the possession or control of the NAIC or a third-party consultant pursuant to this article are:  (1) confidential by law and privileged;  (2) not subject to Section 30-4-10;  (3) not subject to subpoena; and  (4) not subject to discovery or admissible as evidence in a private civil action.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 An insurer who, without just cause, fails to timely file the ORSA Summary Report shall, after notice and hearing, pay a penalty of one thousand dollars for each day's delay, to be recovered by the director. The penalty funds recovered must be paid into the General Revenue Fund of this State. The maximum penalty under this section is thirty thousand dollars. The director may reduce the penalty if the insurer demonstrates to the director that the imposition of the penalty would constitute a financial hardship to the insurer.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.
 No insurer may publish a statement of its assets and liabilities unless it shows both its assets and liabilities with equal conspicuousness. The statement shall reflect the assets and liabilities as were shown on the last annual statement or subsequent report of examination accepted by the director or his designee unless the director or his designee has given prior written approval to the publishing of a statement as of another date. Any publication purporting to show the capital of the insurer shall exhibit only the amount of capital actually paid in. An insurer or agent violating this section is subject to the penalties provided in Section 38-2-10.  HISTORY: Former 1976 Code Section 38-13-90 [1947 (45) 322; 1952 Code Section 37-609; 1962 Code Section 37-609] recodified as Section 38-15-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1310 [1947 (45) 322; 1952 Code Section 37-289; 1958 (50) 1607; 1960 (51) 1646; 1962 Code Section 37-289] recodified as Section 38-13-90 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 6; 1993 Act No. 181, Section 537.
 The requirements of this article become effective on January 1, 2018. The first filing of an ORSA Summary Report must take place in 2018 pursuant to Section 38-13-850.  HISTORY: 2017 Act No. 48 (S.254), Section 1, eff January 1, 2018.  Code Commissioner's Note  At the direction of the Code Commissioner in 2017, in (A), "this article" was substituted for "this act" to correct a clerical error.
 This chapter provides for the creation of Special Purpose Reinsurance Vehicles (SPRVs) exclusively to facilitate the securitization of one or more ceding insurers' risk as a means of accessing alternative sources of capital and achieving the benefits of securitization. Investors in fully funded insurance securitization transactions provide funds that are available to the SPRV to secure the aggregate limit under a SPRV contract that provides coverage against the occurrence of a triggering event. The creation of SPRVs is intended to achieve greater efficiencies in conducting insurance securitizations, to diversify and broaden insurers' access to sources of risk-bearing capital, and to make insurance securitization generally available on reasonable terms to as many United States insurers as possible.  Under the terms of the typical securities underlying an insurance securitization transaction, proceeds from the issuance of securities are repaid to the investor on a specified maturity date with interest or dividends unless a triggering event occurs. The insurance securitization proceeds are available to pay the SPRV's obligations to the ceding insurer if a triggering event occurs, as well as being available to satisfy the SPRV's obligation to repay the insurance securitization investors if a triggering event does not occur. Insurance securitization transactions have been performed by alien companies to utilize efficiencies available to alien companies that are not currently available to domestic companies. This chapter allows more efficiency in conducting insurance securitizations, allows domestic ceding insurers easier access to alternative sources of risk-bearing capital, and promotes the benefits of insurance securitization to United States insurers.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 The SPRV may not declare or pay dividends in any form to its owners unless the dividends do not decrease the capital of the SPRV below five thousand dollars and, after giving effect to the dividends, the assets of the SPRV, including assets held in trust pursuant to the terms of the insurance securitization, must be sufficient to meet its obligations. The dividends may be declared by the board of directors of the SPRV if the dividends would not violate the provisions of this chapter or jeopardize the fulfillment of the obligations of the SPRV or the trustee pursuant to the SPRV insurance securitization, the SPRV contract, or any related transaction. The provisions of Chapter 21 pertaining to dividends do not apply to such dividends.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) The records of the SPRV must be maintained in this State and must be available for examination by the director, or his designee, at any time. No later than five months after the fiscal year end of the SPRV, the SPRV must file with the director, or his designee, an audit by a certified public accounting firm of the financial statements of the SPRV and the trust accounts.  (B) Each SPRV organized under this chapter must file with the director, or his designee, by March first a statement of operations, to include a statement of income, a balance sheet, and a detailed listing of invested assets, including identification of assets held in trust to secure the SPRV's obligations under the SPRV contract, for the year ending the prior December thirty-first. The statements must be prepared in accordance with Section 38-13-80 on forms required by the director, or his designee.  (C) The SPRV must keep its books and records in such manner that its financial condition, affairs, and operations can be ascertained and so that its financial statements filed with the director, or his designee, can be readily verified and its compliance with the provisions of this chapter determined. The books or records may be photographed, reproduced on film, or stored and reproduced electronically.  (D) All original books, records, documents, accounts, and vouchers must be preserved and kept available in this State for the purpose of examination and until authority to destroy or otherwise dispose of the records is secured from the director, or his designee. The original records, however, may be kept and maintained outside this State if, according to a plan adopted by the SPRV's board of directors and approved by the director, or his designee, it maintains suitable records in lieu of it.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 The directors of a SPRV must elect officers that they consider necessary to carry out the purposes of the SPRV pursuant to this chapter. The provisions of Title 33 relating to the indemnification of officers and directors apply to and govern SPRVs organized under this chapter.  (A) Each SPRV authorized to do business in this State must notify the director, or his designee, within thirty days of the appointment or election of any new officers or directors.  (B) In cases where the director, or his designee, deems that an officer or director does not meet the standards set forth in this section, he must, after notice and hearing afforded to the officer or director, and after a finding that the officer or director is incompetent or untrustworthy or of known bad character, order the removal of the person. If the SPRV does not comply with a removal order within thirty days, the director, or his designee, may suspend that SPRV's limited certificate of authority until such time as the SPRV complies with the order.  (C) The SPRV must make no loans to any SPRV organizer, owner, director, officer, manager, or affiliate of the SPRV.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 The director, or his designee, may charge fees to reimburse the director, or his designee, for expenses and costs incurred by the Department of Insurance incident to the examination of financial statements, review of the plan of operation, and to reimburse other such activities of the director, or his designee, related to the formation and ongoing operation of the SPRV. The SPRV must not be subject to state premium or other state taxes incidental to the operation of its business as long as the business remains within the limitations of this chapter.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 A SPRV operating under this chapter may be dissolved at any time by a vote of its board of directors, and after the action has been approved by the director, or his designee. A voluntary dissolution must not be effected or allowed until and unless all of the obligations of the SPRV pursuant to the insurance securitization have been fully and finally satisfied pursuant to their terms. In the case of voluntary dissolution, the disposition of the affairs of the SPRV, including the settlement of all outstanding obligations, must be made by the officers or directors of the SPRV and when the liquidation has been completed and a final statement, in acceptable form, filed with and approved, or deemed approved, by the director, or his designee, the provisions for voluntary dissolution under Title 33 must be followed to dissolve the SPRV.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) The provisions of Chapter 27 of this title apply to a SPRV, except to the extent modified below.  (B)(1) Notwithstanding the provisions of Chapter 27, the director, or his designee, may apply by petition to the circuit court for an order authorizing the director, or his designee, to conserve, rehabilitate, or liquidate a SPRV domiciled in this State on one or more of the following grounds:  (a) there has been embezzlement, wrongful sequestration, dissipation, or diversion of the assets of the SPRV intended to be used to pay amounts owed to the ceding insurer or the holders of SPRV securities; or  (b) the SPRV is insolvent and the holders of a majority in outstanding principal amount of each class of SPRV securities request or consent to conservation, rehabilitation, or liquidation under this chapter.  (2) The court must not grant relief under item (1)(a) unless, after notice and a hearing, the director, or his designee, who must have the burden of proof, establishes by clear and convincing evidence that relief must be granted.  (C) Notwithstanding any contrary provision in this title, the regulations promulgated under this title, or any other applicable law or regulation, upon any order of conservation, rehabilitation, or liquidation of the SPRV, the receiver must be bound to deal with the SPRV's assets and liabilities in accordance with the requirements set forth in this chapter.  (D) With respect to amounts recoverable under a SPRV contract, the amount recoverable by the receiver must not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the ceding insurer, notwithstanding any provisions to the contrary in the contracts or other documentation governing the SPRV insurance securitization.  (1) Notwithstanding the provisions of Chapter 27, an application or petition, or any temporary restraining order or injunction issued under Chapter 27, with respect to a ceding insurer must not prohibit the transaction of any business by a SPRV, including any payment by a SPRV made pursuant to a SPRV security, or any action or proceeding against a SPRV or its assets.  (2) Notwithstanding the provisions of Chapter 27, the commencement of a summary proceeding or other interim proceeding commenced before a formal delinquency proceeding with respect to a SPRV, and any order issued by the court must not prohibit the payment by a SPRV made pursuant to a SPRV security or SPRV contract or the SPRV from taking any action required to make the payment.  (E) Notwithstanding any other provision of Chapter 27 or other state law:  (1) a receiver of a ceding insurer may not avoid a nonfraudulent transfer by a ceding insurer to a SPRV of money or other property made pursuant to a SPRV contract; and  (2) a receiver of a SPRV may not void a nonfraudulent transfer by the SPRV of money or other property made to a ceding insurer pursuant to a SPRV contract or made to or for the benefit of any holder of a SPRV security on account of the SPRV security.  (F) With the exception of the fulfillment of the obligations under a SPRV contract, and notwithstanding any other provisions of this chapter or other law of this State to the contrary, the assets of a SPRV, including assets held in trust, must not be consolidated with or included in the estate of a ceding insurer in any delinquency proceeding against the ceding insurer under this chapter for any purpose including, without limitation, distribution to creditors of the ceding insurer.  (G) Notwithstanding any other provision of this chapter:  (1) the domiciliary receiver of a SPRV domiciled in another state must be vested by operation of law with the title to all assets, property, contracts, and rights of action, and all books, accounts, and other records of the SPRV located in this State. The domiciliary receiver must have the immediate right to recover all vested property, assets, and causes of action of the SPRV located in this State;  (2) an ancillary proceeding may not be commenced or prosecuted in this State against a SPRV domiciled in another state.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) The SPRV or the activities, assets, and obligations relating to the SPRV are not subject to the provisions of Chapters 29 and 31, and a SPRV must not be assessed by or otherwise be required to contribute to any guaranty fund or guaranty association in this State with respect to the activities, assets, or obligations of a SPRV or the ceding insurer.  (B) The SPRV must not be required to participate in residual market, FAIR plan, or other similar plans to provide insurance coverage, take out policies, assume risks, make capital contributions, pay, or be otherwise obligated for assessments, surcharges or fees, or otherwise support or participate in such plans or arrangements.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) Assets of the SPRV held in trust to secure obligations under the SPRV contract must at all times be held in:  (1) cash and cash equivalents;  (2) securities listed by the Securities Valuation Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; or  (3) any other form of security acceptable to the director, or his designee.  (B) In addition, the SPRV may enter into swap agreements or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in the trust to ensure that the investments are sufficient to assure payment or repayment of the securities (and related interest or principal payments) issued pursuant to a SPRV insurance securitization transaction or the SPRV's obligations under the SPRV contract.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 A SPRV contract meeting the requirements under this chapter must be granted credit for reinsurance treatment or must otherwise qualify as an asset or a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer under Section 38-9-210 for the benefit of the ceding insurer, provided and only to the extent that:  (A) the fair value of the assets held in trust for the benefit of the ceding insurer equal or exceed the obligations due and payable to the ceding insurer by the SPRV under the SPRV contract;  (B) the assets are held in trust in accordance with the requirements set forth in this chapter;  (C) the assets are administered in the manner and pursuant to arrangements as set forth in this chapter; and  (D) the assets are held or invested in one or more of the forms allowed in Section 38-14-170.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 The securities issued by the SPRV pursuant to a SPRV insurance securitization must not be deemed to be insurance or reinsurance contracts. An investor in such securities issued pursuant to a SPRV insurance securitization or any holder of such securities must not, by sole means of this investment or holding, be deemed to be transacting an insurance business in this State. The underwriters or selling agents and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors involved in a SPRV insurance securitization must not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection therewith.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) The following sections of Title 38, Code of Laws of South Carolina, 1976, apply to SPRVs: 38-2-10, 38-3-110 through 38-3-240, 38-5-120, 38-5-130, 38-13-10 through 38-13-420, and 38-57-200.  (B) No other provisions of this title are applicable to a SPRV organized under this chapter, except as provided in this chapter.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 The director, or his designee, may promulgate regulations necessary to effectuate the purposes of this chapter. Regulations promulgated pursuant to this section do not affect a SPRV insurance securitization in effect at the time of the promulgation.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.  
 For purposes of this chapter, the following terms have the indicated meanings:  (1) "Aggregate limit" means the maximum sum payable to the ceding insurer under a SPRV contract.  (2) "Ceding insurer" means one or more insurers or reinsurers under common control that enters into a SPRV contract with a SPRV.  (3) "Control", including the terms " controlling", "controlled by" and " under common control with", means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control must be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not, in fact, exist. Notwithstanding the foregoing, for purposes of this chapter, the fact that a SPRV exclusively provides reinsurance to a ceding insurer under a SPRV contract must not by itself be sufficient grounds for a finding that the SPRV or the SPRV organizer or owner is controlled by or under common control with the ceding insurer.  (4) "Fair value" means:  (a) as to cash, the amount of it; and  (b) as to an asset other than cash:  (1) the amount at which that asset could be bought or sold in a current transaction between arms-length, willing parties;  (2) the quoted market price for the asset in active markets should be used if available; and  (3) if quoted market prices are not available, a value determined using the best information available considering values of like assets and other valuation methods, such as present value of future cash flows, historical value of the same or similar assets or comparison to values of other asset classes, the value of which have been historically related to the subject asset.  (5) "Fully funded" means that, with respect to a SPRV contract, the fair value of the assets held in trust by or on behalf of the SPRV under the SPRV contract on the date on which the SPRV contract is effected, equals or exceeds the aggregate limit as defined in this chapter.  (6) "Indemnity trigger" means a transaction term by which the SPRV's obligation to pay the ceding insurer for losses covered by a SPRV contract is triggered by the ceding insurer incurring a specified level of losses.  (7) "Insolvency" or "insolvent" means that the SPRV is unable to pay its obligations when they are due, unless those obligations are the subject of a bona fide dispute.  (8) "Nonindemnity trigger" means a transaction term by which the SPRV's obligation to pay the ceding insurer under a SPRV contract arises from the occurrence or existence of some event or condition other than the ceding insurer incurring a specified level of losses under its insurance or reinsurance contracts.  (9) "Permitted investments" means those investments that meet the qualifications pursuant to Section 38-14-170 of this chapter.  (10) "Qualified United States financial institution" means, for purposes of meeting the requirements of a trustee as specified in Section 38-12-60, a financial institution that is eligible to act as a fiduciary of a trust, and is:  (a) organized, or, in the case of a United States branch or agency office of a foreign banking organization, is licensed under the laws of the United States or any state of the United States; and  (b) regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies.  (11) "SPRV" or "Special Purpose Reinsurance Vehicle" means an entity domiciled in and organized under the laws of South Carolina, which has received a Limited Certificate of Authority from the director, or his designee, under this chapter exclusively for the limited purpose of entering into and effectuating SPRV insurance securitizations, SPRV contracts, and other related transactions permitted by this chapter.  (12) "SPRV contract" means a contract between the SPRV and the ceding insurer pursuant to which the SPRV agrees to pay the ceding insurer an agreed amount upon the occurrence of a triggering event.  (13) "SPRV insurance securitization" means a package of related risk transfer instruments and facilitating administrative agreements by which proceeds are obtained by a SPRV through the issuance of securities, which proceeds are held in trust pursuant to the requirements of this chapter to secure the obligations of the SPRV under a SPRV contract with one or more ceding insurers, wherein the SPRV's obligation to return the full initial investment to the holders of such securities, pursuant to the transaction terms, is contingent upon the funds not being used to pay the obligations of the SPRV to the ceding insurers under the SPRV contract.  (14) "SPRV organizer" means one or more persons who have organized or intend to organize a SPRV, under authority obtained pursuant to Section 38-14-40 of this chapter.  (15) "SPRV securities" means the securities issued by a SPRV.  (16) "Triggering event" means an event or condition that, if and when it occurs or exists, obligates the SPRV to make a payment to the ceding insurer under the provisions of a SPRV contract.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) Within thirty days after receipt by the director, or his designee, of a complete filing by the prospective SPRV organizer for authority to form or acquire a SPRV, which SPRV must exist and operate expressly for the limited purposes set forth in this chapter, the application must be deemed approved and a limited certificate of authority must be issued, unless before the expiration of the thirty-day period the director, or his designee, approves or disapproves the application in writing. A limited certificate of authority may not be issued unless the country or state of domicile of each ceding insurer has notified the director or his designee in writing that they have not disapproved the transaction.  (B) A complete filing of the application must include the following:  (1) an affidavit verifying that each prospective SPRV organizer meets the requirements of this chapter;  (2) a representation that the prospective SPRV organizer intends to form a SPRV that must operate in accordance with the requirements set forth in this chapter;  (3) the proposed name of the SPRV;  (4) biographical affidavits of all SPRV organizers setting forth their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Chapter 21, together with such other biographical information as the director, or his designee, may request;  (5) the source and form of the minimum capital to be contributed to the SPRV;  (6) any persons with which the SPRV is or, upon formation, will be affiliated as defined in Chapter 21;  (7) the names and biographical affidavits of the proposed members of the board of directors and principal officers of the SPRV, setting forth their legal names, any names under which they have or are conducting their affairs and any affiliations with other persons as defined in Chapter 21, together with such other biographical information as the director, or his designee, may request; and  (8) a plan of operation, consisting of a description of the contemplated insurance securitization, the SPRV contract and related transactions, which must include:  (a) draft documentation or, at the discretion of the director, or his designee, a written summary of all material agreements that are entered into to effectuate the insurance securitization and the related SPRV contract, to include the names of the ceding insurers, the nature of the risks being assumed, and the maximum amounts, purpose, and nature and the interrelationships of the various transactions required to effectuate the insurance securitization;  (b) the investment strategy of the SPRV and a representation that the investment strategy complies with the investment requirements set forth in this chapter and that the strategy will include investment practices or other provisions to preserve asset values, which will facilitate attainment of full funding during the term of the securitization with assets that may be monetized in response to a triggering event without a substantial loss in value;  (c) a description of the method by which losses covered by the SPRV contract that may develop after the termination of the contract period are to be addressed under the provisions of the SPRV contract; and  (d) a representation that the trust agreement and the trusts holding assets that secure the obligations of the SPRV under the SPRV contract and the SPRV contract with the ceding insurers in connection with the contemplated insurance securitization will be structured in accordance with the requirements set forth in this chapter.  (C) The director, or his designee, must approve the application and issue a limited certificate of authority upon a finding that:  (1) the proposed plan of operation provides a reasonable expectation of a successful operation;  (2) the terms of the SPRV contract and related transactions comply with this chapter;  (3) the proposed plan of operation is not hazardous to any ceding insurer or to policyholders; and  (4) the commissioner of the state of domicile of each ceding insurer has notified the director, or his designee, in writing that it has not disapproved the transaction. In evaluating the expectation of a successful operation, the director, or his designee, must consider, among other factors, whether the proposed SPRV organizer, directors, and officers are of known good character and not reasonably believed to be affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations, with any person known to have been involved in the improper manipulation of assets, accounts, or reinsurance. If the director, or his designee, denies the application, he must grant the prospective SPRV organizer a hearing upon request.  (D) Upon approval by the director, or his designee, of the application and the issuance of a limited certificate of authority, the SPRV may be acquired or formed and, in accordance with the approved plan of operation, the SPRV may enter into contracts and conduct other activities within the scope of the filed plan of operation.  (E) The limited certificate of authority must state that the SPRV's authorization to be involved in the business of reinsurance must be limited only to the reinsurance activities that the SPRV is allowed to conduct pursuant to this chapter.  (F) The SPRV organizer must provide a complete set of the documentation of the insurance securitization to the director, or his designee, upon closing of the transactions, including an opinion of legal counsel with respect to compliance with this chapter and any other applicable laws as of the effective date of the transaction. Any material change of the SPRV's plan of operation described in items (1) through (8) of subsection (B) including, but not limited to, the issuance of new securities to continue the securitization activities of the SPRV pursuant to this chapter after expiration and full satisfaction of the initial securitization transactions, must require prior approval of the director, or his designee; however, the change in the counterparty to swap transactions for an existing securitization as allowed under this chapter must not be considered a material change. Any material change that is not disapproved by the director, or his designee, in writing within fifteen days after its submission must be deemed approved.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 SPRVs authorized under this chapter are created for the limited purpose of entering into insurance securitization transactions with investors and into related agreements to pay one or more ceding insurers agreed upon amounts under a SPRV contract upon the occurrence of triggering events related to the insurance business of the ceding insurer. A SPRV may not issue a contract for assumption of risk or indemnification of loss other than a SPRV contract as defined in this section.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) SPRVs authorized under this chapter may at any given time enter into and effectuate SPRV contracts with one or more ceding insurers, provided that the SPRV contracts obligate the SPRV to indemnify the ceding insurer for losses and that contingent obligations of the SPRV under the SPRV contracts are securitized in full through a single SPRV insurance securitization and are funded fully and secured with assets held in trust in accordance with the requirements of this chapter pursuant to agreements contemplated by this chapter and invested in a manner that meets the criteria set forth in Section 38-14-170.  (B) A SPRV may enter into agreements with third parties and conduct business necessary to fulfill its obligations and administrative duties incident to the insurance securitization and the SPRV contract. The agreements may include entering into swap agreements or other transactions that have the objective of leveling timing differences in funding up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in trust to assure that the assets held in trust will be sufficient to satisfy payment or repayment of the securities issued pursuant to an insurance securitization transaction or the obligations of the SPRV under the SPRV contract. In fulfilling its function, the SPRV must adhere to the following requirements and must, to the extent of its powers, ensure that contracts obligating other parties to perform certain functions incident to its operations are substantively and materially consistent with the following requirements and guidelines:  (1) A SPRV must have a distinct name, which must include the designation " SPRV". The name of the SPRV must not be deceptively similar to, or likely to be confused with or mistaken for, any other existing business name registered in this State.  (2) Unless otherwise provided in the plan of operation, the principal place of business and office of any SPRV organized under this chapter must be located in this State.  (3) The assets of a SPRV must be preserved and administered by or on behalf of the SPRV to satisfy the liabilities and obligations of the SPRV incident to the insurance securitization and other related agreements, including the SPRV contract.  (4) Assets of the SPRV that are pledged to secure obligations of the SPRV to a ceding insurer under a SPRV contract must be held in trust and administered by a qualified United States financial institution. The qualified United States financial institution must not control, be controlled by, or be under common control with, the SPRV or the ceding insurers.  (5) The agreement governing any such trust must create one or more trust accounts into which all pledged assets must be deposited and held until distributed in accordance with the trust agreement. The pledged assets must be held by the trustee at the trustee's office in the United States and may be held in certificated or electronic form.  (6) The provisions for withdrawal by ceding insurers of assets from the trust must be clean and unconditional, subject only to the following requirements:  (a) the ceding insurer must have the right to withdraw assets from the trust account at any time, without notice to the SPRV, subject only to written notice to the trustee from the ceding insurer that funds in the amount requested are due and payable by the SPRV;  (b) no other statement or document need be presented in order to withdraw assets, except the ceding insurer may be required to acknowledge receipt of withdrawn assets;  (c) the trust agreement must indicate that it is not subject to any conditions or qualifications outside of the trust agreement;  (d) the trust agreement must not contain references to any other agreements or documents; and  (e) no reference must be made to the fact that these funds may represent reinsurance premiums or that the funds have been deposited for any specific purpose.  (7) The trust agreement must be established for the sole use and benefit of the ceding insurer at least to the full extent of the SPRV's obligations to the ceding insurer under the SPRV contract. In the case of more than one ceding insurer, a separate trust agreement must be entered into with each ceding insurer and a separate trust account must be maintained for each ceding insurer.  (8) The trust agreement must provide for the trustee to:  (a) receive assets and hold all assets in a safe place;  (b) determine that all assets are in a form that the ceding insurer or the trustee, upon direction by the ceding insurer may, whenever necessary, negotiate the assets, without consent or signature from the SPRV or any other person or entity;  (c) furnish to the SPRV, the director, or his designee, and the ceding insurer a statement of all assets in the trust account reported at fair value upon its inception and at intervals no less frequent than the end of each calendar quarter;  (d) notify the SPRV and the ceding insurer, within ten days, of any deposits to or withdrawals from the trust account;  (e) upon written demand of the ceding insurer, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the ceding insurer and deliver physical custody of the assets to the ceding insurer; and  (f) allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the ceding insurer.  (9) The trust agreement must provide that at least thirty days, but not more than forty-five days, before termination of the trust account, written notification of termination must be delivered by the trustee to the ceding insurer.  (10) The trust agreement may be made subject to and governed by the laws of any state, in addition to the requirements for the trust as provided in this chapter, provided that the state is disclosed in the plan of operation filed with and approved, or deemed approved, by the director, or his designee, under Section 38-14-40.  (11) The trust agreement must prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.  (12) The trust agreement must provide that the trustee must be liable for its own negligence, wilful misconduct, or lack of good faith.  (13) Notwithstanding the provisions of item (6)(c), (d), and (e) or item 14(e) of this subsection, when a trust agreement is established in conjunction with a SPRV contract, then the trust agreement may provide that the ceding insurer must undertake to use and apply any amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the SPRV, for the following purposes:  (a) to pay or reimburse the ceding insurer amounts due to the ceding insurer under the specific SPRV contract including, but not limited to, unearned premiums due to the ceding insurer, if not otherwise paid by the SPRV in accordance with the terms of the agreement; or  (b) when the ceding insurer has received notification of termination of the trust account, and where the SPRV's entire "obligations" under the specific SPRV contract remain unliquidated and undischarged ten days before the termination date, to withdraw amounts equal to the obligations and deposit the amounts in a separate account, in the name of the ceding insurer, in any qualified United States financial institution, apart from its general assets, in trust for those uses and purposes specified in subsubitem (i) of this subsection as may remain executory after the withdrawal and for any period after the termination date. " Obligations" within the meaning of this subparagraph may, without duplication, include:  (i) losses and loss expenses paid by the ceding insurer but not recovered from the SPRV;  (ii) reserves for losses reported and outstanding;  (iii) reserves for losses incurred but not reported;  (iv) reserves for loss expenses;  (v) reserves for unearned premiums; and  (vi) any other amounts that, together with subsubitems (i) to (v), represent the aggregate limit remaining under the SPRV contract if the period of coverage or the agreed upon period of loss development has yet to expire.  (c) the provisions to be included in the trust agreement pursuant to this item may be included instead in the underlying SPRV contract.  (14) A SPRV contract must contain provisions that:  (a) require the SPRV to enter into a trust agreement specifying what recoverables or reserves, or both, the agreement is to cover and to establish a trust account for the benefit of the ceding insurer;  (b) stipulate that assets deposited in the trust account must be valued according to their current fair value and must consist only of permitted investments;  (c) require the SPRV, before depositing assets with the trustee, to execute assignments, endorsements in blank, or to transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate any such assets without consent or signature from the SPRV or any other entity;  (d) require that all settlements of account between the ceding insurer and the SPRV be made in cash or its equivalent; and  (e) stipulate that the SPRV and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the SPRV contract, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the SPRV contract, and must be utilized and applied by the ceding insurer or any successor by operation of law of the ceding insurer, including, subject to the provisions of Section 38-14-160 , but without further limitation, any liquidator, rehabilitator, receiver, or conservator of the ceding insurer, without diminution because of insolvency on the part of the ceding insurer or the SPRV, only for the following purposes:  (i) to transfer all such assets into one or more trust accounts for the benefit of the ceding insurer pursuant to the terms of the SPRV contract and in compliance with this chapter; and  (ii) to pay any other amounts that the ceding insurer claims are due under the SPRV contract.  (15) The SPRV contract entered into by the SPRV may contain provisions that give the SPRV the right to seek approval from the ceding insurer to withdraw from the trust all or part of the assets contained in the trust and to transfer the assets to the SPRV, provided that:  (a) at the time of the withdrawal, the SPRV must replace the withdrawn assets with other qualified assets having a fair value equal to the fair value of the assets withdrawn and that meet the requirements of Section 38-14-170; and  (b) after the withdrawals and transfer, the fair value of the assets in trust securing the obligations of the SPRV under the SPRV contract is no less than an amount needed to satisfy the fully funded requirement of the SPRV contract. The ceding insurer must be the sole judge as to the application of these provisions but must not unreasonably nor arbitrarily withhold its approval.  (16) The contract must provide that investors in the SPRV agree that any obligation to repay principal, interest, or dividends on the securities issued by the SPRV must be reduced upon the occurrence of a triggering event, to the extent that the assets of the SPRV held in trust for the benefit of the ceding insurer are remitted to the ceding insurer in fulfillment of the obligations of the SPRV under the SPRV contract.  (17) Assets held by a SPRV in trust must be valued at their fair value.  (18) The proceeds from the sale of securities by the SPRV to investors must be deposited with the trustee as contemplated by this chapter and must be held or invested by the trustee in accordance with the requirements of Section 38-14-170.  (19) A SPRV organized under this chapter must engage only in fully funded indemnity triggered SPRV contracts to support in full the ceding insurers' exposures assumed by the SPRV. However, a SPRV may engage in a SPRV contract that is nonindemnity triggered only after the director, or his designee, in accordance with the authority granted under Section 38-14-200 of this chapter, adopts regulations addressing the treatment of the portion of the risk that is not indemnity based, to include accounting, disclosure, risk-based capital treatment, and the manner in which risks associated with a nonindemnity based SPRV contract may be evaluated and managed. At no time may a SPRV enter into a SPRV contract that is not fully funded, whether indemnity triggered or nonindemnity triggered. Assets of the SPRV may be used to pay interest or other consideration on any outstanding debt or other obligation of the SPRV, and nothing in this item must be construed or interpreted to prevent a SPRV from entering into a swap agreement or other transaction that has the effect of guaranteeing interest or other consideration.  (20) In the SPRV insurance securitization, the contracts or other relating documentation must contain provisions identifying the SPRV that will enter into the special purpose reinsurance securitization and the contracts or other documentation must clearly disclose that the assets of the SPRV, and only those assets, are available to pay the obligations of that SPRV. Notwithstanding the foregoing, and subject to the provisions of this chapter and any other applicable law or regulation, the failure to include such language in the contracts or other documentation must not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this chapter.  (21) A SPRV is not authorized to:  (a) issue or otherwise administer primary insurance policies;  (b) have any obligation to the policyholders or reinsureds of the ceding insurer;  (c) enter into a SPRV contract with a person that is not licensed or otherwise authorized to conduct the business of insurance or reinsurance in at least its state or country of domicile; or  (d) assume or retain exposure to insurance or reinsurance losses for its own account that is not initially fully funded by proceeds from a SPRV securitization that meets the requirements of this chapter.  (22) At the cessation of business of a SPRV, the limited certificate of authority granted by the director, or his designee, must expire and the SPRV must no longer be authorized to conduct activities pursuant to this chapter unless and until a new certificate of authority is issued pursuant to a new filing in accordance with Section 38-14-40.  (23) It is unlawful for a SPRV to lend or otherwise invest, or place in custody, trust, or under management any of its assets with, or to borrow money or receive a loan from (other than by issuance of the securities pursuant to an insurance securitization) or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 (A) A SPRV authorized under this chapter must have the necessary powers to enter into contracts and to conduct other commercial activities necessary to fulfill the purposes of this chapter. Those activities may include, but are not limited to, entering into SPRV contracts, issuing securities of the SPRV, and complying with the terms of it, entering into trust, swap, and other agreements necessary to effectuate an insurance securitization in compliance with the limitations and pursuant to the authorities granted to the SPRV under this chapter or the plan of operation approved or deemed approved by the director, or his designee.  (B) A SPRV organized or doing business under this chapter must, by the name adopted by the SPRV, in law, be capable of suing or being sued, and may make or enforce contracts in relation to the business of the SPRV; may have and use a common seal, and in the name of the SPRV or by a trustee chosen by the board of directors, must be capable of taking, purchasing, holding, and disposing of real and personal property for carrying into effect the purposes of its organization; and may by its board of directors, trustees, officers, or managers, make bylaws and amendments not inconsistent with the laws or the Constitution of this State or of the United States. The bylaws must define the manner of electing directors, trustees or managers, and officers of the SPRV, together with their qualifications and duties and fixing the term of office.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 Notwithstanding the provisions of Chapter 21 of this title, the SPRV, the SPRV organizer, or subsequent debt or equity investors in SPRV securities must not be deemed affiliates of the ceding insurer by virtue of the SPRV contract between the ceding insurer and the SPRV, the securities of the SPRV or related agreements necessary to implement the SPRV insurance securitization. The SPRV may not be controlled by, may not control, or may not be under common control with any ceding insurer that is a party to a SPRV contract.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 A SPRV must have minimum initial capital of not less than five thousand dollars. All of the initial capital must be received by the SPRV in cash. The minimum initial capital required and all other funds of the SPRV in excess of its minimum initial capital, including funds held in trust to secure the obligations of the SPRV pursuant to its obligations under the SPRV contracts, must be invested as provided in Section 38-14-170.  HISTORY: 2002 Act No. 259, Section 1, eff May 20, 2002.
 No surety insurer authorized to transact business in this State may execute a fidelity or surety bond for an officer or employee of this State or of a county, municipality, or other subdivision of this State or for an officer or employee of a bank, trust company, or other fiduciary corporation organized under the laws of this State except upon the assumption of risk and upon the forms prescribed by law or approved by the director or his designee and the Attorney General. The insurer also shall procure special authority from the director or his designee and the Attorney General for the writing of the fidelity or surety bonds.  HISTORY: Former 1976 Code Section 38-15-10 [1960 (51) 1664; 1962 Code Section 37-761] recodified as Section 38-19-830 by 1987 Act No. 155, Section 1.] Former 1976 Code Section 38-13-30 [1947 (45) 322; 1952 Code Section 37-603; 1962 Code Section 37-603] recodified as Section 38-15-10 by 1987 Act No. 155, Section 1; 1988 Act No. 386, Section 1; 1993 Act No. 181, Section 538.
 If a fidelity insurer or other corporation or company doing a fidelity insurance business in this State becomes surety on bonds or obligations mentioned in this chapter, it is subject to being sued on these bonds or obligations in the county of the residence of the principal of the bond or obligation.  HISTORY: Former 1976 Code Section 38-13-130 [1947 (45) 322; 1952 Code Section 37-613; 1962 Code Section 37-613] recodified as Section 38-15-100 by 1987 Act No. 155, Section 1.  
 The director or his designee and the Attorney General shall remove from the list of surety insurers whose bonds are acceptable under Section 38-15-10 the names of insurers who in their judgment fail or refuse to carry out promptly their obligations in good faith.  HISTORY: Former 1976 Code Section 38-15-20 [1960 (51) 1664; 1962 Code Section 37-762] recodified as Section 38-19-840 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-13-40 [1947 (45) 322; 1952 Code Section 37-604; 1962 Code Section 37-604] recodified as Section 38-15-20 by 1987 Act No. 155, Section 1; 1988 Act No. 386, Section 2; 1993 Act No. 181, Section 539.
 Insurers doing business in this State who offer or undertake to become surety upon any bond or other surety contract must in addition to any other deposit required by the laws of this State deposit with the director bonds of the United States or of any state of the United States in the market value of one hundred thousand dollars which are receipted for by the director or his designee and held by him. The securities must be held to pay any final judgment entered against the insurer in a court of competent jurisdiction in this State requiring it to pay any loss or liability arising during the term of the bond or while the securities are held. Any judgment obtained is a lien upon the securities. When the insurer ceases to do business in this State, has settled all claims against it, and has been released from all bonds upon which it has been taken as surety, the securities deposited are delivered to the proper party on presentation of the receipt of the director or his designee for the securities. While the securities are deposited with the director, the owner is entitled to collect the interest on them. The faith of the State is pledged for the return of the deposited securities to the person entitled to receive them.  An insurer which has complied with the provisions required of qualified insurers in Section 38-9-100 is relieved of making the deposit required by this section and, subject to the provisions of Section 38-7-90, is entitled to the return of the deposit filed or deposited by it under this section.  A domestic insurer making a voluntary deposit provided by Section 38-9-110 is relieved of making this deposit if the insurer meets the definition of a qualified insurer as defined in Section 38-9-100 and if the voluntary deposit meets the requirements of that section.  HISTORY: Former 1976 Code Section 38-15-30 [1960 (51) 1664; 1962 Code Section 37-763] recodified as Section 38-19-850 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-13-50 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1952 Code Section 37-605; 1962 Code Section 37-605; 1966 (54) 2141; 1975 (59) 318; 1986 Act No. 429, Section 3] recodified as Section 38-15-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 540.
 When the bonds required to be deposited by an insurer in Section 38-15-30 are reduced below the value of one hundred thousand dollars, except by unexpected fluctuation in value, the right of that insurer to do business in this State may be revoked or suspended.  HISTORY: Former 1976 Code Section 38-15-40 [1960 (51) 1664; 1962 Code Section 37-764] recodified as Section 38-19-860 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-13-60 [1947 (45) 322; 1952 Code Section 37-606; 1962 Code Section 37-606] recodified as Section 38-15-40 by 1987 Act No. 155, Section 1; 1988 Act No. 386, Section 3.
 In lieu of depositing bonds with a market value of one hundred thousand dollars, an insurer may satisfy Section 38-15-30 by depositing one hundred thousand dollars in cash in the name of the director with the trust department of a national or state bank of this State approved by the director or his designee. The director or his designee shall give the insurer a receipt for the deposit. When the insurer ceases to do business in this State, has settled all claims against it, and has been released from all the bonds upon which it has been taken as surety, the cash deposit must be delivered to the proper party upon presentation of the receipt of the director or his designee. While the cash is deposited, its owner is entitled to collect the interest. The cash deposit is liable to the same extent as securities deposited with the director and subject to like procedure in case of default or insolvency.  HISTORY: Former 1976 Code Section 38-15-50 [1960 (51) 1664; 1962 Code Section 37-765] recodified as Section 38-19-870 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-13-70 [1947 (45) 322; 1952 Code Section 37-607; 1962 Code Section 37-607] recodified as Section 38-15-50 by 1987 Act No. 155, Section 1; 1988 Act No. 386, Section 4; 1993 Act No. 181, Section 541.
 A surety insurer having an unrevoked certificate of authority may, upon production of the certificate, be accepted as surety on the bond of any person required by the laws of this State to give bond and may be the only surety necessary to render this bond valid. However, other surety may, in the discretion of the official authorized to approve the bond, be required and the surety may be released from its liability on the same terms and conditions as are by law prescribed for the release of individuals. Corporations becoming this surety have and are subject to all the rights and liabilities of natural persons.  HISTORY: Former 1976 Code Section 38-15-60 [1960 (51) 1664; 1962 Code Section 37-766] recodified as Section 38-19-880 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-13-80 [1947 (45) 322; 1952 Code Section 37-608; 1962 Code Section 37-608] recodified as Section 38-15-60 by 1987 Act No. 155, Section 1.
 An insurer which executes any bond or undertaking of surety under this chapter is estopped, in any proceeding to enforce the liability which it has assumed to incur, from denying its corporate power to execute the bond or assume the liability.  HISTORY: Former 1976 Code Section 38-15-70 [1962 Code Section 37-767; 1960 (51) 1664] recodified as Section 38-19-890 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-13-90 [1947 (45) 322; 1952 Code Section 37-609; 1962 Code Section 37-609] recodified as Section 38-15-70 by 1987 Act No. 155, Section 1.
 A person is considered as acting agent for a surety insurer established in another state when he represents the insurer by:  (a) receiving or transmitting applications for suretyship,  (b) receiving for delivery bonds founded on applications forwarded from this State, or  (c) procuring suretyship to be effected by the insurer upon the bonds of this State or upon bonds given to persons in this State.  HISTORY: Former 1976 Code Section 38-13-100 [1947 (45) 322; 1952 Code Section 37-610; 1962 Code Section 37-610] recodified as Section 38-15-80 by 1987 Act No. 155, Section 1.
 No insurer is relieved of its liability upon any bond of a city, county, or state officer because the books and accounts of the principal have been examined and approved as correct by the proper authorities when in fact there has been a breach of the bond of the officer and a loss accruing from this breach. In case of default upon the bond, the city, county, or state authorities have all the remedies against the principal and sureties upon the bonds as are provided by law.  HISTORY: Former 1976 Code Section 38-13-110 [1947 (45) 322; 1952 Code Section 37-611; 1962 Code Section 37-611] and Section 38-13-120 [1947 (45) 322; 1952 Code Section 37-612; 1962 Code Section 37-612] recodified as Section 38-15-90 by 1987 Act No. 155, Section 1.
 Individuals, partnerships, and corporations of this State, designated as "subscribers", may exchange reciprocal or interinsurance contracts with each other or with individuals, partnerships, and corporations of other states and countries, providing indemnity among themselves from any loss which may be insured against under other provisions of law, excepting life insurance.  HISTORY: Former 1976 Code Section 38-17-10 [1962 Code Section 37-561; 1972 (57) 2776] recodified as Section 38-29-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-10 [1947 (45) 322; 1952 Code Section 37-801; 1962 Code Section 37-801] recodified as Section 38-17-10 by 1987 Act No. 155, Section 1.
 There must at all times be maintained as a reserve assets in cash or securities equal to fifty percent of the net annual advance premiums or deposits collected and credited to the accounts of subscribers on policies having one year or less to run and prorata on those for longer periods or, in lieu thereof, one hundred percent of the net unearned premiums or deposits collected and credited to the accounts of subscribers. There must also be maintained as a guaranty fund or surplus an additional sum in cash or securities in the amount required of mutual insurers by Section 38-9-20 or 38-9-30. In addition to the foregoing requirements, in the case of liability insurance there must be maintained as a claim or loss reserve in cash or securities assets sufficient to discharge all liabilities on all outstanding losses arising under policies issued, these losses to be calculated in accordance with the law of the state relating to similar reserve companies insuring similar risks. The securities referred to in this section must be securities authorized by the laws of the state in which the principal office of the attorney is located for the investments of similar funds of insurers doing the same kind of business. If at any time the amounts on hand are less than the foregoing requirements, the subscribers or their attorney shall make up the deficiency.  HISTORY: Former 1976 Code Section 38-17-100 [1962 Code Section 37-571; 1972 (57) 2776] recodified as Section 38-29-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-100 [1947 (45) 322; 1952 Code Section 37-810; 1962 Code Section 37-810; 1964 (53) 2054] recodified as Section 38-17-100 by 1987 Act No. 155, Section 1.
 "Net annual advance premiums or deposits", as used in this chapter, means the advance premiums or deposits made by subscribers after deducting the amounts specifically provided in the subscribers' agreements for expenses.  HISTORY: Former 1976 Code Section 38-17-110 [1962 Code Section 37-572; 1972 (57) 2776] recodified as Section 38-29-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-110 [1947 (45) 322; 1952 Code Section 37-811; 1962 Code Section 37-811] recodified as Section 38-17-110 by 1987 Act No. 155, Section 1.
 When funds other than those which have accrued from premiums or deposits of subscribers are supplied to make up a deficiency as provided in Section 38-17-100, they must be deposited and held for the benefit of subscribers under any terms and conditions the director or his designee may require as long as a deficiency exists and thereafter returned to the depositors.  HISTORY: Former 1976 Code Section 38-17-120 [1962 Code Section 37-573; 1972 (57) 2776] recodified as Section 38-29-120 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-120 [1947 (45) 322; 1952 Code Section 37-812; 1962 Code Section 37-812] recodified as Section 38-17-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 547.
 A reciprocal exchange transacting business in this State may sue or be sued in the name in which its contracts are authorized to be exchanged.  HISTORY: Former 1976 Code Section 38-17-130 [1962 Code Section 37-574; 1972 (57) 2776] recodified as Section 38-29-130 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-130 [1947 (45) 322; 1952 Code Section 37-813; 1962 Code Section 37-813] recodified as Section 38-17-130 by 1987 Act No. 155, Section 1.
 The business affairs and assets of reciprocal or interinsurance exchanges, as shown at the office of its attorney, are subject to examination by the director or his designee as often as he sees fit. The cost of the examination must be paid by the exchange examined.  HISTORY: Former 1976 Code Section 38-17-140 [1962 Code Section 37-575; 1972 (57) 2776] recodified as Section 38-29-140 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-140 [1947 (45) 322; 1952 Code Section 37-814; 1962 Code Section 37-814] recodified as Section 38-17-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 548.
 Each attorney shall annually make and file by March first with the department a sworn statement, upon a form to be prescribed and furnished by the director or his designee, showing that the financial condition of affairs at the office where the reciprocal or interinsurance contracts are issued is in accordance with the standard of solvency provided for in this chapter and stating:  (1) the amount of all premiums or deposits collected from subscribers in this State during the previous calendar year;  (2) the amounts actually paid subscribers on losses;  (3) the total amounts returned to subscribers as savings and the amounts retained for expenses;  (4) the amount of insurance reinsured in other insurers licensed in this State, naming them and the amount of premiums paid;  (5) the amount of insurance reinsured in insurers not licensed in this State, naming them and the amount of premiums paid; and  (6) the amount of reinsurance accepted from admitted companies and the premiums received for that reinsurance on risks located in this State, with the names of the insurers so reinsured.  However, the attorney may not be required to furnish the names and addresses of any subscribers.  HISTORY: Former 1976 Code Section 38-17-150 [1962 Code Section 37-576; 1972 (57) 2776] recodified as Section 38-29-150 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-150 [1947 (45) 322; 1952 Code Section 37-815; 1962 Code Section 37-815] recodified as Section 38-17-150 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 549.
 Each attorney shall pay a license fee of four hundred dollars every two years for the issuance of the certificate of authority or its renewal. In addition to the license fee, each attorney shall pay all of the taxes provided by law on companies doing a like business in this State and shall file the bond required of other companies doing a like class of business.  HISTORY: Former 1976 Code Section 38-17-160 [1962 Code Section 37-577; 1972 (57) 2776] recodified as Section 38-29-160 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-160 [1947 (45) 322; 1952 Code Section 37-816; 1962 Code Section 37-816; 1971 (57) 709; 1980 Act No. 306, Section 3] recodified as Section 38-17-160 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11E.
 Any attorney who exchanges any contract for indemnity specified in this chapter or directly or indirectly solicits or negotiates any applications for this contract without first complying with this chapter is guilty of a misdemeanor. The director or his designee, in his discretion and on terms he may prescribe, may issue a permit for organization purposes which must continue in force or be canceled at his pleasure.  HISTORY: Former 1976 Code Section 38-17-170 [1962 Code Section 37-578; 1972 (57) 2776] recodified as Section 38-29-170 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-170 [1947 (45) 322; 1952 Code Section 37-817; 1962 Code Section 37-817] recodified as Section 38-17-170 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 8; 1993 Act No. 181, Section 550.  
 The subscribers shall, through their attorney, file with the department a declaration verified by the oath of the attorney setting forth:  (1) The name of the office at which the subscribers propose to exchange the indemnity contracts. This name may not be so similar to any name previously adopted by a similar organization or by any insurance corporation or association that in the opinion of the director or his designee is calculated to result in confusion or deception.  (2) The kind of insurance to be effected or exchanged.  (3) A copy of the form of policy contract or agreement under or by which the insurance is to be effected or exchanged.  (4) A copy of the form of power of attorney or other authority of the attorney under which the insurance is to be effected or exchanged.  (5) The location of the office or offices from which the contracts or agreements are to be issued.  (6) That applications have been made for indemnity upon at least one hundred separate risks aggregating not less than one and one-half million dollars represented by executed contracts or bona fide applications to become concurrently effective. In the case of automobile insurance, applications must have been made for indemnity upon at least one thousand motor vehicles or for insurance aggregating not less than one and one-half million dollars represented by executed contracts or bona fide applications to become concurrently effective on any or all classes of automobile insurance effected by the subscribers through the attorney.  (7) That there are assets conforming to the requirements of Section 38-17-100 in the possession of the attorney and available for the payment of losses.  HISTORY: Former 1976 Code Section 38-17-30 [1962 Code Section 37-562; 1972 (57) 2776] recodified as Section 38-29-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-30 [1947 (45) 322; 1952 Code Section 37-803; 1962 Code Section 37-803] recodified as Section 38-17-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 542.
 The maximum liability of any subscriber for losses and expenses must be fixed and determined by the power of attorney.  HISTORY: Former 1976 Code Section 38-17-40 [1962 Code Section 37-563; 1972 (57) 2776] recodified as Section 38-29-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-40 [1947 (45) 322; 1952 Code Section 37-804; 1962 Code Section 37-804; 1964 (53) 2054] recodified as Section 38-17-40 by 1987 Act No. 155, Section 1.
 The director or his designee shall require every reciprocal exchange to provide security deposits pursuant to Sections 38-9-80 to 38-9-140 as required for other insurers doing business in this State.  HISTORY: Former 1976 Code Section 38-17-50 [1962 Code Section 37-566; 1972 (57) 2776] recodified as Section 38-29-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-50 [1947 (45) 322; 1952 Code Section 37-805; 1962 Code Section 37-805; 1964 (53) 2054] recodified as Section 38-17-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 543.
 When filing the declaration provided for in Section 38-17-30, the attorney shall also file with the department a written instrument executed by him for the subscribers stipulating that upon the issuance of a certificate of authority provided for in Section 38-17-70 service of process may be had upon the director in all suits in this State arising out of the policies, contracts, or agreements and that this service is valid and binding upon all subscribers exchanging at any time reciprocal or interinsurance contracts through the attorney.  HISTORY: Former 1976 Code Section 38-17-60 [1962 Code Section 37-567; 1972 (57) 2776] recodified as Section 38-29-60 by 1987 act No. 155, Section 1; Former 1976 Code Section 38-45-60 [1947 (45) 322; 1952 Code Section 37-806; 1962 Code Section 37-806] recodified as Section 38-17-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 544.
 Each attorney by or through whom are issued any policies of or contracts for indemnity referred to in this chapter shall annually procure from the director or his designee a certificate of authority, stating that all of the requirements of this chapter have been complied with and, upon compliance and the payment of the fees required by this chapter, the director or his designee shall issue the certificate of authority. The director or his designee may revoke or suspend the certificate of authority upon breach of any condition imposed by this chapter after reasonable written notice has been given to the attorney so that he may appear and show cause why action should not be taken. Any attorney who may have procured a certificate of authority under this section may renew it annually.  HISTORY: Former 1976 Code Section 38-17-70 [1962 Code Section 37-568; 1972 (57) 2776; 1977 Act No. 69 Section 2] recodified as Section 38-29-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-70 [1947 (45) 322; 1952 Code Section 37-807; 1962 Code Section 37-807] recodified as Section 38-17-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 545.
 Any domestic corporation may, in addition to the rights, powers, and franchises specified in its articles of incorporation, exchange reciprocal or interinsurance insurance contracts. The right to exchange these contracts is incidental to the purposes for which domestic corporations are organized and is granted the same as rights and powers expressly conferred.  HISTORY: Former 1976 Code Section 38-17-80 [1962 Code Section 37-569; 1972 (57) 2776; 1977 Act No. 69 Section 3; 1980 Act No. 345, Section 2] recodified as Section 38-29-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-80 [1947 (45) 322; 1952 Code Section 37-808; 1962 Code Section 37-808] recodified as Section 38-17-80 by 1987 Act No. 155, Section 1.
 The attorney shall file a sworn statement with the department showing the maximum amount of indemnity upon any single fire insurance risk. The attorney shall also file, whenever required, a sworn statement with the department that he has examined the commercial rating of the subscribers as shown by the reference book of a commercial agency having at least one hundred thousand subscribers and that from this examination or other information in his possession it appears that no subscriber has assumed more than ten percent of its net worth on any single fire insurance risk.  HISTORY: Former 1976 Code Section 38-17-90 [1962 Code Section 37-570; 1972 (57) 2776] recodified as Section 38-29-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-45-90 [1947 (45) 322; 1952 Code Section 37-809; 1962 Code Section 37-809] recodified as Section 38-17-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 546.
 Any person, government or governmental agency, state or political subdivision of a state, public or private corporation, board, association, estate, trustee, or fiduciary may be a member of a mutual insurer.  HISTORY: Former 1976 Code Section 38-19-10 [1962 Code Section 37-838; 1971 (57) 1001] recodified as Section 38-31-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-11-210 [1947 (45) 322; 1952 Code Section 37-371; 1962 Code Section 37-371] recodified as Section 38-19-10 by 1987 Act No. 155, Section 1.
 The corporation Farmers Mutual Insurance Association of Newberry, S.C. shall have the right to mutually insure the respective dwelling houses, barns, and other buildings and property of every kind and nature of its members, in Newberry County, in counties contiguous thereto, and in any other county in this State where another county mutual insurance association is not authorized to do business by law against loss by fire, winds, or lightning, or other casualty, and to write all forms of property, casualty, and marine insurance as those terms are defined by law, all upon those terms and under those conditions as may be fixed by the bylaws of the corporation provided that all insurance against liability of the insured to other persons must be fully reinsured by the corporation in or with one or more insurance companies licensed to insure these risks under the laws of this State. It may sue and be sued in any court in this State and may have and use a common seal.  HISTORY: 1893 Act No. 462, Section 2; 1968 Act No. 1617; 1988 Act No. 393.
 The corporation may make by-laws, fixing the number of its board of directors and other officers, and defining the duties and powers of the directors and officers; also making rules and regulations governing the corporation and the conduct of its business, not inconsistent with the laws of this State.  HISTORY: 1893 Act No. 462, Section 3.
 Every member of said corporation shall be, and is hereby, bound and obliged to pay his, her or their portion of all losses and expenses accruing to said corporation; and all buildings or other property insured by and with said corporation, together with the rights, title and interest of assured to the lands on which such building or other property may stand, shall be pledged to the said corporation, and the said corporation shall have a lien thereon against the assured, his or her heirs, representatives and assigns, during the continuance of their insurance, as to all debts or liabilities contracted or incurred by said corporation subsequent to the passage of Sections 38-19-1010 through 38-19-1050.  HISTORY: 1893 Act No. 462, Section 4.
 All property insured by said corporation shall be liable as herein provided until all outstanding losses shall have been paid, and until the owner thereof shall have withdrawn his insurance in the manner prescribed by the by-laws of said corporation: Provided, however, That any transfer of such property shall operate as a release of the same under the provisions of Sections 38-19-1010 through 38-19-1050, as to all subsequent liabilities, unless the purchaser or purchasers thereof shall make application to the Board of Directors for a continuance of said insurance within ten days from the date of such transfer, in which event such purchaser or purchasers shall be substituted to all the rights of the vendor under Sections 38-19-1010 through 38-19-1050, and the said property shall be held liable as herein provided, and the provisions of this Section shall apply as well to personal representatives and guardians as to purchasers of such property.  HISTORY: 1893 Act No. 462, Section 5.
 The aggregate amount of insurance by said corporation shall not be less than ($25,000) twenty-five thousand dollars nor more than ($1,000,000) one million dollars.  HISTORY: 1893 Act No. 462, Section 6.
 A domestic or foreign mutual insurer may reorganize as a domestic mutual insurance holding company system as provided in this article.  HISTORY: 1998 Act No. 413, Section 1.
 (A) A domestic or foreign mutual insurer may reorganize into a domestic mutual insurance holding company system which must consist of a domestic mutual insurance holding company and the reorganized mutual insurer as a domestic stock insurance company and which may consist of one or more intermediate stock holding companies and other subsidiaries. The reorganized mutual insurer shall continue, without interruption, its corporate existence as a stock insurance subsidiary of the mutual insurance holding company or as a subsidiary to one or more intermediate stock holding companies.  (B) A domestic or foreign mutual insurer may reorganize by merging its policyholders' membership interests into an existing domestic mutual insurance holding company formed under subsection (A) of this section. The reorganized mutual insurer shall continue, without interruption, its corporate existence as a stock insurance subsidiary of the mutual insurance holding company or as a subsidiary to one or more intermediate stock holding companies.  (C) Upon reorganization, the membership interests of the policyholders of the reorganized insurer shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. All initial shares of the capital stock of the reorganized insurance company shall be issued to the mutual insurance holding company or to an intermediate holding company which is wholly owned by the mutual insurance holding company. On and after the effective date of the reorganization, the mutual insurance holding company shall at all times, directly or indirectly, own a majority of the voting securities of the reorganized insurance company. The mutual insurance holding company shall, at all times, be wholly-owned by and operated in the interests of the members of the mutual insurance holding company. "Voting securities" means securities having voting power for the election of the board of directors of the reorganized insurance company other than securities having voting power only because of the occurrence of a contingency.  (D) A domestic mutual insurer may reorganize only pursuant to a plan of reorganization adopted by its board of directors and approved by the Director of the Department of Insurance and policyholders as provided in this article.  HISTORY: 1998 Act No. 413, Section 1.
 (A) A plan of reorganization must be approved by the affirmative vote of not less than a two-thirds majority of the board of directors of the mutual insurer. The plan of reorganization approved by the board of directors shall be filed with the Director of the Department of Insurance for review and approval. At any time before the director renders a decision regarding the plan of reorganization the board of directors may modify or withdraw the plan of reorganization by the affirmative vote of not less than a two-thirds majority of the board of directors.  (B) An application to the director shall include the plan of reorganization and the following additional information:  (1) the purpose of reorganization;  (2) an analysis of the benefits and risks attendant to the proposed reorganization;  (3) a statement detailing how the plan is fair and equitable to policyholders;  (4) a copy of the proposed articles of incorporation and bylaws of the mutual insurance holding company, intermediate holding companies, and the reorganized mutual insurer specifying all membership rights;  (5) a copy of the proposed form of notice, the description of the plan of reorganization and proxy to be sent to all policyholders and a statement of the method by which that notice, description, and proxy will be distributed to all policyholders;  (6) an organization chart depicting the formal structure of the holding company and all subsidiaries and affiliates along with the estimated initial percent of ownership;  (7) a description of the number of members of the board of directors of the proposed mutual holding company required to be policyholders and how the number was determined;  (8) a statement that all of the initial shares of the voting stock of the reorganized company shall be issued to the mutual insurance holding company or an intermediate holding company and will not be pledged or encumbered;  (9) a plan for membership of future policyholders;  (10) a certification that the plan has been adopted by the vote of not less than two-thirds of the board of directors;  (11) certification by at least two-thirds of the members of the board of directors that the plan of reorganization is fair and equitable and that a fairness opinion has been obtained from either an independent actuary, an independent certified public accountant, or an independent investment banker, or from three independent actuaries from an independent actuarial firm;  (12) certification that management will not be enriched by the reorganization for aiding, promoting, or assisting in the reorganization except as set forth in the plan approved by the director;  (13) biographical affidavits for all mutual holding company officers and directors and for the reorganized stock insurer officers and directors;  (14) a description of the annual report and financials to be sent to each member;  (15) information sufficient to demonstrate the financial condition of the reorganizing insurer will not be adversely affected;  (16) information describing the holding company's plans, regarding accumulation of earnings including periodic distribution, if any, to members;  (17) an opinion from an attorney with experience in corporate tax matters who has been certified by the Commission on Continuing Legal Education and Specialization of the South Carolina Supreme Court as a specialist in taxation matters regarding potential taxes due as a result of the reorganization;  (18) a description of projected remuneration from all sources to officers and directors prior to the reorganization and a description of projected remuneration from all sources subsequent to the reorganization for all officers and directors. The plan shall contain a provision prohibiting officers and directors of the mutual insurance holding company and its subsidiaries and affiliates from purchasing or owning shares of the reorganized company's stock offering, or issuance of stock options to or for the benefit of such officers or directors for a period of six months following the first date the offering was publicly and regularly traded;  (19) terms of any proposed sale of capital stock;  (20) proposed balance sheet presentation of the mutual insurance holding company and reorganized stock insurer after reorganization;  (21) such other material as the director may require.  HISTORY: 1998 Act No. 413, Section 1.
 (A) The Director of the Department of Insurance shall review the plan of reorganization for the purpose of determining whether the plan meets the requirements of this article. The director may employ staff personnel and outside consultants. All reasonable costs related to the review, including those costs attributable to staff personnel, shall be paid by the insurer making the filing. During the process of review, the director may communicate with the mutual insurer and request such additional information from the mutual insurer as the director may consider necessary.  (B) The director or his designee must conduct a public hearing regarding the proposed plan of reorganization no later than forty-five days from when the filing is deemed complete. Any interested person may appear and participate at the hearing. The director or his designee must provide notice of the public hearing by publication in a newspaper of general circulation.  (C) Within one hundred twenty days of the filing of the plan which is considered to be complete by the director, the director shall issue an order approving or disapproving the plan. The director shall approve the plan if the director determines:  (1) the requirements of this article have been met;  (2) the director is satisfied that the interests of the policyholders are preserved and protected and that the plan of reorganization is fair and equitable to the policyholders, and in the best interests of the policyholders;  (3) the directors, officers, agents, and employees are not unjustly enriched by the reorganization plan. The approval of the director shall be conditioned upon the approval of the policyholders as provided in this article. If the director does not approve the plan, then the director shall issue an order setting forth in detail the reasons for disapproval. If a plan is disapproved, then the mutual insurer may resubmit the plan to the director within thirty days of receipt of the order of disapproval. Within ninety days after the filing of the resubmitted plan, which is considered to be complete by the director, the director shall issue an order approving or disapproving the resubmitted plan. The approval of the resubmitted plan shall be conditioned upon the approval of the policyholders as provided by this article. If the director disapproves the resubmitted plan, then the mutual insurer may seek judicial review of the director's decision in the circuit court of common pleas for Richland County.  HISTORY: 1998 Act No. 413, Section 1.
 (A) After the date of the director's conditioned approval of a plan of reorganization, the mutual insurer shall hold a regular or special meeting of its policyholders at a reasonable time and place to vote upon the plan of reorganization. The mutual insurer shall give at least thirty days' notice, by first class mail, to the last known address of each policyholder that the plan of reorganization will be voted on at a regular or special meeting of the policyholders. If the meeting of policyholders to vote upon the plan of reorganization is held coincident with the mutual insurer's annual meeting of the policyholders, only one combined notice of meeting is required.  (B) The notice shall include a description of the plan of reorganization and a statement that the director has reviewed the proposed plan of reorganization and has approved the plan subject to the approval of the policyholders. The notice to policyholders will include a statement by the director that the director's approval pursuant to this section is not a recommendation to either accept or reject the Plan of Reorganization. The notice to each policyholder shall also include a written proxy permitting the policyholder to vote for or against the plan of reorganization. A plan of reorganization shall be approved by the affirmative vote of a two-thirds majority of the policyholders voting in person or by proxy at the meeting.  (C) For purposes of voting, policyholders means the policyholders of the mutual insurer on the day the plan of reorganization is initially approved by the board of directors of the mutual insurer. The entity to which a group insurance policy is issued, and not a person covered under the group insurance policy, shall be considered the policyholder for purposes of voting. Each policyholder shall be entitled to only one vote regardless of the number of policies owned by the policyholder.  (D) If a mutual insurer substantially complies in good faith with the notice requirements of this section, the mutual insurer's failure to give a policyholder a required notice does not impair the validity of an action taken under this section.  HISTORY: 1998 Act No. 413, Section 1.
 The reorganized insurer shall file the articles of incorporation of the mutual holding company, the reorganized stock insurer, and any holding company subsidiaries with the Director of the Department of Insurance for his approval before filing them with the Secretary of State. The director shall issue a certificate of authority when the mutual insurer files with the director a certificate from the mutual insurer setting forth the vote and certifying that the plan of reorganization was approved by not less than a two-thirds majority of the policyholders voting in person or by proxy on the plan of reorganization, that the articles of incorporation have been filed with the Secretary of State, and payment of all applicable fees to the Department of Insurance. The reorganization shall be effective upon the issuance of a certificate of authority by the director.  HISTORY: 1998 Act No. 413, Section 1.
 A membership interest in a mutual insurance holding company does not constitute a security under the laws of the State of South Carolina. A membership interest in a mutual insurance holding company may not be transferred from the member to another person or entity.  HISTORY: 1998 Act No. 413, Section 1.
 A mutual insurance holding company shall not be authorized to pay dividends or make distributions except as may be expressly approved by the Director of the Department of Insurance. Neither the adoption nor the implementation of a plan of reorganization shall be considered to give rise to an obligation on behalf of a mutual insurance holding company to make a distribution or payment to a member or policyholder, or to another person, board, or entity of any nature whatsoever, in connection with the ownership, control, benefits, policies, purpose, or nature of the mutual insurance company, or otherwise.  HISTORY: 1998 Act No. 413, Section 1.
 Nothing contained in this article shall be construed to prohibit demutualization of a mutual insurance holding company or a mutual insurer pursuant to the laws of this State. All provisions of law regarding demutualization of a mutual insurer shall also apply to a mutual insurance holding company.  HISTORY: 1998 Act No. 413, Section 1.
 All information, documents, and copies that are obtained by or disclosed to the Director of the Department of Insurance or another person in the course of preparing, filing, or processing an application to reorganize, other than information or documents distributed to policyholders in connection with the meeting of policyholders, shall be given confidential treatment and shall not be subject to subpoena and shall not be released to another person or entity without the prior written consent of the insurer.  HISTORY: 1998 Act No. 413, Section 1.
 (A) A mutual insurance holding company, intermediate holding company, and the reorganized stock insurer shall be considered to be insurers according to the laws of this State. However, the director may exempt by order a mutual insurance holding company or intermediate holding company that elects not to write insurance from any provisions of this title or regulations adopted thereunder with respect to the writing of insurance or requirements related to capital, surplus, dividends, reserves, borrowing or investments, or other provisions which the Director of the Department of Insurance determines are not applicable or should be modified. This exemption shall not change the mutual insurance holding company's status as a domestic insurer subject to the provisions of Title 38. A mutual insurance holding company, intermediate holding company, or reorganized mutual insurer may merge with, consolidate with, or acquire the assets of another person or entity, or take another action as consistent with the South Carolina Business Corporation Act or other applicable law.  (B) The director shall have jurisdiction over a mutual insurance holding company and an intermediate holding company to ensure that policyholder interests are preserved and protected.  (C) The director may promulgate regulations and issue orders to implement this article as provided by the insurance laws of this State consistent with the South Carolina Business Corporation Act.  (D) A mutual insurance holding company and subsidiaries or affiliates shall be subject to all applicable provisions of South Carolina's Insurance Holding Company Regulatory Act.  HISTORY: 1998 Act No. 413, Section 1.
 In a proceeding for supervision, rehabilitation, or liquidation involving a reorganized mutual insurer, the assets of the mutual insurance holding company and an intermediate stock holding company shall be considered to be assets of the reorganized mutual insurer for the purposes of satisfying the claims of policyholders. A mutual insurance holding company or an intermediate stock holding company may not be dissolved without approval of the Director of the Department of Insurance. A mutual insurance holding company and an intermediate stock holding company each shall be considered an insurer subject to the Administrative Supervision of Insurers Act and the Insurers Rehabilitation and Liquidation Act.  HISTORY: 1998 Act No. 413, Section 1.
 (A) A mutual insurance holding company shall file with the Director of the Department of Insurance an annual income statement, balance sheet, and cash flow statement, and a statement regarding any encumbrances or plans to encumber the assets of the mutual insurance holding company.  (B) A mutual insurance holding company shall have an annual audit by an independent certified public accountant and shall file an audited financial report with the Director of the Department of Insurance by June first of each year.  (C) A mutual insurance holding company shall notify the director ninety days prior to any initial and subsequent subsidiary stock offering for review by the director for compliance with all applicable state law and the offering shall be deemed approved by the director within thirty days of submission to the director unless the director states otherwise in writing within thirty days of submission.  HISTORY: 1998 Act No. 413, Section 1.
 A challenge to reorganization or an action involving the reorganization of a mutual insurer shall be commenced no later than one hundred eighty days after the effective date of reorganization.  HISTORY: 1998 Act No. 413, Section 1.
 Each holder of an individual or group annuity contract or an individual or group contract of insurance, other than a contract of reinsurance, is a member of the insurer with the rights and obligations of membership as provided by this chapter. With respect to a group annuity contract or a contract of group insurance, the employer or other person to whom or in whose name the master contract is issued or held is considered the member. Each contract issued, individual or group, shall effectively stipulate this fact.  HISTORY: Former 1976 Code Section 38-19-20 [1962 Code Section 37-822; 1971 (57) 1001] recodified as Section 38-31-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-11-220 [1947 (45) 322; 1952 Code Section 37-372; 1962 Code Section 37-372] recodified as Section 38-19-20 by 1987 Act No. 155, Section 1; 1988 Act No. 334, Section 2.
 The directors of a domestic mutual insurer may apportion and pay dividends to its members as entitled thereto, but only out of that part of its surplus funds which is in excess of its required minimum surplus and which represents net realized savings and net realized earnings from its business. Any classification of its participating policies and of risks assumed thereunder which the insurer may make must be reasonable. No dividend may be paid which is inequitable or which unfairly discriminates as between the classifications or as between policies within the same classification. No dividend, otherwise earned, may be made contingent upon the payment of a renewal premium on any policy.  HISTORY: Former 1976 Code Section 38-11-480 [1947 (45) 322; 1952 Code Section 37-388; 1962 Code Section 37-388] recodified as Section 38-19-270 by 1987 Act No. 155, Section 1.
 (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, 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.  HISTORY: Former 1976 Code Section 38-19-30 [1962 Code Section 37-821; 1971 (57) 1001] recodified as Section 38-31-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-11-230 [1947 (45) 322; 1952 Code Section 37-373; 19 Code Section 37-373] recodified as Section 38-19-30 by 1987 Act No. 155, Section 1; 1997 Act No. 68, Section 9.
 Notice of the time and place of the annual meeting of members of a domestic mutual insurer must be given by imprinting the notice plainly on the policies issued by the insurer. Any change of the time or place of the annual meeting may be made only at an annual meeting of members. Notice of a change must be given:  (1) by imprinting the new time or place on all policies which are issued following the annual meeting at which a change was approved; and  (2) by including a written notice of the change in a premium due notice to each member subsequent to the annual meeting at which the change was approved and before the first annual meeting affected by the change; or  (3) by any other method ordered or approved by the director or his designee.  HISTORY: Former 1976 Code Section 38-19-40 [1962 Code Section 37-823; 1971 (57) 1001] recodified as Section 38-31-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-11-240 [1947 (45) 322; 1952 Code Section 37-374; 1962 Code Section 37-374] recodified as Section 38-19-40 by 1987 Act No. 155, Section 1; 1988 Act No. 334, Section 3; 1993 Act No. 181, Section 551.
 Each member of a domestic mutual insurer, except as otherwise provided in this chapter, has a contingent liability, prorata and not one for another, for the discharge of its obligations. The contingent liability is, at a maximum, the amount stated in the insurer's articles of incorporation but may not be less than one nor more than five additional premiums for the member's policy at the annual premium rate. Every policy issued by the insurer shall contain a statement of the contingent liability. Cancellation of the policy of a member does not relieve the member of contingent liability for his proportion of the obligations of the insurer which accrued while the policy was in force.  HISTORY: Former 1976 Code Section 38-11-610 [1947 (45) 322; 1952 Code Section 37-401; 1962 Code Section 37-401] recodified as Section 38-19-410 by 1987 Act No. 155, Section 1.
 The contingent liability of members of a domestic mutual insurer to assessment does not constitute an asset of the insurer in the determination of its financial condition.  HISTORY: Former 1976 Code Section 38-11-620 [1947 (45) 322; 1952 Code Section 37-402; 1962 Code Section 37-402] recodified as Section 38-19-420 by 1987 Act No. 155, Section 1.
 No person may insure against or agree or promise any member of a domestic mutual insurer holding a policy which provides for contingent liability to save him harmless from the contingent liability or any assessment under the policy. Any insurance, agreement, or promise attempted of this nature is void.  HISTORY: Former 1976 Code Section 38-11-630 [1947 (45) 322; 1952 Code Section 37-403; 1962 Code Section 37-403] recodified as Section 38-19-430 by 1987 Act No. 155, Section 1.
 If at any time the surplus of a domestic mutual insurer is less than the amount required by this title and the deficiency is not cured from other sources, its directors may with the approval of the director or his designee make an assessment on its members who, at any time within the twelve months immediately preceding the date the assessment was authorized by the directors, held policies providing for contingent liability. The director or his designee may refuse to approve the assessment if in his judgment refusal will best promote the interests of the insurer's members and creditors and of the insuring public.  HISTORY: Former 1976 Code Section 38-11-640 [1947 (45) 322; 1952 Code Section 37-404; 1962 Code Section 37-404] recodified as Section 38-19-440 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 553.
 A member's proportionate part of any deficiency is computed by applying to the premium earned within the twelve-month period on his contingently liable policy or policies the ratio of the total deficiency to the total premium earned during the period on all contingently liable policies. In computing the earned premiums for the purposes of this section the gross premium received by the insurer for the policy must be used as a base, deducting charges not recurring upon the renewal or extension of the policy.  No member may have an offset against any assessment for which he is liable on account of any claim for unearned premium or losses payable.  HISTORY: Former 1976 Code Section 38-11-650 [1947 (45) 322; 1952 Code Section 37-405; 1962 Code Section 37-405] recodified as Section 38-19-450 by 1987 Act No. 155, Section 1.
 The contingent liability of members of a domestic mutual insurer doing business on the assessment premium plan must be called upon and enforced by its directors as provided in its bylaws.  HISTORY: Former 1976 Code Section 38-11-660 [1947 (45) 322; 1952 Code Section 37-406; 1962 Code Section 37-406] recodified as Section 38-19-460 by 1987 Act No. 155, Section 1.
 A domestic mutual insurer, after it has established a surplus not less than the minimum capital and surplus required of a stock insurer to transact like kinds of insurance and for so long as it maintains this surplus, may extinguish the contingent liability of its members to assessment and omit provisions imposing contingent liability in all policies currently issued. Any deposit made with the director or his designee as a prerequisite to the insurer's certificate of authority may be included as part of the surplus referred to in this section. When the surplus has been established and the director or his designee has so ascertained, he shall issue to the insurer, at its request, his certificate authorizing the extinguishment of the contingent liability of its members and the issuance of policies free from contingent liability.  HISTORY: Former 1976 Code Section 38-11-670 [1947 (45) 322; 1952 Code Section 37-407; 1962 Code Section 37-407] recodified as Section 38-19-470 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 554.
 The director or his designee may not authorize a domestic mutual insurer to extinguish the contingent liability of any of its members or in any of its policies to be issued unless it qualifies to and does extinguish the liability of all its members and in all policies for all kinds of insurance transacted by it.  HISTORY: Former 1976 Code Section 38-11-680 [1947 (45) 322; 1952 Code Section 37-408; 1962 Code Section 37-408] recodified as Section 38-19-480 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 555.
 The director or his designee shall revoke the authority of a domestic mutual insurer to extinguish the contingent liability of its members if:  (1) at any time the insurer's surplus is less than the minimum capital and surplus required of a stock insurer to transact similar kinds of business; or  (2) the insurer, by resolution of its directors approved by its members, requests that the authority be revoked.  Upon revocation of this authority for any cause the insurer may not thereafter issue any policies without contingent liability nor renew any policies then in force without written endorsement thereon providing for contingent liability.  HISTORY: Former 1976 Code Section 38-11-690 [1947 (45) 322; 1952 Code Section 37-409; 1962 Code Section 37-409] recodified as Section 38-19-490 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 556.
 (A) A member of a domestic mutual insurer may vote in person or by proxy on any matter coming before a corporate meeting of members. An appointment of proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. Unless a time of expiration is otherwise specified, an appointment is valid for eleven months.  (B) No member's vote upon any proposal (1) to divest the insurer of its business and assets, or the major part of it, or (2) to change the corporate structure of the insurer as provided in Article 9 of this chapter may be registered or taken except in person or by a proxy newly executed and specific as to the matter to be voted upon.  (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.  HISTORY: Former 1976 Code Section 38-19-50 [1962 Code Section 37-824; 1971 (57) 1001] recodified as Section 38-31-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-11-250 [1947 (45) 322; 1952 Code Section 37-375; 1962 Code Section 37-375] recodified as Section 38-19-50 by 1987 Act No. 155, Section 1; 1988 Act No. 334, Section 4; 1993 Act No. 181, Section 552; 1997 Act No. 68, Section 6.
 At any annual meeting of a domestic mutual insurer all business including the election of directors must be conducted pursuant to majority vote of those members present and voting either in person or by proxy of nonpresent members as provided in Section 38-19-50. No other quorum requirements may limit the conduct of this business.  HISTORY: Former 1976 Code Section 38-19-60 [1962 Code Section 37-825; 1971 (57) 1001; 1976 Act No. 666] recodified as Section 38-31-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-11-260 [1962 Code Section 37-375.1; 1976 Act No. 533] recodified as 38-19-60 by 1987 Act No. 155, Section 1; 1988 Act No. 334, Section 5.
 A domestic mutual insurer, with the advance approval of the director or his designee and without the pledge of any of its assets, may borrow money to defray the expenses of its organization or for any purpose required by its business upon an agreement that the money and the interest as agreed upon must be repaid only out of the insurer's earned surplus in excess of its required minimum surplus. If the money is to be borrowed upon multiple agreements, the agreements must be serially numbered. No loan agreement or series of agreements may have or be given any preferential rights over any other such loan agreement or series. No commission or promotional expense may be paid to a director, officer, or employee of the insurer on account of this loan.  The director's or his designee's approval of the loan, if granted, shall specify the amount to be borrowed, the purpose for which the money is to be used, the terms and forms of the loan agreement, the date by which the loan must be completed, and other related matters the director or his designee considers proper.  This article does not apply to loans obtained by the insurer in the ordinary course of business from banks and other financial institutions, nor to loans secured by pledge or mortgage of assets.  HISTORY: Former 1976 Code Section 38-11-810 [1947 (45) 322; 1952 Code Section 37-421; 1962 Code Section 37-421; 1972 (57) 2676; 1974 (58) 2300] recodified as Section 38-19-610 by 1987 Act No. 155, Section 1; 1988 Act No. 334, Section 6; 1993 Act No. 181, Section 557.
 Any money so borrowed may not form a part of the insurer's legal liabilities or be the basis of any setoff but, until it is repaid, financial statements filed or published by the insurer shall show as a footnote the amount of the loan then unpaid together with interest accrued but unpaid.  HISTORY: Former 1976 Code Section 38-11-820 [1947 (45) 322; 1952 Code Section 37-422; 1962 Code Section 37-422] recodified as Section 38-19-620 by 1987 Act No. 155, Section 1.
 The insurer may repay the loan only out of its realized net earned surplus in excess of the minimum surplus required for the kinds of insurance transacted. This loan may not be repaid out of borrowed money. The insurer shall repay the loan or a part of it when its realized net earned surplus has become adequate to repay without impairing the insurer's operations.  HISTORY: Former 1976 Code Section 38-11-830 [1947 (45) 322; 1952 Code Section 37-423; 1962 Code Section 37-423] recodified as Section 38-19-630 by 1987 Act No. 155, Section 1.
 If there is more than one such loan or if any such loan is represented by multiple agreements, the loan agreement shall provide, in addition to any other time of repayment specified in it, that any part of the loan may be repaid at any time by selection by lot, under supervision of the director or his designee, of those loan agreements, out of all similar agreements then outstanding, to be then repaid in part or in whole.  HISTORY: Former 1976 Code Section 38-11-840 [1947 (45) 322; 1952 Code Section 37-424; 1962 Code Section 37-424] recodified as Section 38-19-640 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 558.
 No repayment of the loan may be made unless approved by the director or his designee. The insurer shall notify the director or his designee in writing not less than sixty days in advance of its intention to repay the loan or any part of it. The director or his designee shall immediately ascertain whether the insurer's financial condition is such that the repayment can properly be made.  HISTORY: Former 1976 Code Section 38-11-850 [1947 (45) 322; 1952 Code Section 37-425; 1962 Code Section 37-425] recodified as Section 38-19-650 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 559.
 Upon dissolution and liquidation of the insurer the holders of such loan agreements remaining unpaid after the retirement of all the insurer's other outstanding obligations are entitled to payment before any distribution may be made to the insurer's members.  HISTORY: Former 1976 Code Section 38-11-860 [1947 (45) 322; 1952 Code Section 37-426; 1962 Code Section 37-426] recodified as Section 38-19-660 by 1987 Act No. 155, Section 1.
 For the purposes of this article:  (1) "Bulk reinsurance and assumption for the purposes of liquidation" means a transaction in which a mutual insurer wholly reinsures its business with another insurer, transfers all or part of its assets to the other insurer in exchange for an assumption of all of its risks and obligations by the other insurer and proceeds to liquidation.  (2) "Merger" means a transaction in which a mutual insurer is absorbed by another mutual insurer, its assets, franchises, powers, and liabilities are acquired by the other insurer, and it ceases to exist as a separate business entity.  (3) "Conversion" means a transaction in which a mutual insurer reorganizes as a stock insurer and the ownership rights of the members of the mutual insurer are exchanged for cash, stock, or both stock and cash as may be provided by the plan of conversion.  HISTORY: 1988 Act No. 334, Section 1.
 (A) A mutual insurer may engage in any of the transactions specified in Section 38-19-815 under such reasonable plan and procedure as approved by the director or his designee after a public hearing on the matter. Notice must be given to those persons who were members, directors or trustees, officers, and employees of the mutual insurer on the date the plan was filed with the department. Notice may be given to any other person at the discretion of the director or his designee. All of these persons have the right to appear and be heard at the hearing.  (B) The director or his designee may not approve any plan or procedure unless:  (1) its terms and conditions are fair and equitable;  (2) it is approved by a vote of not less than two-thirds of the insurer's members voting on it in person, or by proxy, at a meeting of members called for the purpose pursuant to reasonable notice and procedure as approved by the director or his designee. Only persons who are members on the date the plan was filed with the department are entitled to vote;  (3) the equity of each member in the insurer is determinable under a fair and reasonable formula approved by the director or his designee, which must be based upon the insurer's entire surplus as shown in the insurer's financial statement filed with the department, including all voluntary reserves but excluding contingently repayable funds and outstanding guaranty capital shares at the redemption value of them, and without taking into account the value of nonadmitted assets or of insurance business in force;  (4) the members entitled to participate in the distribution of assets, whether cash or property or a combination of them, shall include not less than all members of the insurer as of the date the plan was submitted to the department and each person who had been a member of the insurer within three years prior to that date;  (5) the director or his designee finds that the insurer's management has not, through reduction and volume of new business written, or cancellation, or through any other means, sought to reduce, limit, or affect the number or identity of the insurer's members to be entitled to participate in the plan, or to secure for the individuals comprising management any unfair advantage through the plan.  (C) If the plan provides for a conversion from a mutual insurer to a stock insurer, the director or his designee may not approve the plan or procedure unless:  (1) the plan gives to each member of the insurer, as specified in subsection (B)(4), a preemptive right to acquire his proportionate part of all of a proposed capital stock of the insurer, or all of the stock of any corporation affiliated with the insurer, within a designated, reasonable period, as the part is determinable under the plan of conversion, and to apply upon the purchase of it the amount of his equity in the insurer as determined under subsection (B)(3). The plan must provide for an equitable distribution of fractional interests. The plan may provide, subject to the approval of the director or his designee, that the preemptive right will not extend to any member who resides in a jurisdiction in which the issuance of stock is impossible, or to any member if the extension would involve unreasonable delay or require the insurer to bear unreasonable costs, provided that any member shall receive one hundred percent of his equity share in the insurer in the form of a cash payment;  (2) shares are to be offered to members at a price not greater than that offered after that time under the plan to others except as provided in subsection (D);  (3) the plan provides for payment to each member of his entire equity share in the insurer, with that payment to be made in cash or to be applied for or upon the purchase of stock to which the member is preemptively entitled, or both, provided that with respect to each member who is not given the option of receiving his entire equity share in cash, the plan must provide that the member has the option to receive a reasonable portion of his equity share, as provided in the plan, but not in excess of fifty percent of his entire equity, in the form of a cash payment, which payment together with the amount applied to the purchase of stock constitutes full payment and discharge of the member's equity or property interest in the mutual insurer. The director or his designee may permit an insurer to forego the option of making a cash payment to members if he determines that it would be reasonable not to provide for the cash election, after taking into account all the facts and circumstances, including whether there is expected to be an active market for the stock to be received in the conversion;  (4) the plan, when completed, provides that the insurer's surplus regarding policyholders is reasonable relating to the insurer's outstanding liabilities and adequate to meet its financial needs. In determining if the surplus as regarding policyholders is reasonable relating to the insurer's outstanding liabilities and adequate to meet its financial needs, the following factors, among others, are considered:  (a) the size of the insurer as measured by its assets, capital and surplus, reserves, premium writing, insurance in force, and other appropriate criteria;  (b) the extent to which the insurer's business is diversified among the several lines of insurance;  (c) the number and size of risks insured in each line of business;  (d) the extent of the geographical dispersion of the insurer's insured risks;  (e) the nature and extent of the insurer's reinsurance program;  (f) the quality, diversification, and liquidity of the insurer's investment portfolio;  (g) the recent past and projected future trend in the size of the insurer's investment portfolio;  (h) the surplus regarding policyholders maintained by other comparable insurers;  (i) the adequacy of the insurer's reserves; and  (j) the quality and liquidity of investments in affiliates. The director or his designee may treat any investment as a disallowed asset for purposes of determining the adequacy of surplus regarding policyholders whenever in his judgment the investment warrants it.  (D) Nothing in this section prohibits the inclusion in the conversion plan of provisions under which the individuals comprising the insurer's management and employee group are entitled to purchase for cash, at a price not lower than the price at which it had been offered to the insurer's members, shares of stock not taken by members on the preemptive offering to members, in accordance with the reasonable classification of the individuals included in the plan approved by the director or his designee. This price limitation may not extend beyond a date set forth in the plan. After the expiration of such date, the governing body of the insurer, with the approval of the director or his designee, may dispose of any stock not taken before that time to any person and for such consideration as may be necessary or desirable in its discretion.  (E) A director, officer, agent, or employee of the insurer may receive only his usual regular compensation, for aiding, promoting, or assisting in the conversion, except as set forth in the plan approved by the director or his designee. This provision does not prohibit the payment of reasonable fees and compensation to attorneys, accountants, and actuaries for services performed in the independent practice of their professions.  (F) For the purpose of determining whether a conversion plan meets the requirements of this section and any other relevant provisions of this title, the director may employ staff personnel and outside consultants. All reasonable costs related to the review of a plan of conversion, including those costs attributable to the use of staff personnel, must be borne by the insurer making the filing.  HISTORY: 1988 Act No. 334, Section 1; 1993 Act No. 181, Section 560.
 (A) Unless otherwise specifically provided by law, the following administrative penalties apply for each violation of the insurance laws of this State or federal insurance laws subject to enforcement by the Department of Insurance:  (1) If the violator is an insurer, pharmacy benefits manager, or a health maintenance organization licensed in this State, the director or his designee shall fine the violator in an amount not to exceed fifteen thousand dollars, suspend or revoke the violator's authority to do business in this State, or both. If the violation is wilful, the director or his designee shall fine the violator in an amount not to exceed thirty thousand dollars, suspend or revoke the violator's authority to do business in this State, or both.  (2) If the violator is a person, other than an insurer, pharmacy benefits manager, or a health maintenance organization, licensed by the director or his designee in this State, the director or his designee shall fine the person in an amount not to exceed two thousand five hundred dollars, suspend or revoke the license of the person, or both. If the violation is wilful, the director or his designee shall fine the person in an amount not to exceed five thousand dollars, suspend or revoke the license of the person, or both.  (B) The penalties in subsection (A) are in addition to any criminal penalties provided by law or any other remedies provided by law. The administrative proceedings in subsection (A) do not preclude civil or criminal proceedings from taking place before, during, or after the administrative proceeding.  HISTORY: 1988 Act No. 374, Section 1; 1993 Act No. 181, Section 531; 2018 Act No. 219 (H.4657), Section 1, eff May 18, 2018; 2019 Act No. 48 (S.359), Section 2, eff January 1, 2021.  Effect of Amendment  2018 Act No. 219, Section 1, inserted the (A) and (B) designators; in (A), inserted "or federal insurance laws subject to enforcement by the Department of Insurance" following "laws of this State", in (1), deleted "(a)" preceding "fine the violator" in two places and deleted "or (b)" preceding "suspend or revoke" in two places, and in (2), deleted "(a)" preceding "fine the person" in two places and deleted "or (b)" preceding "suspend or revoke" in two places; and in (B), substituted "subsection (A)" for "items (1) and (2)" in two places.  2019 Act No. 48, Section 2, in (A), in (1) and (2), in the first sentences, inserted ", pharmacy benefits manager,".
 Any person convicted of a misdemeanor defined in this title must be punished by a fine of not more than two thousand five hundred dollars or by imprisonment for not more than two years, or both, unless another penalty is specifically provided by law.  HISTORY: 1988 Act No. 374, Section 1.
 Any person who performs an act without a license required by this title is guilty of a misdemeanor and, upon conviction, must be fined not more than ten thousand dollars or imprisoned for two years, or both.  HISTORY: 1988 Act No. 374, Section 1.  
 In this chapter, unless the context otherwise requires:  (1) An "affiliate" of, or person "affiliated" with, a specific person means a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.  (2) The term "control" (including the terms "controlling", "controlled by", and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly, or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by Section 38-21-220 that control does not exist in fact. The director or his designee may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support his determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.  (3) The term "director" means the Director of the South Carolina Department of Insurance or his designee.  (4) The term "group-wide supervisor" means the regulatory official authorized to engage in conducting or coordinating group-wide supervision activities who is determined or acknowledged by the director pursuant to Section 38-21-295 to have sufficient significant contacts with the internationally active insurance group.  (5) An "insurance holding company system" consists of two or more affiliated persons, one or more of which is an insurer.  (6) The term "insurer" has the same meaning as set forth in Section 38-1-20 except that it does not include (a) agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state or (b) nonprofit medical and hospital service associations.  (7) The term "internationally active insurance group" means an insurance holding company system that includes an insurer registered pursuant to Sections 38-21-143 through 38-21-240 and meets the following criteria:  (a) premiums written in at least three countries;  (b) the percentage of gross premiums written outside the United States is at least ten percent of the insurance holding company system's total gross written premiums; and  (c) based on a three-year rolling average, the total assets of the insurance holding company system are at least fifty billion dollars or the total gross written premiums of the insurance holding company systems are at least ten billion dollars.  (8) A "person" means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity, or any combination of the foregoing acting in concert.  (9) A "securityholder" of a specified person is one who owns any security of that person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing.  (10) A "subsidiary" of a specified person is an affiliate controlled by that person directly, or indirectly through one or more intermediaries.  (11) The term "voting security" includes any security convertible into or evidencing a right to acquire a voting security.  (12) "Enterprise risk" means an activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, likely is to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's risk-based capital to fall into company action level as provided in Section 38-9-330 or would cause the insurer to be in hazardous financial condition as provided in Section 38-5-120.  (13) A "supervisory college" is a meeting or joint meeting of insurance regulators or supervisors with company officials where the topic of discussion is regulatory oversight of one specific insurance group that is writing significant amounts of insurance in other jurisdictions. It may involve detailed discussions about financial data, corporate governance, and enterprise risk management functions. Supervisory colleges are intended to facilitate the oversight of internationally active insurance companies at the group level.  HISTORY: Former 1976 Code Section 38-21-10 [1947 (45) 322; 1952 Code Section 37-851; 1962 Code Section 37-851] recodified as Section 38-37-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-10 [1962 Code Section 37-1400; 1971 (57) 351; 1986 Act No. 426, Section 1] recodified as Section 38-21-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 561; 2000 Act No. 259, Section 3; 2001 Act No. 82, Section 8, eff July 20, 2001; 2015 Act No. 2 (S.342), Section 3, eff March 9, 2015; 2017 Act No. 48 (S.254), Section 2, eff January 1, 2018; 2019 Act No. 3 (S.75), Section 3, eff March 20, 2019.  Effect of Amendment  2015 Act No. 2, Section 3, added (9).  2017 Act No. 48, Section 2, added (10), relating to the definition of "supervisory college".  2019 Act No. 3, Section 3, inserted (3) and (4), relating to the definitions of "director" and "group-wide supervisor"; renumbered (3) to (4) as (5) to (6); inserted (7), relating to the definition of "internationally active insurance group"; renumbered (5) to (10) as (8) to (13); and made nonsubstantive changes.
 The provisions of Sections 38-21-60 to 38-21-120 do not apply to:  (1) Any transaction which is subject to Article 9, Chapter 19 dealing with the merger or consolidation of two or more insurers.  (2) Any offer, request, invitation, agreement, or acquisition which the director or his designee by order exempts as (a) not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer, or (b) as otherwise not comprehended within the purposes of Sections 38-21-60 through 38-21-120.  HISTORY: Former 1976 Code Section 38-29-110 [1962 Code Section 37-1409; 1971 (57) 351; 1986 Act No. 426, Section 7] recodified as Section 38-21-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 568.
 The following are violations of Sections 38-21-60 to 38-21-120:  (1) the failure to file a statement, amendment, or other material required to be filed pursuant to Section 38-21-60 or 38-21-70; or  (2) the effectuation or an attempt to effectuate an acquisition or control of, divestiture of, or merger with a domestic insurer, unless the director or his designee has given his approval.  HISTORY: Former 1976 Code Section 38-29-120 [1962 Code Section 37-1410; 1971 (57) 351] recodified as Section 38-21-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 569; 2015 Act No. 2 (S.342), Section 7, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 7, in (1), substituted "failure to file a statement" for "failure to file any statement"; and in (2), substituted "effectuation or an attempt" for "effectuation or any attempt", and inserted "divestiture of,".
 The courts of this State, including Administrative Law Court as provided by law, are vested with jurisdiction over each person not resident, domiciled, or authorized to do business in this State who files a statement with the department under this chapter and over all actions involving the person arising out of violations of Sections 38-21-60 through 38-21-120. This person must be considered to have performed acts equivalent to and constituting an appointment by him of the director to be his true and lawful attorney upon whom all lawful process may be served in any action, suit, or proceeding arising out of violations of Sections 38-21-60 through 38-21-120. Copies of all lawful process must be served on the director and transmitted by registered or certified mail by the director or his designee to the person at his last known address.  HISTORY: Former 1976 Code Section 38-29-130 [1962 Code Section 37-1411; 1971 (57) 351] recodified as Section 38-21-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 570.
 (A) For purposes of this section:  (1) "Acquisition" means an agreement, arrangement, or activity the consummation of which results in a person directly or indirectly acquiring the control of another person and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance, and mergers.  (2) An "involved insurer" includes an insurer which acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger.  (B)(1) Except as exempted in item (2), this section applies to an acquisition in which there is a change in control of an insurer authorized to do business in this State.  (2) This section does not apply to:  (a) a purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in an insurance market in this State. If a purchase of securities results in a presumption of control under Section 38-21-10(2), it is not solely for investment purposes unless the commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist, and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the director or his designee;  (b) the acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance if preacquisition notification is filed with the department in accordance with subsection (C)(1) thirty days before the proposed effective date of the acquisition. However, preacquisition notification is not required for exclusion from this section if the acquisition would be excluded by other provisions of this subsection;  (c) the acquisition of already affiliated persons;  (d) an acquisition if, as an immediate result of the acquisition:  (i) in any market the combined market share of the involved insurers does not exceed five percent of total market;  (ii) there is not an increase in a market share, or in any market the combined market share of the involved insurers does not exceed twelve percent of the total market, and the market share does not increase by more than two percent of the total market. For the purpose of this subitem a market means direct written insurance premium in this State for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this State;  (e) an acquisition for which a preacquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business;  (f) an acquisition of an insurer whose domiciliary commissioner affirmatively finds that:  (i) the insurer is in failing condition;  (ii) there is a lack of feasible alternatives to improving the condition;  (iii) the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and  (iv) the findings are communicated by the domiciliary commissioner to the director or his designee.  (C)(1) An acquisition covered by subsection (B) may be subject to an order pursuant to subsection (E) unless the acquiring person files a preacquisition notification and the waiting period has expired. The acquired person may file a preacquisition notification. The director or his designee shall give confidential treatment to information submitted under subsection (C) in the same manner provided in Section 38-21-290.  (2) The preacquisition notification must be in a form and contain information prescribed by the National Association of Insurance Commissioners relating to those markets which, under subsection B(2)(e), cause the acquisition not to be exempted from the provisions of this section. The director or his designee may require additional material and information necessary to determine whether the proposed acquisition, if consummated, violates the competitive standard of subsection (D). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this State accompanied by a summary of the education and experience of the person indicating ability to render an informed opinion.  (3) The required waiting period begins on the date of receipt of the department of a preacquisition notification and ends on the earlier of the thirtieth day after the date of receipt or termination of the waiting period by the Director or his designee. Before the end of the waiting period, the director or his designee on a one-time basis may require the submission of additional needed information relevant to the proposed acquisition. If he does, the waiting period ends on the earlier of the thirtieth day after receipt of the additional information by the department or termination of the waiting period by the director or his designee.  (D)(1) The director or his designee may enter an order under subsection (E) (1) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be to lessen competition substantially in a line of insurance in this State or tend to create a monopoly or if the insurer fails to file adequate information in compliance with subsection (C).  (2) In determining whether a proposed acquisition violates the competitive standard of item (1), the director or his designee shall consider the following:  (a) An acquisition covered under subsection (B) involving two or more insurers competing in the same market is prima facie evidence of a violation of the competitive standards:  (i) if the market is highly concentrated and the involved insurers possess the following shares of the market:  Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more   (ii) if the market is not highly concentrated and the involved insurers possess the following shares of the market:  Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more   A highly concentrated market is one of which the share of the four largest insurers is seventy-five percent or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two insurers are involved, exceeding the total of the two columns in the table is prima facie evidence of violation of the competitive standard in item (1). For the purpose of this item, the insurer with the largest share of the market is Insurer A.  (b) It must be determined whether there is a significant trend toward increased concentration in the market. The trend exists when the aggregate market share of a grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven percent or more of the market over time extending from a base year five to ten years before the acquisition up to the time of the acquisition. An acquisition or merger covered under subsection (B) involving two or more insurers competing in the same market is prima facie evidence of a violation of the competitive standard in item (1) if all of the following exist:  (i) There is a significant trend toward increased concentration in the market.  (ii) One of the insurers involved is one of the insurers in a grouping of the large insurers showing the requisite increase in the market share.  (iii) Another involved insurer's market is two percent or more.  (c) Even though an acquisition is not prima facie violative of the competitive standard under this item, the director or his designee may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under this item, a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination include, but are not limited to: market shares, volatility of the ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.  (d) For the purpose of this item:  (i) "Insurer" includes a company or group of companies under common management, ownership, or control.  (ii) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets the director or his designee shall give due consideration to the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business. The line is that used in the annual statement required to be filed by insurers doing business in this State, and the relevant geographical market is assumed to be this State.  (iii) The burden of showing prima facie evidence of a violation of the competitive standard rests upon the director or his designee.  (3) An order must not be entered under subsection (E)(1) if the acquisition will:  (a) yield substantial economies of scale or economies in resource utilization that cannot be achieved feasibly in another way, and the public benefits which would arise from the economies exceed the public benefits which would arise from not lessening competition; or  (b) substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits which would arise from not lessening competition.  (E)(1)(a) If an acquisition violates the standards of this section, the director or his designee may enter an order:  (i) requiring an involved insurer to stop doing business in this State with respect to the line or lines of insurance involved in the violation; or  (ii) denying the application of an acquired or acquiring insurer for a license to do business in this State.  (b) An order must not be entered unless all of the following exist:  (i) There is a hearing.  (ii) Notice of the hearing is issued before the end of the waiting period and not less than fifteen days before the hearing.  (iii) The hearing is concluded and the order is issued no later than sixty days after the end of the waiting period. An order must be accompanied by a written decision of the director or his designee setting forth his findings of fact and conclusions of law.  (c) An order does not become final earlier than thirty days after it is issued. Before it becomes final the involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon the plan or other information, the director or his designee shall specify the conditions, if any, under the time period during which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified.  (d) An order does not apply if the acquisition is not consummated.  (2) A person who violates an order under item (1), while the order is in effect, after notice and hearing, and upon order of the director or his designee, is subject at his discretion to one or more of the following:  (a) monetary penalty of not more than ten thousand dollars for each day of violation;  (b) suspension or revocation of license.  (3) An insurer or other person who fails to make a filing required by this section and who fails to demonstrate a good faith effort to comply with a filing requirement is subject to a fine of not more than fifty thousand dollars.  (F) Sections 38-21-320, 38-21-330, and 38-21-350 do not apply to acquisitions under subsection (B).  HISTORY: 1991 Act No. 13, Section 2; 1993 Act No. 181, Section 571; 2015 Act No. 2 (S.342), Section 8, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 8, in (B)(2), deleted former (a) relating to Section 38-21-60; redesignated the former paragraphs accordingly; and made nonsubstantive changes.
 (A) An insurer authorized to do business in this State and who is a member of an insurance holding company system shall register with the department, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in this chapter.  (B) An insurer who is subject to registration under this chapter shall register within fifteen days after it becomes subject to registration, and annually thereafter by March first of each year for the previous calendar year, unless the director or his designee for good cause shown extends the time for registration, and then within the extended time. The director or his designee may require any authorized insurer which is a member of an insurance holding company system which is not subject to registration under this section to furnish a copy of the registration statement or other information filed by the insurance company with the insurance regulatory authority of its domiciliary jurisdiction.  HISTORY: Former 1976 Code Section 38-29-140 [1962 Code Section 37-1412; 1971 (57) 351; Section 1. 1986 Act No. 426, Section 8] recodified as Section 38-21-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 572; 2015 Act No. 2 (S.342), Section 9, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 9, inserted the paragraph designators; in (A), substituted "An insurer authorized to do business in this State and who" for "Every insurer authorized to do business in this State which"; and in (B), substituted "An insurer who is subject" for "Any insurer which is subject", and substituted "a member of an insurance holding company system" for "a member of a holding company system".
 Every insurer subject to registration shall file the registration statement with the director or his designee on a form and in a format prescribed by the director or his designee which must contain the following current information:  (1) capital structure, general financial condition, ownership, and management of the insurer and a person controlling the insurer;  (2) identity and relationship of every member of the insurance holding company system;  (3) the following agreements in force and transactions currently outstanding or which have occurred during the last calendar year between the insurer and its affiliates:  (a) loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;  (b) purchases, sales, or exchanges of assets;  (c) transactions not in the ordinary course of business;  (d) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;  (e) management agreements, service contracts, and cost-sharing arrangements;  (f) reinsurance agreements;  (g) dividends and other distributions to shareholders; and  (h) consolidated tax allocation agreements;  (4) pledge of the insurer's stock, including stock of a subsidiary or controlling affiliate, for a loan made to a member of the insurance holding company system;  (5) financial statements of or within an insurance holding company system, including all affiliates, if requested by the director or his designee including, but not limited to, annual audited financial statements filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, which may be satisfied by providing the director or his designee with the most recently filed parent corporation financial statements that have been filed with the Securities and Exchange Commission;  (6) other matters concerning transactions between registered insurers and affiliates included in registration forms adopted or approved by the director or his designee;  (7) statements that the insurer's board of directors is responsible for and oversees corporate governance and internal controls and that the insurer's officers or senior management have approved, implemented, and continue to maintain and monitor corporate governance and internal control procedures; and  (8) any other information required by the director or his designee by regulation.  HISTORY: Former 1976 Code Section 38-29-150 [1962 Code Section 37-1413; 1971 (57) 351; 1986 Act No. 426, Section 9] recodified as Section 38-21-140 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 14; 1993 Act No. 181, Section 573; 2015 Act No. 2 (S.342), Section 10, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 10, in the first paragraph, inserted the first instance of "with the director or his designee" and inserted "and in a format"; added (5), (7), and (8); redesignated former (5) as (6); and made nonsubstantive changes.
 All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.  HISTORY: Former 1976 Code Section 38-29-155 [1986 Act No. 426, Section 10] recodified as Section 38-21-150 by 1987 Act No. 155, Section 1.
 No information need be disclosed on the registration statement filed pursuant to Section 38-21-140 if the information is not material for the purposes of this chapter. Unless the department by regulation or by order of the director or his designee provides otherwise, sales, purchases, exchanges, loans or extension of credit, or investments involving one-half of one percent or less of an insurer's admitted assets as of the previous December thirty-first are not considered material for purposes of Sections 38-21-140 through 38-21-240.  HISTORY: Former 1976 Code Section 38-29-160 [1962 Code Section 37-1414; 1971 (57) 351] recodified as Section 38-21-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 574.
 (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 of it and at least fifteen days before the payment of it. The department promptly shall consider this report as information, and these considerations must include the factors as 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 fifteen-day period before payment of it, to limit the amount of the dividends or distributions.  (B) No dividend or other distribution may be declared or paid at any time when the surplus of the insurer is less than the surplus required by law for the kinds of business authorized to be transacted by such insurer, nor when the payment of a dividend or other distribution would reduce its surplus to less than such amount.  (C) Except in the case of share dividends, surplus for determining whether dividends or other distributions may be declared shall not include surplus arising from unrealized appreciation in value, or revaluation of assets, or from unrealized profits upon investments.  (D) No dividend or other distribution may be declared or paid contrary to any restriction contained in the insurer's articles of incorporation.  (E) Notwithstanding any other provision of law, the insurer may declare, conditional upon the department's approval, a dividend or other distribution to shareholders from surplus, and such declaration confers no rights until the department:  (1) has approved the payment of the dividend or distribution; or  (2) has not disapproved the payment within fifteen days after receiving notice of the declaration.  HISTORY: Former 1976 Code Section 38-29-165 [1986 Act No. 426, Section 11] recodified, 1987 Act No. 155, Section 1; 1993 Act No. 70, Section 4; 1993 Act No. 181, Section 575; 2002 Act No. 228, Section 3, eff May 1, 2002; 2003 Act No. 73, Section 3, eff June 25, 2003.
 Any persons within an insurance holding company subject to registration are required to provide complete and accurate information to an insurer, where such information is reasonably necessary to enable the insurer to comply with the provisions of this chapter.  HISTORY: Former 1976 Code Section 38-29-170 [1962 Code Section 37-1415; 1971 (57) 351; 1986 Act No. 426, Section 12] recodified as Section 38-21-180 by 1987 Act No. 155, Section 1.
 The director or his designee shall terminate the registration of an insurer that is no longer a member of an insurance holding company system.  HISTORY: Former 1976 Code Section 38-29-180 [1962 Code Section 37-1416; 1971 (57) 351] recodified as Section 38-21-190 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 576.
 A domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries engaged in the following kinds of business:  (1) Any kind of insurance business authorized by the jurisdiction in which it is incorporated;  (2) Acting as an insurance broker or as an insurance agent for its parent or for any of its parent's insurer subsidiaries;  (3) Investing, reinvesting, or trading in securities for its own account, that of its parent, any subsidiary of its parent, or any affiliate or subsidiary;  (4) Management of an investment company subject to or registered pursuant to the Investment Company Act of 1940, as amended, including related sales and services;  (5) Acting as a broker-dealer subject to or registered pursuant to the Securities Exchange Act of 1934, as amended;  (6) Rendering investment advice to governments, government agencies, corporations, or other organizations or groups;  (7) Rendering other services related to the operations of an insurance business, including, but not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal, and collection services;  (8) Ownership and management of assets which the parent corporation could itself own or manage;  (9) Acting as administrative agent for a governmental instrumentality which is performing an insurance function;  (10) Financing of insurance premiums, agents, and other forms of consumer financing;  (11) Any other business activity determined by the director or his designee to be reasonably ancillary to an insurance business; or  (12) Owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified in this section.  HISTORY: Former 1976 Code Section 38-21-20 [1947 (45) 322; 1952 Code Section 37-852; 1962 Code Section 37-852] recodified as Section 38-37-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-20 [1962 Code Section 37-1401; 1971 (57) 351] recodified as Section 38-21-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 562.
 The director or his designee may require or allow two or more affiliated insurers subject to registration to file a consolidated registration statement.  HISTORY: Former 1976 Code Section 38-29-190 [1962 Code Section 37-1417; 1971 (57) 351; 1986 Act No. 426, Section 13] recodified as Section 38-21-200 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 577.
 The director or his designee may allow an insurer which is authorized to do business in this State and which is part of an insurance holding company system to register on behalf of an affiliated insurer which is required to register under Section 38-21-130 and to file all information and material required to be filed under Sections 38-21-130 through 38-21-240.  HISTORY: Former 1976 Code Section 38-21-210 [1947 (45) 322; 1952 Code Section 37-871; 1962 Code Section 37-871] recodified as Section 38-37-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-200 [1962 Code Section 37-1418; 1971 (57) 351] recodified as Section 38-21-210 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 578.
 A person may file with the department a disclaimer of affiliation with an authorized insurer or a disclaimer may be filed by an insurer or a member of an insurance holding company system. The disclaimer fully shall disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming this affiliation. A disclaimer of affiliation must be considered to have been granted unless the director or his designee, within thirty days following receipt of a complete disclaimer, notifies the filing party the disclaimer is disallowed. In the event of a disallowance, the disclaiming party may request an administrative hearing, which the department must grant. The disclaiming party must be relieved of its duty to register under Sections 38-21-130 through 38-21-240 if approval of the disclaimer is granted by the director or his designee, or if the disclaimer is considered approved.  HISTORY: Former 1976 Code Section 38-21-220 [1947 (45) 322; 1952 Code Section 37-872; 1962 Code Section 37-872] recodified as Section 38-37-220 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-210 [1962 Code Section 37-1420; 1971 (57) 351] recodified as Section 38-21-220 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 579; 2015 Act No. 2 (S.342), Section 11, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 11, rewrote the section.
 The ultimate controlling person of an insurer subject to registration also shall file an annual enterprise risk report. The report must, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report must be filed with the lead state commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.  HISTORY: 2015 Act No. 2 (S.342), Section 1, eff March 9, 2015.
 The failure to file a registration statement or any summary of such registration or enterprise risk filing as required by this chapter within the time specified for filing constitutes a violation of these sections.  HISTORY: Former 1976 Code Section 38-21-230 [1947 (45) 322; 1952 Code Section 37-873; 1962 Code Section 37-873] recodified as Section 38-37-230 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-220 [1962 Code Section 37-1421; 1971 (57) 351; 1986 Act No. 426, Section 14; recodified as Section 38-21-230 by 1987 Act No. 155, Section 1; 2015 Act No. 2 (S.342), Section 12, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 12, inserted "or enterprise risk filing".
 The provisions of Sections 38-21-130 to 38-21-240 do not apply to any insurer, information, or transaction if and to the extent that the department by regulation or the director or his designee by order exempts it from these sections.  HISTORY: Former 1976 Code Section 38-21-240 [1947 (45) 322; 1952 Code Section 37-874; 1962 Code Section 37-874] recodified as Section 38-37-240 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-230 [1962 Code Section 37-1419; 1971 (57) 351] recodified as Section 38-21-240 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 580.
 (A) Transactions within an insurance holding company system to which an insurer subject to registration is a party are subject to the following standards:  (1) The terms must be fair and reasonable.  (2) Agreements for cost-sharing services and management must include provisions required by regulation promulgated by the department.  (3) Charges or fees for services performed must be reasonable.  (4) Expenses incurred and payment received must be allocated to the insurer in conformity with customary insurance accounting practices consistently applied.  (5) The books, accounts, and records of each party to all transactions must be so maintained as to clearly and accurately disclose the nature and details of the transactions including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties.  (6) The insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates must be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.  (B) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in items (1) through (7) may not be entered into unless the insurer has notified the department in writing of its intention to enter into the transaction at least thirty days prior, or such shorter period as the director or his designee may permit, and the director or his designee has not disapproved it within such period. The notice for amendments or modifications must include the reasons for the charge and the financial impact on the domestic insurer. Informal notice must be reported within thirty days after termination of a previously filed agreement to the director or his designee for determination of the type of filing required, if any.  (1) Sales, purchases, exchanges, loans, or extensions of credit, guarantees, or investments if the transactions are equal to or exceed:  (a) with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders;  (b) with respect to life insurers, three percent of the insurer's admitted assets, each as of the thirty-first day of December next preceding.  (2) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to purchase assets of, or make investments in, any affiliate of the insurer making the loans or extensions of credit as long as such transactions are equal to or exceed:  (a) with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders;  (b) with respect to life insurers, three percent of the insurer's admitted assets, each as of the thirty-first day of December next preceding.  (3) Reinsurance agreements or modifications, including:  (a) all reinsurance pooling agreements; and  (b) agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a change to the insurer's liabilities in any of the next three years, equals or exceeds five percent of the insurer's surplus as regards policyholders, as of the thirty-first day of December next preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurer.  (4) All management agreements, service contracts, tax allocation agreements, and all cost-sharing arrangements.  (5) Guarantees when made by a domestic insurer; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this item unless it exceeds the lesser of one-half of one percent of the insurer's admitted assets or ten percent of surplus as regards policyholders as of the thirty-first day of December next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this item.  (6) Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount which, together with its present holdings in such investments, exceeds two and one-half percent of the insurer's surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to Sections 38-21-20 through 38-21-50, or authorized under any other section of this chapter, or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter, are exempt from this requirement.  (7) Any material transactions, specified by regulation of the department, which the director or his designee determines may adversely affect the interests of the insurer's policyholders. Nothing herein authorizes or permits any transactions which, in the case of an insurer, not a member of the same insurance holding company system, would be otherwise contrary to law.  (C) A domestic insurer may not enter into transactions, which are part of a plan or series of like transactions with persons within the insurance holding company system, if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the director or his designee determines that such separate transactions were entered into over any twelve-month period for such purpose, he may exercise his authority under Section 38-21-340.  (D) The director or his designee, in reviewing transactions pursuant to subsection (B), shall consider whether the transactions comply with the standards set forth in subsection (A) and whether they may adversely affect the interests of policyholders.  (E) The department must be notified within thirty days of any investment of the domestic insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation's voting securities.  HISTORY: Former 1976 Code Section 38-21-250 [1947 (45) 322; 1952 Code Section 37-875; 1962 Code Section 37-875] recodified as Section 38-37-250 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-240 [1962 Section 37-1422; 1971 (57) 251; 1986 Act No. 426, Section 15] recodified as Section 38-21-250 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 581; 2015 Act No. 2 (S.342), Section 13, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 13, rewrote the section.
 For purposes of this chapter, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, are considered:  (1) the size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria;  (2) the extent to which the insurer's business is diversified among the several lines of insurance;  (3) the number and size of risks insured in each line of business;  (4) the extent of the geographical dispersion of the insured risks;  (5) the nature and extent of the reinsurance program;  (6) the quality, diversification, and liquidity of the investment portfolio;  (7) the recent past and projected future trend in the size of the insurer's investment portfolio;  (8) the surplus as regards policyholders maintained by other comparable insurers;  (9) the adequacy of the reserves;  (10) the source of the insurer's earnings and the extent to which the reported earnings include extraordinary items, such as surplus relief reinsurance transactions and reserve destrengthening; and  (11) The quality and liquidity of investments in affiliates.  The director or his designee may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in his judgment the investment so warrants.  HISTORY: Former 1976 Code Section 38-21-260 [1947 (45) 322; 1952 Code Section 37-876; 1962 Code Section 37-876] recodified as Section 38-37-260 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-250 [1962 Code Section 37-1423; 1971 (57) 351; 1986 Act No. 426, Section 16] recodified as Section 38-21-260 by 1987 Act No. 155, Section 1; 1993 Act No. 70, Section 5; 1993 Act No. 181, Section 582.
 (A) No domestic insurer may pay an extraordinary dividend or make another extraordinary distribution to its shareholders until the director or his designee:  (1) has approved the payment, or  (2) has not disapproved the payment within fifteen days after receiving notice of the declaration.  (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:  (a) when paid from other than earned surplus exceeds the lesser 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;  (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.  (C) An insurer may declare an extraordinary dividend or distribution which is conditional upon the approval of the director or his designee. The declaration confers no rights upon shareholders until the director or his designee:  (1) has approved the payment of the dividend or distribution, or  (2) has not disapproved the payment within fifteen days after receiving notice of the declaration.  HISTORY: Former 1976 Code Section 38-21-270 [1947 (45) 322; 1952 Code Section 37-877; 1962 Code Section 37-877] recodified as Section 38-37-270 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-260 [1962 Code Section 37-1424; 1971 (57) 351; 1986 Act No. 426, Section 17] recodified as Section 38-21-270 by 1987 Act No. 155, Section 1; 1988 Act No. 370; 1991 Act No. 13, Section 15; 1993 Act No. 70, Section 6; 1993 Act No. 181, Section 583; 2002 Act No. 228, Section 4, eff May 1, 2002; 2003 Act No. 73, Section 4, eff June 25, 2003.
 (A) In addition to his powers relating to examinations or investigations of insurers, the director or his designee has the power to examine an insurer registered pursuant to Sections 38-21-130 through 38-21-240 and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, or by an entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis.  (B) The director or his designee may order an insurer registered under Sections 38-21-130 through 38-21-240 to produce records, books, or other information papers in the possession of the insurer or its affiliates as considered necessary to determine the legality of its conduct or compliance with this chapter.  (C) To determine the legality of its conduct or compliance with this chapter, the director or his designee may order any insurer registered under Sections 38-21-130 through 38-21-240 to produce information not in the possession of the insurer if the insurer can obtain access to such information pursuant to contractual relationships, statutory obligations, or other method. If the insurer cannot obtain the information requested by the director or his designee, the insurer shall provide the director or his designee a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information. When it appears to the director or his designee that the detailed explanation is without merit, the director or his designee may require, after notice and hearing, the insurer to pay a penalty of one thousand dollars for each day's delay, or may suspend or revoke the insurer's license.  (D) The director may retain at the registered insurer's expense attorneys, actuaries, accountants, and other experts not otherwise a part of the department's staff reasonably necessary to assist in the conduct of the examination under subsection (A). A person so retained is under the direction and control of the director or his designee and must act in a purely advisory capacity.  (E) A registered insurer producing for examination records, books, and papers pursuant to this section is liable for and must pay the expense of the examination.  (F) If the insurer fails to comply with an order, the director or his designee has, in addition to powers prescribed in Section 38-21-340, the power to examine the affiliates to obtain this information. The director or his designee also shall have the power to issue subpoenas, to administer oaths, and to examine under oath any person for purposes of determining compliance with this section. Upon the failure or refusal of any person to obey a subpoena, the director or his designee may petition the Administrative Law Court, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court. Every person is obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere in this State, and is entitled to the same fees and mileage, if claimed, as a witness commanded to appear in the Court of Common Pleas, which fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses, and their testimony, must be itemized and charged against and be paid by the company being examined.  HISTORY: Former 1976 Code Section 38-21-280 [1947 (45) 322; 1952 Code Section 37-878; 1962 Code Section 37-878] recodified as Section 38-37-280 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-270 [1962 Code Section 37-1425; 1971 (57) 351; 1986 Act No. 426, Section 18] recodified as Section 38-21-280 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 584; 2015 Act No. 2 (S.342), Section 14, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 14, rewrote the section.
 (A) With respect to an insurer registered under Sections 38-21-130 through 38-21-240 and pursuant to subsection (C), the director or his designee also may participate in a supervisory college for a domestic insurer that is part of an insurance holding company system with international operations to determine compliance by the insurer with this chapter. The powers of the director or his designee with respect to supervisory colleges include, but are not limited to:  (1) initiating the establishment of a supervisory college;  (2) clarifying the membership and participation of other supervisors in the supervisory college;  (3) clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide supervisor;  (4) coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and  (5) establishing a crisis management plan.  (B) A registered insurer subject to this section must be liable for and shall pay the reasonable expenses, including reasonable travel expenses, for the participation of the director or his designee in a supervisory college pursuant to subsection (C). For purposes of this section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates, and the director or his designee may establish a regular assessment to the insurer for the payment of these expenses.  (C) In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management and governance processes, and as part of the examination of individual insurers in accordance with Section 38-21-280, the director or his designee may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies. The director or his designee may enter into agreements pursuant to Section 38-21-290(C) to provide the basis for cooperation between the director or his designee and the other regulatory agencies, and the activities of the supervisory college. Nothing in this section delegates the authority of the director or his designee to regulate or supervise the insurer or its affiliates within its jurisdiction to the supervisory college.  HISTORY: 2015 Act No. 2 (S.342), Section 2, eff March 9, 2015.
 (A) Documents, materials, or other information in the possession or control of the department that are obtained by or disclosed to the director or his designee or any other person in the course of an examination or investigation made pursuant to Section 38-21-280 and all information reported pursuant to Section 38-21-70(A)(13) and (14) and Sections 38-21-130 through 38-21-270 must be confidential by law and privileged, shall not be subject to disclosure, may not be subject to subpoena, and may not be disclosed under the Freedom of Information Act and may not be subject to discovery or admissible in evidence in any private civil action. However, the director or his designee may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of his official duties. The director or his designee otherwise shall not make the documents, materials, or other information public without obtaining the prior written consent of the insurer to which it pertains unless the director or his designee, after giving the insurer and its affiliates who would be affected by it, notice and opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication of it, in which event the director or his designee may publish all or any part.  (B) Neither the director or his designee nor a person who received documents, materials, or other information while acting under the authority of the director or his designee or with whom such documents, materials, or other information are shared pursuant to this chapter may be permitted or required to testify in a private civil action concerning any confidential documents, materials, or information subject to subsection (A).  (C) In order to assist in the performance of the director or his designee's duties, the director or his designee:  (1) may share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subsection (A), with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, including members of any supervisory college described in Section 38-21-285, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information, and has verified in writing the legal authority to maintain confidentiality;  (2) only may share confidential and privileged documents, material, or information reported pursuant to Section 38-21-225 with commissioners of states having statutes or regulations substantially similar to subsection (A) and who have agreed in writing not to disclose such information;  (3) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and  (4) shall enter into written agreements with the NAIC governing sharing and use of information provided pursuant to this chapter consistent with this subsection that shall:  (a) specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC and its affiliates and subsidiaries pursuant to this chapter, including procedures and protocols for sharing by the NAIC with other state, federal, or international regulators;  (b) specify that ownership of information shared with the NAIC and its affiliates and subsidiaries pursuant to this chapter remains with the director or his designee and the NAIC's use of the information is subject to the direction of the director or his designee;  (c) require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC pursuant to this chapter is subject to a request or subpoena to the NAIC for disclosure or production; and  (d) require the NAIC and its affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the NAIC and its affiliates and subsidiaries may be required to disclose confidential information about the insurer shared with the NAIC and its affiliates and subsidiaries pursuant to this chapter.  (D) The sharing of information by the director or his designee pursuant to this chapter may not constitute a delegation of regulatory authority or rulemaking, and the director or his designee is solely responsible for the administration, execution, and enforcement of the provisions of this chapter.  (E) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the director or his designee under this section or as a result of sharing as authorized in subsection (C).  (F) Documents, materials, or other information in the possession or control of the NAIC pursuant to this chapter shall be confidential by law and privileged, may not be disclosed under the Freedom of Information Act, may not be subject to subpoena, and may not be subject to discovery or admissible in evidence in a private civil action.  HISTORY: Former 1976 Code Section 38-21-290 [1947 (45) 322; 1952 Code Section 37-879; 1962 Code Section 37-879] recodified as Section 38-37-290 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-280 [1962 Code Section 37-1426; 1971 (57) 351; 1986 Act No. 426, Section 19] recodified as Section 38-21-290 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 585; 2015 Act No. 2 (S.342), Section 15, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 15, rewrote the section.
 (A) The director is authorized to act as the group-wide supervisor for an internationally active insurance group in accordance with the provisions of this section. However, the director may otherwise acknowledge another regulatory official as the group-wide supervisor where the internationally active insurance group:  (1) does not have substantial insurance operations within the United States;  (2) has substantial insurance operations in the United States but not in South Carolina; or  (3) has substantial insurance operations in the United States and South Carolina, but the director has determined that another regulatory official is the appropriate group-wide supervisor pursuant to the factors set forth in this section.  An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the director make a determination or acknowledgment as to a group-wide supervisor.  (B) In cooperation with other state, federal, and international regulatory agencies, the director will identify a single group-wide supervisor for an internationally active insurance group. The director may determine that he is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this State. However, the director may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. The director shall consider the following factors when making a determination or acknowledgment:  (1) the place of domicile of the insurers within the internationally active insurance group that holds the largest share of the group's written premiums, assets, or liabilities;  (2) the place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group;  (3) the location of the executive offices or largest operational offices of the internationally active insurance group;  (4) whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the director determines to be:  (a) substantially similar to the system of regulation provided under the laws of this State; or  (b) otherwise sufficient in terms of providing for group-wide supervision, enterprise-risk analysis, and cooperation with other regulatory officials; and  (5) whether another regulatory official acting or seeking to act as the group-wide supervisor provides the director with reasonably reciprocal recognition and cooperation.  However, a director identified under this section as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor. The acknowledgment of the group-wide supervisor must be made after consideration of the factors listed above, in cooperation with and subject to the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group, and in consultation with the internationally active insurance group.  (C) Notwithstanding another provision of law, when another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the director shall acknowledge that regulatory official as the group-wide supervisor. However, in the event of a material change in the internationally active insurance group that results in the internationally active insurance group's insurers domiciled in this State holding the largest share of the group's premiums, assets, or liabilities or this State being the place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group, the director shall make a determination or acknowledgment as to the appropriate group-wide supervisor for such an internationally active insurance group.  (D) Pursuant to the provisions of Section 38-21-280, the director is authorized to collect from any insurer registered pursuant to this section all information necessary to determine whether the director may act as the group-wide supervisor of an internationally active insurance group or if the director may acknowledge another regulatory official to act as the group-wide supervisor. Prior to issuing a determination that an internationally active insurance group is subject to group-wide supervision by the director, the director shall notify the insurer registered pursuant to this section and the ultimate controlling person within the internationally active insurance group. The internationally active insurance group shall have no less than thirty days to provide the director with additional information pertinent to the pending determination. The director shall publish in the State Register and on its website the identity of internationally active insurance groups that the director has determined are subject to group-wide supervision.  (E) If the director is the group-wide supervisor for an internationally active insurance group, the director is authorized to engage in the following group-wide supervision activities:  (1) assess the enterprise risks within the internationally active insurance group to ensure that:  (a) the material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management; and  (b) reasonable and effective mitigation measures are in place;  (2) request from any member of an internationally active insurance group subject to the director's supervision, information necessary and appropriate to assess enterprise risk including, but not limited to, information about the members of the internationally active insurance group regarding:  (a) governance, risk assessment, and management;  (b) capital adequacy; and  (c) material intercompany transactions;  (3) coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of such internationally active insurance groups that are engaged in the business of insurance;  (4) communicate with other state, federal, and international regulatory agencies for members within the internationally active insurance group and share relevant information subject to the confidentiality provisions of Section 38-21-290, through supervisory colleges as set forth in Section 38-21-285 or otherwise;  (5) enter into agreements with or obtain documentation from any insurer registered pursuant to this section, any member of the internationally active insurance group, and any other state, federal, and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the director's role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation must not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not domiciled or incorporated in this State is doing business in this State or is otherwise subject to jurisdiction in this State; and  (6) other group-wide supervision activities, consistent with the authorities and purposes enumerated, as considered necessary by the director.  (F) If the director acknowledges that another regulatory official from a jurisdiction that is not accredited by the National Association of Insurance Commissioners is the group-wide supervisor, the director is authorized to reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor, provided that the:  (1) director's cooperation is in compliance with the laws of this State; and  (2) regulatory official acknowledged as the group-wide supervisor also recognizes and cooperates with the director's activities as a group-wide supervisor for other internationally active insurance groups where applicable. Where such recognition and cooperation is not reasonably reciprocal, the director is authorized to refuse recognition and cooperation.  (G) The director is authorized to enter into agreements with or obtain documentation from any insurer registered pursuant to this chapter, any affiliate of the insurer, and other state, federal, and international regulatory agencies for members of the internationally active insurance group, that provide the basis for or otherwise clarify a regulatory official's role as group-wide supervisor.  (H) The director may promulgate regulations necessary for the administration of this section.  (I) A registered insurer subject to this section is liable for and shall pay the reasonable expenses of the director's participation in the administration of this section, including the engagement of attorneys, actuaries, and any other professionals and all reasonable travel expenses.  HISTORY: 2019 Act No. 3 (S.75), Section 2, eff March 20, 2019.
 In addition to investment in common stock, preferred stock, debt obligations, and other securities permitted under this title, a domestic insurer may also:  (1) Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts which do not exceed the lesser of ten percent of the insurer's assets or fifty percent of the insurer's surplus as regards policyholders if, after these investments, the insurer's surplus as regards policyholders must be reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs. In calculating the amount of the investments, investments in domestic or foreign insurance subsidiaries must be excluded, and there must be included (a) total net monies or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities, and (b) all amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary after its acquisition or formation;  (2) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer if each subsidiary agrees to limit its investments in any asset so that the investments will not cause the total investment of the insurer to exceed any of the investment limitations specified in item (1) or in the investment laws or regulations of this State. For the purpose of this item, "the total investment of the insurer" includes (a) any direct investment by the insurer in an asset, and (b) the insurer's proportionate share of any investment in an asset by a subsidiary of the insurer, which must be calculated by multiplying the amount of the subsidiary's investment by the percentage of the ownership of the subsidiary;  (3) With the approval of the director or his designee, invest any greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries if after such investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.  HISTORY: Former 1976 Code Section 38-21-30 [1947 (45) 322; 1952 Code Section 37-853; 1962 Code Section 37-853] recodified as Section 38-37-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-30 [1962 Code Section 37-1402; 1971 (57) 351; 1986 Act No. 426, Section 2] recodified as Section 38-21-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 563.
 The department or the director, as appropriate, may, upon notice and opportunity for all interested persons to be heard, issue regulations and orders necessary to carry out the provisions of this chapter.  HISTORY: Former 1976 Code Section 38-21-300 [1947 (45) 322; 1952 Code Section 37-880; 1962 Code Section 37-880] recodified as Section 38-37-300 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-290 [1962 Code Section 37-1427; 1971 (57) 351] recodified as Section 38-21-300 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 586.
 Whenever it appears to the director or his designee that an insurer or a director, officer, employee, or agent of it has committed or is about to commit a violation of this chapter or of any regulation by the department or order issued by the director or his designee hereunder, the director or his designee may apply to the circuit court for the county in which the principal office of the insurer is located or if the insurer has no such office in this State then to the Circuit Court for Richland County for an order enjoining the insurer or its director, officer, employee, or agent from violating or continuing to violate this chapter or any regulation or order and for any other equitable relief which the nature of the case and the interests of the insurer's policyholders, creditors, and shareholders or the public may require.  HISTORY: Former 1976 Code Section 38-21-310 [1947 (45) 322; 1952 Code Section 37-881; 1962 Code Section 37-881] recodified as Section 38-37-310 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-300 [1962 Code Section 37-1428; 1971 (57) 351] recodified as Section 38-21-310 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 587.
 No security which is the subject of an agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of this chapter or of any regulation issued by the department or order issued by the director or his designee hereunder may be voted at any shareholders' meetings or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though these securities were not issued and outstanding. No action taken at a shareholders' meeting may be invalidated by the voting of these securities, unless the action would materially affect control of the insurer or unless the courts of this State have so ordered. If an insurer or the director or his designee has reason to believe that any security of the insurer has been or is about to be acquired in contravention of this chapter or of any regulation issued by the department or order issued by the director or his designee hereunder, the insurer or the director or his designee may apply to the Circuit Court for Richland County or to the circuit court for the county in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement, or acquisition made in contravention of Sections 38-21-60 through 38-21-120 or any regulation issued by the department or order issued by the director or his designee thereunder, to enjoin the voting of any security so acquired, to void any vote of the security already cast at any meeting of shareholders, and for any other equitable relief which the nature of the case and the interests of the insurer's policyholders, creditors, and shareholders or the public may require.  HISTORY: Former 1976 Code Section 38-21-320 [1947 (45) 322; 1952 Code Section 37-882; 1962 Code Section 37-882] has no comparable provisions in 1987 Act No. 155] Former 1976 Code Section 38-29-310 [1962 Code Section 37-1429; 1971 (57) 351] recodified as Section 38-21-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 588.
 In a case where a person has acquired or is proposing to acquire voting securities in violation of this chapter, or any regulation issued by the department or order issued by the director or his designee hereunder, the Circuit Court for Richland County or the circuit court for the county in which the insurer has its principal place of business may, on notice which the court considers appropriate, upon the application of the insurer or the director or his designee, seize or sequester any voting securities of the insurer owned directly or indirectly by this person and issue orders appropriate to effectuate this chapter. Notwithstanding any other provision of law, for the purposes of this chapter the situs of the ownership of the securities of domestic insurers is considered to be in this State.  HISTORY: Former 1976 Code Section 38-29-320 [1962 Code Section 37-1430; 1971 (57) 351] recodified as Section 38-21-330 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 589.
 (A) An insurer failing, without just cause, to file any registration statement or summary of it as required in this chapter is required, after notice and hearing, to pay a penalty of one thousand dollars for each day's delay, to be recovered by the director or his designee, and the penalty so recovered must be paid into the general fund of the State. The maximum penalty under this section is thirty thousand dollars. The director or his designee may reduce the penalty if the insurer demonstrates to the director or his designee that the imposition of the penalty would constitute a financial hardship to the insurer.  (B) A director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly permits any of the officers or agents of the insurer to engage in transactions or make investments which have not been properly reported or submitted pursuant to this chapter or which violate this chapter, shall pay, in their individual capacity, a civil forfeiture of not more than ten thousand dollars per violation, after notice and hearing before the director or his designee. In determining the amount of the civil forfeiture, the director or his designee shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and other matters as justice may require.  (C) When it appears to the director or his designee that an insurer subject to this chapter or a director, officer, employee, or agent of it has engaged in a transaction or entered into a contract which is subject to Sections 38-21-250 through 38-21-270 and which would not have been approved had the approval been requested, the director or his designee may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing, the director or his designee may also order the insurer to void any such contracts and restore the status quo if such action is in the best interest of the policyholders, creditors, or the public.  (D) When it appears to the director or his designee that an insurer or a director, officer, employee, or agent of it has committed a wilfull violation of this chapter, the director or his designee may, in addition to other powers prescribed in this section, cause criminal proceedings to be instituted in the circuit court for the county in which the principal office of the insurer is located or, if the insurer has no such office in the State, then in the Circuit Court for Richland County against the insurer or the responsible director, officer, employee, or agent of it. An insurer which wilfully violates this chapter may be fined not more than fifty thousand dollars. An individual who wilfully violates this chapter is guilty of a misdemeanor and, upon conviction, must be fined an amount not to exceed ten thousand dollars or be imprisoned for a term not to exceed two years, or both.  (E) An officer, director, or employee of an insurance holding company system who wilfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the director or his designee in the performance of his duties under this chapter is guilty of a misdemeanor and, upon conviction, must be imprisoned for not more than two years, fined ten thousand dollars, or both. A fine imposed must be paid by the officer, director, or employee in his individual capacity.  (F) When it appears to the director or his designee that a person has committed a violation of Sections 38-21-60 through 38-21-120 and which prevents the full understanding of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under an order of supervision in accordance with Chapter 26, Title 38.  (G) When it appears to the director or his designee that an insurer has committed a violation of this chapter, or that any person has committed a violation of this chapter which makes continued operation of the insurer contrary to the interests of policyholders or the public, the director or his designee may, after giving notice and an opportunity to be heard, determine to suspend, revoke, or refuse to renew the insurer's license or authority to do business in this State for a period as he finds is required for the protection of policyholders or the public. This determination must be accompanied by specific findings of fact and conclusions of law.  HISTORY: Former 1976 Code Section 38-29-330 [1962 Code Section 37-1431; 1971 (57) 351; 1986 Act No. 426, Section 20] recodified as Section 38-21-340 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 590; 2015 Act No. 2 (S.342), Section 16, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 16, rewrote the section.
 Whenever it appears to the director or his designee that a person has committed a violation of this chapter which so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, or the public, then the director or his designee may proceed as provided in Chapter 27 of this title to take possession of the property of the insurer and to conduct its business.  HISTORY: Former 1976 Code Section 38-29-340 [1962 Code Section 37-1432; 1971 (57) 351; 1986 Act No. 426, Section 21] recodified as Section 38-21-350 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 591.
 (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order has a right to recover on behalf of the insurer (i) from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions (other than distributions of shares of the same class of stock) paid by the insurer on its capital stock, or (ii) any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer, or employee, where the distribution or payment pursuant to (i) or (ii) is made at any time during the one year preceding the petition for liquidation, conservation, or rehabilitation, as the case may be, subject to the limitations of subsections (b), (c), and (d).  (b) No such distribution may be recoverable if the parent or affiliate shows that when paid the distribution was lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.  (c) Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time the distributions were paid is liable up to the amount of distributions or payments under subsection (a). Any person who otherwise controlled the insurer at the time the distributions were declared is liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they are jointly and severally liable.  (d) The maximum amount recoverable under this section is the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.  (e) To the extent that any person liable under subsection (c) is insolvent or otherwise fails to pay claims due from it pursuant to such subsection, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid is jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation or holding company or person who otherwise controlled it.  HISTORY: Former 1976 Code Section 38-29-350 [1962 Code Section 37-1433; 1971 (57) 351; 1986 Act No. 426, Section 22] recodified as Section 38-21-360 by 1987 Act No. 155, Section 1.
 Any action, order, or decision of the director or his designee pursuant to this chapter is subject to judicial review by the Administrative Law Court as provided by law.  HISTORY: Former 1976 Code Section 38-29-360 [1962 Code Section 37-1434; 1971 (57) 351; 1987 Act No. 60, Section 3] recodified as Section 38-21-370 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 592.
 If any provision of this chapter or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and for this purpose the provisions of this chapter are separable.  HISTORY: Former 1976 Code Section 38-29-380 [1962 Code Section 37-1436; 1971 (57) 351] recodified as Section 38-21-390 by 1987 Act No. 155, Section 1.  
 Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries made pursuant to Section 38-21-30 are not subject to any other investment restrictions or prohibitions contained in this title.  HISTORY: Former 1976 Code Section 38-21-40 [1947 (45) 322; 1952 Code Section 37-854; 1962 Code Section 37-854] recodified as Section 38-37-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-40 [1962 Code Section 37-1403; 1971 (57) 351] recodified as Section 38-21-40 by 1987 Act No. 155, Section 1.
 Whether an investment meets the applicable requirements of Section 38-21-30 is to be determined before the investment is made by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends.  If an insurer ceases to control a subsidiary, it must dispose of any investment made pursuant to Section 38-21-30 within three years from the time of the cessation of control or within such further time that the director or his designee may prescribe unless, at any time after the investment has been made, the investment has met the requirements for investment under any other section of this title and the insurer has notified the director or his designee.  HISTORY: Former 1976 Code Section 38-21-50 [1947 (45) 322; 1952 Code Section 37-855; 1962 Code Section 37-855] recodified as Section 38-37-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-50 [1962 Code Section 37-1404; 1971 (57) 351; 1986 Act No. 426, Section 3] recodified as Section 38-21-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 564.
 (A) No person, other than the issuer, may make a tender offer for or a request or invitation for tenders of, or enter into any agreement to exchange securities for, seek to acquire or acquire, in the open market or otherwise, any voting security of a domestic insurer if, after the consummation of the agreement, the person would directly, indirectly, by conversion, or by exercise of any right to acquire, be in control of the insurer. No person may enter into an agreement to merge with or otherwise to acquire control of a domestic insurer unless, at the time the offer, request, or invitation is made or the agreement is entered into, or before the acquisition of the securities if no offer or agreement is involved, the person has filed with the department a statement containing the information required by this section and the offer, request, invitation, agreement, or acquisition has been approved by the director or his designee in the manner prescribed in this chapter.  (B) For purposes of this section, a controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer in any manner shall file confidential notice of its proposed divestiture with the director or his designee, with a copy to the insurer, at least thirty days before the cessation of control. The director or his designee shall determine those instances in which a party seeking to divest a controlling interest in an insurer shall file for and obtain approval of the transaction by the department. The information must remain confidential until the conclusion of the transaction, unless the director or his designee determines that confidential treatment will interfere with enforcement of this section. If the statement referred to in subsection (A) otherwise is filed, the provisions of this subsection do not apply.  (C) With respect to a transaction subject to this section, the acquiring person also must file a preacquisition notification with the director or his designee. This notification must include the information set forth in Section 38-21-125(C)(2). A person who fails to file this notification may be subject to penalties specified in Section 38-21-125(E)(3).  (D) For purposes of this section, a domestic insurer includes any other person controlling a domestic insurer unless the other person as determined by the director or his designee is either directly or through its affiliates primarily engaged in business other than the business of insurance. As used in this section, "person" does not include any securities broker holding, in the usual and customary brokers' function, less than twenty percent of the voting securities of an insurance company or of any person which controls an insurance company.  HISTORY: Former 1976 Code Section 38-21-60 [1947 (45) 322; 1952 Code Section 37-856; 1962 Code Section 37-856] recodified as Section 38-37-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-60 [1962 Code Section 37-1405; 1971 (57) 351; 1986 Act No. 426, Section 4] recodified as Section 38-21-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 565; 2015 Act No. 2 (S.342), Section 4, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 4, inserted subsection designators (A) and (D) to the former two undesignated paragraphs, added (B) and (C), and made nonsubstantive changes in (A).
 (A) The statement to be filed with the department, as prescribed in Section 38-21-60, must be made under oath or affirmation and must contain the following information:  (1) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in Section 38-21-60 is to be effected, hereinafter called "acquiring party"; and  (a) if the acquiring party is an individual, his principal occupation and all offices and positions held during the past five years and any conviction of crimes other than minor traffic violations during the past ten years; or  (b) if the acquiring party is not an individual, a report of the nature of its business operations during the past five years or for a lesser period as the acquiring party and any predecessors have been in existence; an informative description of the business intended to be done by the acquiring party and its subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of the acquiring party or who perform or will perform functions appropriate to these positions. The list must include for each of these individuals the information required by subitem (a).  (2) The source, nature, and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction in which funds were or are to be obtained for this purpose, and the identity of persons furnishing the consideration. Where a source of the consideration is a loan made in the lender's ordinary course of business, the identity of the lender must remain confidential, if the person filing the statement so requests.  (3) Fully audited financial information concerning the earnings and financial condition for the preceding five fiscal years of an acquiring party or for a lesser period as the acquiring party and any of its predecessors have been in existence.  (4) Unaudited financial information of the earnings and financial condition of each acquiring party as of a date within ninety days before filing the statement.  (5) Any plans or proposals which an acquiring party may have to liquidate the insurer, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management.  (6) The number of shares of a security referred to in Section 38-21-60 which each acquiring party proposes to acquire and the terms of the offer, request, invitation, agreement, or acquisition referred to in Section 38-21-60 and a statement as to the method by which the fairness of the proposal was arrived.  (7) The amount of each class of any security referred to in Section 38-21-60 which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party.  (8) A full description of any contract, arrangement, or understanding with respect to a security referred to in Section 38-21-60 in which an acquiring party is involved, including, but not limited to, transfer of the security, joint venture, loan or option arrangement, put or call, guarantee of loan, guarantee against loss or guarantee of division of loss or profit, or the giving or withholding of a proxy. The description must identify the persons with whom the contract, arrangement, or understanding has been entered.  (9) A description of the purchase of a security referred to in Section 38-21-60 during the twelve calendar months preceding the filing of the statement, by an acquiring party, including the date of purchase, name of the purchaser, and consideration paid or agreed to be paid.  (10) A description of a recommendation to purchase a security referred to in Section 38-21-60 made during the twelve calendar months preceding the filing of the statement by an acquiring party, or by anyone based upon interviews or at the suggestion of an acquiring party.  (11) Copies of all tender offers for, requests or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in Section 38-21-60, if distributed, of additional soliciting material relating to them.  (12) The terms of an agreement, contract, or understanding made with any broker-dealer concerning solicitation of securities referred to in Section 38-21-60 for tender, and the amount of a fee, commission, or other compensation to be paid the broker-dealer.  (13) An agreement by the person required to file the statement referred to in Section 38-21-60 that it will provide the annual report, specified in Section 38-21-225, for so long as control exists.  (14) An acknowledgement by the person required to file the statement referred to in Section 38-21-60 that the person and all subsidiaries within its control in the insurance holding company system will provide information to the director or his designee upon request as necessary to evaluate enterprise risk to the insurer.  (15) Any additional information the director may by regulation prescribe as necessary or appropriate for the protection of policyholders of the insurer or in the public interest.  (B) If the person required to file the statement referred to in Section 38-21-60 is a partnership, limited partnership, syndicate, or other group, the director or his designee may require that the information required in this section be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If this partner, member, or person is a corporation or the person required to file the statement referred to in Section 38-21-60 is a corporation, the director or his designee may require that the information required in this section be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than ten percent of the outstanding voting securities of the corporation.  (C) If a material change occurs in the facts set forth in the statement filed with the department and sent to the insurer pursuant to this section, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, must be filed with the department and sent to the insurer within two business days after the person learns of the change.  HISTORY: Former 1976 Code Section 38-21-70 [1947 (45) 322; 1952 Code Section 37-857; 1962 Code Section 37-857] recodified as Section 38-37-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-70 [1962 Code Section 37-1406; 1971 (57) 351; 1986 Act No. 426, Section 5] recodified as Section 38-21-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 566; 2015 Act No. 2 (S.342), Section 5, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 5, inserted paragraph designator (A) to the former first undesignated paragraph; in (A), added (13) and (14), and redesignated the remaining paragraphs in accordingly; inserted paragraph designators (B) and (C) the the former last two undesignated paragraphs; and made nonsubstantive changes throughout.
 If any offer, request, invitation, agreement, or acquisition referred to in Section 38-21-60 is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in Section 38-21-60 may utilize these documents in furnishing the information called for by that statement.  HISTORY: Former 1976 Code Section 38-29-80 [1962 Code Section 37-1407; 1971 (57) 351; 1986 Act No. 426, Section 5A] recodified as Section 38-21-80 by 1987 Act No. 155, Section 1.
 (A) The director or his designee shall approve a merger or other acquisition of control in Section 38-21-60 unless, after a public hearing, he finds that:  (1) After the change of control the domestic insurer referred to in Section 38-21-60 is not able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed.  (2) The effect of the merger or other acquisition of control would substantially lessen competition in insurance in this State or tend to create a monopoly. In applying the competitive standard in this item:  (a) The information requirements and standards of Section 38-21-125(C) and (D) apply.  (b) The merger or other acquisition must not be approved if the director or his designee finds that at least one of the situations in Section 38-21-125(D) exists.  (c) The director or his designee may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time.  (3) The financial condition of the acquiring party might jeopardize the financial stability of the insurer or prejudice the interest of its policyholders.  (4) The plans or proposals which the acquiring party has to liquidate the insurer, sell its assets, or consolidate or merge it with a person or to make another material change in its business or corporate structure or management are unfair and unreasonable to policyholders of the insurer and not in the public interest.  (5) The competence, experience, and integrity of those persons who would control the operation of the insurer are such that it is not in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control.  (6) The acquisition is likely to be hazardous or prejudicial to the insurance-buying public.  (B) The public hearing referred to in subsection (A) must be held within thirty days after the statement required by Section 38-21-60 is filed, and at least twenty days' notice must be given by the director or his designee to the person filing the statement, to the insurer, and to other persons designated by the director or his designee. The director or his designee shall make a determination within thirty days after the conclusion of the hearing. At the hearing, the person filing the statement, the insurer, a person to whom notice of hearing was sent, and other persons whose interests are affected may present evidence, examine and cross-examine witnesses, and offer oral and written arguments and are entitled to conduct discovery proceedings in the same manner allowed in the circuit courts of this State. Discovery proceedings must be concluded not later than three days before the public hearing.  (C)(1) If the proposed acquisition of control will require the approval of more than one commissioner, the public hearing provided in subsections (A) and (B) may be held on a consolidated basis upon request of the person filing the statement referred to in Section 38-21-60 if he files the statement with the National Association of Insurance Commissioners (NAIC) within five days after making the request for a public hearing. The director or his designee may opt out of a consolidated hearing, but shall provide notice of its decision of the opt out to the applicant within ten days after receipt of the statement. A hearing conducted on a consolidated basis must be public and held within the United States before the commissioners of the states in which the insurers are domiciled. These commissioners shall hear and receive evidence. The director or his designee may attend the hearing in person or by means of telecommunication.  (2) For purposes of this subsection, "commissioner" means the:  (a) insurance commissioner, director, or other chief insurance official of a state, territory, or the District of Columbia;  (b) deputy of a commissioner; and  (c) Insurance Department of a state, territory, or District of Columbia, as appropriate.  (D) The director may retain at the acquiring person's expense attorneys, actuaries, accountants, and other experts not otherwise a part of the department's staff reasonably necessary to assist the director or his designee in reviewing the proposed acquisition of control.  HISTORY: Former 1976 Code Section 38-29-90 [1962 Code Section 37-1408; 1971 (57) 351; 1986 Act No. 426, Section 6] recodified as Section 38-21-90 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 13; 1993 Act No. 181, Section 567; 2015 Act No. 2 (S.342), Section 6, eff March 9, 2015.  Effect of Amendment  2015 Act No. 2, Section 6, in (B), substituted "circuit courts" for "Circuit Courts"; added (C); and redesignated former (C) as (D).
 (A) An acquisition of a domestic insurer, whether a member of a holding company system or not, by a controlling producer may not be approved by the director or his designee unless the acquiring party demonstrates, to the satisfaction of the director or his designee compliance with the requirements contained in subsection (B) of this section. For the purposes of this section, "controlling producer" means a broker that:  (1) places business on behalf of an insured with a licensed insurer;  (2) controls or seeks to control a domestic insurer as that term is defined in Section 38-21-10(2); and  (3) places, in any calendar year, an aggregate amount of gross written premium with the controlled insurer which is equal to or greater than five percent of the admitted assets of the controlled insurer as reported in the insurer's quarterly statement filed as of September thirtieth of the prior year.  (B) Approval of the acquisition of a domestic insurer, whether a member of a holding company system or not, by a controlling producer may not be approved unless the following requirements are met:  (1) A controlled insurer may not accept business from a controlling producer and a controlling producer may not place business with a controlled insurer unless there is a written contract between the controlling producer and the controlled insurer specifying the responsibilities of each party, which contract has been approved by the board of directors of the controlled insurer and which contains a provision:  (a) that the controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination;  (b) that the controlling producer shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the controlling producer;  (c) that the controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date must be fixed so that premiums or installments of it collected must be remitted no later than ninety days after the effective date of any policy placed with the controlled insurer under this contract;  (d) that all funds collected for the controlled insurer's account must be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System;  (e) that the controlling producer shall maintain separately identifiable records of business written for the controlled insurer;  (f) that the contract may not be assigned in whole or in part by the controlling producer;  (g) that the controlled insurer shall provide the controlling producer with its underwriting standards, rules, procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to the standards, rules, procedures, rates, and conditions. The standards, rules, procedures, rates, and conditions must be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer;  (h) establishing the rates and terms of the controlling producer's commissions, charges, or other fees and the purposes for those charges or fees. The rates of the commissions, charges, and other fees must be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this subitem and subitem (g), examples of "comparable business" include the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business;  (i) that, if the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then that compensation must not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. The commissions may not be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified pursuant to subsection (B)(3)(a);  (j) limiting the controlling producer's writings in relation to the controlled insurer's surplus and total writings. The controlled insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and may not accept business from the controlling producer if the limit is reached. The controlling producer may not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and  (k) that the controlling producer may negotiate but does not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which these automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured, and commission schedules.  (2) Each controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall meet annually with management, the controlled insurer's independent certified public accountants, and an independent casualty actuary, or other independent loss reserve specialist acceptable to the director or his designee to review the adequacy of the controlled insurer's loss reserves.  (3)(a) In addition to another required loss reserve certification, the controlled insurer shall file annually, on April first of each year, with the director or his designee an opinion of an independent casualty actuary, or other independent loss reserve specialist acceptable to the director or his designee, reporting loss ratios for each line or subline of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year-end, including incurred but not reported losses, on business placed by the controlling producer.  (b) The controlled insurer shall report annually to the director or his designee the amount of commissions paid to the controlling producer, the percentage the amount represents of the net premiums written, and comparable amounts and percentages paid to noncontrolling producers for placements of the same kinds of insurance.  (4) The controlling producer, before the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship between the controlling producer and the controlled insurer, except that, if the business is placed through a subproducer who is not a controlling producer, the controlling producer shall retain in his records a signed commitment from the subproducer that the subproducer is aware of the relationship between the controlled insurer and the controlling producer and that the subproducer has or will notify the insured.  (5)(a) If the director or his designee believes that the controlling producer or other person has not materially complied with this section, or regulation or order promulgated pursuant to the provisions of this section, after notice and opportunity to be heard, the director or his designee may order the controlling producer to cease placing business with the controlled insurer.  (b) If it was found that because of the material noncompliance that the controlled insurer or any policyholder of it has suffered any loss or damage, the director or his designee may maintain a civil action or intervene in an action brought by or on behalf of the controlled insurer or policyholder for recovery of compensatory damages for the benefit of the controlled insurer or policyholder or other appropriate relief.  (c) If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to Chapter 27, Title 38, and the receiver appointed under that order believes that the controlling producer or another person has not materially complied with this section, or regulation or order promulgated under it, and the controlled insurer suffered any loss or damage from it, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the controlled insurer.  (d) Nothing contained in this section affects the right of the director or his designee to impose other penalties provided for in the insurance law.  (e) Nothing contained in this section is intended to or in any manner alters or affects the rights of policyholders, claimants, creditors, or other third parties.  HISTORY: 1993 Act No. 70, Section 3; 2009 Act No. 27, Section 4, eff June 2, 2009.
 This chapter is known and may be cited as the "Insider Trading Statute".  HISTORY: Former 1976 Code Section 38-23-10 [1947 (45) 322; 1952 Code Section 37-1001; 1962 Code Section 37-1001] recodified as Section 38-35-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 35-9-10 [1962 Code Section 62-471; 1966 (54) 2146] recodified as Section 38-23-10 by 1987 Act No. 155, Section 1.
 The director has the power to make and promulgate regulations necessary for the execution of the functions vested in him by Sections 38-23-20 through 38-23-90 including, but without limitation, regulations pertaining to and governing the solicitation of proxies, including financial reporting in connection therewith, with respect to the capital stock or other equity securities of any domestic stock insurer; he may, for these purposes, classify domestic insurers, securities, and other persons or matters within his jurisdiction. No provision of Sections 38-23-40 to 38-23-60 imposing any liability applies to any act done or omitted in good faith in conforming with any regulation of the department, notwithstanding that the regulation may, after the act or omission, be amended, rescinded, or determined by judicial or other authority to be invalid for any reason.  HISTORY: Former 1976 Code Section 35-9-90 [1962 Code Section 62-479; 1966 (54) 2146] recodified as Section 38-23-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 598.  
 "Equity security", when used in this chapter, means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the director or his designee considers to be of similar nature and considers necessary or appropriate, by any regulation the department may prescribe in the public interest or for the protection of investors, to treat as an equity security.  HISTORY: Former 1976 Code Section 38-23-20 [1947 (45) 322; 1952 Code Section 37-1002; 1962 Code Section 37-1002] recodified as Section 38-35-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 35-9-20 [1962 Code Section 62-477; 1966 (54) 2146] recodified as Section 38-23-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 593.
 "Beneficial owner", when used in this chapter, means a person who directly or indirectly beneficially owns more than ten percent of any class of any equity security of a domestic stock insurer.  HISTORY: Former 1976 Code Section 38-23-30 [1947 (45) 322; 1952 Code Section 37-1003; 1962 Code Section 37-1003; 1984 Act No. 330] recodified as Section 38-35-30 by 1987 Act No. 155, Section 1; En, 1987 Act No. 155, Section 1.
 Every beneficial owner, director, or officer of a domestic stock insurer shall file in the office of the department within ten days after he becomes a beneficial owner, director, or officer a statement, in a form the director or his designee may prescribe, of the amount of all equity securities of the insurer which he beneficially owns. Within ten days after the close of each calendar month thereafter, if there has been a change in his ownership during the month, he shall file in the office of the department a statement, in a form the director or his designee may prescribe, indicating his ownership at the close of the calendar month and the changes in his ownership which have occurred during the calendar month.  HISTORY: Former 1976 Code Section 38-23-40 [1947 (45) 322; 1952 Code Section 37-1004; 1962 Code Section 37-1004] recodified as Section 38-35-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 35-9-30 [1962 Code Section 62-472; 1966 (54) 2146] recodified as Section 38-23-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 594.
 For the purpose of preventing the unfair use of information which may have been obtained by a beneficial owner, director, or officer by reason of his relationship to the insurer, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of the insurer within any period of less than six months, unless the security was acquired in good faith in connection with a debt previously contracted, inures to and is recoverable by the insurer, irrespective of any intention on the part of the beneficial owner, director, or officer in entering into the transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six months. Suit to recover this profit may be instituted at law or in equity in any court of competent jurisdiction by the insurer or by the owner of any security of the insurer in the name and in behalf of the insurer if the insurer fails or refuses to bring the suit within sixty days after request or fails diligently to prosecute it thereafter. This suit may not be brought more than two years after the date the profit was realized. This section may not be construed to cover any transaction where the beneficial owner was not a beneficial owner both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the department, by regulation, may exempt as not comprehended within the purpose of this section.  HISTORY: Former 1976 Code Section 38-23-50 [1947 (45) 322; 1952 Code Section 37-1005; 1962 Code Section 37-1005] recodified as Section 38-35-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 35-9-40 [1962 Code Section 62-473; 1966 (54) 2146] recodified as Section 38-23-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 595.
 It is unlawful for a beneficial owner, director, or officer, directly or indirectly, to sell any equity security of the insurer if the person selling the security or his principal (a) does not own the security sold, or (b) if owning the security, does not deliver it against the sale within twenty days thereafter, or does not within five days after the sale deposit it in the mails or other usual channels of transportation. A person is not considered to have violated this section if he proves that, notwithstanding the exercise of good faith, he was unable to make the delivery or deposit within this time or that to do so would cause undue inconvenience or expense.  HISTORY: Former 1976 Code Section 38-23-60 [1947 (45) 322; 1952 Code Section 37-1006; 1962 Code Section 37-1006] recodified as Section 38-35-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 35-9-50 [1962 Code Section 62-474; 1966 (54) 2146] recodified as Section 38-23-60 by 1987 Act No. 155, Section 1.
 Section 38-23-50 does not apply to any purchase and sale, or sale and purchase, and Section 38-23-60 does not apply to any sale of an equity security of a domestic stock insurer, not then or theretofore held by him in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market, otherwise than on an exchange as defined in the Securities Exchange Act of 1934, for the security. The department may, by any regulation it considers necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.  HISTORY: Former 1976 Code Section 35-9-60 [1962 Code Section 62-475; 1966 (54) 2146] recodified as Section 38-23-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 596.
 Sections 38-23-40 to 38-23-60 do not apply to foreign or domestic arbitrage transactions unless made in contravention of regulations the department may adopt in order to carry out the purposes of this chapter.  HISTORY: Former 1976 Code Section 35-9-70 [1962 Code Section 62-476; 1966 (54) 2146] recodified as Section 38-23-80 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 597.
 Sections 38-23-40 to 38-23-60 do not apply to equity securities of a domestic stock insurer if (a) the securities are registered or are required to be registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or (b) the domestic stock insurer does not have any class of its equity securities held of record by one hundred or more persons on the last business day of the previous year in which equity securities of the insurer would be subject to Sections 38-23-40 to 38-23-60 except for this section.  HISTORY: Former 1976 Code Section 35-9-80 [1962 Code Section 62-478; 1966 (54) 2146] recodified as Section 38-23-90 by 1987 Act No. 155, Section 1.
 (a) The General Assembly declares that it is concerned with the protection of residents of this State against acts by insurers not authorized to conduct an insurance business in this State, by the maintenance of fair and honest insurance markets, by protecting authorized insurers which are subject to regulation from unfair competition by unauthorized insurers, and by protecting against the evasion of the insurance regulatory laws of this State. In furtherance of this state interest, the General Assembly herein provides methods for substituted service of process upon such insurers in any proceeding, suit, or action in any court, including the Administrative Law Court as provided by law, and substituted service of any notice, order, pleading, or process upon such insurers in any proceeding by the director or his designee to enforce or effect full compliance with the insurance laws of this State. In so doing, the state exercises its powers to protect residents of this State and to define what constitutes transacting an insurance business in this State and also exercises powers and privileges available to this State by virtue of Public Law 79-15, 79th Congress of the United States, Chapter 20, 1st Session, S. 340, 59 Stat. 33; 15 U.S.C., Sections 1011 to 1015, inclusive, as amended, which declares that the business of insurance and every person engaged therein are subject to the laws of the several states.  (b) The remedies and proceedings provided in this chapter are in addition to, and not in substitution for, any other remedies or proceedings provided by law.  HISTORY: Former 1976 Code Section 38-25-10 [1962 Code Section 37-1132; 1974 (58) 2378] recodified as Section 38-33-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-53-20 [1975 (59) 127] recodified as Section 38-25-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 599.
 It is unlawful for an insurer to transact insurance business in this State without a certificate of authority from the director or his designee. Any of the acts listed in items (1) through (8) in this State effected by mail or otherwise by or on behalf of an unauthorized insurer is considered to constitute the transaction of an insurance business in this State. The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect. Unless otherwise indicated, the term "insurer" as used in this section includes all corporations, associations, partnerships, and individuals engaged as principals in the business of insurance and also includes interinsurance exchanges and mutual benefit societies.  (1) The making of or proposing to make, as an insurer, an insurance contract.  (2) The making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety.  (3) The taking or receiving of any application for insurance.  (4) The receiving or collection of any premium, commission, membership fees, assessments, dues, or other consideration for any insurance or any part thereof.  (5) The issuance or delivery of contracts of insurance to residents of this State or to persons authorized to do business in this State.  (6) Directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another, any person or insurer in the solicitation, negotiation, procurement, or effectuation of insurance or renewals thereof or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, a fixing of rates or investigation or adjustment of claims or losses or in the transaction of matters after effectuation of the contract and arising out of it, or in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located, or to be performed in this State. This section does not prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance in behalf of their employer.  (7) The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of the statutes relating to insurance.  (8) The transacting or proposing to transact any insurance business in substance equivalent to any of the foregoing in a manner designed to evade the insurance laws of this State.  HISTORY: Former 1976 Code Section 38-53-30 [1975 (59) 127; 1976 Act No. 732 Section 8] recodified as Section 38-25-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 600.
 No person may in this State act as agent for an insurer not authorized to transact business in this State or negotiate for or place or aid in placing insurance coverage in this State for another with an unauthorized insurer.  HISTORY: Former 1976 Code Section 38-52-10 [1947 (45) 322; 1952 Code Section 37-261; 1962 Code Section 37-261; 1978 Act No. 457 Section 1] recodified as Section 38-25-120 by 1987 Act No. 155, Section 1.
 No person may in this State aid an unauthorized insurer in effecting insurance or in transacting insurance business in this State, either by fixing a rate, or by adjusting or investigating losses, by inspecting or examining risks, by acting as attorney in fact or as attorney for service of process or otherwise, except as provided in Sections 38-25-510 and 38-25-520.  HISTORY: Former 1976 Code Section 38-52-20 [1947 (45) 322; 1952 Code Section 37-262; 1962 Code Section 37-262; 1978 Act No. 457 Section 1] recodified as Section 38-25-130 by 1987 Act No. 155, Section 1.
 No person may make, negotiate for or place, or aid in negotiating or placing an insurance contract in this State for another who is an applicant for insurance covering any property or risk in another state, territory, or district of the United States with an insurer not authorized to transact insurance business in the state, territory, or district where the property or risk or any part thereof is located.  HISTORY: Former 1976 Code Section 38-52-30 [1947 (45) 322; 1952 Code Section 37-263; 1962 Code Section 37-263; 1978 Act No. 457 Section 1] recodified as Section 38-25-140 by 1987 Act No. 155, Section 1.
 This article does not apply to:  (1) the lawful transaction of surplus lines insurance;  (2) the lawful transaction of reinsurance by insurers;  (3) transactions in this State involving a policy lawfully solicited, written, and delivered outside this State covering only subjects of insurance not resident, located, or expressly to be performed in this State at the time of issuance, and which transactions are subsequent to the issuance of the policy;  (4) attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses;  (5) except for mass-marketed insurance, transactions in this State involving group life and group accident and health or blanket accident and health insurance or group annuities where (i) the master policy was lawfully issued and delivered in and pursuant to the laws of a state in which the insurer was authorized to do an insurance business and in which the policyholder was domiciled or otherwise had a bona fide situs and (ii) except for group annuities, the insurer complies with Sections 38-65-50, 38-65-60, 38-71-740, and 38-71-750;  (6) transactions in this State involving any policy of insurance or annuity contract issued before April 30, 1975;  (7) contracts of insurance covering risks of transportation and navigation and transactions in this State relative to a policy issued or to be issued outside this State involving insurance on vessels, craft or hulls, cargoes, marine builder's risk, marine protection and indemnity, or other risk, including strikes and war risks commonly insured under ocean or wet marine forms of policy;  (8) transactions in this State involving contracts of insurance other than contracts of life, accident, or accident and health insurance issued to one or more industrial insureds. An "industrial insured" means an insured:  (i) which procures insurance by use of the services of a full-time employee acting as a risk manager or insurance manager or utilizing the services of a regularly and continuously qualified insurance consultant;  (ii) whose aggregate annual premiums for insurance on all risks total at least twenty-five thousand dollars; and  (iii) which has at least twenty-five full-time employees.  HISTORY: Former 1976 Code Section 38-52-40 [1947 (45) 322; 1952 Code Section 37-264; 1962 Code Section 37-264; 1978 Act No. 457 Section 1] Section 38-53-30 [1975 (59) 127; 1976 Act No. 732 Section 8] recodified as Section 38-25-150 by 1987 Act No. 155, Section 1.
 The director or his designee may, by regulation of the department or by his order, exempt from all or any provisions of this chapter an insurer or other organization not formed or operating for profit which affords life insurance or annuities to nonprofit educational and scientific institutions and their staff members in this State. However, in affording this exemption the director or his designee shall require the insurer or other organization to appoint the director as agent for service of process. The director or his designee may require the insurer or other organization to file with the department, as information, policy forms, annual statements, and financial and other similar material. The director or his designee may, after due notice and hearing, discontinue the exemption for any reason which would have, if then existing or known, justified his refusal to afford the exemption when it was granted.  HISTORY: Former 1976 Code Section 38-53-30 [1975 (59) 127; 1976 Act No. 732 Section 8] recodified as Section 38-25-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 601.
 Whenever the director or his designee believes, from evidence satisfactory to him, that an insurer is violating or about to violate Section 38-25-110 the director or his designee may, through the Attorney General, cause a complaint to be filed in the Court of Common Pleas of Richland County to enjoin and restrain the insurer from continuing the violation, engaging in the violation, or doing any act in furtherance of the violation. The court has jurisdiction of the proceeding and has the power to make and enter an order or judgment awarding preliminary or final injunctive relief as in its judgment is proper.  HISTORY: Former 1976 Code Section 38-53-40 [1975 (59) 127] recodified as Section 38-25-310 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 602.
 (A) As an alternative to the procedural remedy detailed within Section 38-25-310, whenever the director, from evidence which is satisfactory to him, has reasonable grounds to believe that a person has engaged in, or is about to engage in, the transaction of insurance business in violation of this chapter and that transaction will adversely impact upon public health, public safety, or public welfare, he may reduce his findings of fact and his conclusions of law to writing and he may issue an emergency cease and desist order. That order must be served upon the person either by certified mail, return receipt requested, at that person's last known address, or in any other manner permitted by law.  (B) An emergency cease and desist order issued by the director must, within its provisions, give notice that the person may contest that order by petitioning for an immediate public hearing before an administrative law judge. The filing of the petition does not itself stay enforcement of the director's decision. The administrative law judge may order a stay upon appropriate terms, and if a stay is granted, the administrative law judge must specifically consider in his order the appropriateness of the posting of a bond by the petitioner. At the public hearing the person must be given the opportunity to be heard upon the findings and conclusions within the emergency cease and desist order. If no request for a public hearing is received within ten days from the person's receipt of service of the emergency cease and desist order, then upon application by the director and without a public hearing, the administrative law judge must make that emergency order a permanent cease and desist order.  (C) If an administrative law judge determines that the person charged with transacting insurance business in violation of this chapter knew or should have known that his actions were in violation of this chapter, then in addition to declaring the cease and desist order to be permanent the administrative law judge may impose a penalty of up to fifty thousand dollars for each violation. The penalty may be imposed following a public hearing requested by the person pursuant to subsection (B) or following a public hearing requested by the director following an administrative law judge's default permanent cease and desist order.  (D) In addition to any other penalties or remedies available, including Sections 38-25-320, 38-25-330, and 38-25-360, if the director believes that a person has violated a permanent cease and desist order issued by an administrative law judge, then the director may certify the relevant facts to the circuit court in any county of this State where that person has transacted business in violation of the permanent cease and desist order. The circuit court, upon its finding that the permanent cease and desist order has been violated, may order the violator to pay an additional penalty of up to twenty-five thousand dollars for each violation.  (E) Any penalties ordered pursuant either to subsection (C) or (D) may be entered immediately by the director upon the judgment rolls in any county where that person resides or where that person has transacted business. Collection proceedings may be initiated immediately by the director.  HISTORY: 1998 Act No. 262, Section 1.
 An unauthorized insurer who transacts any unauthorized act of an insurance business as set forth in Article 3 of this chapter may be fined not more than fifty thousand dollars.  HISTORY: Former 1976 Code Section 38-53-80 [1975 (59) 127] recodified as Section 38-25-320 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 2.
 A person wilfully violating any provisions of this chapter is guilty of a felony and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years, or both.  HISTORY: Former 1976 Code Section 38-51-180 [1947 (45) 322; 1952 Code Section 37-249; 1962 Code Section 37-249] Section 38-52-90 [1947 (45) 322; 1952 Code Section 37-271; 1962 Code Section 37-271; 1978 Act No. 457 Section 1] recodified as Section 28-25-330 by 1987 Act No. 155 Section 1; 1988 Act No. 374, Section 9; 1993 Act No. 184 Section 211; 1998 Act No. 262, Section 2.
 In the event of failure of an unauthorized insurer to pay any claim or loss within the provisions of the insurance contract, a person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract is liable to the insured for the full amount of the claim or loss in the manner provided by the insurance contract.  HISTORY: Former 1976 Code Section 38-53-30 [1975 (59) 127; 1976 Act No. 732 Section 8] recodified as Section 38-25-360 by 1987 Act No. 155, Section 1.
 (a) Any act of transacting an insurance business as set forth in Section 38-25-110 by an unauthorized insurer is equivalent to and constitutes an irrevocable appointment by the insurer, binding upon him, his executor or administrator, or successor in interest if a corporation, of the Secretary of State or his successor in office to be the true and lawful attorney of the insurer upon whom may be served all lawful process in any action, suit, or proceeding in any court by the director or his designee or by the state and upon whom may be served any notice, order, pleading, or process in any proceeding before the director or his designee and which arises out of transacting an insurance business in this State by the insurer. Any act of transacting an insurance business in this State by an unauthorized insurer is signification of its agreement that any lawful process in the court action, suit, or proceeding and any notice, order, pleading, or process in the administrative proceeding before the director or his designee so served is of the same legal force and validity as personal service of process in this State upon the insurer.  (b) Service of process in the action must be made by delivering to and leaving with the Secretary of State, or some person in apparent charge of his office, two copies thereof and by payment to the Secretary of State of the fee prescribed by law. Service upon the Secretary of State as attorney is service upon the principal.  (c) The Secretary of State shall immediately forward by certified mail one of the copies of the process or the notice, order, pleading, or process in proceedings before the director or his designee to the defendant in the court proceeding or to whom the notice, order, pleading, or process in the administrative proceeding is addressed or directed at its last known principal place of business and shall keep a record of all process so served on him which shall show the day and hour of service. The service is sufficient if:  (1) Notice of the service and a copy of the court process or the notice, order, pleading, or process in the administrative proceeding are sent within ten days thereafter by certified mail by the plaintiff or the plaintiff's attorney in the court proceeding or by the director or his designee in the administrative proceeding to the defendant in the court proceeding or to whom the notice, order, pleading, or process in the administrative proceeding is addressed or directed at the last known principal place of business of the defendant in the court or administrative proceeding.  (2) The defendant's receipt or receipts issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and an affidavit of the plaintiff or the plaintiff's attorney in a court proceeding or of the director or his designee in an administrative proceeding, showing compliance therewith, are filed with the clerk of court in which the action, suit, or proceeding is pending or with the director or his designee in administrative proceedings, by the date the defendant in the court or administrative proceeding is required to appear or respond thereto, or within any further time as the court or director or his designee may allow.  (d) No plaintiff is entitled to a judgment by default, a judgment with leave to prove damages, or a judgment pro confesso in any court or administrative proceeding in which court process or notice, order, pleading, or process in proceedings before the director or his designee is served under this section until the expiration of thirty days from the date of filing of the affidavit of compliance.  (e) Nothing in this section limits or affects the right to serve any process, notice, order, or demand upon any person or insurer in any other manner permitted by law.  HISTORY: Former 1976 Code Section 38-53-50 [1975 (59) 127] recodified as Section 38-25-510 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 603.
 (a) The issuance and delivery of a policy of insurance or contract of insurance or indemnity to any person in this State or the collection of a premium thereon by an insurer not licensed in this State, as herein required, irrevocably constitutes the director and any successor of his in office the true and lawful attorney in fact upon whom service of any and all processes, pleadings, actions, or suits arising out of the policy or contract in behalf of the insured may be made.  (b) Service of process in this action is made by delivering to and leaving with the director or some person in apparent charge of his office two copies of it and by payment to the director of a fee of ten dollars, of which five dollars must be retained by the director to offset the costs he incurs in service of process and of which five dollars must be deposited to the credit of the general fund of the state.  (c) The director or his designee shall immediately mail by registered mail one of the copies of the process to the defendant at its last known principal place of business and shall keep a record of all process served upon him. The service of process is sufficient if: (1) notice of the service and a copy of the process are sent within ten days thereafter by registered mail by the plaintiff's attorney to the defendant at its last known principal place of business, and (2) the defendant's receipt or a receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff's attorney showing compliance herewith are filed with the clerk of court in which the action is pending by the date the defendant is required to appear or within any further time which the court may allow.  (d) No plaintiff is entitled to a judgment by default, a judgment with leave to prove damages, or a judgment pro confesso under this section until the expiration of thirty days from the date of filing of the affidavit of compliance.  (e) Nothing in this section limits or abridges the right to serve any process, notice, order, or demand upon any person or insurer in any other manner permitted by law.  HISTORY: Former 1976 Code Section 38-52-50 [1947 (45) 322; 1952 Code Section 37-265; 1962 Code Section 37-265; 1978 Act No. 457 Section 1] recodified as Section 38-25-520 by 1987 Act No. 155, Section 1; 1988 Act No. 366, Section 3; 1993 Act No. 181, Section 604.
 Service of process in any action, suit, or proceeding involving an unauthorized insurer is, in addition to that provided in Sections 38-25-510 and 38-25-520, valid if served upon any person within this State who, in this State on behalf of the insurer, is:  (1) soliciting insurance;  (2) making any contract of insurance or issuing or delivering any policies or written contracts of insurance; or  (3) collecting or receiving any premium for the insurer, or adjusting any loss or claim for the insurance, and if counsel, within ten days after service upon the person, causes to be sent by registered mail to the last known address of the insurer a copy of the process with proper postage affixed to the envelope containing it and files an affidavit, with the clerk of court or magistrate in whose court the cause is pending, of compliance herewith, with leave to the court to extend the time for the mailing of process and filing of affidavit.  HISTORY: 1987 Act No. 155, Section 1.
 An unauthorized insurer is not permitted to maintain any action, suit, or proceeding in this State to enforce a right, claim, or demand arising out of the transaction of insurance business until the insurer has obtained a certificate of authority to transact insurance business in this State. The unauthorized insurer may maintain an action, suit, or proceeding in connection with its investments in this State or in connection with a contract issued by it at a time when it was authorized to do business in the state where the contract was issued. This section does not prevent the insurer from defending an action in the courts of this State. The failure of an insurer transacting insurance business in this State to obtain a certificate of authority does not impair the validity of any act or contract of the insurer. This section does not apply to an eligible surplus lines insurer which maintains the deposit required by Section 38-9-80 or which has on file with the department a surety bond issued by an admitted insurer in an amount determined by the director or his designee to be sufficient to meet the security requirements of Section 38-9-80. Before an eligible surplus lines insurer files or causes to be filed any action, suit, or proceeding in this State to enforce a right, claim, or demand arising out of the transaction of insurance, it shall produce evidence that the security deposit is presently on file or that the required surety bond is then in force and effect.  HISTORY: Former 1976 Code Section 38-52-60 [1947 (45) 322; 1952 Code Section 37-267; 1962 Code Section 37-267; 1978 Act No. 457 Section 1] Section 38-53-30 [1975 (59) 127; 1976 Act No. 732 Section 8] recodified as Section 38-25-540 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 3; 1993 Act No. 181, Section 605.
 (a) Before an unauthorized insurer files or causes to be filed any pleading in any court action, suit, or proceeding or any notice, order, pleading, or process in an administrative proceeding before the director or his designee instituted against the person or insurer, the insurer shall either:  (1) Deposit with the clerk of court in which the action, suit, or proceeding is pending, or with the director or his designee in administrative proceedings before the director or his designee, cash or securities, or file with the clerk of court or the director or his designee a bond with good and sufficient sureties, to be approved by the clerk or director or his designee, in an amount to be fixed by the court or director or his designee sufficient to secure the payment of any final judgment which may be rendered in the action or administrative proceeding.  (2) Procure a certificate of authority to transact the business of insurance in this State. In considering the application of an insurer for a certificate of authority, for the purposes of this paragraph, the director or his designee need not assert the provisions of Section 38-7-90 against the insurer with respect to its application if he determines that the insurer would otherwise comply with the requirements for a certificate of authority.  (b) The director or his designee, in an administrative proceeding in which service is made as provided in Section 38-25-510, may in his discretion order a postponement as may be necessary to afford the defendant reasonable opportunity to comply with subsection (a) and to defend the action.  (c) This section does not apply to an eligible surplus lines insurer which maintains the deposit required by Section 38-9-80 or which has on file with the department a surety bond issued by an admitted insurer in an amount determined by the director or his designee to be sufficient to meet the security requirements of Section 38-9-80. Before an eligible surplus lines insurer files or causes to be filed any action, suit, or proceeding in this State to enforce a right, claim, or demand arising out of the transaction of insurance, it shall produce evidence that the security deposit is presently on file or that the required surety bond is then in force and effect.  HISTORY: Former 1976 Act Section 38-52-70 [1947 (45) 322; 1952 Code Section 37-268; 1962 Code Section 37-268; 1978 Act No. 457 Section 1] Section 38-53-60 [1975 (59) 127] recodified as Section 38-25-550 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 4; 1993 Act No. 181, Section 606.
 Nothing in this article may be construed to prevent an unauthorized insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in Section 38-25-510, 38-25-520, or 38-25-530 on the ground that (a) no policy or contract of insurance has been issued or delivered to a citizen or resident of this State or to a corporation authorized to do business in this State, (b) the insurer has not been transacting business in this State, or (c) the person on whom service was made pursuant to Section 38-25-530 was not doing any of the acts listed in that section.  HISTORY: Former 1976 Code Section 38-52-80 [1947 (45) 322; 1952 Code Section 37-270; 1962 Code Section 37-270; 1978 Act No. 457 Section 1]; Section 38-53-60 [1975 (59) 127] recodified as Section 38-25-560 by 1987 Act No. 155, Section 1.
 (a) The Attorney General upon request of the director or his designee may proceed in the courts of this State or any reciprocal state to enforce an order or decision in any court proceeding or in any administrative proceeding before the director or his designee.  (b) As used in this section:  (1) "Reciprocal state" means any state or territory of the United States the laws of which contain procedures substantially similar to those specified in this section for the enforcement of decrees or orders in equity issued by courts located in other states or territories of the United States against an insurer incorporated or authorized to do business in that state or territory.  (2) "Foreign decree" means any decree or order in equity of a court located in a reciprocal state, including a court of the United States located therein, against any insurer incorporated or authorized to do business in this State.  (3) "Qualified party" means a state regulatory agency acting in its capacity to enforce the insurance laws of its state.  (c) The director or his designee shall determine which states and territories qualify as reciprocal states and shall maintain an up-to-date list of these states.  (d) A copy of any foreign decree authenticated in accordance with the law of this State may be filed in the office of the clerk of court of any circuit court of this State. The clerk, upon verifying with the department that the decree or order qualifies as a foreign decree, shall treat the foreign decree in the same manner as a decree of a circuit court of this State. A foreign decree so filed has the same effect as a decree of a circuit court of this State and is subject to the same procedures, defenses, and proceedings for reopening, vacating, or staying as a decree of a circuit court of this State and may be enforced or satisfied in like manner.  (e)(1) At the time of the filing of the foreign decree, the Attorney General shall make and file with the clerk of court an affidavit setting forth the name and last known post office address of the defendant.  (2) Promptly upon the filing of the foreign decree and the affidavit, the clerk shall mail notice of the filing of the foreign decree to the defendant at the address given and to the department and shall make a note of the mailing in the docket. In addition, the Attorney General may mail a notice of the filing of the foreign decree to the defendant and to the department and may file proof of mailing with the clerk. Failure to mail notice of the filing by the clerk does not affect the enforcement proceedings if proof of mailing by the Attorney General has been filed.  (3) No execution or other process for enforcement of a foreign decree filed hereunder may issue for thirty days after the date the decree is filed.  (f)(1) If the defendant shows the circuit court that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, the court shall stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.  (2) If the defendant shows the circuit court any ground upon which enforcement of a decree of any circuit court of this State would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree which is required in this State.  (g) Any person filing a foreign decree shall pay to the clerk of court fifteen dollars. Fees for docketing, transcription, or other enforcement proceedings are as provided for decrees of the circuit court.  HISTORY: Former 1976 Code Section 38-53-70 [1975 (59) 127] recodified as Section 38-25-570 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 607.
 This chapter may be cited as the "Administrative Supervision of Insurers Act".  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 There is no liability on the part of, and no cause of action may arise against, the director, his designee, or the Department of Insurance or its employees or agents for action taken by them in the performance of their powers and duties under this chapter.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 The department may promulgate regulations necessary for the implementation of this chapter.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.  
 As used in this chapter:  (1) "Insurer" means a person who has done, purports to do, is going to do, or is licensed to do an insurance business and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by the department, or similar entity, of a state. For purposes of this chapter, other persons included under Section 38-27-40 are considered insurers.  (2) "Exceed its powers" means the following conditions:  (a) The insurer has refused to permit examination of its books, papers, accounts, records, or affairs by the director or his deputies, designees, employees, or commissioned examiners.  (b) A domestic insurer unlawfully has removed from this State books, papers, accounts, or records necessary for an examination of the insurer.  (c) The insurer has failed to comply promptly with the applicable financial reporting statutes or regulations and related departmental requests.  (d) The insurer has neglected or refused to observe an order of the director or his designee to make good, within the time prescribed by law, prohibited deficiency in its capital, capital stock, or surplus.  (e) The insurer is continuing to transact insurance or write business after its license has been revoked or suspended by the director or his designee.  (f) The insurer, by contract or otherwise, unlawfully, in violation of an order of the director or his designee, or without first having obtained written approval of the director or his designee if approval is required by law has:  (i) totally reinsured its entire outstanding business; or  (ii) merged or consolidated substantially its entire property or business with another insurer.  (g) The insurer engaged in a transaction in which it is not authorized to engage under the laws of this State.  (h) The insurer refused to comply with a lawful order of the director or his designee.  (3) "Consent" means agreement to administrative supervision by the insurer.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 The provisions of this chapter apply to:  (1) domestic insurers;  (2) an insurer doing business in this State whose state of domicile has asked the director or his designee to apply the provisions of this chapter as regards the insurer.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 (A) An insurer may be subject to administrative supervision by the department if upon examination or at another time it appears in the discretion of the director or his designee that one or more of the following circumstances exist:  (1) The insurer's condition renders the continuance of its business hazardous to the public or to its insureds.  (2) The insurer has exceeded its powers granted under its certificate of authority and applicable law.  (3) The insurer has failed to comply with a provision of the insurance laws of this State.  (4) The business of the insurer is being conducted fraudulently.  (5) The insurer gives its consent.  (B) If the director or his designee determines that one or more of the conditions set forth in subsection (A) exist, he shall:  (1) notify the insurer of his determination;  (2) furnish to the insurer a written list of the requirements to abate this determination;  (3) notify the insurer that it is under the supervision of the department and that the director or his designee is applying the provisions of the chapter. Action by the director or his designee is subject to review pursuant to related regulations and the Administrative Procedures Act.  (C) If placed under administrative supervision, the insurer has sixty days or another period of time designated by the director or his designee to comply with the requirements of the department subject to the provisions of this chapter.  (D) If it is determined after notice and hearing that the conditions giving rise to the supervision still exist at the end of the supervision period, the director or his designee may extend the period or may initiate proceedings under Chapter 27 of this title.  (E) If it is determined that none of the conditions giving rise to the supervision exist, the director or his designee shall release the insurer from supervision.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 (A) Proceedings, hearings, notices, correspondence, reports, records, and other information in the possession of the director, his designee, or the Department of Insurance relating to the supervision of an insurer are confidential except as provided by this section.  (B) Department personnel have access to the proceedings, hearings, notices, correspondence, reports, records, and other information permitted by the director or his designee.  (C) The director or his designee may open the proceedings or hearings or disclose notices, correspondence, reports, records, or other information to a department, agency, or instrumentality of this or another state or of the United States if the director or his designee determines that the disclosure is necessary or proper for the enforcement of the laws of this or another state or the United States.  (D) The director or his designee may open the proceedings or hearings or make public notices, correspondence, reports, records, or other information if the director or his designee determines that it is in the best interest of the public or in the best interest of the insurer, its insureds, its creditors, or the general public.  (E) This section does not apply to hearings, notices, correspondence, reports, records, or other information obtained after the appointment of a receiver for the insurer by a court of competent jurisdiction.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 During the period of supervision, the director or his designated appointee shall serve as the administrative supervisor. The director or his designee may provide, after notice to the insurer, that the insurer may not do any of the following things during supervision without the prior approval of the director or his appointed supervisor:  (1) dispose of, convey, or encumber its assets or its business in force;  (2) withdraw its bank accounts;  (3) lend its funds;  (4) invest its funds;  (5) transfer its property;  (6) incur debt, obligation, or liability;  (7) merge or consolidate with another company;  (8) approve new premiums or renew policies;  (9) enter into a new reinsurance contract or treaty;  (10) terminate, surrender, forfeit, convert, or lapse an insurance policy, a certificate, or a contract, except for nonpayment of premiums due;  (11) release, pay, or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on an insurance policy, certificate, or contract;  (12) make a material change in management;  (13) increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends, or other preferential payments.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 During supervision the insurer may contest an action taken or proposed to be taken by the supervisor specifying the manner in which the action being complained of would not result in improving the condition of the insurer. Denial of the insurer's request upon reconsideration entitles the insurer to review under related regulation and the Administrative Procedures Act.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 Nothing in this chapter precludes the director or his designee from initiating judicial proceedings to place an insurer in conservation, rehabilitation, or liquidation or other delinquency proceedings, however designated under the laws of this State, regardless of whether the director or his designee previously has initiated administrative supervision proceedings under this chapter against the insurer.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 The director or his designee may meet with a supervisor appointed under this chapter and with his attorney or other representative without the presence of another person at the time of or during a proceeding held under authority of this chapter to carry out the duties of the director or his designee or for the supervisor to carry out his duties under this chapter.  HISTORY: 1991 Act No. 13, Section 3; 1993 Act No. 181, Section 608.
 This chapter may be cited as the "Insurers Rehabilitation and Liquidation Act".  HISTORY: Former 1976 Code Section 38-27-10 [1962 Code Section 37-1302; 1967 (55) 273] recodified as Section 38-1-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1810 [En, 1982 Act No. 384, Section 1] recodified as Section 38-27-10 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 16; 1993 Act No. 181, Section 609.
 An insurance proceeding under this chapter begun before the effective date of the Insurers Rehabilitation and Liquidation Act is deemed to have begun after that date for the purpose of conducting the proceeding. However, in the discretion of the director or his designee, the proceeding may be continued, in whole or in part, as it would have been if this act was not in effect.  HISTORY: 1991 Act No. 13, Section 4; 1993 Act No. 181, Section 609.
 If an ancillary receiver in another state or foreign country, whether called by that name or not, fails to transfer to the domiciliary liquidator in this State any assets within his control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims, must be placed in the class of claims under Section 38-27-610(7).  HISTORY: Former 1976 Code Section 38-5-2500 [1982 Act No. 384, Section 59] recodified as Section 38-27-1000 by 1987 Act No. 155, Section 1.
 Until payments of or on account of an insurer's contractual obligations by a guaranty association, including expenses and interest, are repaid to the guaranty association or a plan of repayment by the insurer is approved by the guaranty association, no insurer that is subject to a delinquency proceeding, whether formal or informal, administrative or judicial, may:  (1) be released from the proceeding unless it is converted into a judicial rehabilitation or liquidation proceeding;  (2) be permitted to solicit or accept new business or request or accept the restoration of a suspended or revoked license or certificate of authority;  (3) be returned to the control of its shareholders or private management; or  (4) have its assets returned to the control of its shareholders or private management.  HISTORY: 1991 Act No. 13, Section 4; 1993 Act No. 181, Section 609.
 This chapter does not limit the powers granted the director or his designee by other provisions of law and must be liberally construed to effect the purpose stated in Section 38-27-30.  HISTORY: Former 1976 Code Section 38-27-20 derived from [1962 Code Section 37-1301; 1967 (55) 273] recodified as Section 38-39-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1810 [En, 1982 Act No. 384, Section 1] recodified as Section 38-27-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 609.
 (a) The director or his designee may file in the circuit court a petition alleging, with respect to a domestic insurer:  (1) that grounds exist that would justify a court order for a formal delinquency proceeding against an insurer under this chapter;  (2) that the interests of policyholders, creditors, or the public will be endangered by delay; and  (3) the contents of an order considered necessary by the director or his designee.  (b) Upon a filing under subsection (a), the court may issue forthwith, ex parte and without a hearing, the requested order which shall direct the department to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer and of the premises occupied by it for transaction of its business and, until further order of the court, shall enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from transaction of its business except with the written consent of the director or his designee.  (c) The court shall specify in the order what its duration is, which must be the time the court considers necessary for the department to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may hold any hearings it considers desirable after notice it considers appropriate and may extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the department fails to commence a formal proceeding under this chapter after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under this chapter ipso facto vacates the seizure order.  (d) Entry of a seizure order under this section does not constitute an anticipatory breach of any contract of the insurer.  (e) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of the order for a hearing and review of the order. The court shall hold the hearing and review not more than fifteen days after the request. A hearing under this subsection may be held privately in chambers and it must be so held if the insurer proceeded against so requests.  (f) If, at any time after the issuance of a seizure order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given does not stay the effect of any order previously issued by the court.  HISTORY: Former 1976 Code Section 38-5-1920 [1982 Act No. 384, Section 10] recodified as Section 38-27-220 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 610.
 In proceedings and judicial reviews under Section 38-27-220, records of the insurer, other documents, insurance department files, and court records and papers, so far as they pertain to or are a part of the record of the proceedings, are and must remain confidential except as is necessary to obtain compliance, unless the circuit court, after hearing arguments from the parties in chambers, orders otherwise, or unless the insurer requests that the matter be made public. Until a court order, papers filed with the clerk of the circuit court must be held by him in a confidential file.  HISTORY: Former 1976 Code Section 38-5-1930 [1982 Act No. 384, Section 11] recodified as Section 38-27-230 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 19; 1993 Act No. 181, Section 610.
 The purpose of this chapter is the protection of the interests of insureds, claimants, creditors, and the public generally, with minimum interference with the normal prerogatives of the owners and managers of insurers, through:  (1) Early detection of any potentially dangerous condition in an insurer and prompt application of appropriate corrective measures.  (2) Improved methods for rehabilitating insurers, involving the cooperation and management expertise of the insurance industry.  (3) Enhanced efficiency and economy of liquidation, through clarification of the law, to minimize legal uncertainty and litigation.  (4) Equitable apportionment of any unavoidable loss.  (5) Lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process and by extending the scope of personal jurisdiction over debtors of the insurer outside this State.  (6) Regulation of the insurance business by the impact of the law relating to delinquency procedures and substantive rules on the entire insurance business.  HISTORY: Former 1976 Code Section 38-27-30 [1962 Code Section 37-1303; 1967 (55) 273; 1971 (57) 709; 1985 Act No. 4, Section 1] recodified as Section 38-39-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1810 [1982 Act No. 384, Section 1] recodified as Section 38-27-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 609.
 The director or his designee may apply by petition to the circuit court for an order authorizing him to rehabilitate a domestic insurer or an alien insurer domiciled in this State on any one or more of the following grounds:  (1) The insurer is in a condition in which the further transaction of business would be hazardous, financially, to its policyholders, creditors, or the public.  (2) There is reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer.  (3) The insurer has failed to remove any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, if the person has been found after notice and hearing by the director or his designee to be dishonest or untrustworthy in a way affecting the insurer's business.  (4) Control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in a person or persons found after notice and hearing to be untrustworthy.  (5) Any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director or trustee, employee, or other person, has refused to be examined under oath by the director or his designee concerning its affairs, whether in this State or elsewhere, and, after reasonable notice of the fact, the insurer has failed promptly and effectively to terminate the employment and status of the person and all his influence on management.  (6) After demand by the director or his designee under Section 38-13-20 or 38-13-120 or under this chapter, the insurer has failed to make available promptly for examination any of its own property, books, accounts, documents, or other records, or those of any subsidiary or related company within the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer.  (7) Without first obtaining the written consent of the director or his designee, the insurer has transferred, or attempted to transfer, substantially its entire property or business or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person.  (8) The insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator, or sequestrator or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this State and the appointment has been made or is imminent and the appointment might oust the courts of this State of jurisdiction or might prejudice orderly delinquency proceedings under this chapter.  (9) Within the previous three years the insurer wilfully has violated its charter, articles of incorporation, or bylaws, an insurance law of this State, or an order of the director or his designee.  (10) The insurer has failed to pay within sixty days after due date any obligation to any state or any subdivision thereof or any judgment entered in any state, if the court in which the judgment was entered had jurisdiction over the subject matter, except that the nonpayment may not be a ground until sixty days after any good faith effort by the insurer to contest the obligation has been terminated, whether it is before the director or his designee or in the courts, or the insurer has systematically attempted to compromise or renegotiate previously agreed settlements with its creditors on the ground that it is financially unable to pay its obligations in full.  (11) The insurer has failed to file its annual report or other financial report required by statute within the time allowed by law and, after written demand by the director or his designee, has failed to give an adequate explanation immediately.  (12) The board of directors or the holders of a majority of the shares entitled to vote request or consent to rehabilitation under this chapter.  HISTORY: Former 1976 Code Section 38-5-2010 [1982 Act No. 384, Section 12] recodified as Section 38-27-310 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 20; 1993 Act No. 181, Section 611.
 (a) An order to rehabilitate the business of a domestic insurer or an alien insurer domiciled in this State shall appoint the director, and his successors in office, or his designee the rehabilitator and shall direct the rehabilitator to take possession immediately of the assets of the insurer and to administer them under the general supervision of the court. The filing or recording of the order with the clerk of court or register of deeds of the county in which the principal business of the company is conducted or the county in which its principal office or place of business is located imparts the same notice which a deed, bill of sale, or other evidence of title duly filed or recorded with that office would have imparted. The order to rehabilitate the insurer shall by operation of law vest title to all assets of the insurer in the rehabilitator.  (b) Any order issued under this section shall require accounting to the court by the rehabilitator. Accountings must be at intervals as the court specifies in its order.  (c) Entry of an order of rehabilitation does not constitute an anticipatory breach of any contracts of the insurer.  HISTORY: Former 1976 Code Section 38-5-2020 [1982 Act No. 384, Section 13] recodified as Section 38-27-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 612; 1997 Act No. 34, Section 1.
 (a) The director may appoint one or more special deputies who have all the powers and responsibilities of the rehabilitator granted under this section to assist the director or his designee as rehabilitator, and the director may employ any counsel, clerks, and assistants considered necessary. The compensation of the special deputy, counsel, clerks, and assistants and all expenses of taking possession of the insurer and of conducting the proceedings must be fixed by the director with the court's approval and must be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the director's pleasure. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the director may advance the costs so incurred out of any appropriation for the maintenance of the insurance department. Any amounts so advanced for expenses of administration must be repaid to the director for the use of the insurance department out of the first available monies of the insurer.  (b) The rehabilitator may take any action he considers necessary or appropriate to reform and revitalize the insurer. He has all the powers of the directors, officers, and managers, whose authority is suspended, except as they are redelegated by the rehabilitator. He has full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer.  (c) If it appears to the rehabilitator that there has been criminal or tortious conduct or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, broker, employee, or other person, he may pursue all appropriate legal remedies on behalf of the insurer.  (d) If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer is appropriate, he shall prepare a plan to effect the changes. Upon application of the rehabilitator for approval of the plan, and after any notice and hearings the court may prescribe, the court may either approve or disapprove the proposed plan, or may modify it and approve it as modified. Any plan approved under this section must be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for the period and to the extent necessary.  (e) The rehabilitator has the power under Sections 38-27-450 and 38-27-460 to avoid fraudulent transfers.  HISTORY: Former 1976 Code Section 38-5-2030 [1982 Act No. 384, Section 14] recodified as Section 38-27-330 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 613.
 (a) Any court in this State before which any action or proceeding in which the insurer is a party or is obligated to defend a party is pending when a rehabilitation order against the insurer is entered shall stay the action or proceeding for ninety days and any additional time necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take any action respecting the pending litigation he considers necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside this State and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer.  (b) No statute of limitations or defense of laches runs with respect to any action by or against an insurer between the filing of a petition for appointment of a rehabilitator for that insurer and the order granting or denying that petition. Any action by or against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty days after the order of rehabilitation is entered or the petition is denied.  (c) Any guaranty association or foreign guaranty association covering life or health insurance or annuities has standing to appear in any court proceeding concerning the rehabilitation of a life or health insurer if the association is or may become liable to act as a result of the rehabilitation.  HISTORY: Former 1976 Code Section 38-5-2040 [1982 Act No. 384, Section 15] recodified as Section 38-27-340 by 1987 Act No. 155, Section 1.
 (a) Whenever the director or his designee believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders, or the public or would be futile, the director or his designee may petition the circuit court for an order of liquidation. A petition under this subsection has the same effect as a petition under Section 38-27-360. The circuit court shall permit the directors of the insurer to take actions reasonably necessary to defend against the petition and may order payment from the estate of the insurer of costs and other expenses of defense as justice requires.  (b) The rehabilitator may at any time petition the circuit court for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of costs and other expenses of the petition as justice requires. If the circuit court finds that rehabilitation has been accomplished and that grounds for rehabilitation under Section 38-27-310 no longer exist, it shall order that the insurer be restored to possession of its property and the control of its business. The circuit court may also make that finding and issue that order at any time upon its own motion.  HISTORY: Former 1976 Code Section 38-5-2050 [1982 Act No. 384, Section 16] recodified as Section 38-27-350 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 614.
 The director or his designee may petition the circuit court as provided by law for an order directing him to liquidate a domestic insurer or an alien insurer domiciled in this State on the basis:  (1) of any ground for an order of rehabilitation as specified in Section 38-27-310, whether or not there has been a prior order directing the rehabilitation of the insurer;  (2) that the insurer is insolvent; or  (3) that the insurer is in such a condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors, or the public.  HISTORY: Former 1976 Code Section 38-5-2060 [1982 Act No. 384, Section 17] recodified as Section 38-27-360 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 615.
 (A) An order to liquidate the business of a domestic insurer must appoint the director and his successors in office, or his designee, as liquidator and direct the liquidator immediately to take possession of the assets of the insurer and to administer them under the general supervision of the court. The liquidator is vested by operation of law with the title to the property, contracts, and rights of action and the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the clerk of court or the register of deeds of the county in which its principal office or place of business is located or, for real estate, with the clerk of court and the register of deeds of the county where the property is located imparts the same notice which a deed, bill of sale, or other evidence of title filed or recorded with that office would have imparted.  (B) Upon issuance of the order, the rights and liabilities of the insurer and its creditors, policyholders, shareholders, members, and other persons interested in its estate become fixed as of the date of entry of the order of liquidation, except as provided in Sections 38-27-380 and 38-27-560.  (C) An order to liquidate the business of an alien insurer domiciled in this State must be in the same terms and has the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States are the only assets and business included.  (D) At the time of petitioning for an order of liquidation, or after that time, the director or his designee, after making appropriate findings of an insurer's insolvency, may petition the court for a judicial declaration of insolvency. After providing notice and hearing it considers proper the court may make the declaration.  (E) An order issued under this section must require accounting to the court by the liquidator. Accountings must be at intervals the court specifies in its order.  (F)(1) Within five days of the effective date of this subsection or within five days after the initiation of an appeal of an order of liquidation, which order has not been stayed, the director or his designee shall present for the court's approval a plan for the continued performance of the defendant company's policy claims obligations, including the duty to defend insureds under liability insurance policies during the pendency of an appeal. The plan must provide for the continued performance and payment of policy claims obligations in the normal course of events notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. If the defendant company's financial condition, in the judgment of the director or his designee, does not support the full performance of policy claims obligations during the appeal pendency period, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants as the director or his designee finds to be fair and equitable considering the relative circumstances of the policyholders and claimants. The court shall examine the plan submitted by the director or his designee and if it finds the plan to be in the best interests of the parties, the court shall approve the plan. No action may lie against the director, or his deputies, designees, agents, clerks, assistants, or attorneys based on preference in an appeal pendency plan approved by the court.  (2) The appeal pendency plan may not supersede or affect the obligations of an insurance guaranty association. An appeal pendency plan must provide for equitable adjustments to be made by the liquidator to distributions of assets to guaranty associations, if the liquidator pays claims from assets of the estate, which otherwise would be the obligations of a guaranty association but for the appeal of the order of liquidation, so that guaranty associations equally benefit on a pro rata basis from the assets of the estate. If an order of liquidation is set aside upon appeal, the company must not be released from delinquency proceedings unless funds advanced by a guaranty association, including reasonable administrative expenses relating to obligations of the company, are repaid in full, together with interest at the judgment rate of interest or unless an arrangement for repayment has been made with the consent of applicable guaranty associations.  HISTORY: Former 1976 Code Section 38-5-2070 [1982 Act No. 384, Section 18] recodified as Section 38-27-370 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 21; 1993 Act No. 181, Section 616; 1997 Act No. 34, Section 1.
 (a) All policies, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation continue in force only for the lesser of:  (1) a period of thirty days from the date of entry of the liquidation order;  (2) the expiration of the policy coverage;  (3) the date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy; or  (4) the liquidator has effected a transfer of the policy obligation pursuant to Section 38-27-400(a)(8).  (b) An order of liquidation under Section 38-27-370 terminates coverages at the time specified in subsection (a) of this section for purposes of any other statute.  (c) Policies of life or health insurance or annuities continue in force for the period and under the terms as provided for by any applicable guaranty association or foreign guaranty association.  (d) Policies of life or health insurance or annuities or any period or coverage of the policies not covered by a guaranty association or foreign guaranty association terminates under subsections (a) and (b) of this section.  HISTORY: Former 1976 Code Section 38-5-2080 [1982 Act No. 384, Section 19] recodified as Section 38-27-380 by 1987 Act No. 155, Section 1.
 The director or his designee may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this State at the time he applies for a liquidation order. The court as provided by law shall order dissolution of the corporation upon petition by the director or his designee upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it must be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason.  HISTORY: Former 1976 Code Section 38-5-2090 [1982 Act No. 384, Section 20] recodified as Section 38-27-390 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 617.
 The proceedings authorized by this chapter may be applied to:  (1) insurers who are doing, or have done, an insurance business in this State and against whom claims arising from that business may exist now or in the future;  (2) insurers who purport to do an insurance business in this State;  (3) insurers who have insureds resident in this State;  (4) other persons organized or in the process of organizing with the intent to do an insurance business in this State;  (5) nonprofit service plans, fraternal benefit societies, and beneficial societies; however, this chapter does not apply to associations as defined in Section 38-38-730(A)(8);  (6) title insurance companies;  (7) surety companies subject to Chapter 15, Title 38;  (8) multiple employer self-insured health plans defined in Chapter 41 of Title 38;  (9) prepaid health care delivery plans.  HISTORY: Former 1976 Code Section 38-27-40 [1962 Code Section 37-1304; 1967 (55) 273; 1971 (57) 709; 1985 Act No. 4, Section 2] recodified as Section 38-39-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1820; 1982 Act No. 384, Section 2] recodified as Section 38-27-40 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 17; 1993 Act No. 181, Section 609; 2008 Act No. 193, Section 1, eff April 2, 2008.
 (a) The liquidator has the power:  (1) To appoint a special deputy to act for him under this chapter and to determine the special deputy's reasonable compensation. The special deputy has all powers of the liquidator granted by this section. The special deputy serves at the pleasure of the liquidator.  (2) To employ employees and agents, legal counsel, actuaries, accountants, appraisers, consultants, and other personnel he considers necessary to assist in the liquidation.  (3) To fix the reasonable compensation of employees and agents, legal counsel, actuaries, accountants, appraisers, and consultants with the court's approval.  (4) To pay reasonable compensation to persons appointed and to defray from the funds or assets of the insurer all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the director may advance the costs so incurred out of any appropriation for the maintenance of the insurance department. Any amounts so advanced for expenses of administration must be repaid to the director for the use of the insurance department out of the first available monies of the insurer.  (5) To hold hearings, to subpoena witnesses to compel their attendance, to administer oaths, to examine any person under oath, and to compel any person to subscribe to his testimony after it has been correctly reduced to writing and, in connection therewith, to require the production of any books, papers, records, or other documents which he considers relevant to the inquiry.  (6) To collect all debts and monies due and claims belonging to the insurer, wherever located, and, for this purpose:  (i) To institute timely action in other jurisdictions in order to forestall garnishment and attachment proceedings against the debts.  (ii) To do other acts necessary or expedient to collect, conserve, or protect its assets or property, including the power to sell, compound, compromise, or assign debts for purposes of collection upon terms and conditions he considers best.  (iii) To pursue any creditor's remedies available to enforce his claims.  (7) To conduct public and private sales of the property of the insurer.  (8) To use assets of the estate of an insurer under a liquidation order to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under Section 38-27-610.  (9) To acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon, or otherwise dispose of or deal with any property of the insurer at its market value or upon terms and conditions that are fair and reasonable. He also has power to execute, acknowledge, and deliver any and all deeds, assignments, releases, and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation.  (10) To borrow money on the security of the insurer's assets or without security and to execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation.  (11) To enter into contracts necessary to carry out the order to liquidate, and to affirm or disavow any contracts to which the insurer is a party.  (12) To continue to prosecute and to institute in the name of the insurer or in his own name any and all suits and other legal proceedings, in this State or elsewhere, and to abandon the prosecution of claims he considers unprofitable to pursue further. If the insurer is dissolved under Section 38-27-390, he has the power to apply to any court in this State or elsewhere for leave to substitute himself for the insurer as plaintiff.  (13) To prosecute any action which may exist in behalf of the creditors, members, policyholders, or shareholders of the insurer against any officer of the insurer or any other person.  (14) To remove any or all records and property of the insurer to the offices of the department or to any other place convenient for the purposes of efficient and orderly execution of the liquidation. Guaranty associations and foreign guaranty associations shall have such reasonable access to the records of the insurer as is necessary for them to carry out their statutory obligations.  (15) To deposit in one or more banks in this State sums required for meeting current administration expenses and dividend distributions.  (16) To invest all sums not currently needed, unless the court orders otherwise.  (17) To file any necessary documents for recording in the office of any recorder of deeds or record office in this State or elsewhere where property of the insurer is located.  (18) To assert all defenses available to the insurer as against third persons, including statutes of limitation, statutes of fraud, and the defense of usury. A waiver of any defense by the insurer after a petition in liquidation has been filed does not bind the liquidator. Whenever a guaranty association or foreign guaranty association has an obligation to defend any suit, the liquidator shall give precedence to that obligation and may defend only in the absence of a defense by the guaranty associations.  (19) To exercise and enforce all the rights, remedies, and powers of any creditor, shareholder, policyholder, or member, including any power to avoid any transfer or lien that may be given by the general law and that is not included with Sections 38-27-450 through 38-27-470.  (20) To intervene in any proceeding wherever instituted that might lead to the appointment of a receiver or trustee and to act as the receiver or trustee whenever the appointment is offered.  (21) To enter into agreements with any receiver or commissioner of any other state relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business in both states.  (22) To exercise all powers now held or hereafter conferred upon receivers by the laws of this State not inconsistent with this chapter.  (23) To audit the books and records of agents of the insurer insofar as those records relate to the business activities of the insurer.  (24) Notwithstanding the powers of the liquidator in subsections (a) and (b), the liquidator is not obligated to defend claims or to continue to defend claims after the entry of a liquidation order.  (b) The enumeration, in this section, of the powers and authority of the liquidator may not be construed as a limitation upon him; nor shall it exclude in any manner his right to do other acts not herein specifically enumerated, or otherwise provided for, that may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.  HISTORY: Former 1976 Code Section 38-5-2100 [1982 Act No. 384, Section 21] recodified as Section 38-27-400 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Sections 22, 23; 1993 Act No. 181, Section 618.
 (a) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible:  (1) By first class mail and either by telegram or telephone to the insurance commissioner of each jurisdiction in which the insurer is doing business.  (2) By first class mail to any guaranty association or foreign guaranty association which is or may become obligated as a result of the liquidation.  (3) By first class mail to all insurance agents of the insurer.  (4) By first class mail to all persons known or reasonably expected to have claims against the insurer, including all policyholders, at their last known addresses as indicated by the records of the insurer.  (5) By publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in any other locations the liquidator considers appropriate.  (b) Notice to potential claimants under subsection (a) requires claimants to file with the liquidator their claims together with proper proofs thereof under Section 38-27-550 by a date the liquidator specifies in the notice. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants have a duty to keep the liquidator informed of any changes of address.  (c) If notice is given in accordance with this section, the distribution of assets of the insurer under this chapter is conclusive with respect to all claimants, whether or not they received notice.  HISTORY: Former 1976 Code Section 38-5-2110 [1982 Act No. 384, Section 22] recodified as Section 38-27-410 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 619.
 (a) Every person who receives notice in the form prescribed in Section 38-27-410 that an insurer which he represents as an agent is the subject of a liquidation order shall within fifteen days of the notice give notice of the liquidation order. The notice must be sent by first class mail to the last address contained in the agent's records to each policyholder or other person named in any policy issued through the agent by the insurer, if he has a record of the address of the policyholder or other person. A policy is considered issued through an agent if the agent has a property interest in the expiration of the policy, or if the agent has had in his possession a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another. The written notice shall include the name and address of the insurer, the name and address of the agent, identification of the policy impaired, and the nature of the impairment including termination of coverage, as described in Section 38-27-380. Notice by a general agent satisfies the notice requirement for any agents under contract to him. Each agent obligated to give notice under this section shall file a report of compliance with the liquidator.  (b) Any agent failing to give notice or file a report of compliance as required in subsection (a) of this section is subject to the penalty provisions of Section 38-2-10.  (c) The liquidator may waive the duties imposed by this section if he determines that other notice to the policyholders of the insurer under liquidation is adequate.  HISTORY: Former 1976 Code Section 38-5-2120 [1982 Act No. 384, Section 23] recodified as Section 38-27-420 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 10.
 (a) Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this State, no action at law or equity may be brought against the insurer or liquidator, whether in this State or elsewhere; nor may any existing actions be maintained or further presented after issuance of the order. The courts of this State shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator or the company, when the injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states. Whenever, in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this State, he may intervene in the action. The liquidator may defend any action in which he intervenes under this section at the expense of the estate of the insurer.  (b) The liquidator may, upon or after an order for liquidation, within two years or such time in addition to two years as applicable law may permit, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which the order is entered. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim, or for filing any claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in the case the period had not expired at the date of the filing of the petition, the liquidator may, for the benefit of the estate, take any action or do any act, required of or permitted to the insurer, within a period of one hundred eighty days after the entry of an order for liquidation, or within a further period that is shown to the satisfaction of the court not to be unfairly prejudicial to the other party.  (c) No statute of limitations or defense of laches runs with respect to any action against an insurer between the filing of a petition for liquidation against an insurer and the denial of the petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty days after the petition is denied.  (d) Any guaranty association or foreign guaranty association has standing to appear in any court proceeding concerning the liquidation of an insurer if the association is or may become liable to act as a result of the liquidation.  HISTORY: Former 1976 Code Section 38-5-2130 [1982 Act No. 384, Section 24] recodified as Section 38-27-430 by 1987 Act No. 155, Section 1.
 (a) As soon as practicable after the liquidation order but not later than one hundred twenty days thereafter, the liquidator shall prepare in duplicate a list of the insurer's assets. The list must be amended or supplemented from time to time as the liquidator may determine. One copy must be filed in the office of the clerk of the circuit court and one copy must be retained for the liquidator's files. All amendments and supplements must be similarly filed.  (b) The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation.  (c) A submission to the court for disbursement of assets in accordance with Section 38-27-530 fulfills the requirements of subsection (a) of this Section.  HISTORY: Former 1976 Code Section 38-5-2140 [1982 Act No. 384, Section 25] recodified as Section 38-27-440 by 1987 Act No. 155, Section 1.
 (a) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this chapter is fraudulent as to then existing and future creditors if made or incurred without fair consideration or with actual intent to hinder, delay, or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this chapter, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value and except that any purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for the transfer, lien, or obligation, may retain the property, lien, or obligation as security for repayment. The court may, on due notice, order the transfer or obligation to be preserved for the benefit of the estate, and, in that event, the receiver succeeds to and may enforce the rights of the purchaser, lienor, or obligee.  (b)(1) A transfer of property other than real property is considered made or suffered when it becomes so far perfected that no later lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under Section 38-27-470.  (2) A transfer of real property is considered made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.  (3) A transfer which creates an equitable lien is not considered perfected if there are available means by which a legal lien could be created.  (4) Any transfer not perfected prior to the filing of a petition for liquidation is considered made immediately before the filing of the successful petition.  (5) This subsection (b) applies whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.  (c) Any transaction of the insurer with a reinsurer is considered fraudulent and may be avoided by the receiver under subsection (a) if:  (1) The transaction consists of the termination, adjustment, or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transaction, unless the reinsurer gives a present fair equivalent value for the release.  (2) Any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced.  HISTORY: Former 1976 Code Section 38-5-2150 [1982 Act No. 384, Section 26] recodified as Section 38-27-450 by 1987 Act No. 155, Section 1.
 (a) After petition for rehabilitation or liquidation has been filed a transfer of any of the real property of the insurer made to a person acting in good faith is valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The commencement of a proceeding in rehabilitation or liquidation is constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the register of deeds in the county where any real property in question is located. The exercise by a court of the United States or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state is not impaired by the pendency of the proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.  (b) After a petition for rehabilitation or liquidation has been filed and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:  (1) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith is valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.  (2) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon his order, with the same effect as if the petition were not pending.  (3) A person having actual knowledge of the pending rehabilitation or liquidation is considered not to act in good faith.  (4) A person asserting the validity of a transfer under this section has the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator is valid against the liquidator.  (c) Nothing in this chapter impairs the negotiability of currency or negotiable instruments.  HISTORY: Former 1976 Code Section 38-5-2160 [1982 Act . 384, Section 27] recodified as Section 38-27-460 by 1987 Act No. 155, Section 1; 1997 Act No. 34, Section 1.
 (a)(1) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under this chapter, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then the transfers are considered preferences if made or suffered within one year before the filing of the successful petition for rehabilitation or within two years before the filing of the successful petition for liquidation, whichever time is shorter.  (2) Any preference may be avoided by the liquidator if:  (i) the insurer was insolvent at the time of the transfer;  (ii) the transfer was made within four months before the filing of the petition;  (iii) the creditor receiving it or to be benefited thereby or his agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or  (iv) the creditor receiving it was an officer, employee, attorney, or other person who was in fact in a position of comparable influence in the insurer to an officer, whether or not he held such position, or any shareholder holding directly or indirectly more than five percent of any class of any equity security, as defined in Section 38-23-20, issued by the insurer, or any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.  (3) Where the preference is voidable, the liquidator may recover the property or, if it has been converted, its value from any person who has received or converted the property, except where a bona fide purchaser or lienor has given less than fair equivalent value, he shall have a lien upon the property to the extent of the consideration actually given by him. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title passes to the liquidator.  (b)(1) A transfer of property other than real property is considered made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.  (2) A transfer of real property is considered made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.  (3) A transfer which creates an equitable lien is not considered to be perfected if there are available means by which a legal lien could be created.  (4) A transfer not perfected prior to the filing of a petition for liquidation is considered made immediately before the filing of the successful petition.  (5) This subsection (b) applies whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.  (c)(1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of the proceedings upon the entry or docketing of a judgment or decree, or upon attachment, execution, or like process, whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.  (2) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b) of this section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. The lien could not, however, become superior and the purchase could not create superior rights for the purpose of subsection (b) of this section through any acts subsequent to the obtaining of the lien or subsequent to the purchase which require the agreement or concurrence of any third party or which require any further judicial action or ruling.  (d) A transfer of property for or on account of a new and contemporaneous consideration which is considered under subsection (b) of this section made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within twenty-one days or any period expressly allowed by law, whichever is less. A transfer to secure a future loan, if the loan is actually made, or a transfer which becomes security for a future loan has the same effect as a transfer for or on account of a new and contemporaneous consideration.  (e) If any lien considered voidable under paragraph (2) of subsection (a) of this section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a petition under this chapter which results in a liquidation order, the indemnifying transfer or lien is also considered voidable.  (f) The property affected by any lien considered voidable under subsections (a) and (e) of this section is discharged from the lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety pass to the liquidator, except that the court may on due notice order the lien to be preserved for the benefit of the estate and the court may direct that the conveyance be executed as may be proper or adequate to evidence the title of the liquidator.  (g) The circuit court has summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding must be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and, if the value is less than the amount for which the property is indemnified or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within a reasonable time the court shall fix.  (h) The liability of a surety under a releasing bond or other like obligation is discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and voided by the liquidator, or, where the property is retained under subsection (g), to the extent of the amount paid to the liquidator.  (i) If a creditor has been preferred and afterward in good faith gives the insurer further credit without security of any kind for property which becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from him.  (j) If an insurer, directly or indirectly, within four months before the filing of a successful petition for liquidation under this chapter or at any time in contemplation of a proceeding to liquidate it pays money or transfers property to an attorney-at-law for services rendered or to be rendered, the transaction may be examined by the court on its own motion or must be examined by the court on petition of the liquidator and may be held valid only to the extent of a reasonable amount to be determined by the court. The excess may be recovered by the liquidator for the benefit of the estate; however, where the attorney is in a position of influence in the insurer or an affiliate thereof, payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered is governed by item (iv) of paragraph (2) of subsection (a) of this section.  (k)(1) Every officer, manager, employee, shareholder, member, subscriber, attorney, or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he has reasonable cause to believe the insurer is or is about to become insolvent at the time of the preference is personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is reasonable cause to so believe if the transfer was made within four months before the date of filing of the successful petition for liquidation.  (2) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under subsection (a) is personally liable therefor and is bound to account to the liquidator.  (3) Nothing in this subsection (k) prejudices any other claim by the liquidator against any person.  HISTORY: Former 1976 Code Section 38-5-2170 [1982 Act No. 384, Section 28] recodified as Section 38-27-470 by 1987 Act No. 155, Section 1.
 (A) Notwithstanding any other provision of this chapter to the contrary, the receiver for an insurer-member shall not void any transfer of, or any obligation to transfer, money or any other property arising under or in connection with any federal home loan bank security agreement, or any pledge, security, collateral, or guarantee agreement, or any other similar arrangement or credit enhancement relating to a federal home loan bank security agreement made in the ordinary course of business and in compliance with the applicable federal home loan bank agreement. The receiver also may not void a redemption or repurchase of any stock or equity securities made by the federal home loan bank within four months of the commencement of the delinquency proceedings or which received prior approval of the receiver. However, a transfer is voidable if the transfer is made with the actual intent to hinder, delay, or defraud the insurer-member, existing creditors, or future creditors.  (B) If a federal home loan bank exercises its rights regarding collateral pledged by an insurer-member who is subject to a delinquency proceeding, the federal home loan bank shall repurchase any outstanding capital stock that is in excess of that amount of federal home loan bank stock that the insurer-member is required to hold as a minimum investment, to the extent the federal home loan bank in good faith determines the repurchase to be permissible under applicable laws, regulations, regulatory obligations, and the federal home loan bank's capital plan, and consistent with the federal home loan bank's current capital stock practices applicable to its entire membership.  (C) Following the appointment of a receiver for an insurer-member, the federal home loan bank shall, within ten business days after a request from the receiver is made, provide a process and establish timelines for the:  (1) release of collateral that exceeds the lendable collateral value, as determined pursuant to the advance agreement with the federal home loan bank, required to support secured obligations remaining after any repayment of advances;  (2) release of any of the insurer-member's collateral remaining in the federal home loan bank's possession following full repayment of all outstanding secured obligations of the insurer-member in full;  (3) payment of fees owed by the insurer-member and the operation of deposits and other accounts of the insurer-member with the federal home loan bank; and  (4) possible redemption or repurchase of federal home loan bank stock or excess stock of any class that an insurer-member is required to own.  (D) Upon request from the receiver for an insurer-member, the federal home loan bank shall provide any available options that an insurer-member may exercise to renew or restructure an advance to defer associated prepayment fees, subject to:  (1) market conditions;  (2) the terms of the advances outstanding to the insurer-member;  (3) the applicable policies of the federal home loan bank; and  (4) the compliance of the federal home loan bank with the Federal Home Loan Bank Act, 12 U.S.C. Section 1421, et seq., and corresponding regulations.  (E) Nothing in this section affects the rights of a receiver regarding advances to an insurer-member in delinquency proceedings pursuant to 12 C.F.R. Section 1266.4.  (F) The provisions of this section apply notwithstanding another provision of this chapter.  HISTORY: 2016 Act No. 190 (S.693), Section 1, eff May 26, 2016.
 (a) No claim of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance voidable under this chapter is allowed unless he surrenders the preference, lien, conveyance, transfer, assignment, or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim may not be allowed unless the money is paid or the property is delivered to the liquidator within thirty days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.  (b) A claim allowable under subsection (a) by reason of the avoidance, whether voluntary or involuntary, or a preference, a lien, conveyance, transfer, assignment, or encumbrance, may be filed as an excused late filing under Section 38-27-540 if filed within thirty days from the date of the avoidance or within the further time allowed by the court under subsection (a).  HISTORY: Former 1976 Code Section 38-5-2180 [1982 Act No. 384, Section 29] recodified as Section 38-27-480 by 1987 Act No. 155, Section 1.
 (a) Mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this chapter must be set off and the balance only may be allowed or paid, except as provided in subsection (b) of this section and Section 38-27-520.  (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.  HISTORY: Former 1976 Code Section 38-5-2190 [1982 Act . 384, Section 30] recodified as Section 38-27-490 by 1987 Act No. 155, Section 1; 1997 Act No. 68, Section 10.
 For purposes of this chapter:  (1) "Ancillary state" means any state other than a domiciliary state.  (2) "Creditor" is a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed, or contingent.  (3)(a) "Delinquency proceeding" means a proceeding instituted against an insurer to liquidate, rehabilitate, reorganize, or conserve the insurer and a summary proceeding under Section 38-27-220.  (b) "Formal delinquency proceeding" means a liquidation or rehabilitation proceeding.  (4) "Doing business" includes any of the following acts, whether effected by mail or otherwise:  (a) the issuance or delivery of contracts of insurance to persons resident in this State;  (b) the solicitation of applications for such contracts or other negotiations preliminary to the execution of such contracts;  (c) the collection of premiums, membership fees, assessments, or other consideration for such contracts;  (d) the transaction of matters subsequent to execution of such contracts and arising out of them; or  (e) operating under a license or certificate of authority, as an insurer, issued by the director or his designee.  (5) "Domiciliary state" means the state in which an insurer is incorporated or organized, or, in the case of an alien insurer, its state of entry.  (6) "Fair consideration" is given for property or obligation:  (a) when in exchange for the property or obligation, as a fair equivalent therefor and in good faith, property is conveyed or services are rendered or an obligation is incurred or an antecedent debt is satisfied; or  (b) when the property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared to the value of the property or obligation obtained.  (7) "Federal home loan bank" or "FHLB" means a federal home loan bank established pursuant to the Federal Home Loan Bank Act, 12 U.S.C. Section 1421, et seq.  (8) "Foreign country" means any other jurisdiction not in any state.  (9) "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or classes of persons. As to specifically encumbered property, "general assets" includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, are treated as general assets.  (10) "Guaranty association" means the South Carolina Property and Casualty Insurance Guaranty Association, the South Carolina Life and Accident and Health Insurance Guaranty Association, and any other similar entity created by the legislature of this State for the payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entity created by the legislature of any other state.  (11) "Insolvency" or "insolvent" means:  (a) For an insurer issuing only assessable fire insurance policies:  (i) the inability to pay any obligation within thirty days after it becomes payable; or  (ii) if an assessment is made within thirty days after that date, the inability to pay the obligation thirty days following the date specified in the first assessment notice issued after the date of loss.  (b) For any other insurer, that it is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of:  (i) any capital and surplus required by law for its organization; or  (ii) the total par or stated value of its authorized and issued capital stock.  (c) For purposes of this item, "liabilities" includes, but is not limited to, reserves required by statute, regulations, or specific requirements imposed by the director or his designee upon a subject company at the time of admission or subsequent thereto.  (12) "Insurer" means any person who has done, purports to do, is doing, or is licensed to do an insurance business and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, the commissioner of insurance, or similar entity, of any state. For purposes of this chapter, any other persons included under Section 38-27-40 are considered insurers.  (13) "Insurer-member" means an insurer who is a member of a federal home loan bank.  (14) "Person" means natural persons, corporations, partnerships, trusts, associations, societies, orders, special purpose reinsurance vehicles, or any other organizations or entities.  (15) "Preferred claim" means any claim with respect to which the terms of this chapter accord priority of payment from the general assets of the insurer.  (16) "Receiver" means receiver, liquidator, rehabilitator, or conservator as the context requires.  (17) "Reciprocal state" means any state other than this State in which in substance and effect subsection (a) of Section 38-27-370, Section 38-27-930, Section 38-27-940, and Sections 38-27-960 through 38-27-980 are in force, and in which provisions are in force requiring that the director, his designee, or equivalent official be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.  (18) "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which have become liens upon specific assets by reason of judicial process.  (19) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any claim secured by general assets.  (20) "State" means any state, district, or territory of the United States and the Panama Canal Zone.  (21) "Transfer" includes the sale and every other and different mode, direct or indirect, of disposing of or of parting with property or with an interest therein or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor is considered a transfer suffered by the debtor.  HISTORY: Former 1976 Code Section 38-27-50 [1962 Code Section 37-1305; 1967 (55) 273] recodified as Section 38-39-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1830 [En, 1982 Act No. 384, Section 3] recodified as Section 38-27-50 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 18; 1993 Act No. 181, Section 609; 2002 Act No. 228, Section 5, eff May 1, 2002; 2016 Act No. 190 (S.693), Section 2, eff May 26, 2016.  Effect of Amendment  2016 Act No. 190, Section 2, in (3), added designators (a) and (b); added (7) and (13), definitions for "federal home loan bank" and "insurer-member"; and redesignated the paragraphs accordingly.
 (a) As soon as practicable but not more than two years from the date of an order of liquidation under Section 38-27-370 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth:  (1) The reasonable value of the assets of the insurer.  (2) The insurer's probable total liabilities.  (3) The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment.  (4) A recommendation as to whether or not an assessment should be made and in what amount.  (b)(1) Upon the basis of the report provided in subsection (a), including any supplements and amendments thereto, the circuit court may levy one or more assessments against all members of the insurer who are subject to assessment.  (2) Subject to any applicable legal limits on assessability, the aggregate assessment must be for the amount that the sum of the probable liabilities, the expenses of administration, and the estimated cost of collection of the assessment exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically.  (c) After levy of assessment under subsection (b) the liquidator shall issue an order directing each member who has not paid the assessment pursuant to the order to show cause why the liquidator should not pursue a judgment therefor.  (d) The liquidator shall give notice of the order to show cause by publication and by first class mail to each member liable thereunder mailed to his last known address as it appears on the insurer's records, at least twenty days before the return day of the order to show cause.  (e)(1) If a member does not appear and serve duly verified objections upon the liquidator by the return day of the order to show cause under subsection (c), the court shall make an order adjudging the member liable for the amount of the assessment against him, pursuant to subsection (c), together with costs, and the liquidator shall have a judgment against the member therefor.  (2) If by the return day the member appears and serves duly verified objections upon the liquidator, the director or his designee may hear and determine the matter or may appoint a referee to hear it and make an order as the facts warrant. In the event that the director or his designee determines that the objections do not warrant relief from assessment, the member may request the court to review the matter and vacate the order to show cause.  (f) The liquidator may enforce any order or collect any judgment under subsection (e) by any lawful means.  HISTORY: Former 1976 Code Section 38-5-2200 [1982 Act No. 384, Section 31] recodified as Section 38-27-500 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 620.
 The amount recoverable by the liquidator from reinsurers may not be reduced as a result of delinquency proceedings. Payment made directly to an insured or other creditor does not diminish the reinsurer's obligation to the insurer's estate except:  (1) where the contract or other written agreement specifically provides another payee of the reinsurance in the event of the insolvency of the ceding insurer; or  (2) where the assuming insurer, with the consent of the direct insured, has assumed the policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under the policies and in substitution for the obligations of the ceding insurer to the payees.  The reinsurance is payable under contracts reinsured by the assuming insurer on the basis of reported claims allowed in the liquidation proceedings, subject to court approval, without diminution because of the insolvency of the ceding insurer.  The domiciliary liquidator of an insolvent ceding insurer shall give written notice to the assuming insurer of the pendency of a claim against the ceding insurer on the contract reinsured within a reasonable time after the claim is filed in the liquidation proceeding. During the pendency of the claim, an assuming insurer may investigate the claim and interpose, at its own expense in the proceeding where the claim is to be adjudicated, any defenses which it considers available to the ceding insurer or its liquidator. This expense is chargeable, subject to court approval, against the insolvent ceding insurer as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. Where two or more assuming insurers are involved in the same claim and a majority in interest elect to interpose a defense to the claim, the expense must be apportioned in accordance with the terms of the reinsurance agreement as though the expense had been incurred by the ceding insurer.  HISTORY: Former 1976 Code Section 38-5-2210 [1982 Act No. 384, Section 32] recodified as Section 38-27-510 by 1987 Act No. 155, Section 1; 1998 Act No. 416, Section 1.
 (a)(1) An agent, broker, premium finance company, or any other person, other than the insured, responsible for the payment of a premium is obligated to pay any unpaid collected premium held by such person at the time of the declaration of insolvency, whether earned or unearned, and any unpaid earned premium, all as shown on the records of the insurer. An agent, broker, premium finance company, or any other person shall have no obligation to pay an uncollected unpaid unearned premium to the liquidator. The liquidator has the right to recover from that person any part of an unearned premium that represents that person's commission. Credits or setoffs or both are not allowed to an agent, broker, or premium finance company for any amounts advanced to the insurer by the agent, broker, or premium finance company on behalf of, but in the absence of a payment by, the insured.  (2) An insured is obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer.  (b) Upon satisfactory evidence of a violation of this section, the director or his designee may pursue either one or both of the following courses of action:  (1) Suspend or revoke or refuse to renew the licenses of the offending party or parties.  (2) Impose a penalty of not more than one thousand dollars for each and every act in violation of this section by the party or parties.  (c) Before the director or his designee takes any action as set forth in subsection (b), he shall give written notice to the person, company, association, or exchange accused of violating the law, stating specifically the nature of the alleged violation and advising of an opportunity of hearing to be held at least ten days thereafter. After the hearing, upon failure of the accused to appear at the hearing, or upon failure to request the hearing, the director or his designee, if he finds a violation, shall impose the penalties under subsection (b) he considers advisable.  (d) When the director or his designee takes action in any or all of the ways set out in subsection (b), the party aggrieved may appeal from the action to the Administrative Law Court as provided by law.  HISTORY: Former 1976 Code Section 38-5-2220 [1982 Act No. 384, Section 33] recodified as Section 38-27-520 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 621; 1994 Act No. 368, Section 1.
 (a) Within one hundred twenty days of a final determination of insolvency of an insurer by a court of competent jurisdiction of this State, the liquidator shall make application to the court for approval of a proposal to disburse assets out of marshaled assets, as the assets become available, to a guaranty association or foreign guaranty association having obligations because of the insolvency. If the liquidator determines that there are insufficient assets to disburse, the application required by this section is considered satisfied by a filing by the liquidator stating the reasons for this determination.  (b) The proposal shall at least include provisions for:  (1) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within the priorities established in Section 38-27-610, Classes 1 and 2.  (2) Disbursement of the assets marshaled to date and subsequent disbursement of assets as they become available.  (3) Equitable allocation of disbursements to each of the guaranty associations and foreign guaranty associations entitled thereto.  (4) The securing by the liquidator from each of the associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator the assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in Section 38-27-610 in accordance with such priorities. No bond is required of the associations.  (5) A full report to be made by each association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on the assets, and any other matter as the court may direct.  (c) The liquidator's proposal shall provide for disbursements to the associations in amounts estimated at least equal to the claim payments made or to be made thereby for which the associations could assert a claim against the liquidator and shall further provide that if the assets available for disbursement do not equal or exceed the amount of the claim payments made or to be made by the association then disbursements must be in the amount of available assets.  (d) The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming, or guaranteeing policies or contracts of insurance under the acts creating the associations.  (e) Notice of the application must be given to the association and to the commissioners of insurance of each of the states. The notice is considered to have been given when deposited in the United States certified mails, first class postage prepaid, at least thirty days prior to submission of the application to the court. Action on the application may be taken by the court if the above required notice has been given and if the liquidator's proposal complies with subsection (b)(1) and (2).  HISTORY: Former 1976 Code Section 38-5-2230 [1982 Act No. 384, Section 34] recodified as Section 38-27-530 by 1987 Act No. 155, Section 1.
 (a) Proof of all claims must be filed with the liquidator in the form required by Section 38-27-550 by the last day for filing specified in the notice required under Section 38-27-410, except that proof of claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires.  (b) The liquidator may permit a claimant making a late filing to share in distributions, whether past or future, as if he were not late, to the extent that the payment will not prejudice the orderly administration of the liquidation, under the following circumstances:  (1) The existence of the claim was not known to the claimant and he filed his claim as promptly thereafter as reasonably possible after learning of it.  (2) A transfer to a creditor was avoided under Sections 38-27-450 through 38-27-470, or was voluntarily surrendered under Section 38-27-480 and the filing satisfies the conditions of Section 38-27-480.  (3) The valuation under Section 38-27-600, of security held by a secured creditor, shows a deficiency, which is filed within thirty days after the valuation.  (c) The liquidator shall permit late filing claims to share in distributions, whether past or future, as if they were not late, if the claims are claims of a guaranty association or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, after the last day for filing where the payments were made and expenses incurred as provided by law.  (d) The liquidator may consider any claim filed late which is not covered by subsection (b) of this section and permit it to receive distributions which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on his claim as is then being paid to claimants of any lower priority. This must continue until his claim has been paid in full.  HISTORY: Former 1976 Code Section 38-5-2240 [1982 Act No. 384, Section 35] recodified as Section 38-27-540 by 1987 Act No. 155, Section 1.
 (a) Proof of claim consists of a statement signed by the claimant that includes all of the following that are applicable:  (1) the particulars of the claim, including the consideration given for it;  (2) the identity and amount of the security on the claim;  (3) the payments made on the debt, if any;  (4) that the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to the claim;  (5) any right of priority of payment or other specific right asserted by the claimants;  (6) a copy of the written instrument which is the foundation of the claim;  (7) the name and address of the claimant and the attorney who represents him, if any.  (b) No claim need be considered or allowed if it does not contain all the information in subsection (a) which may be applicable. The liquidator may require that a prescribed form be used and may require that other information and documents be included.  (c) At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subsection (a) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.  (d) No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four months before the filing of the petition need be considered as evidence of liability or of the quantum of damages.  (e) All claims of a guaranty association or foreign guaranty association must be in the form and shall contain the substantiation as agreed to by the association and the liquidator.  HISTORY: Former 1976 Code Section 38-5-2250 [1982 Act No. 384, Section 36] recodified as Section 38-27-550 by 1987 Act No. 155, Section 1.
 (a) The claim of a third party which is contingent only on his first obtaining a judgment against the insured must be considered and allowed as if there were no contingency.  (b) A claim may be allowed even if contingent, if it is filed in accordance with Section 38-27-540. It may be allowed and may participate in all distributions declared after it is filed to the extent that it does not prejudice the orderly administration of the liquidation.  (c) Claims that are due except for the passage of time must be treated as absolute claims are treated, except that the claims may be discounted at the legal rate of interest.  (d) Claims made under employment contracts by directors, principal officers, or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under Section 38-27-320 or 38-27-370.  HISTORY: Former 1976 Code Section 38-5-2260 [1982 Act No. 384, Section 37] recodified as Section 38-27-560 by 1987 Act No. 155, Section 1.
 (a) Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator.  (b) Whether or not the third party files a claim, the insured may file a claim on his own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within sixty days after mailing of the notice required by Section 38-27-410, whichever is later, he is an unexcused late-filer.  (c) The liquidator shall make his recommendations to the court under Section 38-27-610 for the allowance of an insured's claim under subsection (b) of this section after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action, and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, he shall reconsider the claim on the basis of additional information and amend his recommendations to the court. The insured must be afforded the same notice and opportunity to be heard on all changes in the recommendations as in their initial determination. The court may amend its allowance as it thinks appropriate. As claims against the insured are settled or barred, the insured must be paid from the amount withheld the same percentage dividend as was paid on other claims of like property, based on the lesser of (1) the amount actually recovered from the insured by action or paid by agreement, plus the reasonable costs and expenses of defense, or (2) the amount allowed on the claims by the court. After all claims are settled or barred, any sum remaining from the amount withheld reverts to the undistributed assets of the insurer. Delay in final payment under this subsection (c) is not a reason for unreasonable delay of final distribution and discharge of the liquidator.  (d) If several claims founded upon one policy are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed must be reduced in the same proportion so that the total equals the policy limit. Claims by the insured must be evaluated as in subsection (c). If any insured's claim is subsequently reduced under subsection (c), the amount thus freed must be apportioned ratably among the claims which have been reduced under this subsection (d).  (e) No claim may be presented under this section if it is or may be covered by any guaranty association or foreign guaranty association.  HISTORY: Former 1976 Code Section 38-5-2270 [1982 Act No. 384, Section 38] recodified as Section 38-27-570 by 1987 Act No. 155, Section 1.
 (a) When a claim is denied in whole or in part by the liquidator, written notice of the determination must be given to the claimant or his attorney by first class mail at the address shown in the proof of claim. Within sixty days from the mailing of the notice, the claimant may file his objections with the liquidator. If no filing is made, the claimant may not further object to the determination.  (b) Whenever objections are filed with the liquidator and the liquidator does not alter his denial of the claim as a result of the objections, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or his attorney and to any other persons directly affected, not less than ten nor more than thirty days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee who shall submit findings of fact along with his recommendation.  HISTORY: Former 1976 Code Section 38-5-2280 [1982 Act No. 384, Section 39] recodified as Section 38-27-580 by 1987 Act No. 155, Section 1.
 Whenever a creditor whose claim against an insurer is secured, in whole or in part, by the undertaking of another person fails to prove and file that claim, the other person may do so in the creditor's name and is subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that he discharges the undertaking. In the absence of an agreement with the creditor to the contrary, however, the other person is not entitled to any distribution until the amount paid to the creditor on the undertaking, plus the distributions paid on the claim from the insurer's estate to the creditor, equals the amount of the entire claim of the creditor. Any excess received by the creditor must be held by him in trust for the other person. The term "other person" as used in this section is not intended to apply to a guaranty association or foreign guaranty association.  HISTORY: Former 1976 Code Section 38-5-2290 [1982 Act No. 384, Section 40] recodified as Section 38-27-590 by 1987 Act No. 155, Section 1.
 (a) Except as provided in this subsection, no delinquency proceeding may be commenced under this chapter by anyone other than the director or his designee and no court has jurisdiction to entertain, hear, or determine any proceeding commenced by any other person. However, the court may consider the application for receivership of a person other than the director or his designee if the applicant for receivership has proceeded as follows:  (1) The applicant for receivership, before presenting his complaint or petition to the court for action thereon, presents a copy thereof to the department for action thereon, as hereinafter set forth, and gives reasonable notice to the insurance company to be affected that a copy has been lodged with the department.  (2) The insurance company affected thereby has ten days after the service of the notice within which to lodge with the department a copy of the answer which it proposes to file, and thereupon the director or his designee shall proceed to investigate and within a reasonable time determine the merits of the application for receivership and shall fix a time for the hearing of the investigation of the matters involved in the petition or complaint.  (3) The director or his designee, after completing the investigation, shall recommend to the court that the receiver be or not be appointed. The court shall then consider the application for a receiver.  (b) No court of this State has jurisdiction to entertain, hear, or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership of an insurer or praying for an injunction or restraining order or other relief preliminary to, incidental to, or relating to the proceedings other than in accordance with this chapter.  (c) Whenever the director or his designee finds that any of the grounds for rehabilitation or liquidation of a domestic or alien insurance company as set forth in Sections 38-27-310 and 38-27-360 exists, he may apply to the circuit court for an order directing the company to show cause by a designated date why a receiver should not be appointed for the company or why an order should not be entered authorizing the department to proceed with the delinquency proceedings of the company or to take any other appropriate steps authorized in this chapter. The application and order may include any other relief the nature of the case and the interests of the policyholders, creditors, stockholders, and members of the company and of the public may require. A copy of the application and the order to show cause must be served upon the company by registered or certified mail and constitutes legal process in lieu of any summons or process otherwise provided by law.  (d) In addition to other grounds for jurisdiction provided by the law of this State, a court of this State having jurisdiction of the subject matter in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this State has jurisdiction over a person served with process by registered or certified mail:  (1) if the person served is obligated to the insurer in any way as an incident to any agency or brokerage arrangement that may exist or has existed between the insurer and the agent or broker, in any action on or incident to the obligation;  (2) if the person served is a reinsurer who has at any time written a policy of reinsurance for an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; or  (3) if the person served is or has been an officer, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from such a relationship with the insurer.  (e) If the court on motion of any party finds that any action should as a matter of substantial justice be tried in a forum outside this State, the court may enter an appropriate order to stay further proceedings on the action in this State.  (f) All actions herein authorized shall be brought in the Court of Common Pleas for Richland County.  HISTORY: Former 1976 Code Section 38-27-60 [1962 Code Section 37-1306; 1967 (55) 273] recodified as Section 38-39-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1840 [En, 1982 Act No. 384, Section 4] recodified as Section 38-27-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 609.
 (a) The value of any security held by a secured creditor must be determined in one of the following ways, as the court may direct:  (1) by converting the same into money according to the terms of the agreement pursuant to which the security was delivered to the creditor; or  (2) by agreement, arbitration, compromise, or litigation between the creditor and the liquidator.  (b) The determination must be under the supervision and control of the court with due regard for the recommendation of the liquidator. The amount so determined must be credited upon the secured claim, and any deficiency is treated as an unsecured claim. If the claimant surrenders his security to the liquidator, the entire claim is allowed as if unsecured.  HISTORY: Former 1976 Code Section 38-5-2300 [1982 Act No. 384, Section 41] recodified as Section 38-27-600 by 1987 Act No. 155, Section 1.
 The priority of distribution of claims from the insurer's estate must be in accordance with the order in which each class of claims is set forth in this section. Every claim in each class must be paid in full or adequate funds retained for the payment before the members of the next class receive any payment. No subclasses may be established within any class. The order of distribution of claims is:  (1) Class 1. The costs and expenses of administration including, but not limited to:  (a) the actual and necessary costs of preserving or recovering the assets of the insurer;  (b) compensation for services rendered by the receiver in the amount of five percent of the total assets of the insurer coming into the possession of the receiver;  (c) any necessary filing fees;  (d) the fees and mileage payable to witnesses;  (e) compensation of the special deputies, attorneys, and other persons as appointed by the receiver for the efficient conduct of the receivership, rehabilitation, or liquidation;  (f) the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.  (2) Class 2. Claims under policies, including claims of federal, state, and local governments, for losses incurred, loss claims, including third party claims, and claims of a guaranty association or foreign guaranty association. Claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, must be treated as loss claims. That portion of a loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, must not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death, or as proceeds of life insurance or as gratuities. No payment by an employer to his employee may be treated as a gratuity.  (3) Class 3. Claims under nonassessable policies for unearned premium or other premium refunds.  (4) Class 4. Claims of the federal government not included in items (2) or (3).  (5) Class 5. Debts due to employees for services performed to the extent that they do not exceed one thousand dollars and represent payment for services performed within one year before the filing of the petition for liquidation. Officers and directors are not entitled to the benefit of this priority. This priority is in lieu of any other similar priority authorized by law as to wages or compensation of employees.  (6) Class 6. Claims of general creditors and claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies.  (7) Class 7. Claims of state and local governments, except those under item (2). Claims, including those of a state or local governmental body for a penalty or forfeiture, are allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs. The remainder of the claims are postponed to the class of claims under item (11).  (8) Class 8. Claims filed late or any other claims other than claims under items (9), (10), and (11) of this section.  (9) Class 9. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies except premium refund claims of the federal government which must be included in the class of claims under item (4).  (10) Class 10. Payments to members of domestic mutual insurance companies are limited in accordance with law.  (11) Class 11. The claims of shareholders or other owners.  HISTORY: Former 1976 Code Section 38-5-2310 [1982 Act No. 384, Section 42] recodified as Section 38-27-610 by 1987 Act No. 155, Section 1; 1988 Act No. 334, Section 7; 1991 Act No. 13, Section 24; 2000 Act No. 312, Section 6.
 (a) The liquidator shall review all claims duly filed in the liquidation and shall make any further investigation he considers necessary. He may compound, compromise, or in any other manner negotiate the amount for which claims will be recommended to the court except where the liquidator is required by law to accept claims as settled by any person or organization, including any guaranty association or foreign guaranty association. Unresolved disputes are determined under Section 38-27-580. As soon as practicable, he shall present to the court a report of the claims against the insurer with his recommendations. The report shall include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment value and the amounts owed.  (b) The court may approve, disapprove, or modify the report on claims by the liquidator. The reports not modified by the court within a period of sixty days following submission by the liquidator must be treated by the liquidator as allowed claims, subject thereafter to later modification or to rulings made by the court pursuant to Section 38-27-580. No claim under a policy of insurance may be allowed for an amount in excess of the applicable policy limits.  HISTORY: Former 1976 Code Section 38-5-2320 [1982 Act No. 384, Section 43] recodified as Section 38-27-620 by 1987 Act No. 155, Section 1.
 Under the direction of the court, the liquidator shall pay distributions in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and approved by the court.  HISTORY: Former 1976 Code Section 38-5-2330 [1982 Act No. 384, Section 44] recodified as Section 38-27-630 by 1987 Act No. 155, Section 1.
 (a) All unclaimed funds subject to distribution remaining in the liquidator's hands when he is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member, or other person who is unknown or cannot be found, must be deposited with the State Treasurer and must be paid without interest except in accordance with Section 38-27-610 to the person entitled thereto or his legal representative upon proof satisfactory to the State Treasurer of his right thereto. Unclaimed funds deposited with the State Treasurer in accordance with this section must be advertised and disposed of in accordance with the provisions of Section 27-19-220.  (b) All funds withheld under Section 38-27-560 and not distributed must, upon discharge of the liquidator, be deposited with the State Treasurer and paid by him in accordance with Section 38-27-610. Any sums remaining which under Section 38-27-610 would revert to the undistributed assets of the insurer must be transferred to the State Treasurer and become the property of the state under subsection (a) of this section unless the director or his designee in his discretion petitions the court to reopen the liquidation under Section 38-27-660.  HISTORY: Former 1976 Code Section 38-5-2340 [1982 Act No. 384, Section 45] recodified as Section 38-27-640 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 622.
 (a) When all assets justifying the expense of collection and distribution have been collected and distributed under this chapter the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders, including an order to transfer any remaining funds that are uneconomic to distribute, as may be considered appropriate.  (b) Any other person may apply to the court at any time for an order under subsection (a). If the application is denied, the applicant shall pay the costs and expenses of the liquidator in resisting the application, including a reasonable attorney's fee.  HISTORY: Former 1976 Code Section 38-5-2350 [1982 Act No. 384, Section 46] recodified as Section 38-27-650 by 1987 Act No. 155, Section 1.
 After the liquidation proceeding has been terminated and the liquidator discharged, the director or his designee or other interested party may at any time petition the circuit court to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it must so order.  HISTORY: Former 1976 Code Section 38-5-2360 [1982 Act No. 384, Section 47] recodified as Section 38-27-660 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 623.
 Whenever it appears to the director or his designee that the records of any insurer in process of liquidation or completely liquidated are no longer useful, he may recommend to the court, and the court shall direct, what records should be retained for future reference and what should be destroyed.  HISTORY: Former 1976 Code Section 38-5-2370 [1982 Act No. 384, Section 48] recodified as Section 38-27-670 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 624.
 The circuit court may, as it considers desirable, cause audits to be made of the books of the director or his designee relating to any receivership established under this chapter, and a report of each audit must be filed with the department and with the court. The books, records, and other documents of the receivership must be made available to the auditor at any time without notice. The expense of each audit is considered a cost of administration of the receivership.  HISTORY: Former 1976 Code Section 38-5-2380 [1982 Act No. 384, Section 49] recodified as Section 38-27-680 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 625.
 (A)(1) A receiver appointed in a proceeding under this chapter may at any time apply for, and a court of general jurisdiction may grant, restraining orders, preliminary and permanent injunctions, and other orders considered necessary and proper to prevent:  (a) the transaction of further business;  (b) the transfer of property;  (c) interference with the receiver or with a proceeding under this chapter;  (d) waste of the insurer's assets;  (e) dissipation and transfer of bank accounts;  (f) the institution or further prosecution of any actions or proceedings;  (g) the obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets, or its policyholders;  (h) the levying of execution against the insurer, its assets, or its policyholders;  (i) the making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer;  (j) the withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or  (k) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of any proceeding under this chapter.  (2) The receiver may apply to any court outside of the State for the relief described in this subsection.  (B) After the seventh day following the commencement of a delinquency proceeding involving an insurer-member domiciled in this State, the insurer-member's FHLB must not be stayed or prohibited from exercising its rights regarding collateral pledged by that insurer-member. The provisions of this subsection apply notwithstanding another provision of this chapter.  HISTORY: Former 1976 Code Section 38-27-70 [1962 Code Section 37-1307; 1967 (55) 273] recodified as Section 38-39-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1850 [En, 1982 Act No. 384, Section 5] recodified as Section 38-27-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 609; 2016 Act No. 190 (S.693), Section 3, eff May 26, 2016.  Effect of Amendment  2016 Act No. 190, Section 3, redesignated former (a) as (A)(1); redesignated former (a)(1) through (a)(11) as (a) through (k); redesignated former (b) as (a)(2); added (B); and made other nonsubstantive changes.
 (a) Any officer, manager, director, trustee, owner, employee, or agent of any insurer or any other person with authority over or in charge of any segment of the insurer's affairs must cooperate with the director or his designee in any proceeding under this chapter or any investigation preliminary to the proceeding. The term "person" as used in this section includes any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer. "To cooperate" includes, but is not limited to:  (1) To reply promptly in writing to any inquiry from the director or his designee requesting a reply.  (2) To make available to the director or his designee any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in his possession, custody, or control.  (b) No person may obstruct or interfere with the director or his designee in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto.  (c) This section may not be construed to abridge otherwise existing legal rights, including the right to resist a petition for liquidation or other delinquency proceedings, or other orders.  (d) Any person included within subsection (a) who fails to cooperate with the director or his designee, or any person who obstructs or interferes with the director or his designee in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto, or who violates any valid order the director or his designee issues under this chapter may:  (1) upon conviction, be sentenced to pay a fine not exceeding ten thousand dollars or to undergo imprisonment for a term of not more than one year, or both, or  (2) after a hearing, be subject to the imposition by the director or his designee of a civil penalty not to exceed ten thousand dollars and be subject further to the revocation or suspension of any insurance licenses issued by the director or his designee.  HISTORY: Former 1976 Code Section 38-27-80 [1962 Code Section 37-1308; 1967 (55) 273] recodified as Section 38-39-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1860 [1982 Act No. 384, Section 6] recodified as Section 38-27-80 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 609.
 In any proceeding under this chapter, the director and his designee(s) are responsible on their official bonds for the faithful performance of their duties. If the court considers it desirable for the protection of the assets, it may at any time require an additional bond from the director or his designee(s). These bonds must be paid for out of the assets of the insurer as a cost of administration.  HISTORY: Former 1976 Code Section 38-27-90 [1962 Code Section 37-1309; 1967 (55) 273; 1971 (57) 709, 937; 1980 Act No. 455; 1982 Act No. 378; 1983 Act No. 34; 1985 Act No. 37] recodified as Section 38-39-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1870 [1982 Act No. 384, Section 7] recodified as Section 38-27-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 609.
 (a) If a domiciliary liquidator has not been appointed, the director or his designee may apply to the circuit court by verified petition for an order directing him to act as conservator to conserve the property of an alien insurer not domiciled in this State or a foreign insurer on any one or more of the following grounds:  (1) Any of the grounds in Section 38-27-310.  (2) That any of its property has been sequestered by official action in its domiciliary state or in any other state.  (3) That enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent.  (4)(i) That its certificate of authority to do business in this State has been revoked or that none was ever issued; and  (ii) That there are residents of this State with outstanding claims or outstanding policies.  (b) When an order is sought under subsection (a) of this section, the court shall cause the insurer to be given reasonable notice and time to respond.  (c) The court may issue the order in whatever terms it considers appropriate. The filing or recording of the order with the clerk of court or the register of deeds of the county in which the principal business of the company is located or the county in which its principal office or place of business is located imparts the same notice which a deed, bill of sale, or other evidence of title duly filed or recorded with that office would have imparted.  (d) The conservator may at any time petition for, and the court may grant, an order under Section 38-27-920 to liquidate assets of a foreign or alien insurer under conservation or, if appropriate, for an order under Section 38-27-940, to be appointed ancillary receiver.  (e) The conservator may at any time petition the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make that finding and issue the order at any time upon motion of any interested party, but, if the motion is denied, all costs must be assessed against the interested party.  HISTORY: Former 1976 Code Section 38-5-2410 [1982 Act No. 384, Section 50] recodified as Section 38-27-910 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 626; 1997 Act No. 34, Section 1.
 (a) If no domiciliary receiver has been appointed, the director or his designee may apply to the circuit court by verified petition for an order directing him to liquidate the assets found in this State of a foreign insurer or an alien insurer not domiciled in this State, on any of the following grounds:  (1) any of the grounds in Section 38-27-310 or 38-27-360; or  (2) any of the grounds specified in items (2) through (4) of subsection (a) of Section 38-27-910.  (b) When an order is sought under subsection (a) of this section, the court shall cause the insurer to be given reasonable notice and time to respond.  (c) If it appears to the court that the best interests of creditors, policyholders, and the public require, the court may issue an order to liquidate in whatever terms it considers appropriate. The filing or recording of the order with the clerk of court or the register of deeds of the county in which the principal business of the company is located or the county in which its principal office or place of business is located imparts the same notice which a deed, bill of sale, or other evidence of title duly filed or recorded with that office would have imparted.  (d) If a domiciliary liquidator is appointed in a reciprocal state while a liquidation is proceeding under this section, the liquidator under this section must thereafter act as ancillary receiver under Section 38-27-940. If a domiciliary liquidator is appointed in a nonreciprocal state while a liquidation is proceeding under this section, the liquidator under this section may petition the court for permission to act as ancillary receiver under Section 38-27-940.  (e) On the same grounds as are specified in subsection (a) of this section, the director or his designee may petition any appropriate federal district court to be appointed receiver to liquidate that portion of the insurer's assets and business over which the court will exercise jurisdiction or any lesser part thereof that the director or his designee considers desirable for the protection of the policyholders and creditors in this State.  (f) may order the director or his designee, when he has liquidated the assets of a foreign or alien insurer under this section, to pay claims of residents of this State against the insurer under such rules as to the liquidation of insurers under this chapter as are otherwise compatible with the provisions of this section.  HISTORY: Former 1976 Code Section 38-5-2420 [1982 Act No. 384, Section 51] recodified as Section 38-27-920 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 627; 1997 Act No. 34, Section 1.
 (a) The domiciliary liquidator of an insurer domiciled in a reciprocal state is, except as to special deposits and security on secured claims under Section 38-27-940(c), vested by operation of law with the title to all of the assets, property, contracts and rights of action, agents' balances, and all of the books, accounts, and other records of the insurer located in this State. The date of vesting is the date of the filing of the petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state. Otherwise, the date of vesting is the date of entry of the order directing possession to be taken. The domiciliary liquidator has the immediate right to recover balances due from agents and to obtain possession of the books, accounts, and other records of the insurer located in this State. He also has the right to recover all other assets of the insurer located in this State, subject to Section 38-27-940.  (b) If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the director of this State or his designee is vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books, accounts, and other records of the insurer located in this State, at the same time that the domiciliary liquidator is vested with title in the domicile. The director of this State or his designee may petition for a conservation or liquidation order under Section 38-27-910 or 38-27-920, or for an ancillary receivership under Section 38-27-940 or, after approval by the circuit court, may transfer title to the domiciliary liquidator, as the interests of justice and the equitable distribution of the assets require.  (c) Claimants residing in this State may file claims with the liquidator or ancillary receiver, if any, in this State or with the domiciliary liquidator, if the domiciliary law permits. The claims must be filed by the last date fixed for the filing of claims in the domiciliary liquidation proceedings.  HISTORY: Former 1976 Code Section 38-5-2430 [1982 Act No. 384, Section 52] recodified as Section 38-27-930 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 628.
 (a) If a domiciliary liquidator has been appointed for an insurer not domiciled in this State, the director or his designee may file a petition with the circuit court requesting appointment as ancillary receiver in this State:  (1) If he finds that there are sufficient assets of the insurer located in this State to justify the appointment of an ancillary receiver.  (2) If the protection of creditors or policyholders in this State so requires.  (b) The court may issue an order appointing an ancillary receiver in whatever terms it considers appropriate. The filing or recording of the order with a register of deeds in this State imparts the same notice which a deed, bill of sale, or other evidence of title duly filed or recorded with that office would impart.  (c) When a domiciliary liquidator has been appointed in a reciprocal state, then the ancillary receiver appointed in this State may, whenever necessary, aid and assist the domiciliary liquidator in recovering assets of the insurer located in this State. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this State and shall pay the necessary expenses of the proceedings. He shall promptly transfer all remaining assets, books, accounts, and records to the domiciliary liquidator. Subject to this section, the ancillary receiver and his deputies have the same powers and are subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this State.  (d) When a domiciliary liquidator has been appointed in this State, ancillary receivers appointed in reciprocal states have, as to assets and books, accounts, and other records in their respective states, corresponding rights, duties, and powers to those provided in subsection (c) for ancillary receivers appointed in this State.  HISTORY: Former 1976 Code Section 38-5-2440 [1982 Act No. 384, Section 53] recodified as Section 38-27-940 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 629; 1997 Act No. 34, Section 1.
 The director or his designee in his sole discretion may institute proceedings under Sections 38-27-220 and 38-27-230 at the request of the commissioner or other appropriate insurance official of the domiciliary state of a foreign or an alien insurer having property located in this State.  HISTORY: Former 1976 Code Section 38-5-2450 [1982 Act No. 384, Section 54] recodified as Section 38-27-950 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 25; 1993 Act No. 181, Section 630.
 (a) In a liquidation proceeding begun in this State against an insurer domiciled in this State, claimants residing in foreign countries or in states not reciprocal states shall file claims in this State and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states or with the domiciliary liquidator. Claims must be filed by the last date fixed for the filing of claims in the domiciliary liquidation proceeding.  (b) Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this State as provided in this chapter or in ancillary proceedings, if any, in the reciprocal states. If notice of the claims and opportunity to appear and be heard are afforded the domiciliary liquidator of this State as provided in Section 38-27-970(b) with respect to ancillary proceedings, the final allowance of claims by the courts in ancillary proceedings in reciprocal states is conclusive as to amount and as to priority against special deposits or other security located in the ancillary states but is not conclusive with respect to priorities against general assets under Section 38-27-610.  HISTORY: Former 1976 Code Section 38-5-2460 [1982 Act No. 384, Section 55] recodified as Section 38-27-960 by 1987 Act No. 155, Section 1.
 (a) In a liquidation proceeding in a reciprocal state against an insurer domiciled in that state, claimants against the insurer who reside within this State may file claims either with the ancillary receiver, if any, in this State or with the domiciliary liquidator. Claims must be filed by the last dates fixed for the filing of claims in the domiciliary liquidation proceeding.  (b) Claims belonging to claimants residing in this State may be proved either in the domiciliary state under the law of that state or in ancillary proceedings, if any, in this State. If a claimant elects to prove his claim in this State, he shall file his claim with the liquidator in the manner provided in Sections 38-27-540 and 38-27-550. The ancillary receiver shall make his recommendation to the court as under Section 38-27-620. He shall also arrange a date for hearing if necessary under Section 38-27-580 and shall give notice to the liquidator in the domiciliary state, either by certified mail or by personal service, at least forty days prior to the date set for hearing. If the domiciliary liquidator, within thirty days after the giving of the notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of his intention to contest the claim, he is entitled to appear or to be represented in any proceeding in this State involving the adjudication of the claim.  (c) The final allowance of the claim by the courts of this State is conclusive as to the amount and as to priority against special deposits or other security located in this State.  HISTORY: Former 1976 Code Section 38-5-2470 [1982 Act No. 384, Section 56] recodified as Section 38-27-970 by 1987 Act No. 155, Section 1.
 During the pendency in this State or any other state of a liquidation proceeding, whether called by that name or not, no action or proceeding in the nature of an attachment, garnishment, or levy of execution may be commenced or maintained in this State against the delinquent insurer or its assets.  HISTORY: Former 1976 Code Section 38-5-2480 [1982 Act No. 384, Section 57] recodified as Section 38-27-980 by 1987 Act No. 155, Section 1.
 (a) In a liquidation proceeding in this State involving one or more reciprocal states, the order of distribution of the domiciliary state controls as to all claims of residents of this State and reciprocal states. All claims of residents of reciprocal states are given equal priority of payment from general assets regardless of where the assets are located.  (b) The owner of a secured claim against an insurer for which a liquidator has been appointed in this State or any other state may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security in accordance with Section 38-27-600, in which case the deficiency, if any, is treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors.  HISTORY: Former 1976 Code Section 38-5-2490 [1982 Act No. 384, Section 58] recodified as Section 38-27-990 by 1987 Act No. 155, Section 1.
 This chapter is known and may be cited as the "South Carolina Life and Accident and Health Insurance Guaranty Association Act".  HISTORY: Former 1976 Code Section 38-29-10 [1962 Code Section 37-1400; 1971 (57) 351; 1986 Act No. 426, Section 1] recodified as Section 38-21-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-10 [1962 Code Section 37-561; 1972 (57) 2776] recodified as Section 38-29-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, reenacted the section with no apparent changes.
 In addition to the duties and powers enumerated elsewhere in this chapter:  (1) The director or his designee:  (a) shall notify the board of directors of the existence of an impaired insurer no later than three days after a determination of impairment is made or he receives notice of impairment;  (b) shall, upon request of the board of directors, provide the association with a statement of the premiums written in this State and any other appropriate state for each member insurer;  (c) shall, when an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time. Notice to the impaired insurer constitutes notice to its shareholders, if any. The failure of the insurer to comply promptly with the demand does not excuse the association from the performance of its powers and duties under this chapter.  (2) The director or his designee may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this State of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the director or his designee may levy a forfeiture on a member insurer that fails to pay an assessment when due. The forfeiture may not exceed five percent of the unpaid assessment per month but may not be less than one hundred dollars a month.  (3) A final action of the board of directors or the association may be appealed to the director as provided by law by any member insurer if the appeal is taken within sixty days of receipt of notice of the final action being appealed. A final action or order of the director is subject to judicial review in a court of competent jurisdiction in accordance with the laws of this State.  (4) The liquidator, rehabilitator, or conservator of an impaired or insolvent insurer may notify all interested persons of the effect of this chapter.  HISTORY: Former 1976 Code Section 38-29-100 [1962 Code Section 37-1408.1; 1971 (57) 351] repealed by 1986 Act No. 426, Section 23; Former 1976 Code Section 38-17-100 [1962 Code Section 37-571; 1972 (57) 2776] recodified as Section 38-29-100 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 11; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 To aid in the detection and prevention of insurer impairments and insolvencies:  (1) It is the duty of the director:  (a) to notify the commissioners of all the other states and territories of the United States and the District of Columbia within thirty days following an action taken or the date the action occurs, when the director takes any of the following actions against a member insurer:  (i) revocation of license;  (ii) suspension of license; or  (iii) makes a formal order that the member insurer restrict its premium writing, obtain additional contributions to surplus, withdraw from the State, reinsure all or any part of its business, or increase capital, surplus, or any other account for the security of policy owners, contract owners, certificate holders, or creditors;  (b) to report to the board of directors when the director has taken any of the actions set forth in subitem (a) or has received a report from any other director indicating that any such action has been taken in another state. The report to the board of directors shall contain all significant details of the action taken or the report received from another commissioner;  (c) to report to the board of directors when the director has reasonable cause to believe from an examination, whether completed or in process, of any member insurer that the insurer may be an impaired or insolvent insurer;  (d) to furnish to the board of directors the National Association of Insurance Commissioners' (NAIC) Insurance Regulatory Information System (IRIS) ratios and listings of companies not included in the ratios developed by the NAIC, and the board may use the information contained therein in carrying out its duties and responsibilities under this section. The report and the information contained therein must be kept confidential by the board of directors until such time as made public by the director or other lawful authority.  (2) The director may seek the advice and recommendations of the board of directors concerning any matter affecting the duties and responsibilities of the director regarding the financial condition of member insurers, insurers, or health maintenance organizations seeking admission to transact business in this State.  (3) The board of directors may, upon majority vote, make reports and recommendations to the director upon any matter germane to the solvency, liquidation, rehabilitation, or conservation of a member insurer or germane to the solvency of any insurer or health maintenance organization seeking to do business in this State. These reports and recommendations may not be considered public documents.  (4) The board of directors may, upon majority vote, notify the director of any information indicating a member insurer may be an impaired or insolvent insurer.  (5) The board of directors may, upon majority vote, make recommendations to the director for the detection and prevention of member insurer insolvencies.  HISTORY: Former 1976 Code Section 38-29-110 [1962 Code Section 37-1409; 1971 (57) 351; 1986 Act No. 426, Section 7] recodified as Section 38-21-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-110 [1962 Code Section 37-572; 1972 (57) 2776] recodified as Section 38-29-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 The association may recommend the appointment of a person to serve as a special deputy to act for the director or his designee and under his supervision in the liquidation, rehabilitation, or conservation of a member insurer.  HISTORY: Former 1976 Code Section 38-29-120 [1962 Code Section 37-1410; 1971 (57) 351] recodified as Section 38-21-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-120 [1962 Code Section 37-573; 1972 (57) 2776] recodified as Section 38-29-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, reenacted the section with no apparent changes.
 (1) Nothing in this chapter may be construed to reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer operating under a plan with assessment liability.  (2) Records must be kept of all negotiations and meetings of the board of directors to discuss the activities of the association in carrying out its powers and duties under Section 38-29-70. Records of these meetings must be made public only upon the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer, upon the termination of the impairment or insolvency of the insurer, or upon the order of a court of competent jurisdiction. Nothing in this subsection limits the duty of the association to render a report of its activities under Section 38-29-140.  (3) For the purpose of carrying out its obligations under this chapter, the association is considered to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the association is entitled as subrogee pursuant to Section 38-29-70(12). All assets of the impaired or insolvent insurer attributable to covered policies must be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this chapter. Assets attributable to covered policies, as used in this subsection, are that proportion of the assets which the reserves that should have been established for those policies bear to the reserve that should have been established for all policies of insurance written by the impaired or insolvent insurer.  (4) As a creditor of the impaired or insolvent insurer as established in this section and consistent with Section 38-27-530, the association and other similar associations are entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under this chapter. If the liquidator has not, within one hundred twenty days of a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, then the association is entitled to make application to the receivership court for approval of its own proposal to disburse these assets.  (5)(a) Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the association, the shareholders, policy and contract owners, certificate holders, and enrollees of the impaired or insolvent insurer, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of the impaired or insolvent insurer. In this determination, consideration must be given to the welfare of the policy and contract owners, certificate holders, and enrollees of the continuing or successor insurer.  (b) No distribution to stockholders, if any, of an impaired or insolvent insurer may be made until and unless the total amount of assessments levied by the association with respect to the insurer plus interest has been fully recovered by the association.  (6) The recovery procedure shall provide that:  (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order has a right to recover on behalf of the insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation subject to the limitations of items (b), (c), and (d) of this subsection.  (b) No such distribution is recoverable if the insurer shows that when paid the distribution was lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.  (c) Any person who was an affiliate that controlled the insurer at the time the distributions were paid is liable up to the amount of distributions he received. Any person who was an affiliate that controlled the insurer at the time the distributions were declared is liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they are jointly and severally liable.  (d) The maximum amount recoverable under this section is the amount needed in excess of all other available assets of the impaired insurer to pay the contractual obligations of the impaired insurer.  (e) If any person liable under item (c) is insolvent, all its affiliates that controlled it at the time the dividend was paid are jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.  HISTORY: Former 1976 Code Section 38-29-130 [1962 Code Section 37-1411; 1971 (57) 351] recodified as Section 38-21-120 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-130 [1962 Code Section 37-574; 1972 (57) 2776] recodified as Section 38-29-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 The association is subject to examination and regulation by the department. The board of directors shall annually submit to the department, by May first, a financial report for the preceding calendar year in a form approved by the director or his designee and a report of its activities during the preceding calendar year.  HISTORY: Former 1976 Code Section 38-29-140 [1962 Code Section 37-1412; 1971 (57) 351; 1986 Act No. 426, Section 8] recodified as Section 38-21-130 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-140 [1962 Code Section 37-575; 1972 (57) 2776] recodified as Section 38-29-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, reenacted the section with no apparent changes.
 The association is exempt from payment of all fees and all state, county, and municipal taxes.  HISTORY: Former 1976 Code Section 38-29-150 [1962 Code Section 37-1413; 1971 (57) 351; 1986 Act No. 426, Section 9] recodified as Section 38-21-140 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-150 [1962 Code Section 37-576; 1972 (57) 2776] recodified as Section 38-29-150 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, reenacted the section with no apparent changes.
 (1) Unless a longer period has been allowed by the director or his designee, a member insurer, at its option, has the right to show a certificate of contribution as an asset in the form approved by the director or his designee pursuant to Section 38-29-80(8) at percentages of the original face amount approved by the director or his designee, for calendar years as follows:  (a) one hundred percent for the calendar year of issuance;  (b) eighty percent for the first calendar year after the year of issuance;  (c) sixty percent for the second calendar year after the year of issuance;  (d) forty percent for the third calendar year after the year of issuance;  (e) twenty percent for the fourth calendar year after the year of issuance; and  (f) zero percent for the fifth calendar year after the year of issuance and thereafter.  (2) The insurer may offset the amount written off by it in a calendar year under subsection (1) against its premium, or income, tax liability to this State accrued with respect to business transacted in that year.  (3) Any sums acquired by refund, pursuant to Section 38-29-80(6), from the association which have previously been written off by contributing insurers and offset against premium (or income) taxes as provided in subsection (2) of this section and are not then needed for purposes of this chapter must be paid by the association to the department and by him deposited with the State Treasurer for credit to the general fund of this State.  HISTORY: Former 1976 Code Section 38-29-160 derived from 1962 Code Section 37-1414; 1971 (57) 351 recodified as Section 38-21-160 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-160 [1962 Code Section 37-577; 1972 (57) 2776] recodified as Section 38-29-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, in (1), inserted the (a) to (f) designators, and made nonsubstantive changes.
 There is no liability on the part of, and no cause of action of any nature may arise against, any member insurer or its agents or employees, the association's agents or employees, members of the board of directors, or the director or his representatives for any action taken or omission by them in the authorized performance of their powers and duties under this chapter. This section does not relieve the association of any of its statutory obligations. The immunity extends to the participation in an organization of one or more state associations of similar purposes and to such organization, its agents, and employees.  HISTORY: Former 1976 Code Section 38-29-170 [1962 Code Section 37-1415; 1971 (57) 351; 1986 Act No. 426, Section 12] recodified as Section 38-21-180 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-170 [1962 Code Section 37-578; 1972 (57) 2776] recodified as Section 38-29-170 by 1987 Act No. 155, Section 1; 1988 Act No. 379, Section 3; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, in the first sentence, inserted "or omission" following "any action taken", in the second sentence, substituted "statutory obligations" for "liability", and added the third sentence.
 All proceedings in which the impaired or insolvent insurer is a party in any court in this State must be stayed one hundred eighty days from the date an order of liquidation, rehabilitation, or conservation is final to permit proper legal action by the association on any matters germane to its powers or duties. As to a judgment under any decision, order, verdict, or finding based on default the association may apply to have the judgment set aside by the same court that made the judgment and must be permitted to defend against the suit on the merits.  HISTORY: Former 1976 Code Section 38-29-180 [1962 Code Section 37-1416; 1971 (57) 351] recodified as Section 38-21-190 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-180 [1962 Code Section 37-579; 1972 (57) 2776] recodified as Section 38-29-180 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, in the first sentence, inserted "or insolvent" following "impaired" and substituted "one hundred eighty days" for "sixty days".
 For domestic insolvencies, the court shall fix a date, no less than four months from the date of the order, as the last day for the filing of claims, together with proper proofs thereof, with the association and shall prescribe the notice that must be given to insureds and claimants of the date. Prior to the date fixed the court may extend the time for the filing of claims.  HISTORY: Former 1976 Code Section 38-29-190 [1962 Code Section 37-1417; 1971 (57) 351; 1986 Act No. 426, Section 13] recodified as Section 38-21-200 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-185 [1977 Act No. 69 Section 4] recodified as Section 38-29-190 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, In the first sentence, substituted "For domestic insolvencies, the court shall fix a date, no less than" for "The court shall fix a date, not less than".
 As used in this chapter:  (1) "Account" means any of the three accounts created under Section 38-29-50.  (2) "Association" means the South Carolina Life and Accident and Health Insurance Guaranty Association created under Section 38-29-50.  (3) "Authorized assessment" or "authorized" when used in the context of assessments means the board of directors has passed a resolution whereby an assessment will be called immediately or in the future from member insurers for a specified amount. An assessment is authorized when the resolution is passed.  (4) "Benefit plan" means a specific employee, union, or association of natural persons benefit plan.  (5) "Called assessment" or "called" when used in the context of assessments means that notice has been issued by the association to the member insurers requiring that an authorized assessment be paid within the time frame set forth within the notice. An authorized assessment becomes a called assessment when notice is mailed by the association to member insurers.  (6) "Contractual obligation" means any obligation under covered policies, contracts, or certificates under a group policy or contract, or portion thereof for which coverage is provided pursuant to Section 38-29-40.  (7) "Covered policy" or "covered contract" means any policy or contract or portion of a policy or contract within the scope of Section 38-29-40.  (8) "Director" means the Director of the Department of Insurance.  (9) "Extra-contractual claims" includes claims relating to bad faith in the payment of claims, punitive or exemplary damages, or attorney's fees and costs.  (10) "Health benefit plan" means any hospital or medical expense policy or certificate, or health maintenance organization subscriber contract or any other similar health contract. "Health benefit plan" does not include:  (a) accident only insurance;  (b) credit insurance;  (c) dental only insurance;  (d) vision only insurance;  (e) Medicare supplement insurance;  (f) benefits for long-term care, home health care, community-based care, or any combination thereof;  (g) disability income insurance;  (h) coverage for on-site medical clinics; or  (i) specified disease, hospital confinement indemnity, or limited benefit health insurance if the types of coverage do not provide coordination of benefits and are provided under separate policies or certificates.  (11) "Impaired insurer" means a member insurer which, after the effective date of this chapter, is not an insolvent insurer but has been placed under an order of rehabilitation or conservation by a court of competent jurisdiction.  (12) "Insolvent insurer" means a member insurer which, after the effective date of this chapter, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.  (13) "Member insurer" means an insurer or health maintenance organization authorized to transact in this State any kind of insurance to which this chapter applies under Section 38-29-40. This includes an insurer or health maintenance organization whose authority to transact business in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn but does not include:  (a) a hospital or medical service organization, whether profit or nonprofit;  (b) a fraternal benefit society;  (c) a mandatory state pooling plan;  (d) a mutual assessment company or other person that operates on an assessment basis;  (e) an insurance exchange;  (f) an organization that has a certificate or license limited to the issuance of charitable gift annuities under Section 38-5-20; or  (g) an entity similar to any of the above.  (14) "Moody's Corporate Bond Yield Average" means the Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto.  (15) "Owner" of a policy or contract and "policy holder", "policy owner", and "contract owner" means the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the member insurer. The terms owner, contract owner, policyholder and policy owner do not include persons with a mere beneficial interest in a policy or contract.  (16) "Person" means an individual, corporation, limited liability company, partnership, association, governmental body, or entity or voluntary organization.  (17) "Premiums" means amounts or considerations received on covered policies or contracts less returned premiums, considerations and deposits and less dividends and experience credits. "Premiums" does not include amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided pursuant to Section 38-29-40 except that assessable premiums may not be reduced on account of the provisions of Section 38-29-40 relating to interest limitations and limitations with respect to one individual, one participant, and one policy or contract owner. "Premiums" does not include premiums on an unallocated annuity contract or, with respect to multiple nongroup policies of life insurance owned by one owner, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.  (18) "Principal place of business" means the state in which a natural person who establishes policies or contracts for the direction, control, and coordination of the operations of the entity as a whole primarily exercises that function, determined by the association after consideration of the state in which the:  (a) primary executive and administrative headquarters of the entity is located;  (b) principal office of the chief executive officer of the entity is located;  (c) board of directors conducts the majority of its meetings;  (d) executive or management committee of the board of directors of the entity conducts the majority of its meetings;  (e) management of the overall operations of the entity is directed; and  (f) holding company or controlling affiliate has its principal place of business in the case of a benefit plan by affiliated companies comprising a consolidated corporation.  However, in the case of a plan sponsor, if more than fifty percent of the participants in the benefit plan are employed in a single state, that state is deemed to be the principal place of business of the plan sponsor.  The principal place of business of a plan sponsor of a benefit plan is deemed to be the principal place of business of the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan that, in lieu of a specific or clear designation of a principal place of business, shall be deemed to be the principal place of business of the employer or employee organization that has the largest investment in the benefit plan in question.  (19) "Receivership court" means the court in the insolvent or impaired insurer's state with jurisdiction over the conservation, rehabilitation, or liquidation of the member insurer.  (20) "Resident" means a person who resides in this State at the time the impairment as determined by a court of appropriate jurisdiction and to whom contractual obligations are owed. A person may be a resident of only one state, which in the case of a person other than a natural person shall be its principal place of business. Citizens of the United States that are either residents of foreign countries, or residents of United States' possessions, territories, or protectorates that do not have an association similar to the association created by this chapter, are deemed residents of the state of domicile of the member insurer that issued the policies or contracts.  (21) "State" means a state, the District of Columbia, Puerto Rico, and a United States' possession, territory, or protectorate.  (22) "Structured settlement annuity" means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant.  (23) "Supplemental contract" means a written agreement entered into for the distribution of proceeds under a life, health, or annuity policy or contract.  (24) "Unallocated annuity contract" means an annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under the contract or certificate.  HISTORY: Former 1976 Code Section 38-29-20 [1962 Code Section 37-1401; 1971 (57) 351] recodified as Section 38-21-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-20 [1962 Code Section 37-565; 1972 (57) 2776; 1977 Act No. 69 Section 1] recodified as Section 38-29-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 (1) No person, including a member insurer, agent, or affiliate of a member insurer shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or social media, or in any other way, an advertisement, announcement, or statement, written or oral, which uses the existence of the South Carolina Life and Accident and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this chapter. However, this section shall not apply to the South Carolina Life and Accident and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.  (2) Within one hundred eighty days of July 1, 2020, the association shall prepare a summary document describing the general purposes and current limitations of the chapter and complying with this section. This document must be submitted to the director for approval. At the expiration of the sixtieth day after the date on which the director approves the document, a member insurer may not deliver a policy or contract to a policy owner, contract owner, certificate holder, or enrollee unless the summary document is delivered to the policy owner, contract owner, certificate holder, or enrollee at the time of delivery of the policy or contract. The document must be made available upon request by a policy owner, contract owner, certificate holder, or enrollee. The distribution, delivery, or contents or interpretation of this document does not guarantee that either the policy or the contract or the policy owner, contract owner, certificate holder, or enrollee is covered in the event of the impairment or insolvency of a member insurer. The description document must be revised by the association as amendments to the chapter may require. Failure to receive this document does not give the policy owner, contract owner, certificate holder, enrollee, or insured any greater rights than those stated in this chapter.  (3) The document shall contain a clear and conspicuous disclaimer on its face. The director shall establish the form and content of the disclaimer. The disclaimer shall:  (a) state the name and address of the South Carolina Life and Accident and Health Insurance Guaranty Association and insurance department;  (b) prominently warn the policy owner, contract owner, certificate holder, or enrollee that the South Carolina Life and Accident and Health Insurance Guaranty Association may not cover the policy or contract or, if coverage is available, it will be subject to substantial limitations and exclusions and conditioned on continued residence in this State;  (c) state the types of policies or contracts for which guaranty funds will provide coverage;  (d) state the member insurer and its agents are prohibited by law from using the existence of the South Carolina Life and Accident and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or health maintenance organization coverage;  (e) state that the policy owner, contract owner, certificate holder, or enrollee should not rely on coverage under the South Carolina Life and Accident and Health Insurance Guaranty Association when selecting an insurer or health maintenance organization;  (f) explain rights available and procedures for filing a complaint to allege a violation of any provisions of this chapter; and  (g) provide other information as directed by the director including, but not limited to, sources for information about the financial condition of insurers provided that the information is not proprietary and is subject to disclosure under that state's public records law.  (4) A member insurer shall retain evidence of compliance for so long as the policy or contract for which the notice is given remains in effect.  HISTORY: 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  Prior Laws: Former Section 38-29-200 was titled Construction, and had the following history: Former 1976 Code Section 38-29-200 [1962 Code Section 37-1418; 1971 (57) 351] recodified as Section 38-21-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-190 [1962 Code Section 37-564; 1972 (57) 2776] recodified as Section 38-29-200 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631. See now, Code 1976 Section 38-29-210.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."
 This chapter must be liberally construed to effect the purpose under Section 38-29-30 which constitutes an aid and guide to interpretation.  HISTORY: Former 1976 Code Section 38-29-200 [1962 Code Section 37-1418; 1971 (57) 351] recodified as Section 38-21-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-190 [1962 Code Section 37-564; 1972 (57) 2776] recodified as Section 38-29-200 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631. Formerly Code 1976 Section 38-29-200, renumbered by 2020 Act No. 121, Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  
 (1) The purpose of this chapter is to protect, subject to certain limitations, the persons specified in Section 38-29-40(1) against failure in the performance of contractual obligations of certain life, health, and annuity policies, plans, or contracts due to the impairment or insolvency of the member insurer issuing these policies, plans, or contracts.  (2) To provide this protection, an association of member insurers is created to pay benefits and continue coverage in the manner provided for in this chapter and the member insurers are subject to an assessment to provide funds to carry out this purpose.  HISTORY: Former 1976 Code Section 38-29-30 [1962 Code Section 37-1402; 1971 (57) 351; 1986 Act No. 426, Section 2] recodified as Section 38-21-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-30 [1962 Code Section 37-562; 1972 (57) 2776] recodified as Section 38-29-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 (1)(a) The provisions of this chapter shall provide coverage to a person, regardless of where they reside, excluding nonresident certificate holders under group policies or contracts, who is the beneficiary, assignee, or payee, including health care providers rendering services covered under health insurance policies or certificates, of the persons covered under this section.  (b) The provisions of this chapter shall provide coverage to a person who is the owner of, certificate holder, or enrollee under a policy or contract, other than a structured settlement annuity, and is:  (i) a resident; or  (ii) not a resident, but under all of the following conditions:  (A) the member insurer that issued the policies or contracts is domiciled in this State;  (B) the states in which the person resides have associations similar to the association created by this chapter;  (C) the person is not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in the state at the time specified in the state's guaranty association law.  (c) The provisions of this chapter shall provide coverage to a person who is a payee or a beneficiary if the payee is deceased under a structured settlement annuity if the payee:  (i) is a resident, regardless of where the contract owner resides;  (ii) is not a resident but the contract owner is a resident; or  (iii) is not a resident but:  (A) the insurer that issued the structured settlement annuity is domiciled in this State; and  (B) the state in which the contract owner resides has an association similar to the association created pursuant to this chapter but the payee and contract owner are not eligible for coverage by the association of the state in which they reside.  (d) The provisions of this chapter shall not provide coverage to a person who:  (i) is a payee of a contract owner resident of this State, if the payee is afforded any coverage by the association of another state; or  (ii) acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. Section 55891(c)(3)(A), regardless of when the transaction occurred.  (e) This chapter is intended to provide coverage to a person who is a resident of this State and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this chapter is provided coverage under the laws of any other state, the person may not be provided coverage under this chapter. In determining the application of the provisions of this subsection in situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary, or assignee, this chapter may be construed in conjunction with other state laws to result in coverage by only one association.  (2)(a) This chapter shall provide coverage for policies or contracts of direct, nongroup life insurance, health insurance including health maintenance organization subscriber contracts and certificates, or annuities, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, allocated funding agreements, structured settlement annuities, and any immediate or deferred annuity contracts.  (b) Except as otherwise provided, this chapter does not provide coverage for:  (i) a portion of a policy or contract or part thereof not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner;  (ii) a policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract;  (iii) a portion of a policy or contract, other than a portion, including a rider, that provides long-term care or any other health insurance benefits, to the extent the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value:  (A) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and  (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody's Corporate Bond Yield Average as most recently available;  (iv) any policy or contract issued by assessment mutuals, fraternals, and nonprofit hospital and medical service plans;  (v) a portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, health, or annuity benefits to its employees, members, or others, to the extent that the plan or program is self-funded or uninsured including, but not limited to, benefits payable by an employer, association, or other person under:  (A) a multiple employer welfare arrangement as defined in 29 U.S.C. Section 1002(40);  (B) a minimum premium group insurance plan;  (C) a stop-loss group insurance plan; or  (D) an administrative services-only contract;  (vi) a portion of a policy or contract to the extent that it provides for:  (A) dividends or experience rating credits;  (B) voting rights; or  (C) payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract;  (vii) a portion of a policy or contract to the extent that the assessments required by Section 38-29-80 with respect to the policy or contract are preempted by federal or state law;  (viii) an obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner, or policy owner, including without limitation:  (A) claims based on marketing materials;  (B) claims based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements;  (C) misrepresentations of or regarding policy or contract benefits;  (D) extra-contractual claims; or  (E) a claim for penalties or consequential or incidental damages;  (ix) a contractual agreement that establishes the member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer;  (x) an unallocated annuity contract;  (xi) a portion of a policy or contract to the extent it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier. If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture;  (xii) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to 42 U.S.C. Chapter 7, Subchapter XVIII, Part C or Part D; 42 U.S.C. Chapter 7, Subchapter XIX; or 42 U.S.C. Chapter 7; or any regulations issued pursuant thereto; or  (xiii) structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a structured settlement factoring transaction as defined in 26 U.S.C. Section 5891(c)(3)(A), regardless of when the transaction occurred before or after such section became effective.  (c) The exclusion from coverage referenced in subitem (iii) does not apply to any portion of a policy or contract, including a rider that provides long-term care or any other health insurance benefits.  (3) The benefits that the association may become obligated to cover may not exceed the lesser of:  (a) the contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or  (b)(i) with respect to one life, regardless of the number of policies or contracts:  (A) $300,000 in life insurance death benefits, but not more than $300,000 in net cash surrender and net cash withdrawal values for life insurance;  (B) for health insurance benefits:  (1) $300,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values;  (2) $300,000 for disability income insurance and $300,000 for long-term care insurance;  (3) $500,000 for health benefit plans;  (C) $300,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values;  (ii) with respect to each payee of a structured settlement annuity or beneficiary if the payee is deceased, $300,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any;  (iii) the association is not obligated to cover more than an aggregate of $300,000 in benefits with respect to any one life except with respect to benefits for health benefit plans, in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual or with respect to one owner of multiple nongroup policies of life insurance, whether the policy or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner;  (iv) the limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association's obligations may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights;  (v) for purposes of this chapter, benefits provided by a long-term care rider to a life insurance policy or annuity contract are considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.  (4) In performing its obligations to provide coverage, the association may not be required to guarantee, assume, reinsure, reissue, or perform, or cause to be guaranteed, assumed, reinsured, or reissued, or performed, the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that does not materially affect the economic values or economic benefits of the covered policy or contract.  HISTORY: Former 1976 Code Section 38-29-40 [1962 Code Section 37-1403; 1971 (57) 351] recodified as Section 38-21-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-40 [1962 Code Section 37-563; 1972 (57) 2776] recodified as Section 38-29-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2008 Act No. 348, Section 11, eff June 16, 2008; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 (1) There is created a nonprofit legal entity to be known as the South Carolina Life and Accident and Health Insurance Guaranty Association. All member insurers are and must remain members of the association as a condition of their authority to transact insurance in this State. The association shall perform its functions under the plan of operation established and approved under Section 38-29-90 and shall exercise its powers through a board of directors established under Section 38-29-60. For purposes of administration and assessment, the association shall maintain three accounts:  (a) the accident and health insurance account;  (b) the life insurance account; and  (c) the annuity account.  (2) The association is under the immediate supervision of the department and is subject to the applicable insurance laws of this State.  HISTORY: Former 1976 Code Section 38-29-50 [1962 Code Section 37-1404; 1971 (57) 351; 1986 Act No. 426, Section 3] recodified as Section 38-21-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-50 [1962 Code Section 37-566; 1972 (57) 2776] recodified as Section 38-29-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, reenacted the section with no apparent changes.
 (1) The board of directors of the association shall consist of not less than five nor more than eleven members serving terms as established in the plan of operation. Member insurers shall select the members of the board subject to the director's approval. Any vacancies on the board must be filled for the remaining period of the term by a person elected by a majority vote of the remaining board members and subject to approval by the director.  (2) In approving selections or in appointing members to the board, the director shall consider, among other things, whether all member insurers are fairly represented.  (3) Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors, but members of the board may not otherwise be compensated by the association for their services.  HISTORY: Former 1976 Code Section 38-29-60 [1962 Code Section 37-1405; 1971 (57) 351; 1986 Act No. 426, Section 4] recodified as Section 38-21-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-60 [1962 Code Section 37-567; 1972 (57) 2776] recodified as Section 38-29-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, in (1), in the first sentence, substituted "eleven members" for "nine members", and in the third sentence, substituted "by a person elected by a majority vote of the remaining board members and subject to approval by the director" for "in the manner described in the plan of operation".
 In addition to the powers and duties enumerated in other sections of this chapter:  (1) If a member insurer is an impaired insurer, the association may, in its discretion, and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer and that are approved by the director:  (a) guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the covered policies or contracts of the impaired insurer; and  (b) provide such monies, pledges, loans, notes, guarantees, or other means as are proper and assure payment of the impaired insurer's pending contractual obligations.  (2) If a member insurer is an insolvent insurer, the association shall, in its discretion, either:  (a)(i)(A) guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; or  (B) assure payment of the contractual obligations of the insolvent insurer; and  (ii) provide monies, pledges, loans, notes, guarantees, or other means reasonably necessary to discharge the association's duties; or  (b) provide benefits and coverages in accordance with the following provisions:  (i) with respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer, for claims incurred:  (A) with respect to group policies and contracts, no later than the earlier of the next renewal date under those policies or contracts or forty-five days, but in no event less than thirty days, after the date on which the association becomes obligated with respect to the policies and contracts;  (B) with respect to nongroup policies, contracts, and annuities no later than the earlier of the next renewal date, if applicable, under the policies or contracts or one year, but in no event less than thirty days, from the date on which the association becomes obligated with respect to the policies or contracts;  (ii) make diligent efforts to provide all known insureds, enrollees, or annuitants for nongroup policies and contracts, or group policy or contract owners with respect to group policies and contracts, thirty days' notice of the termination of the benefits provided;  (iii) with respect to nongroup policies and contracts covered by the association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of this section, if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class;  (iv)(A) in providing the substitute coverage, the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates;  (B) alternative or reissued policies or contracts must be offered without requiring evidence of insurability and may not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract;  (C) the association may reinsure any alternative or reissued policy or contract;  (v)(A) alternative policies or contracts adopted by the association are subject to the approval of the director. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency;  (B) alternative policies or contracts must contain at least the minimum statutory provisions required in this State and provide benefits that shall not be unreasonable in relation to the premium charged. The association must set the premium in accordance with a table of rates that it adopts. The premium shall reflect the amount of insurance to be provided and the age and class of risk of each insured, but may not reflect any changes in the health of the insured after the original policy or contract was last underwritten;  (C) any alternative policy or contract issued by the association shall provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association;  (vi) if the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium must be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk;  (vii) the association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract shall cease on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the association;  (viii) when proceeding with respect to a policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with Section 38-29-40.  (3) Nonpayment of premiums within thirty-one days after the date required under the terms of any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage shall terminate the association's obligations under the policy, contract, or coverage under this chapter with respect to the policy, contract, or coverage, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with the provisions of this chapter.  (4) Premiums due for coverage after entry of an order of liquidation of an insolvent insurer shall belong to and be payable at the direction of the association. If the liquidator of an insolvent insurer requests, the association must provide a report to the liquidator regarding such premium collected by the association. The association is liable for unearned premiums due to policy or contract owners arising after the entry of the order.  (5) The protection provided by this chapter does not apply where any guaranty protection is provided to residents of this State by the laws of the domiciliary state or jurisdiction of the impaired or insolvent insurer other than this State.  (6) In carrying out its duties, the association may, subject to approval by a court in this State, impose:  (a) permanent policy or contract liens in connection with a guarantee, assumption or reinsurance agreement, if the association finds that the amounts which can be assessed under this chapter are less than the amounts needed to assure full and prompt performance of the association's duties, or that the economic or financial conditions as they affect member insurers are sufficiently averse to render the imposition of such permanent policy or contract liens, to be in the public interest;  (b) temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer, the association may defer the payment of cash values, policy loans, or other rights by the association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.  (7) The association has no liability for any covered policy of a foreign or alien insurer whose domiciliary jurisdiction or state of entry provides by statute or regulation for residents of this State protection substantially similar to that provided by this chapter for residents of other states. In addition, the association has no liability under this chapter for covered policies of a domestic insurer for residents of another state unless the other state has a guaranty association that provides protection to South Carolina residents substantially similar to that provided by this chapter for residents of other states.  (8) A deposit in this State held pursuant to Sections 38-9-80 and 38-9-90 or otherwise required by the director for the benefit of South Carolina creditors, including policy or contract owners, must be released to the domiciliary receiver upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer in accordance with Section 38-9-150. The association is entitled to a portion of the deposit in an amount equal to the aggregate of policy or contract owners' claims for which the association has provided statutory benefits on behalf of the insurer and associated administrative expenses. The amount must be promptly paid to the association provided such payment does not prejudice the rights of a South Carolina policyholder or creditor of the insurer that is the subject of the liquidation or rehabilitation proceedings. Any amount so paid to the association and retained by it not used in fulfilling the association's obligations must be treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements. The director, the association, and other necessary parties are authorized to enter into agreements to effectuate the intent of this section.  (9) If the association fails to act within a reasonable period of time with respect to an insolvent insurer, the director shall have the powers and duties of the association under this chapter with respect to the insolvent insurer.  (10) The association may render assistance and advice to the director, upon the director's request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer.  (11) The association shall have standing to appear or intervene before a court or agency in this State with jurisdiction over an impaired or insolvent insurer concerning that which the association is or may become obligated to cover under this chapter or with jurisdiction over any person or property against that which the association may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the association including, but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the covered policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The association also shall have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise.  (12)(a) A person receiving benefits under this chapter is deemed to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from or otherwise relating to, the covered policy or contract to the association to the extent of the benefits received because of this chapter, whether the benefits are payments of or on account of contractual obligations continuation of coverage or provision of substitute or alternative policies, contracts, or coverages. The association may require an assignment to it of such rights and cause of action by any enrollee, payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any rights or benefits conferred by this chapter upon that person.  (b) The subrogation rights of the association under this subsection shall have the same priority against the assets as that possessed by the person entitled to receive benefits under this chapter.  (c) The association has all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contracts.  (d) If the preceding provisions are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations must be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts, or portion thereof, covered by the association.  (e) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights to, the person must pay to the association the portion of the recovery attributable to the policies or contracts covered by the association.  (13) In addition to the rights and powers elsewhere in this chapter, the association may:  (a) enter into such contracts as are necessary or proper to carry out the provisions and purposes of this chapter;  (b) sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments under Section 38-29-80 and to settle claims or potential claims against it;  (c) borrow money to effect the purposes of this chapter. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic member insurers and may be carried as admitted assets;  (d) employ or retain such persons necessary or appropriate to handle the financial transactions of the association, and to perform such other functions as become necessary or proper under this chapter;  (e) take such legal action as may be necessary or appropriate to avoid or recover payment of improper claims;  (f) exercise, for the purposes of this chapter and to the extent approved by the director, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the association issue policies or contracts other than those issued to perform its obligations under this chapter;  (g) organize itself as a corporation or in other legal form permitted by the laws of the State;  (h) request information from a person seeking coverage from the association in order to aid the association in determining its obligations under this chapter with respect to the person, and the person shall promptly comply with the request;  (i) unless prohibited by law, in accordance with the terms and conditions of the policy or contract, file for actuarially justified rates or premium increases for any policy or contract for which it provides coverage under this chapter; and  (j) take other necessary or appropriate action to discharge its duties and obligations under this chapter or to exercise its powers under this chapter.  (14) The association may join an organization of one or more other state associations of similar purposes to further the purposes and administer the powers and duties of the association.  (15)(a)(i) At any time within one hundred eighty days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the association, in each case under any one or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any such assumption shall be effective as of the date of the order of liquidation. The election shall be effected by the association or the National Organization of Life and Health Insurance Guaranty Association (NOLHGA) on its behalf sending written notice, return receipt requested, to the affected reinsurers.  (ii) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer must make available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether such contracts should be assumed, and notices of any defaults under the reinsurance contacts or any known event or condition which with the passage of time could become a default under the reinsurance contracts.  (iii) The following applies to reinsurance contracts assumed by the association:  (A) The association is responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and is responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case which relate to policies, contracts, or annuities covered, in whole or in part, by the association. The association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and must provide notice and an accounting of these charges to the liquidator.  (B) The association is entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the association, provided that, upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contract, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of:  (1) the amount received by the association; and  (2) the excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contract, or annuity less the retention of the insurer applicable to the loss or event.  (C) Within thirty days following the association's election, the association and each reinsurer under contracts assumed by the association must calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the association, which calculation shall give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five days of the completion of the aforementioned calculation. Any disputes over the amounts due to either the association or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due to the association, the receiver must remit the same to the association as promptly as practicable.  (D) If the association or receiver on the association's behalf, within sixty days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the association, the reinsurer is not entitled to terminate the reinsurance contracts for failure to pay premiums insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the association, and is not entitled to set-off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association, against amounts due the association.  (b) During the period from the date of the order of liquidation until the election date or until one hundred eighty days after the date of the order of liquidation if the election date does not occur:  (i)(A) the association or the reinsurer does not have any rights or obligations under reinsurance contracts that the association has the right to assume whether for periods prior to or after the date of the order of liquidation; and  (B) the reinsurer, the receiver, and the association shall, to the extent practicable, provide each other data and records reasonably requested;  (ii) provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations must be governed pursuant to this section.  (c) If the association does not elect to assume a reinsurance contract by the election date, the association has no rights or obligations, in each case for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.  (d) When policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, reinsurance on the policies, contracts, or annuities also may be transferred by the association, in the case of contracts assumed, subject to the following:  (i) unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance, contracts, or annuities in addition to those transferred;  (ii) the obligations described in this section no longer apply with respect to matters arising after the effective date of the transfer; and  (iii) notice must be given in writing, return receipt requested, by the transferring party to the affected reinsurer no less than thirty days prior to the effective date of the transfer.  (e) The provisions of this section supersede the provisions of any state law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds, on account of losses or events that occur in periods after the date of the order of liquidation, to the receiver of the insolvent insurer or any other person. The receiver remains entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable set-off provisions.  (f) Except as otherwise provided in this section, nothing in this section alters or modifies the terms and conditions of any reinsurance contract. Nothing in this section abrogates or limits any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section gives a policyholder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section limits or affects the association's rights as a creditor of the estate against the assets of the estate. Nothing in this section applies to reinsurance agreements covering property or casualty risks.  (16) The board of directors of the association shall have discretion and may exercise reasonable business judgment to determine the means by which the association is to provide the benefits of this chapter in an economical and efficient manner.  (17) Where the association has arranged or offered to provide the benefits of this chapter to a covered person under a plan or arrangement that fulfills the association's obligations under this chapter, the person is not entitled to benefits from the association in addition to or other than those provided under the plan or arrangement.  (18) Venue in a suit against the association arising under the chapter is in Richland County. The association may not be required to give an appeal bond in an appeal that relates to a cause of action arising under this chapter.  (19) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts, the association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:  (a) in lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for a fixed interest rate, a payment of dividends with minimum guarantees, or a different method for calculating interest or changes in value;  (b) there is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and  (c) the alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms.  HISTORY: Former 1976 Code Section 38-29-70 [1962 Code Section 37-1406; 1971 (57) 351; 1986 Act No. 426, Section 5] recodified as Section 38-21-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-70 [1962 Code Section 37-568; 1972 (57) 2776; 1977 Act No. 69 Section 2] recodified as Section 38-29-70 by 1987 Act No. 155, Section 1; 1988 Act No. 326, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 (1) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account, at times and for amounts as the board finds necessary. Payment is due thirty days after written notice to the member insurers and shall accrue interest as set forth in the plan of operation.  (2) There are two classes of assessments, as follows:  (a) Class A assessments are made for the purpose of meeting administrative costs and other general expenses not related to a particular impaired insurer.  (b) Class B assessments are made to the extent necessary to carry out the powers and duties of the association under Section 38-29-70 with regard to an insolvent or impaired insurer.  (3)(a) The amount of any Class A assessment for each account must be determined by the board and may be authorized and called on a pro rata or non pro rata basis. If called on a pro rata basis, the board may provide that the assessment must be credited against future Class B assessments.  (b) The amount of a Class B assessment, except for assessments related to long-term care insurance, must be allocated for assessment purposes between the accounts pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard deemed by the board in its sole discretion as being fair and reasonable under the circumstances.  (c) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer must be allocated according to a methodology included in the plan of operation and approved by the director. The methodology must provide for fifty percent of the assessment to be allocated to accident and health member insurers and fifty percent to be allocated to life and annuity member insurers.  (d) Class B assessments against member insurers for each account must be in proportion to the premiums received on business in this State by each assessed member insurer on policies or contracts covered by each account for the three most recent calendar years for which information is available preceding the year in which the member insurer became insolvent. In the case of an assessment of an impaired insurer, the assessment must be in proportion to the premiums received on business in this State for those calendar years by all assessed member insurers.  (e) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer may not be authorized or called until necessary to implement the purposes of this chapter. Classification and computation of assessments under this subsection must be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible. The association shall notify each member insurer of its anticipated pro rata share of an authorized assessment not yet called within one hundred eighty days after the assessment is authorized.  (4) The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated or deferred, in whole or in part, the amount by which the assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this section. Once the conditions that caused a deferral have been removed or rectified, the member insurer must pay all assessments that were deferred pursuant to a repayment plan approved by the association.  (5)(a)(i) The total of all assessments authorized by the association with respect to a member insurer for each account shall not in one calendar year exceed four percent of that member insurer's average annual premiums received in this State on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.  (ii) If two or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation must be equal and limited to the higher of the three-year average annual premiums for the applicable account as calculated pursuant to this section.  (iii) If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds must be assessed as soon as permitted by this chapter.  (b) The board may provide in the plan of operation a method of allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims.  (c) If the maximum assessment for the life or annuity account in one year does not provide an amount sufficient to carry out the responsibilities of the association, then the board shall assess the other accounts for the necessary additional amount, subject to the maximum provided in this section.  (6) The board may, by an equitable method established in the plan of operation, refund to member insurers in proportion to the contribution of each member insurer to that account, the amount by which the assets of the account exceed the amount the board finds is necessary to carry out during the coming year the obligations of the association with regard to that account, including assets accruing from assignment, subrogation, net realized gains, and income from investments. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the association and for future claims.  (7) It is proper for any member insurer, in determining its premium rates and policy owner dividends as to any kind of insurance or health maintenance organization business within the scope of this chapter, to consider the amount reasonably necessary to meet its assessment obligations under this chapter.  (8) The association must issue to each member insurer paying an assessment under this chapter, other than a Class A assessment, a certificate of contribution, in a form prescribed by the director, for the amount of the assessments so paid. All outstanding certificates must be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the member insurer in its financial statement as an asset in the form and for the amount and for a period of five years.  (9)(a) A member insurer that wishes to protest all or part of an assessment shall pay when due the full amount of the assessment as set forth in the notice provided by the association. The payment must be available to meet association obligations during the pendency of the protest or any subsequent appeal. Payment shall be accompanied by a statement in writing that the payment is made under protest and setting forth a brief statement of the grounds for the protest.  (b) Within sixty days following the payment of an assessment under protest by a member insurer, the association shall notify the member insurer in writing of its determination with respect to the protest unless the association notifies the member insurer that additional time is required to resolve the issues raised by the protest.  (c) Within thirty days after a final decision has been made, the association shall notify the protesting member insurer in writing of that final decision. Within sixty days of receipt of notice of the final decision, the protesting member insurer may appeal that final action to the director.  (d) In the alternative to rendering a final decision with respect to a protest based on a question regarding the assessment base, the association may refer protests to the director for a final decision, with or without a recommendation from the association.  (e) If the protest or appeal on the assessment is upheld, the amount paid in error or excess must be returned to the member insurer. Interest on a refund due a protesting member insurer shall be paid at the rate actually earned by the association.  (10) The association may request information of member insurers in order to aid in the exercise of its power under this section and member insurers shall promptly comply with a request.  HISTORY: Former 1976 Code Section 38-29-80 [1962 Code Section 37-1407; 1971 (57) 351; 1986 Act No. 426, Section 5A] recodified as Section 38-21-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-80 [1962 Code Section 37-569; 1972 (57) 2776; 1977 Act No. 69 Section 3; 1980 Act No. 345, Section 2] recodified as Section 38-29-80 by 1987 Act No. 155, Section 1; 1988 Act No. 326, Section 2; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, rewrote the section.
 (1) The association shall submit to the department a plan of operation and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments become effective upon the written approval of the director or his designee or thirty days after submission if the plan of operation and any amendments have not been rejected by the director. If the association fails to submit suitable amendments to the plan, the director or his designee shall, after notice and hearing, adopt and promulgate reasonable amendments necessary or advisable to effectuate the provisions of this chapter. These amendments must continue in force until modified by the director or his designee or superseded by amendments submitted by the association and approved by the director or his designee.  (2) All member insurers shall comply with the plan of operation.  (3) The plan of operation shall, in addition to requirements enumerated elsewhere in this chapter:  (a) establish procedures for handling the assets of the association;  (b) establish the amount and method of reimbursing members of the board of directors under Section 38-29-60;  (c) establish regular places and times for meetings of the board of directors;  (d) establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors;  (e) establish the procedure whereby selections for the board of directors must be made and submitted to the department director;  (f) establish any additional procedures for assessments under Section 38-29-80;  (g) contain additional provisions necessary or proper for the execution of the powers and duties of the association;  (h) establish procedures whereby a member of the board of directors may be removed for cause including a case where a member insurer director becomes an impaired or insolvent insurer;  (i) require the board of directors to establish a policy and procedures for addressing conflicts of interest.  (4) The plan of operation may provide that any or all powers and duties of the association, except those under Section 38-29-70(13)(c) and Section 38-29-80, are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. Such a corporation, association, or organization must be reimbursed for any payments made on behalf of the association and must be paid for its performance of any function of this association. A delegation under this subsection takes effect only with the approval of both the board of directors and the department director or his designee and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by this chapter.  HISTORY: Former 1976 Code Section 38-29-90 [1962 Code Section 37-1408; 1971 (57) 351; 1986 Act No. 426, Section 6] recodified as Section 38-21-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-17-90 [1962 Code Section 37-570; 1972 (57) 2776] recodified as Section 38-29-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 631; 2020 Act No. 121 (S.580), Section 1.A, eff March 24, 2020.  Editor's Note  2020 Act No. 121, Section 1.B, provides as follows:  "[1.]B. The amendments made by this act do not apply to a member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2020."  Effect of Amendment  2020 Act No. 121, Section 1.A, in (1), in the second sentence, inserted "or thirty days after submission if the plan of operation and any amendments have not been rejected by the director"; in (3), added (h) and (i) and made nonsubstantive changes; and in (4), in the first sentence, substituted "Section 38-29-70(13)(c)" for "Section 38-29-70(11)(c)".
 There is established a separate and distinct department of this State, known as the Department of Insurance. The department must be managed and operated by a director appointed by the Governor upon the advice and consent of the Senate. The director is subject to removal by the Governor as provided in Section 1-3-240(B). The director shall be selected with special reference to his training, experience, technical knowledge of the insurance industry, and demonstrated administrative ability. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the Department of Insurance.  HISTORY: 1947 (45) 322; 1952 Code Section 37-51; 1960 (51) 1646; 1962 Code Section 37-51; 1976 Code Section 38-3-10; 1980 Act No. 488, Section 2; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The director or his designee is not subject to the State Employee Grievance Committee or any internal grievance procedure established at the Insurance Department. The director or his designee shall devote all of his working time to the duties of his office. Before taking the oath of office he shall sever all connections, either direct or indirect, except as a policyholder, with any insurance company or agency and shall maintain the severance during his tenure of office. If he becomes a candidate for public office or becomes a member of a political committee during tenure, his office as director or his designee must be immediately vacated.  HISTORY: Former 1976 Code Section 38-3-100 [1947 (45) 322; 1952 Code Section 37-55; 1960 (51) 1646; 1962 Code Section 37-60] has no comparable provision in 1987 Act No. 155; Former 1976 Code Section 38-3-80 [1947 (45) 322; 1952 Code Section 37-52; 1960 (51) 1646; 1962 Code Section 37-58; 1973 (58) 623; 1980 Act No. 488, Section 6] recodified as Section 38-3-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The director or his designee has the following duties:  (1) supervise and regulate the rates and service of every insurer in this State and fix just and reasonable standards, classifications, regulations, practices, and measurements of service to be observed and followed by every insurer doing business in this State. Nothing contained in this title authorizes or requires a review by the department or the director of any order of the director's designee or the deputy director under the Administrative Procedures Act. This item does not grant any additional authority to the director or his designee with regard to insurance rates other than the ratemaking authority specifically granted to the director or his designee, or the Department of Insurance for certain kinds of insurance in other provisions of this title;  (2) see that all laws of this State governing insurers or relating to the business of insurance are faithfully executed and make regulations to carry out this title and all other insurance laws of this State, the enforcement or administration of which is not otherwise specifically provided for;  (3) report to the Attorney General or other appropriate law enforcement officials criminal violations of the laws relative to the business of insurance or the provisions of this title which he considers necessary to report;  (4) institute civil actions, either through his office or through the Attorney General, relative to the business of insurance or the provisions of this title which he considers necessary to institute.  (5)(a) The director may hold a public hearing at a location within the seacoast area, as defined in Section 38-75-310(7), to provide the public with information and an opportunity to discuss and offer input concerning the rates, territory, and other pertinent issues regarding the South Carolina Wind and Hail Underwriting Association. The director must provide publicized notice of the hearing at least thirty days before the date of the public hearing.  (b) The director must engage in efforts to provide market assistance and promote consumer education to South Carolina residential property insurance consumers. These efforts may include, but are not limited to:  (i) posting on its website information to assist consumers in understanding the general provisions of homeowners insurance policies;  (ii) providing information on the mitigation discounts and credits available pursuant to Section 38-73-1095(C), including a summary of those offered by the twenty largest homeowners property insurance issuers by premium volume;  (iii) providing premium comparison information;  (iv) providing information to assist consumers in identifying insurers writing property insurance coverage in their area;  (v) providing a listing of licensed property and casualty producers in their area; and  (vi) providing information on catastrophe savings accounts available pursuant to Article 11, Chapter 6, Title 12.  (c) The director must submit a report to the President of the Senate, the Speaker of the House of Representatives, the Chairman of the Senate Banking and Insurance Committee, and the Chairman of the House Labor, Commerce and Industry Committee by January thirty-first of each year regarding the status of the coastal property insurance market. The report shall be posted in an electronic format on the department's website within five days of its submission. The report shall include, but not be limited to, the following:  (i) status of the South Carolina Wind and Hail Underwriting Association, including any recommended modifications to statutory or regulatory law regarding the operation of the South Carolina Wind and Hail Underwriting Association and its territory;  (ii) status of operations and grants issued under the South Carolina Hurricane Damage Mitigation Program as provided for in Section 38-75-485;  (iii) availability and affordability of coverage in the coastal area as defined in Section 38-75-310(5), including any portion of the area as it may be expanded pursuant to Section 38-75-460;  (iv) consumer outreach and education efforts relating to coastal property insurance issues, including, but not limited to:  (a) summary of the annual meeting as required pursuant to item (5)(a); and  (b) specific projects and efforts undertaken pursuant to item (5)(b).  HISTORY: Former 1976 Code Section 38-3-110 [1947 (45) 322; 1960 (51) 1646; 1962 Code Section 37-61] recodified as Section 38-3-130 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-3-85 [En, 1980 Act No. 488, Section 7] recodified as Section 38-3-110 by 1987 Act No. 155, Section 1; 1988 Act No. 335, Section 2; 1993 Act No. 181, Section 532; 2000 Act No. 312, Section 1; 2007 Act No. 78, Section 7, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2014 Act No. 191 (S.569), Section 1.A, eff August 1, 2014; 2019 Act No. 1 (S.2), Section 52, eff January 31, 2019; 2019 Act No. 6 (S.360), Section 3, eff July 1, 2019.  Editor's Note  2014 Act No. 191, Section 1.B, provides as follows:  "B. The provisions of this section take effect sixty days after the effective date of this act [June 2, 2014]."  Effect of Amendment  2014 Act No. 191, Section 1.A, rewrote subsection (5).  2019 Act No. 1, Section 52, in (5)(c), in the first sentence, substituted "President of the Senate" for "President Pro Tempore of the Senate".  2019 Act No. 6, Section 3, in (5)(a), in the first sentence, substituted "may hold a public hearing at a location" for "must hold a public hearing at least annually at a location".
 The director shall take the oath of office as prescribed for all state officers. Before entering upon or continuing the discharge of the duties of his office, he shall give bond to the State for the benefit of any person aggrieved by his unlawful or wrongful actions. This bond must be in the sum of fifty thousand dollars, with sufficient surety, to be approved by the State Treasurer, for the faithful performance of all the duties required of him under the law during the term of his office. The premium of the bond must be paid by the State.  HISTORY: Former 1976 Code Section 38-3-120 [1956 (49) 1742; 1960 (51) 1646; 1962 Code Section 37-62; 1972 (57) 2451] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-3-90 [1947 (45) 322; 1952 Code Section 37-53; 1960 (51) 1646; 1962 Code Section 37-59] recodified as Section 38-3-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The director shall appoint or employ actuaries, examiners, clerks, and other employees necessary for the proper execution of the work of the department.  HISTORY: Former 1976 Code Section 38-3-130 [1956 (49) 1761; 1960 (51) 1646; 1962 Code Section 37-63] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-3-110 [1947 (45) 322; 1952 Code Section 37-56; 1960 (51) 1646; 1962 Code Section 37-61] recodified as Section 38-3-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The failure to do any act required by this title is considered a violation committed in part at the office of the director in Columbia.  HISTORY: Former 1976 Code Section 38-3-140 [1947 (45) 322; 1952 Code Section 37-57; 1960 (51) 1646; 1962 Code Section 37-64] recodified as Section 38-3-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-1-90 [1979 Act No. 63] recodified as Section 38-3-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 All examinations or investigations provided by this title, unless otherwise provided by any other insurance laws of this State, may be conducted by the director or by one or more of his duly authorized assistants or agents. All hearings must be held by the director or by one of his duly authorized assistants or agents when authorized to do so in writing by the director. However, in any hearing concerning the adjustment of insurance rates the director or his designee may conduct the hearing.  HISTORY: 1947 (45) 322; 1952 Code Section 37-59; 1960 (51) 1562, 1646; 1962 Code Section 37-65; 1971 (57) 46; 1976 Code Section 38-3-150; 1981 Act No. 10, Section 1; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The director or his duly appointed assistants or agents shall administer all oaths required in the discharge of his official duties.  HISTORY: 1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-58; 1960 (51) 1646; 1962 Code Section 37-66; 1976 Code Section 38-3-160; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 All hearings, unless otherwise specifically provided, must be held at the time and place designated in a written notice given by the director or his designee to the person cited to appear at least thirty days before the designated date. The notice shall state the subject of the inquiry and specific charges, if any. It is sufficient to give notice either by delivering it to the person or by depositing it in the United States mail, postage prepaid, addressed to the last known address of the person and registered with return receipt requested.  HISTORY: 1947 (45) 322; 1952 Code Section 37-60; 1960 (51) 1646; 1962 Code Section 37-67; 1976 Code Section 38-3-170; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The director or any assistants or agents appointed to conduct examinations may summon and compel the attendance of witnesses to testify in relation to any matter which is, by the provisions of this title or by any other insurance laws of this State, a subject of inquiry and investigation. The director or his designee has the power of a circuit judge to punish for contempt any witness failing to answer any summons or failing or refusing to testify when so required. The director or any assistants or agents appointed to conduct examinations may also administer oaths and affirmations to persons appearing as witnesses before them, and false testimony in any matter or proceeding is considered perjury and must be punished in accordance with the laws of this State.  HISTORY: 1947 (45) 322; 1952 Code Section 37-61; 1960 (51) 1646; 1962 Code Section 37-68; 1976 Code Section 38-3-180; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 Any person summoned by the Insurance Department to testify as a witness at any hearing must be paid for his actual mileage at the same rate as provided by law for state departments or divisions.  HISTORY: 1962 Code Section 37-681; 1971 (57) 397; 1976 Code Section 38-3-190; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 No order of the director or his designee is effective unless made in writing and signed by the director or by his authority.  HISTORY: 1947 (45) 322; 1952 Code Section 37-62; 1960 (51) 1646; 1962 Code Section 37-69; 1976 Code Section 38-3-200; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 Any order or decision made, issued, or executed by the director or his designee is subject to judicial review in accordance with the appellate procedures of the South Carolina Administrative Law Court, as provided by law. An appeal from an order or decision under this section must be heard in the Administrative Law Court, as provided by law. The administrative law judge or judges may not, under any terms, order a stay of enforcement of any order of the director or his designee to make good an impairment of capital or surplus or a deficiency in the amount of admitted assets.  HISTORY: Former 1976 Code Section 38-3-210 [1947 (45) 322, 1952 Code Section 37-63, 1960 (51) 1646, 1962 Code Section 37-70], Section 38-3-220 [1947 (45) 322, 1952 Code Section 37-64, 1960 (51) 1646, 1962 Code Section 37-71], Section 38-3-230 [1947 (45) 322, 1952 Code Section 37-65, 1960 (51) 1646, 1962 Code Section 37-72], Section 38-3-240 [1947 (45) 322, 1952 Code Section 37-66, 1960 (51) 1646, 1962 Code Section 37-73], and Section 38-3-250 [1947 (45) 322, 1952 Code Section 37-67, 1960 (51) 1646, 1962 Code Section 37-74], recodified as Section 38-3-210 by 1987 Act No. 155, Section 1; 1989 Act No. 27, Section 1; 1993 Act No. 181, Section 532.
 Every certificate or other paper executed by the director or his designee in pursuance of any authority conferred upon him by law and sealed with the seal of the department and all copies of papers certified by the director or his designee and authenticated by the director's or his designee's seal may in all cases be used as evidence in any suit or proceeding in any court of this State with the same force and effect as the originals.  HISTORY: Former 1976 Code Section 38-3-220 [1947 (45) 322; 1952 Code Section 37-64; 1960 (51) 1646; 1962 Code Section 37-71] recodified as Section 38-3-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-3-270 [1947 (45) 322; 1952 Code Section 37-69; 1960 (51) 1646; 1962 Code Section 37-76] recodified as Section 38-3-220 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 In any case or controversy where it is necessary to determine whether any insurance or other company, or agent thereof, is or has been licensed by the director or his designee to do business in this State, the certificate of the director or his designee under the seal of the department is admissible in evidence as proof of this authority.  HISTORY: Former 1976 Code Section 38-3-230 [1947 (45) 322; 1952 Code Section 37-65; 1960 (51) 1646; 1962 Code Section 37-72] recodified as Section 38-3-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-3-280 [1947 (45) 322; 1952 Code Section 37-70; 1960 (51) 1646; 1962 Code Section 37-77] recodified as Section 38-3-230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 (A) Beginning July 1, 1992, the department shall begin converting certain licenses required by statute or regulation to a biennial license fee collection period. These license fees must be collected as follows:  (1) All insurers transacting business in this State including reciprocals, fraternal benefit associations, mutual insurers doing a property business only in no more than three counties, mutual insurers doing a property business only in a single county, and approved reinsurers shall pay a license fee for two years to the department by March 1, 1994, and every two years after that time by March first every even-numbered year.  (2) An agency transacting the business of insurance in this State shall pay a license fee for two years to the department within thirty days after January 1, 1994, and every two years after that time within thirty days after January first every even-numbered year.  (3) A broker transacting the business of insurance in this State shall pay a license fee for two years to the department within thirty days after May 1, 1994, and every two years after that time within thirty days after May first every even-numbered year.  (4) An adjuster transacting business in this State shall pay a license fee for two years to the department within thirty days after August 1, 1993, and every two years after that time within thirty days after August first every odd-numbered year.  (5) A motor vehicle damage appraiser transacting business in this State shall pay a license fee for two years to the department within thirty days after October 1, 1993, and every two years after that time within thirty days after October first every odd-numbered year.  (6) An agent transacting the business of insurance in this State shall pay a license fee for two years to the department within thirty days after September 1, 1992, and every two years after that time within thirty days after September first every even-numbered year.  (B) The fees described in this section must be earned fully when paid and are not refundable, proratable, or transferable. They must be collected in the amount and manner prescribed by statute or regulation before July 1, 1992, until the dates prescribed in subsection (A) when collections must be made pursuant to that subsection.  HISTORY: 1992 Act No. 501, Part II Section 11A; 1993 Act No. 181, Section 532; 1998 Act No. 411, Section 1.
 The director or his designee shall receive annual compensation as may be provided by the General Assembly and official expenses as provided by law for executing the duties and functions of the department.  HISTORY: 1960 (51) 1646; 1962 Code Section 37-54; 1976 Code Section 38-3-40; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 (A) If the Governor declares a state of emergency pursuant to Section 1-3-420, the director may issue one or more emergency regulations pursuant to Section 1-23-130(A) applicable to all insurance companies, entities, and persons, as defined in Section 38-1-20, that are subject to Title 38.  (B)(1) The provisions of Section 1-23-130(A), (B), and (D) are applicable to emergency regulations promulgated under this section.  (2) The provisions of Section 1-23-130(C) are not applicable to emergency regulations promulgated under this section. An emergency regulation promulgated under this section becomes effective upon issuance and continues for one hundred twenty days unless terminated sooner by the director. The director may extend an emergency regulation for additional periods of one hundred twenty days, whether or not the General Assembly is in session, for as long as he determines that the conditions that gave rise to the emergency regulation still exist. Each extension of the emergency regulation must be published in the State Register as provided in Section 1-23-130(D). By concurrent resolution, the General Assembly may terminate an emergency regulation issued under this section.  (C) The text of an emergency regulation promulgated under this section together with a statement explaining how the emergency regulation facilitates recovery from the emergency must be published in the State Register as provided in Section 1-23-130(D).  HISTORY: 2007 Act No. 78, Section 4.B, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) By an emergency regulation issued pursuant to Section 38-3-410, the director may adopt any procedure that facilitates recovery from the emergency and is fair under the circumstances if the:  (1) procedure provides at least the procedural protection given by other statutes, the Constitution of this State, or the United States Constitution;  (2) department takes only that action necessary to protect the public interest under the emergency procedure; and  (3) department publishes in writing, at the time of or before its action, the specific facts and reasons for finding an immediate danger to the public health, safety, or welfare and its reasons for concluding that the procedure used is fair under the circumstances.  (B) Subject to applicable constitutional and statutory provisions, an emergency regulation becomes effective immediately on filing. After notice of the emergency regulation is published in the State Register as provided in Section 1-23-130(D) and Section 38-3-410, then the department's findings of immediate danger, necessity, and procedural fairness are judicially reviewable under Section 38-3-210.  HISTORY: 2007 Act No. 78, Section 4.B, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) The department may promulgate by emergency regulation, pursuant to Section 38-3-410, standardized requirements that may be applied to insurers as a consequence of a hurricane or other natural disaster. The emergency regulations must address the following areas:  (1) claims reporting requirements;  (2) grace periods for payment of premiums and performance of other duties by insureds;  (3) temporary postponement of cancellations and nonrenewals; and  (4) any other rule the director considers necessary.  (B) The emergency regulations adopted under this section shall require the department to issue an order within ten days after the occurrence of a hurricane or other natural disaster specifying, by line of insurance, which of the standardized requirements apply, the geographic areas in which they apply, the time at which applicability commences, and the time at which applicability terminates. An order issued pursuant to this subsection must comply with the requirements of Section 1-23-140.  HISTORY: 2007 Act No. 78, Section 4.B, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 The department may promulgate the regulations pursuant to the South Carolina Administrative Procedures Act, Chapter 23 of Title 1, necessary to implement the provisions of this article.  HISTORY: 2007 Act No. 78, Section 4.B, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 The director or his designee must follow the general policies and broad objectives enacted by the General Assembly regarding the operation of the insurance industry in this State.  HISTORY: 1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-58; 1960 (51) 1646; 1962 Code Section 37-56; 1976 Code Section 38-3-60; 1980 Act No. 488, Section 4; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 The department shall have a seal with a suitable inscription, an impression of which must be filed with the Secretary of State.  HISTORY: Former 1976 Code Section 38-3-80 [1947 (45) 322; 1952 Code Section 37-52; 1960 (51) 1646; 1962 Code Section 37-58; 1973 (58) 623; 1980 Act No. 488, Section 6] recodified as Section 38-3-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-3-140 [1947 (45) 322; 1952 Code Section 37-57; 1960 (51) 1646; 1962 Code Section 37-64] recodified as Section 38-3-80 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 532.
 This chapter is known and may be cited as the "South Carolina Property and Casualty Insurance Guaranty Association Act".  HISTORY: Former 1976 Code Section 38-31-10 [1953 (48) 493; 1956 (49) 2146; 1962 Code Section 37-307] recodified as Section 38-65-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-10 [1962 Code Section 37-838; 1971 (57) 1001] recodified as Section 38-31-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632.
 (1) A person, having a claim under an insurance policy, whether or not it is a policy issued by a member insurer, and the claim under such other policy arises from the same facts, injury, or loss that gave rise to the covered claim against the association, is required to first exhaust all coverage and limits provided by any such policy. Any amount payable on a covered claim under this chapter must be reduced by the full limits of such other coverage as set forth on the declarations page and the association shall receive a full credit for such limits, or, where there are no applicable limits, the claim must be reduced by the total recovery. Notwithstanding the foregoing, no person may be required to exhaust all coverage and limits under the policy of an insolvent insurer.  (a) A claim under a policy providing liability coverage to a person who may be jointly and severally liable with or a joint tortfeasor with the person covered under the policy of the insolvent insurer that gives rise to the covered claim must be considered to be a claim arising from the same facts, injury, or loss that gave rise to the covered claim against the association. Any amount payable on a covered claim under this chapter must be reduced by the full and combined policy limits of all joint tortfeasers.  (b) To the extent that the association's obligation is reduced by the application of this section, the liability of the person insured by the insolvent insurer's policy for the claim must be reduced in the same amount.  (2) A person having a claim which may be recovered under more than one insurance guaranty association or associations similar to the association must be required first to exhaust all coverage and limits in recovery from the association of the place of residence of the insured except that, if it is a first-party claim for damage to property with a permanent location, he shall be required first to exhaust all coverage and limits in recovery from the association of the location of the property, and, if it is a workers' compensation claim, he shall be required first to exhaust all coverage and limits in recovery from the association of the residence of the claimant. Any amount payable on a covered claim under this chapter must be reduced by the full amount of recovery from any other insurance guaranty association or associations similar to the association, and the association shall receive full credit for such recovery.  (3) A person having a claim or legal right of recovery under any governmental insurance or guaranty program which is also a covered claim shall be required first to exhaust all coverage and limits in recovery under the program. Any amount payable on a covered claim under this chapter must be reduced by the full amount of any recovery under the governmental insurance or guaranty program.  (4) No claim held by an insurer, reinsurer, insurance pool, or underwriting association based on an assignment or on rights of subrogation, or otherwise, may be recovered from a claimant or asserted in any legal action against a person insured under a policy issued by an insolvent insurer or the association except to the extent the amount of the claim exceeds the obligation of the association under this chapter.  (5) A person who has liquidated by settlement or judgment a claim against an insured under a policy issued by an insolvent insurer, and the claim is a covered claim and is also a claim within the coverage of any policy issued by a solvent insurer, must be required first to exhaust all coverage and limits provided under the policy issued by the solvent insurer before execution, levy, or any other proceedings are begun to enforce any judgment obtained against or the settlement with the insured of the insolvent insurer. Any amount payable on a covered claim under this chapter, whether through settlement, judgment, or otherwise, must be reduced by the full limits of such other coverage as set forth on the declarations page of the policy issued by the insolvent insurer.  (6) A person having a claim against an insolvent insurer under any provision in an insurance policy is limited to ten million dollars aggregate payout from the association.  (7) A person having a net worth of greater than twenty-five million dollars and having a claim against an insolvent insurer under any provision in an insurance policy may not make a claim against the association.  HISTORY: Former 1976 Code Section 38-31-100 [1953 (48) 493; 1962 Code Section 37-309; 1976 Act No. 731; 1976 Act No. 732 Section 5; 1983 Act No. 85] recodified as Section 38-65-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-100 [1962 Code Section 37-829; 1971 (57) 1001] recodified as Section 38-31-100 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 5; 1993 Act No. 181, Section 632; 2000 Act No. 235, Section 2; 2001 Act No. 82, Section 14, eff July 20, 2001.
 (A) The board of directors, upon majority vote, may make recommendations to the director, his designee, and the department for the detection and prevention of insurer insolvencies.  (B) The board of directors, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, may prepare a report on the history and causes of the insolvency, based on the information available to the association, and submit the report to the department.  (C) The board of directors, upon majority vote, may respond to requests by the director or his designee to discuss and make recommendations regarding the status of any member insurer whose financial condition may be hazardous to policyholders or the public. These recommendations are not considered public documents.  HISTORY: Former 1976 Code Section 38-31-110 [1962 Code Section 37-312; 1969 (56) 699] recodified as Section 38-65-310 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-110 [1962 Code Section 37-830; 1971 (57) 1001] recodified as Section 38-31-110 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 6; 1993 Act No. 181, Section 632.
 The association is subject to examination and regulation by the department. The board of directors shall annually submit, to the department, by March thirtieth a financial report for the preceding calendar year in a form approved by the director or his designee.  HISTORY: Former 1976 Code Section 38-31-120 [1962 Code Section 37-312.1; 1969 (56) 699] recodified as Section 38-65-320 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-120 [1962 Code Section 37-831; 1971 (57) 1001] recodified as Section 38-31-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632.
 The association is exempt from payment of all fees and all taxes levied by this State or any of its political subdivisions, except taxes levied on real or personal property.  HISTORY: Former 1976 Code Section 38-31-130 [1962 Code Section 37-312.2; 1969 (56) 699] recodified as Section 38-65-330 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-130 [1962 Code Section 37-832; 1971 (57) 1001] recodified as Section 38-31-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632.
 The rates and premiums charged for insurance policies to which this chapter applies shall include amounts sufficient to recoup a sum equal to the amounts paid to the association by the member insurer less any amounts returned to the member insurer by the association. These rates may not be considered excessive because they contain an amount reasonably calculated to recoup assessments paid by the member insurer.  HISTORY: Former 1976 Code Section 38-31-140 [1962 Code Section 37-312.3; 1969 (56) 699] recodified as Section 38-65-340 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-140 [1962 Code Section 37-833; 1971 (57) 1001] recodified as Section 38-31-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632.
 There is no liability on the part of, and no cause of action of any nature may arise against, any member insurer, the association's agents or employees, the board of directors, or the director or his representatives for any act or omission in the performance of their powers and duties under this chapter. This section does not relieve the association of any of its liability.  HISTORY: Former 1976 Code Section 38-31-150 [1962 Code Section 37-312.4; 1969 (56) 699] recodified as Section 38-65-350 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-150 [1962 Code Section 37-834; 1971 (57) 1001] recodified as Section 38-31-150 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 7; 1993 Act No. 181, Section 632.
 All proceedings involving covered claims in which the insolvent insurer is a party or is obligated to defend a party in any court in this State must be stayed ninety days from the date insolvency is determined to permit proper defense by the association. The court may stay the proceedings for a longer period of time if the court finds the additional time is necessary to permit proper defense by the association. As to any judgment, decision, order, verdict, or finding based on the insurer's default or failure to defend the insured, the association may apply to have the judgment, decision, order, verdict, or finding set aside by the same court or administrator which made it and must be permitted to defend against the claim on its merits.  HISTORY: Former 1976 Code Section 38-31-160 [1962 Code Section 37-310; 1953 (48) 493] recodified as Section 38-65-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-160 [1962 Code Section 37-835; 1971 (57) 1001] recodified as Section 38-31-160 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 8; 1993 Act No. 181, Section 632.
 (1) The director or his designee shall by order terminate the operation of the association as to any kind of insurance covered by this chapter with respect to which he has found, after hearing, that there is in effect a statutory or voluntary plan which:  (a) is a permanent plan which is adequately funded or for which adequate funding is provided; and  (b) extends, or will extend, to the South Carolina policyholders and residents protection and benefits with respect to insolvent insurers not substantially less favorable and effective to such policyholders and residents than the protection and benefits provided with respect to such kinds of insurance under this chapter.  (2) The director or his designee shall by the same order authorize discontinuance of future payments by insurers to the association with respect to the same kinds of insurance. However, the assessments and payments must continue, as necessary, to liquidate covered claims of insurers adjudged insolvent prior to the order and the related expenses not covered by such other plan.  (3) In the event the operation of the association is terminated as to all kinds of insurance within its scope, the association shall as soon as possible thereafter distribute the balance of remaining money and assets, after first discharging the association's duties with respect to prior insurer insolvencies and related expenses not covered by such other plan. The distribution must be to the insurers which are then writing in this State policies of the kinds of insurance covered by this chapter and which had made payments to this association, pro rata upon the basis of the aggregate of the payments made by the respective insurers during the period of five years next preceding the date of the order. Upon completion of the distribution with respect to all of the kinds of insurance covered by this chapter, this chapter is considered to have expired.  HISTORY: Former 1976 Code Section 38-19-170 [1962 Code Section 37-836; 1971 (57) 1001] recodified as Section 38-31-170 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632.  
 As used in this chapter:  (1) "Account" means any one of the four accounts created by Section 38-31-40.  (2) "Affiliate" means a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December thirty-first of the year next preceding the date the insurer becomes an insolvent insurer.  (3) "Affiliate of the insolvent insurer" means a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December thirty-first of the year next preceding the date the insurer becomes an insolvent insurer.  (4) "Association" means the South Carolina Property and Casualty Insurance Guaranty Association created under Section 38-31-40.  (5) "Association similar to the association" means any guaranty association, security fund, or other insolvency mechanism which affords protection similar to that of the association. The term also includes any property/casualty insolvency mechanism which obtains assessments or other contributions from insurers on a pre-insolvency basis.  (6) "Claimant" means any insured making a first party claim or any person instituting a liability claim. However, no person who is an affiliate of the insolvent insurer may be a claimant.  (7) "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person directly or indirectly owns, controls, holds with the power to vote, or holds proxies representing ten percent or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact.  (8) "Covered claim" means an unpaid claim, including one of unearned premiums, which arises out of and is within the coverage and is subject to the applicable limits of an insurance policy to which this chapter applies issued by an insurer, if the insurer is an insolvent insurer and (a) the claimant or insured is a resident of this State at the time of the insured event, if for entities other than an individual, the residence of a claimant or insured is the state in which its principal place of business is located at the time of the insured event or (b) the claim is for first-party benefits for damage to property permanently located in this State. 'Covered claim' does not include:  (a) any amount awarded as extra-contractual damages unless awarded against the association;  (b) any amount sought as a return of premium under any retrospective rating plan;  (c) any amount due any reinsurer, insurer, insurance pool, or underwriting association as subrogation recoveries, reinsurance recoveries, contribution, indemnification, or otherwise. No such claim for any amount due any reinsurer, insurer, insurance pool, or underwriting association may be asserted against a claimant or a person insured under a policy issued by an insolvent insurer other than to the extent such a claim exceeds the association obligation limitations set forth in Section 38-31-60;  (d) any first party claim by an insured whose net worth exceeds ten million dollars on December thirty-first of the year next preceding the date the insurer becomes an insolvent insurer; provided that an insured's net worth on such date must be deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis;  (e) any first party claims by an insured which is an affiliate of the insolvent insurer;  (f) any fee or other amount relating to goods or services sought by or on behalf of any attorney or other provider of goods or services retained by the insolvent insurer or an insured prior to the date it was determined to be insolvent;  (g) any fee or other amount sought by or on behalf of any attorney or other provider of goods or services retained by any insured or claimant in connection with the assertion or prosecution of any claim, covered or otherwise, against the association; or  (h) any claims for interest.  (9) "Insolvent insurer" means an insurer (a) licensed to transact insurance in this State either at the time the policy was issued or when the insured event occurred and (b) determined to be insolvent by a court of competent jurisdiction in the insurer's state of domicile or of this State and which the director or his designee has found fails to meet its obligation to policyholders in this State.  (10) "Insured" means any named insured, any additional insured, any vendor, lessor, or any other party identified as an insured under the policy.  (11) "Member insurer" means any person who (a) writes any kind of insurance to which this chapter applies under Section 38-31-30, including the exchange of reciprocal or interinsurance contracts, and (b) is licensed to transact insurance in this State. An insurer shall cease to be a member insurer effective on the day following the termination or expiration of its license to transact the kinds of insurance to which this chapter applies; however, the insurer shall remain liable as a member insurer for any and all obligations, including obligations for assessments levied prior to the termination or expiration of the insurer's license and assessments levied after the termination or expiration, which relate to any insurer which became an insolvent insurer prior to the termination or expiration of such insurer's license.  (12) "Net direct written premiums" means direct gross premiums written in this State on insurance policies to which this chapter applies, less return premiums on the policies and dividends paid or credited to policyholders on the direct business. It does not include premiums on contracts between insurers or reinsurers.  (13) "Person" means an individual, corporation, partnership, association, voluntary organization, or governmental entity.  HISTORY: Former 1976 Code Section 38-31-20 [1962 Code Section 37-307.1; 1970 (56) 2505] recodified as Section 38-65-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-20 [1962 Code Section 37-822; 1971 (57) 1001] recodified as Section 38-31-20 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 1; 1993 Act No. 181, Section 632; 1995 Act No. 97, Section 1; 2001 Act No. 82, Section 9, eff July 20, 2001.
 This chapter applies to all kinds of direct insurance but does not apply to the following:  (1) life, annuity, health, or accident insurance;  (2) mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risks;  (3) fidelity or surety bonds, or any other bonding obligations;  (4) credit insurance, vendors' single interest insurance, collateral protection insurance, or any similar insurance protecting the interests of a creditor arising out of a creditor-debtor transaction;  (5) insurance of warranties or service contracts;  (6) insurance written on a retroactive basis to cover known losses which have resulted from an event with respect to which a claim has already been made, and the claim is known to the insurer at the time the insurance is bound;  (7) title insurance;  (8) ocean marine insurance; ocean marine insurance includes marine insurance as defined in Section 38-1-20(28), except for inland marine, and includes any other form of insurance, regardless of the name, label, or marketing designation of the insurance policy, which insures against maritime perils or risks and other related perils or risks, which are usually insured against by traditional marine insurance, such as hull and machinery, marine builders risk, and marine protection and indemnity. Such perils and risk insured against include without limitation loss, damage, or expense or legal liability of the insured for loss, damage, or expense arising out of or incident to ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, or death or for loss or damage to the property of the insured or another person;  (9) any transaction or combination of transactions between a person, including affiliates of the person, and an insurer, including affiliates of the insurer, which does not effect a transfer of risk from the person, including affiliates of the person, to the insurer, including affiliates of the insurer, to the extent there is not a transfer of risk;  (10) any claim or loss or part of a claim or loss covered by self-insurance that occurred prior to the assumption, transfer, merger, or other acquisition of a block of business by a licensed insurer.  HISTORY: Former 1976 Code Section 38-31-30 [1953 (48) 493; 1959 (51) 302; 1962 Code Section 37-301; 1976 Act No. 732 Section 1] recodified as Section 38-65-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-30 [1962 Code Section 37-821; 1971 (57) 1001] recodified as Section 38-31-30 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 2; 1993 Act No. 181, Section 632; 1994 Act No. 367, Section 1; 2019 Act No. 5 (S.358), Section 1, eff July 1, 2019.  Effect of Amendment  2019 Act No. 5, Section 1, added (10), relating to claims or losses covered by self-insurance that occurred prior to the assumption, transfer, merger, or other acquisition of a block of business by a licensed insurer.
 There is created a nonprofit unincorporated legal entity to be known as the South Carolina Property and Casualty Insurance Guaranty Association. All insurers defined as member insurers in Section 38-31-20(8) are members of the association as a condition of their authority to transact insurance in this State. The association shall perform its functions under a plan of operation established and approved under Section 38-31-70 and shall exercise its powers through a board of directors established under Section 38-31-50. For purposes of administration and assessment, the association is divided into four separate accounts:  (a) the workers' compensation insurance account;  (b) the automobile insurance account;  (c) the homeowners multiple peril and farmowners multiple peril insurance account;  (d) the account for all other insurance to which this chapter applies.  HISTORY: Former 1976 Code Section 38-31-40 [1953 (48) 493; 1956 (49) 2146; 1962 Code Section 37-302; 1976 Act No. 732 Section 2; 1981 Act No. 45] recodified as Section 38-65-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-40 [1962 Code Section 37-823; 1971 (57) 1001] recodified as Section 38-31-40 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 3; 1993 Act No. 181, Section 632.
 (1) The board of directors of the association shall consist of not less than five nor more than nine persons who shall serve terms as established in the plan of operation. Member insurers shall select the members of the board subject to the approval of the director. Any vacancy on the board must be filled for the unexpired portion of the term in the same manner as any initial appointment.  (2) In approving selections to the board, the director shall consider, among other things, whether all member insurers are fairly represented.  (3) Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors.  HISTORY: Former 1976 Code Section 38-31-50 [1953 (48) 493; 1962 Code Section 37-303; 1976 Act No. 732 Section 3] recodified as Section 38-65-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-50 [1962 Code Section 37-824; 1971 (57) 1001] recodified as Section 38-31-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632.
 The association:  (a) is obligated to the extent of claims existing before the determination of insolvency and claims arising up to the earliest of the following dates:  (i) thirty days after the determination of insolvency;  (ii) the policy expiration date; or  (iii) the date the insured replaces or cancels the policy.  (iv) Notwithstanding any other provisions of this chapter, except in the case of a claim for benefits under worker's compensation coverage, any obligation of the association to or on behalf of an insured and its affiliates on all covered claims combined shall cease when ten million dollars shall have been paid in the aggregate by the association and any one or more associations similar to the association of any other state or states, to or on behalf of that insured, its affiliates, and additional insureds on covered claims or allowed claims arising under the policy or policies of any one insolvent insurer. If the association determines that there may be more than one claimant having a covered claim or allowed claim against the association, or any associations similar to the association in other states, under the policy or policies of any one insolvent insurer, the association may establish a plan to allocate amounts payable by the association in such manner as the association in its discretion considers equitable.  This obligation includes only the amount each covered claim is in excess of two hundred fifty dollars and is less than three hundred thousand dollars. However, the association shall pay the full amount of any covered workers' compensation claim. The association has no obligation to pay a claimant's covered claim, except a workers' compensation claim, if:  (1) the insured had primary coverage at the time of the loss with a solvent insurer equal to or in excess of three hundred thousand dollars and applicable to the claimant's loss; or  (2) the insured's coverage is written subject to a self-insured retention equal to or in excess of three hundred thousand dollars. If the primary coverage and self-insured retention is less than three hundred thousand dollars, the association's obligation to the claimant is reduced by the coverage or retention. The Guaranty Association shall pay the full amount of a covered workers' compensation claim to a claimant notwithstanding any self-insured retention but the Guaranty Association has the right to recover the amount of the self-insured retention from the employer. The association is not obligated to pay a claimant an amount in excess of the obligation of the insolvent insurer under the policy or coverage from which the claim arises. A covered claim does not include any claim filed with the association after the final date set by a court for the filing of claims against the liquidator or receiver of an insolvent insurer, or any claim filed with the association more than eighteen months after the declaration of insolvency, whichever date occurs first; provided, however, that this provision shall be without prejudice to the filing of a claim with the liquidator or receiver of an insolvent insurer or the filing of a claim with any other Guaranty Association or similar organization in another state. The association shall pay only that amount of each unearned premium which is in excess of one hundred dollars;  (b) is considered the insurer to the extent of its obligation on the covered claims and, to this extent, has all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent. However, the association has the right but not the obligation to defend an insured who is not a resident of this State at the time of the insured event unless the property from which the claim arises is permanently located in this State in which instance the association does have the obligation to defend the insured;  (c) shall allocate claims paid and expenses incurred among the four accounts separately and assess member insurers separately for each account amounts necessary to pay:  (i) the obligation of the association under item (a) of this section;  (ii) the expenses of handling covered claims;  (iii) other expenses authorized by this chapter.  The assessments of each member insurer must be in the proportion that the net direct written premiums of the member insurer for the calendar year preceding the insolvency on the kinds of insurance in the account bear to the net direct written premiums of all member insurers for the calendar year preceding the insolvency on the kinds of insurance in the account. Each member insurer must be notified of the assessment not later than thirty days before it is due. No member insurer may be assessed in any year on any account an amount greater than one percent of that member insurer's net direct written premiums for the calendar year preceding the insolvency on the kinds of insurance in the account. If the maximum assessment, together with the other assets of the association in any account, does not provide in any year an amount sufficient to make all necessary payments from that account, the funds available must be prorated, and the unpaid portion must be paid as soon after proration as funds become available. The association may exempt or defer, in whole or in part, the payment of an assessment of any member insurer, if the payment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance. Any member insurer serving in the capacity of a servicing carrier for the South Carolina Reinsurance Facility, the South Carolina Windstorm and Hail Underwriting Association, the Medical Malpractice Joint Underwriting Association, or any other involuntary association must not be assessed for the premiums so written, but the assessment must be made directly against the facility, pool, joint underwriting association, or other association. Each member insurer serving as a servicing facility on behalf of the association may set off against any assessment authorized payments made on covered claims and expenses incurred in the payment of the claims by the member insurer;  (d) shall investigate claims brought against the association and adjust, compromise, settle, and pay covered claims to the extent of the association's obligation and deny all other claims and may review settlements, releases, and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which these settlements, releases, and judgments may be properly contested;  (e) shall notify any person the director or his designee directs under Section 38-31-80(2)(a);  (f) shall handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the director or his designee, but designation may be declined by a member insurer;  (g) shall reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association and pay the other expenses of the association authorized by this chapter;  (h) may employ or retain persons necessary to handle claims and perform other duties of the association;  (i) may borrow funds necessary to effect the purpose of this chapter in accord with the plan of operation;  (j) may sue or be sued; provided, however, that any action brought directly against the association must be brought against the association in the State of South Carolina as a condition precedent to recovery directly against the association;  (k) may negotiate and become a party to contracts necessary to carry out the purpose of this chapter;  (l) may perform any other acts necessary or proper to effectuate the purpose of this chapter;  (m) may refund to the member insurers in proportion to the contribution of each member insurer to that account that amount by which the assets of the account exceed the liabilities, if, at the end of any calendar year, the board of directors finds that the assets of the association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year.  HISTORY: Former 1976 Code Section 38-31-60 [1953 (48) 493; 1962 Code Section 37-304; 1976 Act No. 732 Section 4] recodified as Section 38-65-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-19-60 [1962 Code Section 37-825; 1971 (57) 1001; 1976 Act No. 666] recodified as Section 38-31-60 by 1987 Act No. 155, Section 1; 1988 Act No. 402, Section 4; 1993 Act No. 181, Section 632; 1994 Act No. 366, Section 1; 1994 Act No. 517, Section 1; 2001 Act No. 82, Section 10, eff July 20, 2001.
 (1) The association shall submit to the department a plan of operation and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments become effective upon the written approval of the director or his designee. If the association fails to submit suitable amendments to the plan, the director or his designee shall, after notice and hearing, adopt and promulgate reasonable amendments necessary or advisable to effectuate the provisions of this chapter. These amendments continue in force until modified by the director or his designee or superseded by amendments submitted by the association and approved by the director or his designee.  (2) All member insurers shall comply with the plan of operation.  (3) The plan of operation shall:  (a) Establish the procedures whereby all the powers and duties of the association under Section 38-31-60 will be performed.  (b) Establish procedures for handling assets of the association.  (c) Establish the amount and method of reimbursing members of the board of directors under Section 38-31-50.  (d) Establish procedures by which claims may be filed with the association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer is considered notice to the association or its agent and a list of these claims must be periodically submitted to the association or an association similar to the association in another state by the receiver or liquidator.  (e) Establish regular places and times for meetings of the board of directors.  (f) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors.  (g) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the Administrative Law Court as provided by law within thirty days after the action or decision.  (h) Establish the procedures whereby selections for the board of directors will be submitted to the department director.  (i) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.  (4) The plan of operation may provide that any or all powers and duties of the association, except those under items (c) and (i) of Section 38-31-60, are delegated to a corporation, an association similar to the association, or another organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. This corporation, association, or organization must be reimbursed as a servicing facility would be reimbursed and must be paid for its performance of any other functions of the association. A delegation under this subsection (4) takes effect only with the approval of both the board of directors and the director or his designee and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by this chapter.  HISTORY: Former 1976 Code Section 38-19-70 [1962 Code Section 37-826; 1971 (57) 1001] recodified as Section 38-31-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632; 2001 Act No. 82, Sections 11, 12, eff July 20, 2001.
 (A) The director or his designee shall:  (1) notify the association of the existence of an insolvent insurer not later than three days after he receives notice of the determination of the insolvency;  (2) upon request of the board of directors, provide the association with a statement of the net direct written premiums of each member insurer.  (B) The director or his designee may:  (1) require that the association notify the insureds of the insolvent insurer and other interested parties of the determination of insolvency and of their rights under this chapter. The notification must be by mail at their last known address, where available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation is sufficient;  (2) suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this State of a member insurer who fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the director or his designee may impose the penalties provided in Section 38-2-10;  (3) revoke the designation of a servicing facility if he finds claims are being handled unsatisfactorily;  (4) upon request of the board of directors, notwithstanding the limitation on assessments contained in Section 38-31-60(c)(iii), increase the maximum assessment in a year in an account in order for that assessment to provide an amount sufficient to make all necessary payments by the association from that account. However, no member insurer may be assessed in a year on an account under this provision an amount greater than two percent of the member insurer's net direct written premiums for the calendar year preceding the insolvency on the kinds of insurance in the account;  (5) after determining that an insurance emergency or catastrophe exists in this State pursuant to Insurance Department Regulation 69-1(2), direct the association to pay the first one hundred dollars of each unearned premium claim and the first two hundred fifty dollars of each covered claim, notwithstanding the provisions of Section 38-31-60(a).  HISTORY: Former 1976 Code Section 38-19-80 [1962 Code Section 37-827; 1971 (57) 1001] recodified as Section 38-31-80 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 12; 1991 Act No. 5, Section 1; 1993 Act No. 181, Section 632.
 (1) A person recovering under this chapter is considered to have assigned his rights under the policy to the association to the extent of his recovery from the association. Every insured or claimant seeking the protection of this chapter shall cooperate with the association to the same extent as he would have been required to cooperate with the insolvent insurer. The association has no cause of action against the insured of the insolvent insurer for any sums it has paid out except the causes of action the insolvent insurer would have had if the sums had been paid by the insolvent insurer and except as provided in subsection (2). In the case of an insolvent insurer operating on a plan with assessment liability, payments of claims of the association do not operate to reduce the liability of insureds to the receiver, liquidator, or statutory successor for unpaid assessments.  (2) The association has the right to recover from the following persons the amount of any "covered claim" paid on behalf of such person pursuant to this chapter;  (a) an insured whose net worth on December thirty-one of the year immediately preceding the date the insurer becomes an insolvent insurer exceeds twenty-five million dollars and whose liability obligations to other persons are satisfied in whole or in part by payments made under this chapter; and  (b) a person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this chapter.  (3) The receiver, liquidator, or statutory successor of an insolvent insurer is bound by settlements of covered claims by the association or an association similar to the association in another state. The court having jurisdiction shall grant these claims priority equal to that to which the claimant would have been entitled in the absence of this chapter against the assets of the insolvent insurer. The expenses of the association or an association similar to the association in handling claims must be accorded the same priority as the liquidator's expenses.  (4) The association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the association and estimates of anticipated claims on the association which shall preserve the rights of the association against the assets of the insolvent insurer.  HISTORY: Former 1976 Code Section 38-19-90 [1962 Code Section 37-828; 1971 (57) 1001] recodified as Section 38-31-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 632; 2001 Act No. 82, Section 13, eff July 20, 2001.
 This chapter may be cited as the Health Maintenance Organization Act of 1987.  HISTORY: Former 1976 Code Section 38-33-10 [1962 Code Section 37-331; 1968 (55) 2407; 1978 Act No. 441, Section 1] recodified as Section 38-67-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-25-10 [1962 Code Section 37-1132; 1974 (58) 2378] recodified as Section 38-33-10 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 [amendment to former 1976 Code Section 38-25-10 transferred to Section 38-33-10 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 633.
 (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. After the issuance, the health maintenance organization shall maintain a net worth of not less than seven hundred fifty thousand dollars, six hundred thousand dollars of which must be capital if it is a stock health maintenance organization. Net worth means total assets less total liabilities. Instruments acceptable to the director or his designee may be utilized in determining net worth. If the director or his designee 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, the director or his designee may require that future enrollment be limited until it is no longer necessary.  (B) If the surplus of a stock health maintenance organization is less than twenty-five percent of the surplus initially required, as set forth in subsection (A), the health maintenance organization is considered delinquent, and the director or his designee may begin delinquency proceedings as provided by Chapter 27.  (C) If the capital of a stock health maintenance organization is impaired, the health maintenance organization is delinquent, and the director or his designee shall begin delinquency proceedings.  (D) If the surplus of a licensed mutual health maintenance organization is less than the sum of the capital and minimum surplus required to be maintained by a stock health maintenance organization licensed to write the same kind or kinds of business, the mutual health maintenance organization is considered delinquent, and the director or his designee may begin delinquency proceedings as provided by Chapter 27.  (E) If the surplus of a licensed mutual health maintenance organization is less than the minimum capital required to be possessed by a stock health maintenance organization licensed to write the same kind or kinds of business, the mutual health maintenance organization is delinquent, and the director or his designee shall begin delinquency proceedings.  HISTORY: Enacted as 1976 Code Section 38-25-100 by 1987 Act No. 83, Section 1; recodified as Section 38-33-100 by 1987 Act No. 155, Section 24; 1991 Act No. 13, Section 26; 1993 Act No. 181, Section 633; 2000 Act No. 312, Section 8.
 (A)(1) Every health maintenance organization shall establish and maintain a complaint system which is approved by the director or his designee to provide reasonable procedures for the resolution of written complaints initiated by enrollees.  (2) Each health maintenance organization, with the annual report required in Section 38-33-90, shall submit to the department an annual report in a form the director prescribes which must include:  (a) a summary of written complaints handled through the health maintenance organization's approved complaint system. The summary must include the total number of complaints organized by the nature of the complaint and the average time taken to resolve the complaint;  (b) the number, amount, and disposition of malpractice claims made by enrollees of the health maintenance organization that it settled during the year.  (B) The director or his designee at any time may examine the complaint system. Information concerning complaints and malpractice claims filed pursuant to this section must be held in confidence and are not subject to disclosure under the Freedom of Information Act.  HISTORY: Enacted as 1976 Code Section 38-25-110 by 1987 Act No. 83, Section 1; recodified as Section 38-33-110 by 1987 Act No. 155, Section 24; 1992 Act No. 403, Section 4; 1993 Act No. 181, Section 633.
 With the exception of investments made in accordance with Section 38-33-50 (A)(1) and (2) and (B), the funds of a health maintenance organization must be invested only in securities or other investments permitted by the laws of this State for the investment of assets which qualify to cover policyholder obligations of life insurance companies or such other securities or investments as the director or his designee may permit.  HISTORY: Enacted as 1976 Code Section 38-25-120 by 1987 Act No. 83, Section 1; recodified as Section 38-33-120 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) Each health maintenance organization shall deposit and maintain with the department cash or securities which qualify as legal investments under the laws of this State for public sinking funds in the amount of three hundred thousand dollars. The director or his designee may require a health maintenance organization to make deposits in excess of the amount specified in this section if in his opinion the additional deposits are necessary for the protection of enrollees and the public. All income from deposits must belong to the depositing organization and must be paid to it as it becomes available. A health maintenance organization that has made a security deposit may withdraw that deposit or part of it after making a substitute deposit of cash, securities, or a combination of these of equal amount and value. Securities must be approved by the director or his designee before being substituted. The return of cash or securities deposited with the department by a health maintenance organization pursuant to this section is governed by Section 38-9-150.  (B) Each health maintenance organization shall require every provider who participates in the health maintenance organization and furnishes health care services to the health maintenance organization's enrollees to execute an agreement not to bill the enrollees or otherwise hold the enrollees financially responsible for services rendered. Provided, an employing entity may execute one agreement on behalf of the employing entity and all of its providers. An employing entity may also execute one participation agreement and one of other similar required forms on behalf of the employing entity and all of its providers. The provider's agreement must be given on forms prescribed or approved by the director or his designee, shall extend to all services furnished to the enrollee during the time he was enrolled in the health maintenance organization, and shall apply even where the provider or employing entity had not been paid by the health maintenance organization.  (C) A health maintenance organization shall procure and maintain a policy of individual excess stop-loss coverage provided by an insurance company licensed by the State. The policy also must include provisions to cover all incurred, unpaid claim liability in the event of the termination of the health maintenance organization due to insolvency or otherwise. In addition, the director or his designee may require that the policy provide that the insurer will issue an individual policy to an enrollee upon termination of the health maintenance organization or the ineligibility of the enrollee for further coverage in the health maintenance organization.  HISTORY: Enacted as 1976 Code Section 38-25-130 by 1987 Act No. 83, Section 1; recodified as Section 38-33-130 by 1987 Act No. 155, Section 24; 1988 Act No. 622, Section 3; 1992 Act No. 280, Section 3; 1993 Act No. 181, Section 633; 1999 Act No. 98, Section 4; 2012 Act No. 137, Section 6, eff April 2, 2012.
 (A) No health maintenance organization, or representative thereof, may cause or knowingly permit the use of advertising which is untrue or misleading, solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive. For purposes of this chapter:  (1) A statement or item of information is considered to be untrue if it does not conform to fact in any respect which is significant to a reasonable person enrolled in, or considering enrollment with, a health maintenance organization.  (2) A statement or item of information is considered to be misleading, whether or not it may be literally untrue, if, in the total context in which the statement is made or the item of information is communicated, the statement or item of information may be reasonably understood by a reasonable person, not possessing special knowledge regarding health care coverage, as indicating any benefit or advantage or the absence of any exclusion, limitation, or disadvantage of possible significance to an enrollee of, or person considering enrollment in a health maintenance organization if the benefit or advantage or absence of limitation, exclusion, or disadvantage does not in fact exist.  (3) An evidence of coverage is considered to be deceptive if the evidence of coverage taken as a whole, and with consideration given to typography and format, as well as language, causes a reasonable person, not possessing special knowledge regarding health maintenance organizations and evidences of coverage therefor, to expect benefits, services, charges, or other advantages which the evidence of coverage does not provide or which the health maintenance organization issuing the evidence of coverage does not regularly make available for enrollees covered under such evidence of coverage.  (B) Chapter 57, Title 38 is construed to apply to health maintenance organizations and evidences of coverage except to the extent that the director or his designee determines that the nature of health maintenance organizations and evidences of coverage render such sections clearly inappropriate.  (C) A health maintenance organization may not cancel or refuse to renew an enrollee, except for reasons stated in the organization's regulations applicable to all enrollees, or for the failure to pay the charge for such coverage, or for such other reasons as may be promulgated by the department.  (D) No health maintenance organization may refer to itself as an insurer or use a name deceptively similar to the name or description of any insurance or surety corporation doing business in the state.  (E) Any person not in possession of a valid certificate of authority issued pursuant to this chapter may not use the phrase "health maintenance organization" or "HMO" in the course of operation.  HISTORY: Enacted as 1976 Code Section 38-25-140 by 1987 Act No. 83, Section 1; recodified as Section 38-33-140 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) An agent means a person who is appointed or employed by a health maintenance organization and who engages in solicitation of membership in the organization. This definition does not include a person enrolling members on behalf of an employer, union, or other organization to whom a master subscriber contract has been issued.  (B) The department may by regulation exempt certain classes of persons from the requirement of obtaining a license:  (1) if the functions they perform do not require special competence, trustworthiness, or the regulatory surveillance made possible by licensing; or  (2) if other existing safeguards make regulation unnecessary.  HISTORY: Enacted as 1976 Code Section 38-25-150 by 1987 Act No. 83, Section 1; recodified as Section 38-33-150 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) An insurance company licensed in this State may through a subsidiary or affiliate organize and operate a health maintenance organization under the provisions of this chapter. Any two or more such insurance companies or subsidiaries or affiliates thereof may jointly organize and operate a health maintenance organization.  (B) An insurer may contract with a health maintenance organization to provide insurance or similar protection against the cost of care provided through health maintenance organizations and to provide coverage in the event of the failure of the health maintenance organization to meet its obligations. Among other things, under such contracts, the insurer may make benefit payments to health maintenance organizations for health care services rendered by providers.  HISTORY: Enacted as 1976 Code Section 38-25-160 by 1987 Act No. 83, Section 1; recodified as Section 38-33-160 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) The director or his designee may make an examination of the affairs of a health maintenance organization and providers with whom the organization has contracts, agreements, or other arrangements as often as is reasonably necessary for the protection of the interests of the people of this State but not less frequently than once every five years. The director or his designee may accept the report of an examination made by the state where the health maintenance organization is domiciled.  (B) The director or his designee may make an examination concerning the quality of health care service of a health maintenance organization and providers with whom the organization has contracts, agreements, or other arrangements as often as is reasonably necessary for the protection of the interests of the people of this State but not less frequently than once every five years.  (C) Every health maintenance organization and provider shall submit its relevant books and records for the examinations and facilitate them. For the purpose of examinations, the director or his designee and the department may administer oaths to and examine the officers and agents of the health maintenance organization and the principals of the providers concerning their business.  (D) The expenses of examinations under this section are assessed against the organization being examined and remitted to the director or his designee for whom the examination is being conducted.  HISTORY: Enacted as 1976 Code Section 38-25-170 by 1987 Act No. 83, Section 1; recodified as Section 38-33-170 by 1987 Act No. 155, Section 24; 1992 Act No. 403, Section 5; 1993 Act No. 181, Section 633; 2018 Act No. 219 (H.4657), Section 3, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 3, in (A), in the first sentence, substituted "five years" for "three years"; and in (B), substituted "five years" for "three years".
 (A) The director or his designee may suspend or revoke a certificate of authority issued to a health maintenance organization if he finds that one or more of the following conditions exist:  (1) The health maintenance organization is operating significantly in contravention of its basic organizational document or in a manner contrary to that described in other information submitted under Section 38-33-30, unless amendments to the submissions have been filed with and approved by the director or his designee.  (2) The health maintenance organization issues evidence of coverage or uses a schedule of charges for health care services which do not comply with the requirements of Section 38-33-80.  (3) The health maintenance organization does not provide or arrange for basic health care services.  (4) The health maintenance organization does not meet the requirements of Section 38-33-40 or is unable to fulfill its obligations to furnish health care services.  (5) The health maintenance organization is financially unsound or reasonably may be expected to be unable to meet its obligations to enrollees or prospective enrollees.  (6) The health maintenance organization has failed to implement a mechanism affording the enrollees an opportunity to participate in matters of policy and operation under Section 38-33-60.  (7) The health maintenance organization has failed to implement the complaint system required by Section 38-33-110 in a reasonable manner to resolve valid complaints.  (8) The health maintenance organization, or a person on its behalf, advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner.  (9) The continued operation of the health maintenance organization is hazardous to its enrollees.  (10) The health maintenance organization otherwise has failed to comply with this chapter or regulations promulgated under it by the department.  (B) A certificate of authority is suspended or revoked only after compliance with the requirements of Section 38-33-210.  (C) When the certificate of authority of a health maintenance organization is suspended, the health maintenance organization, during the suspension, may not enroll additional enrollees except newborn children or other newly acquired dependents of existing enrollees and may not engage in advertising or solicitation.  (D) When the certificate of authority of a health maintenance organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs and may conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. It may not engage in further advertising or solicitation. The director or his designee, by written order, may permit further operation of the organization he finds to be in the best interest of enrollees, to the end that enrollees are afforded the greatest practical opportunity to obtain continuing health care coverage.  HISTORY: Enacted as 1976 Code Section 38-25-180 by 1987 Act No. 83, Section 1; recodified as Section 38-33-180 by 1987 Act No. 155, Section 24; 1992 Act No. 403, Section 6; 1993 Act No. 181, Section 633.
 Any rehabilitation, liquidation, or conservation of a health maintenance organization is considered to be the rehabilitation, liquidation, or conservation of an insurance company and must be conducted under the supervision of the director or his designee pursuant to the law governing the rehabilitation, liquidation, or conservation of insurance companies. The director or his designee may apply for an order directing him to rehabilitate, liquidate, or conserve a health maintenance organization upon any one or more grounds set out in Sections 38-27-310 and 38-27-370, or when in his opinion the continued operation of the health maintenance organization would be hazardous either to the enrollees or to the people of this State. Enrollees shall have the same priority in the event of liquidation or rehabilitation as the law provides to policyholders of an insurer.  HISTORY: Enacted as 1976 Code Section 38-25-190 by 1987 Act No. 83, Section 1; recodified as Section 38-33-190 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 As used in this chapter:  (1) "Basic health care services" means emergency care, inpatient hospital and physician care, and outpatient medical services. It does not include dental services, mental health services, or services for alcohol or drug abuse, although a health maintenance organization at its option may elect to provide these services in its coverage.  (2) "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the insurance department.  (3) "Copayment" or "deductible" means the amount specified in the evidence of coverage that the enrollee shall pay directly to the provider for covered health care services, which may be stated in either specific dollar amounts or as a percentage of the negotiated rate or lesser charge of the provider. For good cause shown, the Director of the South Carolina Department of Insurance may, in his discretion, approve forms with provisions which vary from the provisions required in this subsection if he finds the provisions are more favorable to the enrollee.  (4) "Employing entity" means a person employing one or more providers and agreeing to perform or provide a duty or function of the provider pursuant to this chapter, where the provider is prevented by contract with the employing entity or the employing entity's governing documents from performing such statutory duty or function individually. With respect to a statutory duty or function for which the employing entity acts for providers, an employing entity shall possess all corresponding rights and duties of its providers and shall be allowed to collectively satisfy such duty or function under this chapter as to all its providers (for example, by furnishing one hold harmless agreement and one participation agreement to a health maintenance organization on behalf of all the employing entity's providers).  (5) "Enrollee" means an individual who is enrolled in a health maintenance organization.  (6) "Evidence of coverage" means a certificate, an agreement, or a contract issued to an enrollee setting out the coverage to which he is entitled.  (7) "Health care services" means services included in furnishing an individual medical or dental care or hospitalization or incident to the furnishing of care or hospitalization, and other services to prevent, alleviate, cure, or heal human illness, injury, or physical disability.  (8) "Health maintenance organization" means a person who undertakes to provide or arrange for basic health care services to enrollees for a fixed prepaid premium.  (9) "Person" means a natural or an artificial person including, but not limited to, individuals, partnerships, associations, trusts, or corporations.  (10) "Provider" means a physician, dentist, hospital, or other person properly licensed, where required, to furnish health care services.  (11) "Designee or Deputy Director" means the person or person appointed by director, serving at his will and pleasure as his designee, to supervise and carry out the functions and duties of the department as provided by law. Any duty or function of the director to manage and supervise the insurance department may be conferred by the director's authority upon his designee or deputy director.  HISTORY: Former 1976 Code Section 38-33-20 [1962 Code Section 37-332; 1968 (55) 2407; 1978 Act No. 441 Section 2] recodified as Section 38-67-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-25-20 [1962 Code Section 37-1131; 1974 (58) 2378] recodified as Section 38-33-20 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 [amendment to former 1976 Code Section 38-25-20 transferred to Section 38-33-20 by 1987 Act No. 155, Section 24]; 1988 Act No. 622, Section 2; 1992 Act No. 403, Section 1; 1993 Act No. 181, Section 633; 1995 Act No. 58, Section 1; 1999 Act No. 98, Section 3.
 The department may, after notice and hearing, promulgate regulations to carry out the provisions of this chapter.  HISTORY: Enacted as 1976 Code Section 38-25-200 by 1987 Act No. 83, Section 1; recodified as Section 38-33-200 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) When the director or his designee has cause to believe that grounds for the denial of an application for a certificate of authority exist, or that grounds for the suspension or revocation of a certificate of authority exist, he shall notify the health maintenance organization in writing specifically stating the grounds for denial, suspension, or revocation and fixing a time of at least thirty days thereafter for a hearing on the matter. However, if the ground for suspension or revocation relates solely to financial condition, the director or his designee may immediately and without hearing suspend the certificate of authority of the health maintenance organization.  (B) The provisions of Article 3, Chapter 23, Title 1, apply to administrative proceedings under this section. Whenever the director or his designee issues an order of suspension without an administrative hearing before the director or his designee based upon a health maintenance organization's financial condition, as authorized under subsection (A), the health maintenance organization has a right to judicial review before the Administrative Law Court in accordance with law.  HISTORY: Enacted as 1976 Code Section 38-25-210 by 1987 Act No. 83, Section 1; recodified as Section 38-33-210 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) Every health maintenance organization subject to this chapter shall pay to the department the following fees:  (1) for filing an application for a certificate of authority, two thousand dollars;  (2) for filing an amendment to the organization documents that requires approval, one hundred dollars;  (3) for filing each annual report, one thousand dollars;  (4) for transferring a certificate of authority from one entity to another which qualifies for such a certificate of authority, two thousand dollars.  (B) Fees charged under this section must be deposited in the general fund of the state. Fees required in this section must be fully earned when paid and are not refundable, proratable, nor transferable.  HISTORY: Enacted as 1976 Code Section 38-25-220 by 1987 Act No. 83, Section 1; recodified as Section 38-33-220 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) The director or his designee, in lieu of revocation or suspension of a certificate of authority under Section 38-33-180, may levy an administrative penalty of not more than fifteen thousand dollars for each violation of state or federal law the Department of Insurance is authorized to enforce or ground as prescribed therein. A series of acts by an organization which merely implement a basic violation and are not separate and distinct violations of an independent nature are considered to be part of the basic violation and only one penalty may be imposed. A monetary penalty may be imposed under this paragraph only after notice and an opportunity to be heard have been afforded in accordance with Section 38-33-210.  (B) Whenever the director or his designee has reason to believe that any person has transacted the business of, or is about to transact the business of, a health maintenance organization without a certificate of authority, he may cause a complaint to be filed in the court of common pleas of Richland County to enjoin and restrain the unauthorized transaction of business. The court has power to make and enter an order or judgment awarding such preliminary or final injunctive relief as may be necessary and proper. In addition, the court may impose a civil penalty of not more than ten thousand dollars upon such person for each unauthorized act of business so transacted.  HISTORY: Enacted as 1976 Code Section 38-25-230 by 1987 Act No. 83, Section 1; recodified as Section 38-33-230 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633; 2018 Act No. 219 (H.4657), Section 4, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 4, in (A), in the first sentence, deleted "may" following "his designee", and inserted "of state or federal law the Department of Insurance is authorized to enforce" following "each violation".
 (A) Except as otherwise specifically provided, the provisions of the insurance law do not apply to any health maintenance organization granted a certificate of authority under this chapter.  (B) Solicitation of enrollees by a health maintenance organization granted a certificate of authority, or its representatives, are not construed to violate any provision of law relating to solicitation or advertising by health professionals.  (C) No health maintenance organization authorized under this chapter is considered to be practicing medicine, dentistry, or other healing professions.  HISTORY: Enacted as 1976 Code Section 38-25-240 by 1987 Act No. 83, Section 1; recodified as Section 38-33-240 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 All applications and filings required under Section 38-33-30 and any annual and quarterly financial reports required under Section 38-33-90 must be treated as public documents. Nothing herein may be construed to require disclosure of trade secrets, privileged or confidential commercial information, or replies to a specific request for information made by the director or his designee.  HISTORY: Enacted as 1976 Code Section 38-25-250 by 1987 Act No. 83, Section 1; recodified as Section 38-33-250 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 Any data or information pertaining to the diagnosis, treatment, or health of any enrollee or applicant obtained from such person or from any provider by any health maintenance organization is confidential and may not be disclosed to any person except to the extent that it may be necessary to carry out the purposes of this chapter, or upon the express consent of the enrollee or applicant, or pursuant to statute or court order for the production of evidence or the discovery thereof, or in the event of claim or litigation between such person and the health maintenance organization wherein the data or information is pertinent. A health maintenance organization is entitled to claim any statutory privileges against such disclosure which the provider who furnished the information to the health maintenance organization is entitled to claim.  HISTORY: Enacted as 1976 Code Section 38-25-260 by 1987 Act No. 83, Section 1; recodified as Section 38-33-260 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 (A) The director or his designee, in carrying out the obligations under Sections 38-33-40, 38-33-170(B), and 38-33-180(A), may contract with qualified persons to make recommendations concerning the determinations required to be made by him. The recommendations may be accepted in full or in part by the director or his designee.  (B) The director or his designee may assess the health maintenance organization directly for consulting expenses incurred pursuant to subsection (A) and require the organization to remit payment directly to the consultant. These expenses must be reasonable. The director or his designee is not required to but may consider the results of a quality assurance examination made at an appropriate time by a person with whom the health maintenance organization has a contract to provide health care services or by a person who has a legitimate interest in the quality of care provided by the organization.  HISTORY: Enacted as 1976 Code Section 38-25-270 by 1987 Act No. 83, Section 1; recodified as Section 38-33-270 by 1987 Act No. 155, Section 24; 1992 Act No. 403, Section 7; 1993 Act No. 181, Section 633.
 (A) No person may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire in the open market or otherwise, any voting security of a health maintenance organization or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the health maintenance organization, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a health maintenance organization, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, the person has filed with the department and has sent to the health maintenance organization, information required by Section 38-21-70 and the offer, request, invitation, agreement, or acquisition has been approved by the director or his designee. Approval by the director or his designee is governed by Section 38-21-90.  (B) The provisions of Section 38-21-250 shall apply to health maintenance organizations.  HISTORY: Enacted as 1976 Code Section 38-25-280 by 1987 Act No. 83, Section 1; recodified as Section 38-33-280 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633; 2002 Act No. 228, Section 6, eff May 1, 2002.
 No health maintenance organization may prohibit any licensed physician, podiatrist, optometrist, or oral surgeon from participating as a provider in the organization on the basis of his profession. Nothing in this section may be construed to interfere in any way with the medical decision of the primary health care provider to use or not use any health professional on a case-by-case basis.  HISTORY: 1976 Code Section 38-25-80 [1986 Act No. 440; repealed by 1987 Act No. 155, Section 25(f)] recodified as Section 38-33-80 by 1987 Act No. 155, Section 1; substance transferred to Section 38-33-290 by 1987 Act No. 83, Section 1; 1993 Act No. 181, Section 633.
 (A) No person may establish or operate a health maintenance organization in this State without first obtaining a certificate of authority from the director or his designee. A foreign corporation, upon compliance with the provisions of this chapter, may be issued a certificate of authority upon further conditions that:  (1) the applicant is registered as a foreign corporation to do business in this State;  (2) the applicant is subject to regulation of its financial condition by authorities in its state of domicile, including regular financial examination not less frequently than once every three years; and  (3) the applicant complies with such conditions as the director or his designee may prescribe with respect to the maintenance of books, records, accounts, and facilities in this State.  (B) 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:  (1) a copy of the organizational documents of the applicant, such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents, and all amendments;  (2) a copy of the bylaws and regulations, or similar document, if any, regulating the conduct of the internal affairs of the applicant;  (3) a list of the names, addresses, and official positions of the persons who are to be responsible for the management and conduct of the affairs of the applicant, including, but not limited to, all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal offices in the case of a corporation, and the partners or members in the case of a partnership or association;  (4) a copy of any contract made or to be made between any providers or persons listed in item (3) and the applicant;  (5) a copy of the form of evidence of coverage to be issued to the enrollees;  (6) a copy of the form or group contract, if any, which is to be issued to employers, unions, trustees, or other organizations;  (7) financial statements showing the applicant's assets, liabilities, and sources of financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent certified financial statements satisfies this requirement unless the director or his designee directs that additional or more recent financial information is required for the proper administration of this chapter;  (8) a description of the proposed method of marketing, a financial plan which includes a projection of operating results anticipated until the organization has had net income for at least one year, and a statement as to the sources of working capital as well as any other sources of funding;  (9) a power of attorney duly executed by the applicant appointing the director and his authorized deputies or designees, as the lawful attorney of the applicant in this State upon whom all lawful process in any legal action or proceeding against the health maintenance organization on a cause of action arising in this State may be served;  (10) a statement reasonably describing the geographic area to be served;  (11) a description of the complaint procedures to be utilized as required under Section 38-33-110;  (12) a description of the procedures and programs to be implemented to meet the quality of health care requirements in Section 38-33-40;  (13) a description of the mechanism by which enrollees have an opportunity to participate in matters of policy and operation under Section 38-33-60(2);  (14) any other information as the director or his designee may require to make the determination required in Section 38-33-40.  (C)(1) An applicant or a health maintenance organization holding a certificate of authority granted hereunder shall, unless otherwise provided for in this chapter, file a notice describing any material modification of the operation set out in the information required by subsection (B). The notice must be filed with the director or his designee prior to the modification. If the director or his designee does not disapprove within thirty days of filing, the modification is considered approved.  (2) The department may promulgate regulations exempting from the filing requirements of item (1) those items he considers unnecessary.  (D) An applicant or a health maintenance organization holding a certificate of authority shall file all contracts of reinsurance or a summary of the plan of self-insurance. Any agreement between the organization and an insurer is subject to the laws of this State regarding reinsurance. All reinsurance agreements or summaries of plans of self-insurance and any modifications thereto must be filed and approved. Reinsurance agreements shall remain in full force and effect for at least thirty days following written notice by registered mail of cancellation by either party to the director or his designee.  HISTORY: Former 1976 Code Section 38-33-30 [1962 Code Section 37-333; 1968 (55) 2407; 1978 Act No. 441 Section 3] recodified as Section 38-67-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-25-30 [1962 Code Section 37-1133; 1974 (58) 2378] recodified as Section 38-33-30 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 [amendment to former 1976 Code Section 38-25-30 transferred to Section 38-33-30 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 633; 1997 Act No. 68, Section 7.
 There may be no monetary liability on the part of, and no cause of action may arise against, any person who participates in quality of care or utilization reviews by a peer review committee established in accordance with regulations of the department under Section 38-33-40(A)(2) for any act performed during such reviews, provided such person acts in good faith and without malice, has made a reasonable effort to obtain the facts of the matter, and reasonably believes that the action taken is warranted by the facts.  HISTORY: Enacted as 1976 Code Section 38-25-300 by 1987 Act No. 83, Section 1; recodified as Section 38-33-300 by 1987 Act No. 155, Section 24; 1993 Act No. 181, Section 633.
 Nothing in this chapter may be construed to prevent a health maintenance organization from contracting with an out-of-state provider.  HISTORY: 1995 Act No. 58, Section 7.
 (A) A health benefit plan shall allow a female enrollee thirteen years of age or older a minimum of two visits annually pursuant to the health benefit plan, without prior referral, to the health care services of an obstetrician-gynecologist in the health benefit plan.  (B) For any continuing treatment resulting from obstetrical or gynecological, or both, complications diagnosed during the two visits for a calendar year, authorization must be made for medical necessity directly by the health maintenance organization. Written communication should be sent by the obstetrician-gynecologist to the patient's primary care physician regarding the condition being treated within a reasonable time after each visit.  (C) A health benefit plan must notify its members of the provisions of this subsection (A). The information must be provided in the Summary Plan Description materials and enrollment materials.  (D) For purposes of this section:  (1) "Health benefit plan" means a health maintenance organization, a preferred provider plan, an exclusive provider plan, or other managed care arrangement plan;  (2) "Health care services" means the full scope of medically necessary services provided by the participating obstetrician-gynecologist in the care of or related to the female reproductive system and breasts.  HISTORY: 1998 Act No. 329, Section 2.  
 (A) The director or his designee shall issue a certificate of authority to a person filing an application pursuant to Section 38-33-30 if, upon payment of the application fee prescribed in Section 38-33-220, the director or his designee is satisfied that:  (1) The persons responsible for the conduct of the affairs of the applicant are competent, trustworthy, and possess good reputations.  (2) The health maintenance organization's proposed plan of operation has arrangements for an on-going quality assurance program.  (3) The health maintenance organization effectively provides or arranges for the provision of basic health care services for a fixed prepaid premium, except to the extent of reasonable requirements for deductibles or co-payments.  (4) The health maintenance organization is financially responsible, is able to meet its obligations to enrollees and prospective enrollees, and otherwise meets the requirements of this chapter. In making this determination, considerations by the director or his designee may include, but are not limited to:  (a) the financial soundness of the arrangements for health care services and the schedule of charges used in connection with them;  (b) the adequacy of working capital;  (c) an agreement with an insurer, a government, or other organization for insuring the payment of the cost of health care services or the provision for automatic applicability of an alternative coverage if the health maintenance organization is discontinued;  (d) an agreement with providers for the provision of health care services;  (e) a deposit of cash or securities submitted in accordance with Section 38-33-130.  (5) The enrollees are afforded an opportunity to participate in matters of policy and operation pursuant to Section 38-33-60.  (6) Nothing in the proposed method of operation, pursuant to Section 38-33-30 or by independent investigation, is contrary to the public interest.  (B) No health maintenance organization may be licensed unless it has employed or contracted with or made arrangements satisfactory to the director or his designee with both physicians and hospitals to participate as providers in each geographic area to be served, as identified by the health maintenance organization under Section 38-33-30.  HISTORY: Former 1976 Code Section 38-33-40 [1962 Code Section 37-334; 1968 (55) 2407; 1978 Act No. 441 Section 4] recodified as Section 38-67-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-25-40 [1962 Code Section 37-1134; 1974 (58) 2378] recodified as Section 38-33-40 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 (amendment to former 1976 Code Section 38-25-40 transferred to Section 38-33-40 by 1987 Act No. 155, Section 24]; 1992 Act No. 403, Section 2; 1993 Act No. 181, Section 633.
 (A) The powers of a health maintenance organization include, but are not limited to, the following:  (1) the purchase, lease, construction, renovation, operation, or maintenance of hospitals, medical facilities, or both, and their ancillary equipment, and such property as may reasonably be required for its principal office or for such purposes as may be necessary in the transaction of the business of the organization;  (2) the making of loans to a medical group under contract with it in furtherance of its program or the making of loans to a corporation under its control for the purpose of acquiring or constructing medical facilities and hospitals or in furtherance of a program providing health care services to enrollees;  (3) the furnishing of health care services through providers which are under contract with or employed by the health maintenance organization;  (4) the contracting with any person for the performance on its behalf of certain functions such as marketing, enrollment, and administration;  (5) the contracting with an insurance company licensed in this State for the provision of insurance, indemnity, or reimbursement against the cost of health care services provided by the health maintenance organization;  (6) the offering of other health care services, in addition to basic health care services;  (7) providing services included in federal health care programs such as "Medicare", "Medicaid", "Champus", and veterans administration and other health programs funded in whole or in part by federal funds, in accordance with the laws governing these programs.  (8) the offering of an out-of-network coverage under a point of service option; the Director of the Department of Insurance shall, by regulations and/or policy bulletin, implement the provisions of this item.  (B)(1) A health maintenance organization shall file notice, with adequate supporting information, with the director or his designee prior to the exercise of any power granted in subsection (A)(1), (2), (4), or (7). The director or his designee may disapprove such exercise of power if in his opinion it would adversely affect the financial soundness of the health maintenance organization and endanger its ability to meet its obligations. If the director or his designee does not disapprove within thirty days of the filing, it is considered approved.  (2) The department may promulgate regulations exempting from the filing requirement of item (1) those activities having a de minimis effect.  (C) Any contract issued by a Health Maintenance Organization in this State on or after January 1, 1988, may include provision for subrogation by the Health Maintenance Organization to the enrollee's right of recovery against a liable third party for not more than the amount of insurance benefits that the Health Maintenance Organization has paid previously in relation to the enrollee's injury by the liable third party. If the director or his designee, upon being petitioned by the enrollee, determines that the exercise of subrogation by a Health Maintenance Organization is inequitable and commits an injustice to the enrollee, subrogation is not allowed. Attorney's fees and costs must be paid by the Health Maintenance Organization from the amounts recovered. This determination by the director or his designee may be appealed to the Administrative Law Court as provided by law in accordance with Section 38-3-210.  HISTORY: Former 1976 Code Section 38-33-50 [1962 Code Section 37-335; 1968 (55) 2407; 1978 Act No. 441 Section 5] recodified as Section 38-67-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-25-50 [1962 Code Section 37-1135; 1974 (58) 2378] recodified as Section 38-33-50 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 [amendment to former 1976 Code Section 38-25-50 transferred to Section 38-33-50 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 633; 1999 Act No. 98, Section 1; 2000 Act No. 380, Section 2A.
 (A) The governing body of any health maintenance organization may include providers, or other individuals, or both.  (B) The governing body shall establish a mechanism to afford the enrollees an opportunity to participate in matters of policy and operation through the establishment of advisory panels, by the use of advisory referenda on major policy decisions, or through the use of other mechanisms.  HISTORY: Former 1976 Code Section 38-25-60 [1962 Code Section 37-1136; 1974 (58) 2378] recodified as Section 38-33-60 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 [amendment to former 1976 Code Section 38-25-60 transferred to Section 38-33-60 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 633.
 Any director, officer, employee, or partner of a health maintenance organization who receives, collects, disburses, or invests funds in connection with the activities of an organization is responsible for the funds in a fiduciary relationship to the organization.  HISTORY: Former 1976 Code Section 38-25-70 [1984 Act No. 512, Part II, Section 32] recodified as Section 38-33-70 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 (amendment to former 1976 Code Section 38-25-70 transferred to Section 38-33-70 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 633.
 (A)(1) Every enrollee is entitled to an evidence of coverage issued by the health maintenance organization. If any of the enrollee's benefits are provided through an insurance policy, the insurer shall issue a separate evidence of coverage for those benefits provided. However, for a point of service option offered jointly by a health maintenance organization and an insurer, only one evidence of coverage is required, as long as the benefits provided by each party are clearly identified therein.  (2) Evidence of coverage, or an amendment to it, may not be issued or delivered to a person in this State until a copy of the form of the evidence of coverage, or amendment to it, has been filed with and approved by the director or his designee pursuant to Section 38-71-310(A) or 38-71-720(A).  (3) No evidence of coverage may contain provisions or statements which are unjust, unfair, inequitable, misleading, deceptive, which encourage misrepresentation, or which are untrue, misleading, or deceptive as defined in Section 38-33-140; and  (4) An evidence of coverage must contain a clear and concise statement, if a contract, a summary, or a certificate, of:  (a) the health care services and the insurance or other benefits, if any, to which the enrollee is entitled;  (b) any limitations on the services, kind of services, benefits, or kind of benefits, to be provided, including any deductible or co-payment feature;  (c) where and in what manner information is available as to how services may be obtained;  (d) the total amount of payment for health care services and the indemnity or service benefits, if any, which the enrollee is obligated to pay with respect to individual contracts;  (e) clear and understandable description of the health maintenance organization's method for resolving enrollee complaints; and  (f) the contract period during which the enrollee is entitled to health care services and benefits, the applicable charges for coverage during that contract period, and the time and manner in which charges and benefits under the contract or certificate can be changed. Any subsequent change may be evidenced in a separate document issued to the enrollee.  (5) The director or his designee may require additional provisions in the evidence of coverage as may be necessary to the fair, just, and equitable treatment of enrollees. The additional provisions may include, but are not limited to, any of the provisions required of health insurance policies in Chapter 71 of Title 38 and regulations promulgated thereunder, if in the opinion of the director or his designee, the provisions are appropriate for the coverages provided under the health maintenance organization's evidence of coverage.  (6) The provisions of Section 38-71-760 governing discontinuance and replacement of coverage are applicable to group health maintenance organization contracts, except to the extent that the director or his designee determines the provisions to be inappropriate to the coverage provided.  (7) A health maintenance organization that issues a health maintenance organization contract which requires the enrollee to pay a specified percentage of the cost of covered health care services shall calculate those copayments and deductibles on the negotiated rate or lesser charge of the provider. Nothing in this section precludes a health maintenance organization from issuing a contract which contains fixed dollar copayments and deductibles.  (B) No schedule of charges applicable to individual health maintenance organization contracts may be used until a copy of the schedule has been filed with and approved by the director or his designee. The director or his designee may disapprove this schedule of charges if it is determined that the benefits provided in the contracts are unreasonable in relation to the charges.  (C) The director or his designee shall approve within thirty days any form if the requirements of subsection (A) are met. The director or his designee, in his discretion, may extend for up to an additional sixty days the period within which he shall approve or disapprove the form. The director or his designee shall approve, within a reasonable period, any schedule of charges if the requirements of subsection (B) are met. It is unlawful to issue a form or to use a schedule of charges until approved. If the director or his designee disapproves the filing, he shall notify the filer. The notice must contain the reasons for disapproval, and the filer, upon request in writing, is entitled to a public hearing on it. If action is not taken to approve or disapprove any form within thirty days of the filing of the form, if the period is not extended, or at the expiration of the extended period, if any, the filing is deemed approved. If action is not taken to approve or disapprove any schedule of charges within ninety days of the filing of the charges, the filing is deemed approved. An organization may not use a form or schedule of charges deemed approved pursuant to the default provision of this section until the organization has filed with the director or his designee a written notice of its intent to use the form or schedule of charges. The notice must be filed in the office of the director at least ten days before the organization uses the form or schedule of charges.  (D) At any time the director or his designee, after a public hearing of which at least thirty days' notice has been given, may withdraw approval of a schedule of charges previously approved under subsection (B) or an evidence of coverage approved under subsection (A) if he determined that the schedule of charges or evidence of coverage no longer meets the standards for approval specified in this section.  HISTORY: Former 1976 Code Section 38-25-80 [1986 Act No. 440; repealed by 1987 Act No. 155, Section 25 (f)] recodified as Section 38-33-80 by 1987 Act No. 155, Section 1, and substance transferred to Section 38-33-290 by 1987 Act No. 83, Section 1; New Section 38-33-80 enacted by 1987 Act No. 83, Section 1; 1993 Act No. 181, Section 633; 1995 Act No. 58, Section 4; 1995 Act No. 58, Section 2; 1999 Act No. 98, Section 2; 2001 Act No. 82, Section 15, eff July 20, 2001.
 (A) Every health maintenance organization annually shall file with the department by March first, in the form and detail the director or his designee prescribes, a statement showing the business standing and financial condition of the health maintenance organization on December thirty-first of the preceding year, except that upon timely written request by the president or chief executive officer setting forth reasons why the statement cannot be filed within the time provided, the director or his designee may grant in writing an extension of filing time for not more than thirty days. This statement must conform substantially to the statement form adopted by the National Association of Insurance Commissioners. Unless the director or his designee provides otherwise, the annual statement is to be prepared in accordance with the annual statement instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners.  (B) The director or his designee may require every health maintenance organization to file quarterly reports and additional information considered necessary to enable the director or his designee to carry out his duties under this chapter. The reports and information must be furnished in the time and manner prescribed by the director or his designee.  (C) Every health maintenance organization which is authorized to write business in this State shall file annually with the National Association of Insurance Commissioners by March first a copy of its annual statement convention blank along with any additional filings prescribed by the director or his designee for the preceding year. The information filed with the National Association of Insurance Commissioners must be in the same format and scope as that required by the director or his designee and must include the signed jurat page and the actuarial certification. Any amendments and addenda to the annual statement filing subsequently filed with the director or his designee also must be filed with the National Association of Insurance Commissioners. Foreign health maintenance organizations domiciled in a state which has a law substantially similar to this subsection are considered in compliance with this section.  (D) In the absence of actual malice, members of the National Association of Insurance Commissioners, their authorized committees, subcommittees, and task forces, their delegates, National Association of Insurance Commissioners' employees, and all others charged with the responsibility of collecting, reviewing, analyzing, and disseminating the information developed from the filing of the annual statement convention blanks are acting as agents of the director or his designee under the authority of this section and are not subject to civil liability for libel, slander, or any other cause of action by virtue of their collection, review, and analysis or dissemination of the data and information collected from the filings required by this section.  HISTORY: Enacted as 1976 Code Section 38-25-90 by 1987 Act No. 83, Section 1; recodified as Section 38-33-90 by 1987 Act No. 155, Section 24; 1992 Act No. 403, Section 3; 1993 Act No. 181, Section 633; 2000 Act No. 312, Section 7.
 Members of religious denominations, local lodges, or fraternal orders under the control and supervision of a representative governing body within this State or of local labor organizations with a national or international charter or any number of persons, not less than twenty, a majority of whom must be bona fide residents of this State may, when investigated and approved by the director or his designee, form mutual associations, incorporated or unincorporated, for the purpose of aiding their members or their beneficiaries in times of sickness and death by levying equitable assessments for the payment of sick relief or death benefits upon compliance with this chapter.  HISTORY: Former 1976 Code Section 38-35-10 [1962 Code Section 37-441; 1968 (55) 2584; 1971 (57) 474; 1972 (57) 3116] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-23-10 [1947 (45) 322; 1952 Code Section 37-1001; 1962 Code Section 37-1001] recodified as Section 38-35-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 634.
 A mutual association may not have paid agents for the soliciting of business or members and must be conducted without profit.  HISTORY: Former 1976 Code Section 38-35-20 [1962 Code Section 37-442; 1968 (55) 2584] recodified as Section 38-71-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-23-20 [1947 (45) 322; 1952 Code Section 37-1002; 1962 Code Section 37-1002] recodified as Section 38-35-20 by 1987 Act No. 155, Section 1.
 Assessments must be made by a mutual association at the time an individual becomes a member or at the time of death or sickness of a member and for the purpose of paying benefits due the member because of death or sickness.  HISTORY: Former 1976 Code Section 38-35-30 [1962 Code Section 37-443; 1968 (55) 2584] no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-23-30 [1947 (45) 322; 1952 Code Section 37-1003; 1962 Code Section 37-1003; 1984 Act No. 330] recodified as Section 38-35-30 by 1987 Act No. 155, Section 1.
 Mutual associations shall file an annual report with the department. If, after examination of the report, the director or his designee determines that the mutual association has complied with the insurance laws, he may issue it a certificate showing compliance.  HISTORY: Former 1976 Code Section 38-35-40 [1947 (45) 322; 1952 Code Section 37-453; 1962 Code Section 37-453] recodified as Section 38-71-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-23-40 [1947 (45) 322; 1952 Code Section 37-1004; 1962 Code Section 37-1004] recodified as Section 38-35-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 635.
 A mutual association is subject to any examination by the director or his designee which will enable him to determine that it has complied with the state insurance laws.  HISTORY: Former 1976 Code Section 38-35-50 [1962 Code Section 37-444; 1968 (55) 2569] recodified as Section 38-71-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-23-50 [1947 (45) 322; 1952 Code Section 37-1005; 1962 Code Section 37-1005] recodified as Section 38-35-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 636.
 Mutual associations shall not pay a license fee.  HISTORY: Former 1976 Code Section 38-35-60 [1962 Code Section 37-445; 1968 (55) 2582] recodified as Section 38-71-120 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-23-60 [1947 (45) 322; 1952 Code Section 37-1005; 1962 Code Section 37-1005] recodified as Section 38-35-60 by 1987 Act No. 155, Section 1.  
 Any incorporated society, order, or supreme lodge, without capital stock, whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which provides benefits in accordance with this chapter, is a fraternal benefit society.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A society shall specify in its bylaws or rules:  (1) eligibility standards for each and every class of membership, provided that if benefits are provided on the lives of children, the minimum age for adult membership must be set at not less than age fifteen and not greater than age twenty-one;  (2) the process for admission to membership for each membership class; and  (3) the rights and privileges of each membership class, provided that only benefit members have the right to vote on the management of the insurance affairs of the society.  (B) A society also may admit social members who shall have no voice or vote in the management of the insurance affairs of the society.  (C) Membership rights in the society are personal to the member and are not assignable.  HISTORY: 2000 Act No. 259, Section 1.
 (A) The principal place of business and primary executive, administrative, and home offices and all original books and records of a domestic society must be located and maintained in this State. The meetings of its supreme governing body may be held in a state, district, province, or territory in which the society has at least one subordinate lodge, or in another location as determined by the supreme governing body, and all business transacted at these meetings is as valid in all respects as if these meetings were held in this State. The minutes of the proceedings of the supreme governing body and of the board of directors must be in the English language.  (B)(1) A society may provide in its bylaws for an official publication in which a notice, report, or statement required by law to be given to members, including notice of election, may be published. These required reports, notices, and statements must be printed conspicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member must be deemed to be mailed to all members at the same address, unless a member requests a separate copy.  (2) Not later than June first of each year, a synopsis of the society's annual statement providing an explanation of the facts concerning the condition of the society must be printed and mailed to each benefit member of the society, or the synopsis may be published in the society's official publication.  (C) A society may provide in its bylaws or rules for grievance or complaint procedures for members.  HISTORY: 2000 Act No. 259, Section 1.
 (A) The officers and members of the supreme governing body or a subordinate body of a society are not personally liable for the payment of any benefits provided by a society. The payment is payable only out of the funds of the society and in a manner provided by its constitution and bylaws.  (B) A person may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed upon, that person in connection with or arising out of any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or threat of them, in which the person may be involved by reason of the fact that he is or was a director, officer, employee, or agent of the society or of a firm, corporation, or an organization which he served in a capacity at the request of the society. A person may not be indemnified or reimbursed (1) in relation to any matter in the action, suit, or proceeding as to which he is finally adjudged to be or to have been guilty of breach of a duty as a director, officer, employee, or agent of the society, or (2) in relation to any matter in the action, suit, or proceeding, or threat of them, which has been made the subject of a compromise settlement unless, in either (1) or (2) of this subsection, the person acted in good faith for a purpose the person reasonably believed to be in, or not opposed to, the best interests of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that his conduct was unlawful. The determination whether the conduct of the person meets the standard required in order to justify indemnification and reimbursement in relation to any matter described in (1) or (2) of this subsection may be made only by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to the action, suit, or proceeding or by a court of competent jurisdiction. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or upon a plea of no contest, as to that person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The right of indemnification and reimbursement is not exclusive of other rights to which the person may be entitled as a matter of law and inures to the benefit of his heirs, executors, and administrators.  (C) A society is empowered to purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, or agent of the society, or who is or was serving at the request of the society as a director, officer, employee, or agent of another firm, corporation, or organization, against any liability asserted against the person and incurred by him in that capacity or arising out of his status as such, whether or not the society would have the power to indemnify the person against liability under this section.  (D) A director, an officer, employee, a member, or volunteer of a society serving without compensation is not liable, and no cause of action may be brought, for damages resulting from the exercise of judgment or discretion in connection with the duties or responsibilities of that person for the society, unless the act or omission involved wilful or wanton misconduct.  HISTORY: 2000 Act No. 259, Section 1.
 The bylaws of the society may provide that no subordinate body or any of its subordinate officers or members has the power or authority to waive any of the provisions of the bylaws of the society. This provision is binding on the society and every member and beneficiary of a member.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its bylaws, rules, and ritual. Subordinate lodges must be required by the bylaws of the society to hold regular meetings at least once in each month in furtherance of the purposes of the society.  (B) A society may, at its option, organize and operate lodges for children under the minimum age for adult membership. Membership and initiation in local lodges may not be required of these children, nor shall these children have a voice or vote in the management of the society.  HISTORY: 2000 Act No. 259, Section 1.
 A domestic society organized on or after the effective date of this chapter must be formed as follows:  (1) Seven or more citizens of the United States, a majority of whom are citizens of this State, who desire to form a fraternal benefit society may make, sign, and acknowledge articles of incorporation before an officer competent to take acknowledgment of deeds. The articles of incorporation shall state:  (a) the proposed corporate name of the society, which may not so closely resemble the name of a society or an insurance company as to be misleading or confusing;  (b) the purposes for which it is being formed and the mode in which its corporate powers are to be exercised. These purposes may not include more liberal powers than are granted by this chapter;  (c) the names and residences of the incorporators and the names, residences, and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers must be elected by the supreme governing body, which election must be held not later than one year from the date of issuance of the permanent certificate of authority.  (2) The articles of incorporation, certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applications, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year must be filed with the director or his designee, who may require further information he considers necessary. The bond with sureties approved by the director or his designee must be in an amount of not less than three hundred thousand dollars nor more than one million five hundred thousand dollars, as required by the director or his designee. All documents filed must be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the director or his designee shall certify, retain, and file the articles of incorporation, and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members as provided in this chapter.  (3) A preliminary certificate of authority granted under the provisions of this section is not valid after one year from its date or after any further period, not exceeding one year, as may be authorized by the director or his designee upon cause shown, unless the five hundred applicants required have been secured and the organization has been completed as provided in this chapter. The charter and all other proceedings under the charter become null and void in one year from the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society has completed its organization and received a certificate of authority to do business as provided in this chapter.  (4) Upon receipt of a preliminary certificate of authority from the director or his designee, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall issue to each applicant a receipt for the amount collected. A society shall not incur liability other than for the return of the advance premium, issue a certificate, or pay or allow, or offer or promise to pay or allow, a benefit to a person until:  (a) actual bonafide applications for benefits have been secured on not less than five hundred applicants, and any necessary evidence of insurability has been furnished to and approved by the society;  (b) at least ten subordinate lodges have been established into which the five hundred applicants have been admitted;  (c) there has been submitted to the director or his designee, under oath of the president or secretary, or corresponding officer of the society, a list of the applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted, and premiums; and  (d) it has been shown to the director or his designee by sworn statement of the treasurer, or corresponding officer of the society, that at least five hundred applicants have each paid in cash at least one regular monthly premium as provided in this chapter, which premiums in the aggregate must equal at least one hundred fifty thousand dollars. The advance premiums must be held in trust during the period of organization, and if the society has not qualified for a certificate of authority within one year, the premiums must be returned to the applicants.  (5) The director or his designee may make any examination and require any further information as he considers advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the director or his designee shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to Section 38-38-550 and other applicable provisions of this chapter. The certificate of authority is prima facie evidence of the existence of the society as of the date of the certificate. The director or his designee shall cause a record of the certificate of authority to be made. A certified copy of this record may be given in evidence with like effect as the original certificate of authority.  (6) An incorporated society authorized to transact business in this State at the time this chapter becomes effective is not required to reincorporate.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A domestic society may amend its bylaws, in accordance with the provisions of its bylaws, by action of its supreme governing body at a regular or special meeting or, if its bylaws provide, by referendum. The referendum may be held in accordance with the provisions of its bylaws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members, or by the vote of local lodges. A society may provide for voting by mail. An amendment submitted for adoption by referendum may not be adopted unless, within six months from the date of submission, a majority of the members voting have signified their consent to the amendment by one of the methods specified.  (B) An amendment to the bylaws of a domestic society may not take effect unless approved by the director or his designee who shall approve the amendment if he finds that it has been adopted and is not inconsistent with any requirement of the laws of this State or with the character, objects, and purposes of the society. The approval or disapproval of the director or his designee must be forwarded in writing and mailed to the secretary or corresponding officer of the society at its principal office. If the director or his designee disapproves the amendment, the reasons for the disapproval must be stated in the written notice.  (C) Within ninety days from approval by the director or his designee, all amendments, or a synopsis of the amendments, must be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of an officer of the society or of anyone authorized by it to mail amendments or synopses, stating facts which show that the amendments or synopses have been addressed and mailed, is prima facie evidence that the amendments or synopses have been furnished the addressee.  (D) Every foreign or alien society authorized to do business in this State must file with the director or his designee a certified copy of all amendments of, or additions to, its bylaws within ninety days after the enactment of the bylaws or additions to the bylaws.  (E) Printed copies of the bylaws as amended, certified by the secretary or corresponding officer of the society, are prima facie evidence of the legal adoption of the amended bylaws.  HISTORY: 2000 Act No. 259, Section 1.
 A society may create, maintain, and operate or may establish organizations to operate not-for-profit institutions to further the purposes permitted by Section 38-38-50(A)(2). These institutions may furnish services free or at a reasonable charge. Real or personal property owned, held, or leased by the society for this purpose must be reported in every annual statement but is not allowed as an admitted asset of the society.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A domestic ceding society must comply with Section 38-9-200, but the society may not reinsure substantially all of its insurance in force without the written permission of the director or his designee.  (B) Notwithstanding subsection (A) of this section, a domestic society may reinsure the risks of another society in a consolidation, merger, or assumption reinsurance transaction approved by the director or his designee.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A domestic society may consolidate or merge with another society by complying with the applicable provisions of Chapter 21 of this title and Regulation 69-14. It shall file with the director or his designee:  (1) the information required by Regulation 69-14;  (2) a certified copy of the written contract containing in full the terms and conditions of the consolidation or merger;  (3) a sworn statement by the president and secretary or corresponding officers of each society showing the financial condition the societies on a date fixed by the director or his designee, but not earlier than December thirty-first next preceding the date of the contract;  (4) a certificate of the officers, verified by the respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme governing body of each society; this vote must be conducted at a regular or special meeting of each body or, if the society's bylaws permit, by mail; and  (5) evidence that, at least sixty days before the action of the supreme governing body of each society, the text of the contract was furnished to all members of each society either by mail or by publication in full in the official publication of each society.  (B) If the director or his designee finds that the transaction is in conformity with the provisions of this section, that the financial statements are correct, and that the consolidation or merger is just and equitable to the members of each society, the director or his designee shall approve the transaction and issue a certificate to that effect. Upon this approval, the contract is in full force and effect, unless a society which is a party to the contract is incorporated under the laws of another state or territory. In that event, the consolidation or merger does not become effective unless and until it has been approved as provided by the laws of that other state or territory and a certificate of that approval has been filed with the director or his designee of this State. If the laws of the other state or territory contain no such provision, then the consolidation or merger does not become effective unless and until it has been approved by the director of insurance, or equivalent official, of that state or territory and a certificate of the approval has been filed with the director or his designee of this State.  (C) Upon the consolidation or merger becoming effective, all the rights, franchises, and interests of the consolidated or merged societies in and to every species of property, real, personal, or mixed, and things in action belonging to the same are vested in the society resulting from or remaining after the consolidation or merger without another instrument, except that conveyances of real property may be evidenced by proper deeds, and the title to a real estate or interest in real estate, vested under the laws of this State in any of the societies consolidated or merged does not revert, nor is in any way impaired, by reason of the consolidation or merger but vests absolutely in the society resulting from or remaining after the consolidation or merger.  (D) The affidavit of an officer of the society or of anyone authorized by it to mail a notice or document, stating that the notice or document has been duly addressed and mailed, is prima facie evidence that the notice or document has been furnished the addressees.  HISTORY: 2000 Act No. 259, Section 1.
 A domestic fraternal benefit society may reorganize into a mutual life insurer. The reorganized fraternal benefit society must comply with all of the requirements of this title pertaining to the licensure and financial requirements for mutual life insurers and any other applicable provisions of this title. The plan of reorganization shall be prepared in writing by the board of directors setting forth in full the terms and conditions of conversion. The plan of reorganization must contain the applicable information outlined in Section 38-19-1130 and must comply with all requirements of this title governing conversions of mutual insurers. The two-thirds vote of all members of the supreme governing body at a regular or special meeting is necessary for approval of the plan. No such reorganization shall be effective until approved by the director or his designee in accordance with the procedures and the criteria set forth in Section 38-19-1140 or such other procedures as the director or his designee shall prescribe.  HISTORY: 2000 Act No. 259, Section 1.
 A society has a representative form of government when:  (1) it has a supreme governing body constituted in one of the following ways:  (a) the supreme governing body is an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as may be prescribed in the society's bylaws. A society may provide for election of delegates by mail. The elected delegates constitute a majority in number and may not have less than two-thirds of the votes and not less than the number of votes required to amend the society's bylaws. The assembly must be elected and shall meet at least once every four years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's bylaws; or  (b) the supreme governing body is a board composed of persons elected by the members, either directly or by the representatives in intermediate assemblies, and other persons prescribed in the society's bylaws. A society may provide for election of the board by mail. Each term of a board member may not exceed four years. Vacancies on the board between elections may be filled in the manner prescribed by the society's bylaws. Those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's bylaws. A person filling the unexpired term of an elected board member is considered an elected member. The board shall meet at least quarterly to conduct the business of the society;  (2) the officers of the society are elected either by the supreme governing body or by the board of directors;  (3) only benefit members are eligible for election to the supreme governing body and the board of directors; and  (4) each voting member has one vote; a vote may not be cast by proxy.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A society may provide the following contractual benefits in any form:  (1) death;  (2) endowment;  (3) annuity;  (4) temporary or permanent disability;  (5) hospital, medical, or nursing;  (6) monument or tombstone benefits to the memory of deceased members; and  (7) other benefits as authorized for life insurers under this title, provided the benefit is:  (a) offered in compliance with the requirements of this title, and  (b) consistent with this chapter.  (B) A society shall specify in its rules those persons who may be issued, or covered by, the contractual benefits in subsection (A), consistent with providing benefits to members and their dependents. A society may provide benefits on the lives of children under the minimum age for adult membership upon application of an adult person.  HISTORY: 2000 Act No. 259, Section 1.
 (A) The owner of a benefit contract has the right at all times to change the beneficiary or beneficiaries in accordance with the bylaws or rules of the society, unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society shall provide that no revocable beneficiary has, or can obtain, a vested interest in the proceeds of a certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract.  (B) If at the death of a person insured under a benefit contract there is no lawful beneficiary to whom the proceeds are payable, the amount of the benefit, except to the extent that funeral benefits may be paid as provided in this chapter is payable to the personal representative of the deceased insured. If the owner of the certificate is other than the insured, the proceeds must be paid to that owner.  HISTORY: 2000 Act No. 259, Section 1.
 Money or other benefit, charity, relief, or aid to be paid, provided, or rendered by a society is not liable to attachment, garnishment, or other process, nor may it be seized, taken, appropriated, or applied by legal or equitable process or operation of law to pay a debt or liability of a member or beneficiary or another person who may have a right to it, either before or after payment by the society.  HISTORY: 2000 Act No. 259, Section 1.
 (A) Every society authorized to do business in this State shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided by the benefit contract. The certificate, riders or endorsements attached to the certificate, the bylaws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant, and all amendments to each of these items constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate must so state. A copy of the application for insurance and declaration of insurability, if any, must be endorsed upon or attached to the certificate. All statements on the application are representations and not warranties. A waiver of this provision is void.  (B) Any changes, additions, or amendments to the bylaws of the society made or enacted subsequent to the issuance of the certificate bind the owner and the beneficiaries and govern and control the benefit contract in all respects as though the changes, additions, or amendments had been made before and were in force at the time of the application for insurance, except that a change, addition, or amendment does not destroy or diminish benefits which the society contracted to give the owner as of the date of issuance.  (C) A person upon whose life a benefit contract is issued before attaining the age of majority is bound by the terms of the application and certificate and by all the bylaws and rules of the society to the same extent as though the age of majority had been attained at the time of application.  (D) A society must provide in its bylaws that if its reserves as to all or any class of certificates become impaired its board of directors or corresponding body may require that there be paid by the owner to the society the amount of the owner's equitable proportion of the deficiency as ascertained by its board and that if the payment is not made either (1) it must stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates, or (2) instead of or in combination with (1), the owner may accept a proportionate reduction in benefits under the certificate. The society may specify the manner of the election in which alternative is to be presumed if no election is made. This provision must be disclosed in all certificates filed and approved by the director or his designee on or after the effective date of this chapter.  (E) Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, must be received in evidence of the terms and conditions of the documents.  (F) A certificate may not be delivered or issued for delivery in this State unless a copy of the form has been filed with and approved by the director or his designee in the manner provided for like policies issued by life and health insurers in this State. Every life, accident and sickness, health, or disability insurance certificate and every annuity certificate issued on or after the effective date of this chapter must be filed with and approved by the director or his designee and shall meet the standard contract provision requirements not inconsistent with this chapter for like policies issued by life and health insurers in this State, except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate also shall contain a provision stating the premiums which are payable under the certificate. If the bylaws of the society provide for expulsion or suspension of a member, the certificate also shall contain a provision that a member expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership of insurance, has the privilege of maintaining the certificate in force by continuing payment of the required premium.  (G) Benefit contracts issued on the lives of persons below the society's minimum age for adult membership may provide for transfer of control of ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer and may provide in all other respects for the regulation, government, and control of the certificates and all incidental and connected rights, obligations, and liabilities. Ownership rights before the transfer must be specified in the certificate.  (H) A society may specify the terms and conditions on which benefit contracts may be assigned.  HISTORY: 2000 Act No. 259, Section 1.
 (A) For certificates issued before the effective date of this chapter, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted must comply with the provisions of law applicable immediately before the effective date of this chapter.  (B) For certificates issued on or after the effective date of this chapter, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted must comply with the provisions of law applicable to life insurers issuing policies containing like benefits in this State.  HISTORY: 2000 Act No. 259, Section 1.
 Whenever used in this chapter:  (1) "Benefit contract" means the agreement for provision of benefits authorized by this chapter, as that agreement is described in this chapter.  (2) "Benefit member" means an adult member who is designated by the bylaws or rules of the society to be a benefit member under a benefit contract.  (3) "Certificate" means the document issued as written evidence of the benefit contract.  (4) "Director" means the Director of the Department of Insurance of this State.  (5) "Bylaws" means the society's articles of incorporation, constitution, and bylaws, however designated.  (6) "Lodge" means subordinate member units of the society, known as camps, courts, councils, branches, or by any other designation.  (7) "Premiums" means premiums, rates, dues, or other required contributions, by whatever name known, which are payable under the certificate.  (8) "Rules" means all rules, regulations, or resolutions adopted by the supreme governing body or board of directors which are intended to have general application to the members of the society.  (9) "Society" means fraternal benefit society, unless otherwise indicated.  HISTORY: 2000 Act No. 259, Section 1.
 A society shall invest its funds only in investments authorized by the laws of this State for the investment of assets of life insurers and subject to the limitations on those investments. A foreign or alien society permitted or seeking to do business in this State which invests its funds in accordance with the laws of the state, district, territory, country, or province in which it is incorporated shall comply with the requirements of this section for the investment of funds.  HISTORY: 2000 Act No. 259, Section 1.
 (A) All assets must be held, invested, and disbursed for the use and benefit of the society, and a member or beneficiary may not have or acquire individual rights in the assets or become entitled to an apportionment on the surrender of a part of the assets, except as provided in the benefit contract.  (B) A society may create, maintain, invest, disburse, and apply a special fund or funds necessary to carry out a purpose permitted by the bylaws of the society.  (C) A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of law regulating life insurers establishing these accounts and issuing these contracts. To the extent the society considers it necessary in order to comply with applicable federal or state laws or regulations issued pursuant to federal or state laws, the society may (1) adopt special procedures for the conduct of the business and affairs of a separate account; (2) for persons having beneficial interests in the separate accounts, provide special voting and other rights including, without limitation, special rights and procedures relating to investment policy, investment advisory services, selection of certified public accounts, and selection of a committee to manage the business and affairs of the account; and (3) issue contracts on a variable basis, in which case Section 38-38-340(B) and (D) do not apply.  HISTORY: 2000 Act No. 259, Section 1.
 Societies and associations described in Section 38-38-730(A)(8) are governed by this chapter and are exempt from all other provisions of the insurance laws of this State, unless expressly designated or specifically made applicable by this chapter.  HISTORY: 2000 Act No. 259, Section 1; 2008 Act No. 193, Section 2, eff April 2, 2008.
 Every society organized or licensed under this chapter is declared to be a charitable and benevolent institution, and all of its funds are exempt from every state, county, district, municipal, and school tax other than taxes on real estate not occupied by the society in carrying on its business.  HISTORY: 2000 Act No. 259, Section 1.
 (A) A society shall operate for the benefit of members and their beneficiaries by:  (1) providing benefits as specified in Section 38-38-310; and  (2) operating for one or more social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its members, which also may be extended to others.  These purposes may be carried out directly by the society or indirectly through subsidiary corporations or affiliated organizations.  (B) Every society has the power to adopt bylaws and rules for the government of the society, the admission of its members, and the management of its affairs. It has the power to change, alter, add to, or amend the bylaws and rules and has other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.  HISTORY: 2000 Act No. 259, Section 1.
 (A) Standards of valuation for certificates issued before the effective date of this chapter are those provided by the laws applicable immediately before the effective date of this chapter.  (B) The minimum standards of valuation for certificates issued on or after the effective date of this chapter are based upon the tables, valuation methods and standards, including interest assumptions, specified in the laws of this State applicable to life and health insurers issuing policies containing like benefits.  (C) The director or his designee may, in his discretion, accept other standards for valuation if he finds that the reserves produced will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard prescribed in this section. The director or his designee may, in his discretion, vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by a society authorized to do business in this State.  (D) A society, with the consent of the director of insurance, or similar official, of the state of domicile of the society and under conditions, if any, which the director may impose, may establish and maintain reserves on its certificates in excess of the required reserves, but the contractual rights of a benefit member shall not be affected.  HISTORY: 2000 Act No. 259, Section 1.
 (A) Every society annually shall file with the department by March first, in the form and detail the director or his designee prescribes, a statement showing the business standing and financial condition of the society on December thirty-first of the preceding year, except that upon timely written request by the chief managing agent or officer setting forth reasons why the statement cannot be filed within the time provided, the director or his designee may grant in writing an extension of filing time for not more than thirty days. This statement must conform substantially to the form of statement adopted by the National Association of Insurance Commissioners. Unless the director or his designee provides otherwise, the annual statement is to be prepared in accordance with the annual statement instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners.  (B) The director or his designee may require every society to file quarterly reports and additional information considered necessary to enable the director or his designee to carry out his duties under this chapter. The reports and information must be furnished in the time and manner prescribed by the director or his designee.  (C) On or before March first, as part of the annual statement, each society shall file with the director or his designee a valuation of its certificates in force on December thirty-first of the previous calendar year. However, the director or his designee, in his discretion for cause shown, may extend the time for filing the valuation for not more than two calendar months. The valuation and underlying data must be certified by a qualified actuary or, at the expense of the society, verified by a qualified actuary of or retained by the Department of Insurance of the state of domicile of the society.  (D) A society neglecting to file the annual statement in the form and within the time provided by this section is subject to the penalties set forth in Section 38-2-10.  HISTORY: 2000 Act No. 259, Section 1.
 The authority of a fraternal benefit association authorized to transact business in this State which complies with this chapter terminates the last day of February. However, a license continues in effect until a new license is issued or specifically refused. For each license or renewal the association shall pay the department one thousand dollars every two years. However, if the association has less than two hundred members, it shall pay the department a fee of one hundred dollars every two years for its license or renewal. A certified copy or duplicate of the license is prima facie evidence that the licensee is a fraternal benefit association within the meaning of this chapter.  HISTORY: 2000 Act No. 259, Section 1.
 (A) The director or his designee may examine any domestic, foreign, or alien society transacting or applying for admission to transact business in this State in the same manner as authorized for examination of domestic, foreign, or alien insurers. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurers are also applicable to the examination of societies.  (B) The provisions of Section 38-13-20(D) shall apply with regard to examinations.  HISTORY: 2000 Act No. 259, Section 1.
 A society may not transact business in this State without a certificate of authority issued by the director or his designee. A society desiring admission to, or wishing to continue to transact business in this State, shall comply with the requirements and limitations of this chapter. A society may be authorized to transact, or continue to transact, business in this State upon filing with the director or his designee:  (1) a certified copy of its articles of incorporation;  (2) a copy of its bylaws, certified by its secretary or corresponding officer;  (3) a power of attorney to the director or his designee as prescribed in Section 38-38-710;  (4) a statement of its business under the oath of its president and secretary or corresponding officers in a form prescribed by the director or his designee, verified by an examination made by the supervising insurance official of its home state or other state, territory, province, or country, satisfactory to the director or his designee;  (5) certification from the proper official of this State or its home state, territory, province, or country that the society is legally incorporated, and that, for a foreign or alien society, it is licensed to transact business there and to write the lines of business for which authority is being requested;  (6) copies of its certificate forms;  (7) evidence that its assets are invested in accordance with the provisions of this chapter;  (8) evidence that its name is not substantially similar to another society authorized to do business in this State;  (9) evidence that the society's surplus complies with the amount required by Section 38-9-20. A society, if possessed of surplus on December 31, 1998, 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 1998 annual statement. If the surplus of the society is reduced to less than eighty percent of the amount shown in its 1998 annual statement, the society is considered delinquent, and the director or his designee may begin delinquency proceedings as provided by Chapter 27 of this title. If the surplus of the society is increased to an amount greater than the amount possessed on December 31, 1998, 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 society is considered delinquent, and the director or his designee may begin delinquency proceedings as provided by Chapter 27 of this title;  (10) evidence that the society's deposit complies with the amount required by Section 38-9-80 and Regulation 69-15, Section 38-9-100, or Section 38-9-110;  (11) evidence that the society's reserves are adequate for the protection of certificate holders of this State;  (12) evidence that the society's directors and officers are competent, trustworthy, and have a good business reputation and that none of the directors and officers has been convicted of a crime in any jurisdiction involving fraud, dishonesty, or like moral turpitude or convicted of violating an insurance statute of any jurisdiction;  (13) evidence that the society has employed one or more persons residing in this State with adequate experience and training to manage properly its business and affairs;  (14) evidence that the society has not entered into any management contract, agency agreement, or other agreement which may materially affect its financial condition so as to render its proceedings hazardous to the public or to its certificate holders;  (15) evidence that the society has made adequate reinsurance arrangements if required;  (16) evidence that the society's proposed method of operation, when considered in light of its financial condition and the absence of any prior operating experience, will not likely render its proceedings hazardous to the public or to its policyholders;  (17) an affidavit of its president or other chief officer that it has not violated this title in the past year and that it accepts the terms and obligations of this title as part of the consideration for license;  (18) evidence that the society is safe and solvent;  (19) evidence that society's dealings are fair and equitable;  (20) evidence that the society conducts its business in a manner not contrary to the public interest; and  (21) any other information the director or his designee considers necessary.  The above requirements are subject to retaliatory provisions, if applicable, pursuant to Section 38-7-90. If subsequently the director or his designee is of the opinion that a condition exists which would have prohibited him from issuing the original certificate of authority or license to the society, then that condition also constitutes a ground for license revocation under Section 38-5-120.  HISTORY: 2000 Act No. 259, Section 1.
 (A) When the director or his designee upon investigation finds that a domestic society has exceeded its powers, has failed to comply with a provision of this chapter, is not fulfilling its contracts in good faith, has a membership of less than four hundred after an existence of one year or more, or is conducting business fraudulently or in a manner hazardous to its members, creditors, or the public, the director or his designee shall notify the society of the deficiency or deficiencies and state in writing the reasons for his dissatisfaction. The director or his designee simultaneously shall issue a written notice to the society requiring that the deficiencies which exist be corrected. After this notice the society has thirty days in which to comply with the director or his designee's request for correction, and if the society fails to comply, the director or his designee may take action as necessary and appropriate under Chapter 26 or 27 of this title or Section 38-38-570.  (B) The director or his designee may take action as necessary and appropriate under this section as respects a domestic society which voluntarily shall determine to discontinue business.  HISTORY: 2000 Act No. 259, Section 1.
 (A) When the director or his designee upon investigation finds that a foreign or alien society transacting or applying to transact business in this State (1) has exceeded its powers, (2) has failed to comply with any of the provisions of this chapter, (3) is not fulfilling its contracts in good faith, or (4) is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public, the director or his designee shall notify the society of the deficiencies and state in writing the reasons for his dissatisfaction. The director or his designee shall issue a written notice at once to the society requiring that the deficiencies which exist are corrected. The director shall issue a written notice to the society the nature of the alleged violations committed not less than thirty days before revoking its authority to do business in this State. The director or his designee must specify in the notice the particulars of the alleged violation of the law or its charter or grounds for revocation and an opportunity must be offered to the society for a hearing. The director or his designee may, in lieu of license revocation or suspension provided in Section 38-2-10, impose a monetary penalty as provided in Section 38-2-10 for each violation or failure of compliance or refusal to submit or perform as prescribed therein. Series of acts by a society which merely implement a basic violation and are not separate and distinct violations of an independent nature are considered to be a part of the basic violation and only one penalty may be imposed thereon . If on the named date the society does not present good and sufficient reason why its authority to do business in this State should not be suspended, revoked, or refused, the director or his designee may suspend or refuse the license of the society to do business in this State until satisfactory evidence is furnished to the director or his designee that the suspension or refusal should be withdrawn, or the director or his designee may revoke the authority of the society to do business in this State.  (B) Nothing contained in this section may be construed as preventing any society from continuing in good faith all contracts made in this State during the time the society was legally authorized to transact business in this State.  HISTORY: 2000 Act No. 259, Section 1.
 Whenever the director or his designee believes, from evidence satisfactory to him, that a society is violating or about to violate this title, the director or his designee may, through the Attorney General or upon his own initiative, cause a complaint or petition for an injunction against a domestic, foreign, or alien society or lodge of a domestic, foreign, or alien society to be filed in the court of common pleas of Richland County to enjoin and restrain the society from continuing the violation, engaging in the violation, or doing any act in furtherance of the violation. The court has jurisdiction of the proceeding and has the power to make and enter an order or judgment awarding preliminary or final injunctive relief as in its judgment is proper.  HISTORY: 2000 Act No. 259, Section 1.
 Agents of societies must be licensed in accordance with and comply with the provisions of Chapter 43 and any other applicable provision of this title.  HISTORY: 2000 Act No. 259, Section 1.
 Every society authorized to do business in this State is subject to Chapters 55, 57, and 59 of this title. However, nothing in Chapters 55, 57, and 59 may be construed as applying to or affecting the right of a society to determine its eligibility requirements for membership, or be construed as applying or affecting the offering of benefits exclusively to members or persons eligible for membership in the society by a subsidiary corporation or affiliated organization of the society.  HISTORY: 2000 Act No. 259, Section 1.
 Every society shall, before being licensed, appoint in writing the director and his successors in office to be its true and lawful attorney upon whom all legal process in any action or proceeding against it must be served and in this writing shall agree that lawful process against it which is served upon this attorney is of the same legal force and validity as if served upon the society and that the authority continues in force so long as any liability remains outstanding in the State. Copies of the appointment, certified by the director, are sufficient evidence of the appointment and must be admitted in evidence with the same force and effect as the original might be admitted. Service upon a society must also comply with the requirements of Section 15-9-270 and any other applicable provisions of Title 15.  HISTORY: 2000 Act No. 259, Section 1.
 Any person or insurer who makes a false statement or misrepresentation, and any other person knowingly, with an intent to injure, defraud, or deceive, who assists, abets, solicits, or conspires with such person or insurer to make a false statement or misrepresentation, is guilty of a:  (1) misdemeanor, for a first offense violation, if the amount of the economic advantage benefit received is less than one thousand dollars. Upon conviction, the person must be punished by a fine not to exceed five hundred dollars or by imprisonment not to exceed thirty days;  (2) misdemeanor, for a first offense violation, if the amount of the economic advantage benefit received is one thousand dollars or more. Upon conviction, the person must be punished by a fine not to exceed fifty thousand dollars or by imprisonment for a term not to exceed three years, or by both such fine and imprisonment;  (3) felony, for a second or subsequent violation, regardless of the amount of the economic advantage benefit received. Upon conviction, the person must be punished by a fine not to exceed fifty thousand dollars or by imprisonment for a term not to exceed ten years, or by both such fine and imprisonment.  Any person or insurer convicted under this section must be ordered to make full restitution to the victim or victims for any economic advantage or benefit which has been obtained by the person or insurer as a result of that violation.  HISTORY: 2000 Act No. 259, Section 1.
 (A) This chapter does not apply to the following:  (1) associations which limit their memberships to one hazardous occupation;  (2) similar societies which do not issue insurance certificates;  (3) an association of local lodges of an association;  (4) the ladies' societies or ladies' auxiliaries to these societies or associations, doing business in this State on May 12, 1947, which provide death benefits not exceeding five hundred dollars to a person or disability benefits not exceeding three hundred dollars in one year to one person, or both;  (5) contracts or reinsurance business on these plans in this State;  (6) domestic associations which limit their memberships to the employees of a particular city or town or designated firm, business, house, or corporation;  (7) domestic lodges, orders, or associations of a purely religious, charitable, and benevolent description which do not provide for a death benefit of more than one hundred dollars or for disability benefits of more than one hundred fifty dollars to one person in one year;  (8) an association, whether a fraternal benefit society or not, which was organized before 1880 and whose members are officers or enlisted, regular or reserve, active, retired, or honorably discharged members of the Armed Forces or Sea Services of the United States, and a principal purpose of which is to provide insurance and other benefits to its members and their dependents or beneficiaries.  (B) The director or his designee may require from a society or an association, by examination or otherwise, information that will enable the director or his designee to determine whether the society or association is exempt from the provisions of this chapter.  HISTORY: 2000 Act No. 259, Section 1; 2008 Act No. 193, Section 3, eff April 2, 2008.
 All decisions and findings of the director or his designee made under the provisions of this chapter are subject to review as set forth in Chapter 3 of this title.  HISTORY: 2000 Act No. 259, Section 1.
 This chapter does not apply to:  (a) an insurer authorized to do business in this State;  (b) a banking institution, savings and loan association, cooperative credit union, consumer finance company provided for in Sections 34-29-10 to 34-29-260 authorized to do business in this State, or a supervised lender provided for in Title 37 authorized to do business in this State;  (c) the inclusion of a charge for insurance in connection with an installment sale of goods or services;  (d) the advancing of premiums by insurance agents and producers of record under Article 3, Chapter 43 of this title.  HISTORY: Former 1976 Code Section 38-39-10 [1962 Code Section 37-772; 1971 (57) 744] recodified as Section 38-75-310 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-20 [1962 Code Section 37-1301; 1967 (55) 273] recodified as Section 38-39-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 653; 1999 Act No. 66, Section 22.
 Filing of the premium service agreement is not necessary to perfect the validity of the agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrances, successors, or assigns.  HISTORY: Former 1976 Code Section 38-39-100 [1962 Code Section 37-779; 1971 (57) 744] recodified as Section 38-75-400 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-110 [1962 Code Section 37-1311; 1967 (55) 273] recodified as Section 38-39-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 653.
 The director or his designee shall approve all forms and rate charges of premium service companies in accordance with the standards prescribed in this chapter.  HISTORY: Former 1976 Code Section 38-39-110 [1962 Code Section 37-780; 1971 (57) 744] recodified as Section 38-75-410 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-130 [1962 Code Section 37-1313; 1967 (55) 273] recodified as Section 38-39-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 653.  
 (a) No person may engage in the business of servicing insurance premiums in this State without first obtaining a license from the director or his designee. Any person who engages in the business of servicing insurance premiums in this State without obtaining a license is guilty of a misdemeanor. Each transaction constitutes a separate offense.  (b) The biennial license fee is one thousand dollars payable to the department by March 1, 2010, and biennially after that time. These funds are to be deposited in the general fund of the State.  (c) The person to whom the license is issued shall file sworn answers, subject to the penalties of perjury, to any interrogatories the director or his designee may require. The director or his designee has authority to require the applicant to disclose the identity of all stockholders, partners, officers, and employees. He may refuse to issue or renew a license in the name of any firm, partnership, or corporation if he is not satisfied that any officer, employee, stockholder, or partner of it who may materially influence the applicant's conduct meets the standards of this chapter.  HISTORY: Former 1976 Code Section 38-39-20 [1962 Code Section 37-771; 1971 (57) 744] recodified as Section 38-75-320 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-30 [1962 Code Section 37-1303; 1967 (55) 273; 1971 (57) 709; 1985 Act No. 4, Section 1] recodified as Section 38-39-20 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 14; 1993 Act No. 181, Section 653; 2009 Act No. 69, Section 2, eff June 2, 2009.
 (a) Upon the filing of an application and the payment of the license fee the director or his designee shall make an investigation of the applicant and shall issue a license if the applicant is qualified. If the director or his designee does not find the applicant qualified, he shall, within thirty days after he has received the application, at the request of the applicant, give the applicant a full hearing.  (b) The director or his designee shall issue a license when he is satisfied that the person to be licensed:  (1) is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;  (2) has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for;  (3) if a corporation, is a corporation incorporated under the laws of this State or a foreign corporation authorized to transact business in this State;  (4) has on deposit with the department a surety bond of fifty thousand dollars or has proven financial responsibility by depositing with the department acceptable securities of fifty thousand dollars. The bond or the deposit of securities must be held for the reimbursement of parties damaged through the acts, neglects, defaults, or insolvency of the premium service company;  (5) if directly or indirectly owned or controlled by, or affiliated with, an insurer, will not use the license to restrain trade or to secure an unfair competitive advantage or to falsify the insurer's financial condition or to render deceptive or misleading a financial statement of the insurer or, in any other way, to aid or assist the insurer in evading insurance laws or regulations;  (6) if a foreign corporation is regulated and examined by the appropriate department in its state of domicile.  (c) Each license is for an indefinite term, unless sooner revoked or suspended, if the annual license fee is paid by March first.  HISTORY: Former 1976 Code Section 38-39-30 [1962 Code Section 37-773; 1971 (57) 744] recodified as Section 38-75-330 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-40 [1962 Code Section 37-1304; 1967 (55) 273; 1971 (57) 709; 1985 Act No. 4, Section 2] recodified as Section 38-39-30 by 1987 Act No. 155, Section 1; 1990 Act No. 365, Section 2; 1993 Act No. 181, Section 653.
 (a) The director or his designee may revoke or suspend the license of an insurance premium service company after investigation if it appears to the director or his designee that:  (1) The license issued to the company was obtained by fraud;  (2) There was any misrepresentation in the application for the license;  (3) The holder of the license has otherwise shown himself untrustworthy or incompetent to act as a premium service company;  (4) The company has violated this chapter; or  (5) The company has been rebating directly or indirectly part of the service charge to an insurance agent or insurance broker or to an employee of an insurance agent or insurance broker or to any other person as an inducement to the financing of an insurance policy with the premium service company.  (b) Before the director or his designee revokes, suspends, or refuses to renew the license of a premium service company, he shall give the person an opportunity to be fully heard and to introduce evidence in his behalf. In lieu of revoking or suspending the license for any of the causes enumerated in this section, after a hearing, the director or his designee may subject the company to a monetary penalty as provided for in Section 38-2-10 for each offense when in his judgment he finds that the public interest would not be harmed by the continued operation of the company. The penalty must be paid to the department and must be deposited by the department in the state treasury. Any action by the director or his designee pursuant to this section may be appealed by the premium service company before the Administrative Law Court.  HISTORY: Former 1976 Code Section 38-39-40 [1962 Code Section 37-775; 1971 (57) 744] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-27-50 [1962 Code Section 37-1305; 1967 (55) 273] recodified as Section 38-39-40 by 1987 Act No. 155, Section 1. 1988 Act No. 374, Section 15; 1993 Act No. 181, Section 653.
 (a) Every licensed premium service company shall maintain records of its premium service transactions and the records must be open to examination and investigation by the director or his designee. The director or his designee may at any time require the company to bring any records he directs to his office for examination.  (b) Every licensed premium service company shall preserve its records, including cards used in a card system, for at least three years after making the final entry in respect to any premium service agreement. The preservation of records in photographic form constitutes compliance with this requirement.  HISTORY: Former 1976 Code Section 38-39-50 [1962 Code Section 37-777; 1971 (57) 744; 1972 (57) 2736; 1976 Act No. 460; 1978 Act No. 562] recodified as Sections 38-75-340 and 38-75-350 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-60 [1962 Code Section 37-1306; 1967 (55) 273] recodified as Section 38-39-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 653.
 The department, after a public hearing, has authority to make and enforce any regulations necessary to carry out this chapter, but these regulations may not be contrary to nor inconsistent with this chapter.  HISTORY: Former 1976 Code Section 38-39-60 [1962 Code Section 37-774; 1971 (57) 744] recodified as Section 38-75-360 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-70 [1962 Code Section 37-1307; 1967 (55) 273] recodified as Section 38-39-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 653.
 (a) A premium service agreement must:  (1) be at least eight-point type for the printed portion;  (2) be dated and signed by the insured;  (3) contain the name and place of business of the insurance agency or insurance brokerage company negotiating the related insurance contract, the name and residence or the place of business of the insured as specified, the name and place of business of the premium service company to which payments are to be made, a description of the contracts involved, and the amount of the premium; and  (4) contain the following, where applicable, the:  (A) total amount of the premiums;  (B) amount of the down payment;  (C) principal balance, the difference between subitems (A) and (B);  (D) amount of the service charge;  (E) balance payable by the insured, sum of subitems (C) and (D); and  (F) number of installments required, the amount of each installment expressed in dollars, and the due date or period of it.  (b) The subitems provided for in subsection (a)(4) does not need to be stated in the sequence or order in which they appear, and additional subitems may be included to explain the computations made in determining the amount to be paid by the insured.  (c) A premium service contract may include policy premiums, policy fees, agent commissions and fees, premium taxes, inspection fees, charges for motor vehicle (driving record) or property charges and claims history reports, and other automobile related services. All amounts must be disclosed on the premium service agreement. It also may include interest on mitigation loans as approved by the director or his designee. Any interest charges related to mitigation projects or loans must be limited to the legal rate of interest as set forth in Section 34-31-20(B).  (d) If an insurance policy has been financed pursuant to this chapter, an additional premium to that policy or a renewal or extension of that policy may be financed with the same premium service company without the execution of a new premium service agreement. Upon renewal of the insurance policy, the premium service company shall provide to the insured an addendum to or revision of the existing premium service agreement containing the subitems provided for in subsection (a)(4).  (e) Nothing contained in this chapter or in Section 38-55-50 prohibits a licensed agent or broker from charging and collecting an administrative fee of five dollars for originating a premium service agreement, provided that the agent or broker has no ownership interest in the premium service company to which payments are to be made. The amount, if any, must be disclosed on the premium service agreement and must not be considered in any way a charge by the premium service company.  HISTORY: Former 1976 Code Section 38-39-70 [1962 Code Section 37-776; 1971 (57) 744; 1983 Act No. 12] recodified as Section 38-75-370 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-80 [1962 Code Section 37-1308; 1967 (55) 273]; Section 38-27-140 [1962 Code Section 37-1314; 1967 (55) 273] recodified as Section 38-39-70 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 54; 1993 Act No. 181, Section 653; 2004 Act No. 268, Section 1, eff July 6, 2004; 2015 Act No. 47 (S.666), Section 1, eff June 3, 2015.  Effect of Amendment  2015 Act No. 47, Section 1, in (c), inserted "or property charges" in the first sentence, and added the second sentence, relating to interest on mitigation loans.
 (a) A premium service company may not write any insurance or sell any other service or commodity in connection with a premium service contract, except as approved by the director or his designee for mitigation purposes.  (b) A premium service company may not charge, contract for, receive, or collect a service charge other than as permitted by this chapter.  (c) The service charge must be computed on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the premium service agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium service agreement is payable, unless the service charge is computed as a fixed amount for each installment.  (d) An initial charge up to twenty dollars for each premium service contract, addendum, and revision is permitted, which may not be refunded upon cancellation or prepayment. The amount of the initial charge must be filed with the department.  (e) The service charge is the greater of the rate of one percent for each month computed on the remainder of the outstanding balance or an amount for each installment filed with and approved or promulgated by the department. However, if there is a cancellation by the borrower before maturity of the contract, the unearned service charge must be refunded on a short rate basis as determined by the department. With respect to the service charge for a premium service agreement which is for other than personal, family, or household purposes, the parties may contract for the payment by the debtor of a service charge at any rate, but no rate charged pursuant to the provisions of this subsection may be unconscionable. "Unconscionable" is defined as a rate substantially exceeding the usual and customary charge for financing insurance premiums.  (f) A premium service company may not induce an insured to become obligated under more than one premium service agreement for the purpose of obtaining more than one nonrefundable initial charge, and a premium service company may not intentionally cancel an insurance contract for the purpose of obtaining an additional nonrefundable initial charge on a new premium service agreement accepted within sixty days of the cancellation on the prior agreement.  (g) A premium service agreement may provide for the payment by the insured of a delinquency charge on each installment in default for a period of not less than five days of one dollar to a maximum of five percent of the installment. However, if the loan is primarily for personal family and household purposes, the amount of the delinquency charge must be filed with and approved or promulgated by the department, and may be charged on each installment in default for one or more days. Only one delinquency charge may be collected on an installment regardless of the period during which it remains in default.  (h) A premium service company may charge an amount for payments made by the borrower or on the borrower's behalf through alternative payment mechanisms. This amount must be filed with and approved or promulgated by the department.  HISTORY: Former 1976 Code Section 38-39-80 [1962 Code Section 37-782; 1971 (57) 744] recodified as Section 38-75-380 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-90 [1962 Code Section 37-1309; 1967 (55) 273; 1971 (57) 709, 937; 1980 Act No. 455; 1982 Act No. 378; 1983 Act No. 34; 1985 Act No. 37] recodified as Section 38-39-80 by 1987 Act No. 155, Section 1; 1988 Act No. 426; 1993 Act No. 181, Section 653; 2004 Act No. 268, Section 2, eff July 6, 2004; 2015 Act No. 47 (S.666), Section 2, eff June 3, 2015.  Effect of Amendment  2015 Act No. 47, Section 2, in (a), inserted ", except as approved by the director or his designee for mitigation purposes".
 (a) If a premium service agreement contains a power of attorney enabling the company to cancel an insurance contract listed in the agreement, the insurance contract may not be canceled by the premium service company unless the cancellation is effectuated in accordance with this section.  (b) The premium service company shall deliver to the insured at least ten days' written notice of its intent to cancel the insurance contract if there is a default. This notice must be mailed or delivered not more than ten days before the due date.  (c) Not less than five days after the expiration of the notice required pursuant to the provisions of subsection (b), the premium service company may after that time request in the name of the insured cancellation of the insurance contract by delivering to the insurer a notice of cancellation. The insurance contract must be canceled as if the notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract. The premium service company also shall deliver a notice of cancellation to the insured at his last address as provided for in its records by the date the notice of cancellation is delivered to the insurer. It is sufficient to give notice either by delivering it to the person or by depositing it in the United States mail, postage prepaid, addressed to the last address of the person. Notice delivered in accordance with the provisions of this section is sufficient proof of delivery. If a notice of cancellation effected in accordance with this chapter is issued, a nonrefundable cancellation charge is permitted. The amount of the cancellation charge must be filed with and promulgated by the department.  (d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or to holders of certificates of insurance apply where cancellation is effected pursuant to the provisions of this section; otherwise, provided the provisions of subsections (a), (b), and (c) have been met, upon receipt of the notice by the insurer, the insurance contract must be canceled effective the date of cancellation on the notice of cancellation issued by the premium service company. The insurer shall give the prescribed notice in behalf of itself or the insured to any governmental agency, mortgagee, or holders of certificates of insurance by the second business day after the day it receives the notice of cancellation from the premium service company and shall determine the effective date of cancellation taking into consideration the number of days' notice required to complete the cancellation.  (e) If an insurance contract is canceled, the insurer shall return whatever gross unearned premiums are due under the insurance contract to the premium service company which financed the premium for the account of the insured. The gross unearned premiums due on personal lines insurance contracts financed by premium service companies must be computed on a pro rata basis.  (f) If the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium service company promptly shall refund the excess to the insured or the agent of record. A refund is not required if it amounts to less than five dollars.  (g) A cancellation of an insurance contract by a premium service company must be effected exclusively by the forms, method, and timing provided for in this chapter.  (h) A payment made by an insured, or on the insured's behalf, to the agent of the insurer in an amount required by the premium service company to extend or renew financing for a renewal policy period which is made on or before the policy renewal date causes the policy to be renewed without a lapse in coverage upon receipt of the policy premium from the agent or premium service company by the insurer.  (i) The gross unearned premiums due on cancellations of personal lines insurance contracts effected pursuant to the provisions of this chapter may not be reduced by any amounts due the insurer from a prior policy term or other policies.  HISTORY: Former 1976 Code Section 38-39-90 [1962 Code Section 37-778; 1971 (57) 744] recodified as Section 38-75-390 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-27-100 [1962 Code Section 37-1310; 1967 (55) 273; 1984 Act No. 490, Section 1, 2] recodified as Section 38-39-90 by 1987 Act No. 155, Section 1; 1988 Act No. 622, Section 1; 1993 Act No. 181, Section 653; 1998 Act No. 411, Section 3; 2000 Act No. 263, Section 1; 2001 Act No. 82, Section 16, eff July 20, 2001; 2004 Act No. 268, Section 3, eff July 6, 2004.
 As used in this chapter, "multiple employer self-insured health plan" or "Multiple Employer Welfare Arrangement (MEWA)" means a plan or arrangement established or maintained to offer or provide health, dental, or short-term disability benefits to employees of two or more employers but which is not fully insured. A plan or arrangement is considered "fully insured" only if all benefits payable are guaranteed under a contract or policy of insurance issued by an insurer authorized to transact business in this State.  HISTORY: Former 1976 Code Section 38-41-10 [1975 (59) 157] recodified as Section 38-75-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-65-10 [1985 Act No. 137, Section 1] recodified as Section 38-41-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654; 2012 Act No. 137, Section 8, eff April 2, 2012.
 The department may promulgate regulations which are necessary to implement the provisions of this chapter and to ensure the safe and proper operation of multiple employer self-insured health plans in this State.  HISTORY: Former 1976 Code Section 38-65-90 [1985 Act No. 137, Section 9] recodified as Section 38-41-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.
 If the director or his designee is of the opinion that a multiple employer self-insured health plan is in an unsound condition, that it has failed to comply with the law or any applicable regulations or orders issued by the director or his designee, or that it is in a condition which renders its proceedings hazardous to the public or to persons covered under the plan, the director or his designee may, after a hearing, revoke or suspend the license of the plan or, in lieu thereof, impose a monetary penalty not to exceed five thousand dollars for each violation or ground.  If the director or his designee is of the opinion that any of the grounds set forth in the first paragraph of this section exists, he may commence delinquency proceedings against the plan and supervise, rehabilitate, or liquidate the plan in accordance with the procedures set forth in Chapter 27 of this title.  HISTORY: Former 1976 Code Section 38-65-90 [1985 Act No. 137, Section 9] recodified as Section 38-41-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.  
 It is unlawful for any multiple employer self-insured health plan to transact business in this State without a license issued by the director or his designee. Any of the acts described in items (1) through (8) of Section 38-25-110, effected by mail or otherwise by or on behalf of a multiple employer self-insured health plan, constitutes the transaction of business in this State. Any multiple employer self-insured health plan which transacts business in this State without the license required by this chapter is considered to be an unauthorized insurer within the meaning of Chapter 25 of this title and all remedies and penalties prescribed therein are fully applicable.  This Chapter 41 does not apply to any plan or arrangement established or maintained by municipalities, counties, or other political subdivisions of the state or any multiple employer self-insured health plan which is not subject to the application of state insurance laws under the provisions of the Employee Retirement Income Security Act of 1974 (29 U.S.C., Sections 1001, et seq.).  A multiple employer self-insured health plan which was in existence prior to July 1, 1985, and which is associated with or organized or sponsored by a homogenous association exempt from taxation under United States Code, Title 26, Section 501(c)(6), and controlled by a board of directors a majority of whom are members of the association, is exempt from the requirements of this chapter and the insurance laws of this State. To prove exemption from taxation under 26 U.S.C., Section 501(c)(6), the association shall provide to the director or his designee a certificate issued by the United States Internal Revenue Service demonstrating the association's tax-exempt status.  HISTORY: Former 1976 Code Section 38-41-20 [1975 (59) 157] recodified as Section 38-75-220 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-65-20 [1985 Act No. 137, Section 2] recodified as Section 38-41-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.
 (A) No agent or broker may solicit, advertise for, market, accept an application for, or in any way transact business on behalf of a multiple employer self-insured health plan in this State, as that term is defined in this chapter, unless the agent or broker first notifies the commissioner, in writing, that the plan is transacting or proposing to transact business in this State.  (B) No third party administrator, licensed administrator of insurance benefit plans, or insurer acting as an administrator may collect charges or premiums for, or adjust or settle claims on behalf of, any multiple employer self-insured health plan in this State, as that term is defined in this chapter, unless the third party administrator, licensed administrator of insurance benefit plans, or insurer first notifies the commissioner, in writing, that the plan is transacting or proposing to transact business in this State.  (C) The notice required by this section does not constitute approval by the commissioner of the multiple employer self-insured health plan, nor does it limit, in any manner, the administrative remedies available to the commissioner. Further, the notice does not limit or deprive any person of any private right of action under the law or the criminal jurisdiction of any law enforcement officer.  HISTORY: 1993 Act No. 50, Section 1.
 Application for a license must be made on forms prescribed by the director or his designee. No multiple employer self-insured health plan may be licensed unless it has and maintains a minimum of two hundred fifty covered employees.  Not later than March first of each year every multiple employer self-insured health plan shall pay to the department a license fee equal to two percent of the claims paid by the plan during the immediately preceding calendar year. All the funds collected by the department must be deposited in the general fund of the state.  HISTORY: Former 1976 Code Section 38-41-30 [1975 (59) 157] recodified as Section 38-75-230 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-65-30 [1985 Act No. 137, Section 3] and 38-65-60 [1985 Act No. 137, Section 6] recodified as Section 38-41-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.
 Each participating employer, as a condition of participation in a multiple employer self-insured health plan, shall execute an agreement by which the employer agrees to personally pay all claims for benefits covered under the multiple employer self-insured health plan which are incurred by his or its covered employees and their covered dependents, but which the plan has failed to pay. Such agreements shall be made on forms prescribed by the director and shall extend to all unpaid claims for benefits incurred by the employer's employees and their dependents during the time such employees and dependents were covered under the multiple employer self-insured health plan. Neither failure of a participating employer to execute an agreement, nor failure of the plan to require such execution, shall excuse the employer from liability for unpaid claims incurred by covered employees and dependents. An employer shall be deemed to have notice of the requirements of this section, and upon joining a multiple employer self-insured health plan, the employer shall be deemed to have agreed to liability for unpaid claims of his covered employees and their dependents in the same manner as if an agreement had been executed.  The multiple employer self-insured health plan shall provide each participating employer annual notice of the participating employer's responsibilities. This notice shall be in a form approved by the director or his designee and shall state that the participating employer is responsible for all claims incurred by the participating employer's covered employees and their covered dependents that the multiple employer self-insured health plan has failed to pay. The multiple employer self-insured health plan must obtain written certification from each participating employer annually that the participating employer understands that it is liable for covered claims which the multiple employer self-insured health plan fails to pay. The multiple employer self-insured health plan shall file an affidavit signed by the multiple employer self-insured health plan's chief executive officer that it has obtained each participating employer's certification. The multiple employer self-insured health plan shall maintain copies of each participating employer's annual certification for the duration of the multiple employer self-insured health plan. Failure of the multiple employer self-insured health plan to comply with any of its obligations under this section shall not be a defense to, or in any way diminish, an employer's obligation to personally pay all claims for benefits covered under the multiple employer self-insured health plan which are incurred by his or its covered employees and their covered dependents, but which the plan has failed to pay.  HISTORY: 2013 Act No. 88, Section 1, eff June 13, 2013.
 At the time application for a license is made, the multiple employer self-insured health plan shall file with the department a copy of the plan's bylaws, all schedules of benefits, and all management, administration, and trust agreements which the plan has made or proposes to make for the conduct of its business and affairs. Any proposed changes or amendments to the foregoing must also be filed with the department.  HISTORY: Former 1976 Code Section 38-65-30 [1985 Act No. 137, Section 3] recodified as Section 38-41-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.
 (A) For purposes of this section:  (1) "Group health plan" means an employee welfare benefit plan to the extent that the plan provides medical care, including items and services paid for as medical care to employees or their dependents as defined under the terms of the plan, directly or through insurance, reimbursement, or otherwise.  (2) "Medical care" means amounts paid for:  (a) the diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of affecting any structure or function of the body;  (b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and  (c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).  (3) "Network plan" means health insurance coverage offered by a health insurance issuer under which the financing and delivery of medical care, including items and services paid for as medical care, are provided, in whole or in part, through a defined set of providers under contract with the issuer.  (4) "Health insurance coverage" means benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by an issuer, except:  (a) coverage only for accident or disability income insurance or any combination of these;  (b) coverage issued as a supplement to liability insurance;  (c) liability insurance, including general liability insurance and automobile liability insurance;  (d) workers' compensation or similar insurance;  (e) automobile medical payment insurance;  (f) credit-only insurance;  (g) coverage for on-site medical clinics;  (h) other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits;  (i) if offered separately:  (i) limited scope dental or vision benefits;  (ii) benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these;  (iii) such other similar, limited benefits as are specified in regulations;  (j) if offered as independent, noncoordinated benefits:  (i) coverage only for specified disease or illness;  (ii) hospital indemnity or other fixed indemnity insurance;  (k) if offered as a separate insurance policy:  (i) Medicare supplement health insurance, as defined under Section 1882(g)(1) of the Social Security Act;  (ii) coverage supplemental to the coverage provided under Chapter 55, Title 10 of the United States Code;  (iii) similar supplemental coverage provided to coverage under a group health plan.  (5) "Health insurance issuer" or "issuer" means an entity that provides health insurance coverage in this State. For purposes of this section, issuer includes an insurance company, a health maintenance organization, and any other entity providing health insurance coverage which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (6) "Health status-related factor" means any of the following factors: health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; or disability.  (B) A group health plan which is a multiple employer self-insured health plan may not deny an employer whose employees are covered under such a plan continued access to the same or different coverage under the terms of such a plan, other than:  (1) for nonpayment of contributions;  (2) for fraud or other intentional misrepresentation of material fact by the employer;  (3) for noncompliance with material plan provisions;  (4) because the plan is ceasing to offer any coverage in a geographic area;  (5) in the case of a plan that offers benefits through a network plan, there is no longer any individual enrolled through the employer who lives, resides, or works in the service area of the network plan and the plan applies this item uniformly without regard to the claims experience of employers or any health status-related factor in relation to such individuals or their dependents; and  (6) for failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agreement.  HISTORY: 1997 Act No. 5, Section 1.
 A multiple employer self-insured health plan shall include aggregate excess stop-loss coverage and individual excess stop-loss coverage provided by an insurer licensed, approved, or eligible by the State. A MEWA shall maintain excess insurance coverage written by an insurer that the Department of Insurance considers approved or eligible to do business in this State. This coverage must have a net retention level determined in accordance with sound actuarial principles approved by the director or his designee, and based on the number of risks insured by the MEWA. The MEWA must file the policy contract providing this coverage with the director or his designee. The terms of this policy contract must require that before the insurer may cancel or modify the terms of this policy contract, the insurer must give notice of the pending cancellation or modification of terms to the director at least thirty days before the cancellation or modification may occur. Aggregate excess stop-loss coverage shall include provisions to cover incurred, unpaid claim liability in the event of plan termination. The excess or stop-loss insurer shall bear the risk of coverage for any member of the pool that becomes insolvent with outstanding contributions due. The limits required for an excess stop-loss policy shall be determined by the director or his designee in accordance with sound actuarial principles, so that the probability of incurred claims exceeding the participating employers' fund and the aggregate limit of the excess or stop-loss coverage is de minimus. A plan shall submit its proposed excess or stop-loss insurance contract to the director or his designee at least thirty days prior to the proposed contract's effective date and at least thirty days prior to any renewal date. The director or his designee shall review the contract to determine whether it meets the standards established by this chapter and respond within a thirty-day period. In reviewing an excess stop-loss agreement for approval, the director or his designee will closely scrutinize the agreement to determine whether the levels of individual and aggregate risk retained by the plan will put the plan in an unsound condition or will render its proceedings hazardous to the public or to persons covered under the plan. Any excess or stop-loss insurance contract must be noncancelable for a minimum term of two years. In addition, the plan shall have a participating employer's fund in an amount at least equal to the point at which the excess or stop-loss insurer shall assume a one hundred percent share of additional liability. The amount required for the employer's fund must be determined in accordance with sound actuarial principles and approved by the director or his designee and based upon the number of risks insured by the plan. This employer's fund must be funded via cash or cash equivalent securities.  HISTORY: Former 1976 Code Section 38-65-30 [1985 Act No. 137, Section 3] recodified as Section 38-41-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654; 2012 Act No. 137, Section 9, eff April 2, 2012; 2013 Act No. 88, Section 2, eff June 13, 2013.
 Funds collected from the participating employers under multiple employer self-insured health plans must be held in trust subject to the following requirements:  (a) A board of trustees elected by participating employers must serve as fund managers on behalf of participants. Trustees must be plan participants. No participating employer may be represented by more than one trustee. A minimum of three and a maximum of seven trustees may be elected. Trustees may not receive remuneration but they may be reimbursed for actual and reasonable expenses incurred in connection with duties as trustee.  (b) Trustees must be bonded in an amount not less than one hundred fifty thousand dollars from a licensed surety company.  (c) Investment of plan funds is subject to the same restrictions which are applicable to insurers pursuant to Sections 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.  (d) Trustees, on behalf of the plan, shall file an annual report with the department by March first showing the condition and affairs of the plan as of the preceding thirty-first day of December. The report must be made on forms prescribed by the director or his designee. The report shall summarize the financial condition of the fund, itemize collections from participating employers, detail all fund expenditures, and provide any additional information which the director or his designee requires.  HISTORY: Former 1976 Code Section 38-65-40 [1985 Act No. 137, Section 4] recodified as Section 38-41-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654; 2003 Act No. 73, Section 5, eff June 25, 2003.
 A plan shall establish loss reserves for all incurred losses, both reported and unreported, and for unearned premiums, in the same manner required for health insurers under Sections 38-9-170 and 38-9-190.  A plan also shall establish a surplus account equal to the greater of:  (a) three times the average paid monthly premium during the plan's most recent fund year;  (b) for plans which do not yet have one fund year's experience, three times estimated monthly premium; or  (c) one hundred thousand dollars.  HISTORY: Former 1976 Code Section 38-65-50 [1985 Act No. 137, Section 5] recodified as Section 38-41-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.
 A multiple employer self-insured health plan shall make and keep a full and correct record of its business and affairs and the director or his representative shall inspect these records at least every three years. The information from these records must be furnished to the director or his representatives on demand and the original books or records must be open to examination by the director or his representatives when demanded. Every multiple employer self-insured health plan must be subject to an examination of its financial affairs. This examination must be conducted in accordance with the requirements of Chapter 13, and the cost of the examination must be borne by the Multiple Employer Welfare Arrangement.  HISTORY: Former 1976 Code Section 38-65-70 [1985 Act No. 137, Section 7] recodified as Section 38-41-80 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654; 2012 Act No. 137, Section 10, eff April 2, 2012.
 A plan that desires to cease existence shall apply to the director or his designee for authority to dissolve. Applications to dissolve must be on forms prescribed by the director or his designee and must be approved or disapproved by the director or his designee within sixty days of receipt. Dissolution without authorization is prohibited and does not absolve a plan or its participants from fulfilling the plan's continuing obligations. An application to dissolve must be granted if either of the following conditions is met:  (1) The plan demonstrates that it has no outstanding liabilities, including incurred but not reported liabilities.  (2) The plan has obtained an irrevocable commitment from a licensed insurer which provides for payment of all outstanding liabilities and for providing all related services, including payment of claims, preparation of reports, and administration of transactions associated with the period when the plan provided coverage.  Upon dissolution, after payment of all outstanding liabilities and indebtedness, the assets of the plan must be distributed to all employers participating in the plan during the last five years immediately preceding dissolution. The distributive share of each employer must be in the proportion that all contributions made by the employer during such five-year period bear to the total contributions made by all participating employers during such five-year period.  HISTORY: Former 1976 Code Section 38-65-80 [1985 Act No. 137, Section 8] recodified as Section 38-41-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 654.
 (A) A person who:  (1) sells, solicits, or negotiates insurance on behalf of an insurer;  (2) takes or transmits other than for himself an application for insurance or a policy of insurance to or from an insurer;  (3) advertises or otherwise gives notice that he will receive or transmit insurance applications or policies;  (4) receives or delivers a policy of insurance of an insurer;  (5) receives, collects, or transmits any premium of insurance; or  (6) performs any other act in the making of an insurance contract for or with an insurer, other than for himself; whether these acts are done by an employee of an insurer or at the instance or request of an insurer, must be an appointed producer of the insurer for which the act is done or the risk is taken unless provided otherwise in Section 38-43-20.  (B) This chapter does not apply to excess and surplus lines brokers licensed pursuant to Section 38-45-30 except as provided in Section 38-43-70.  (C) An insurance producer doing business under any name other than the producer's legal name is required to notify the director or his designee prior to using the assumed name.  HISTORY: Former 1976 Code Section 38-43-10 [1947 (45) 322; 1952 Code Section 37-651; 1962 Code Section 37-651] recodified as Section 38-73-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-10 [1947 (45) 322; 1952 Code Section 37-233; 1962 Code Section 37-233] and Section 38-51-15 [1986 Act No. 518, Section 2] recodified as Section 38-43-10 by 1987 Act No. 155, Section 1; 1988 Act No. 371, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003; 2003 Act No. 73, Section 6, eff June 25, 2003.
 (A) 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 insurance are approved in South Carolina and which are exempt from examination. 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.  (B) A resident individual applying for an insurance producer license shall pass an examination. The examination must test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer, and the insurance laws and regulations of this State. The examination required by this section must be developed and conducted under regulations prescribed by the director or his designee.  (C) The director or his designee may make arrangements, including contracting with an outside testing service, for administering licensing examinations.  (D) Each individual applying for a licensing examination shall remit a nonrefundable examination fee as required by the licensing exam administrator.  (E) An individual who fails to appear for the examination as scheduled or fails to pass the examination, shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination.  (F) A person applying for a resident insurance producer license or a person applying on behalf of the applicant shall make application to the director or his designee on the Uniform Application and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the applicant's knowledge and belief. Before approving the application, the director or his designee shall find that the applicant:  (1) is at least eighteen years of age;  (2) is a person of good moral character and has not been convicted of a felony or any act within the last ten years that is a ground for denial, suspension, or revocation as provided for in Section 38-43-130 or been convicted of a misdemeanor involving dishonesty, breach of trust, or other financial- or insurance-related crime within five years;  (3) has paid the fees provided for in Section 38-43-80; and  (4) has successfully passed the examination or examinations for the line or lines of insurance for which the person has applied.  (5) Before a license is issued to an applicant or is renewed permitting him to act as a resident producer, the applicant shall comply with the licensing and renewal requirements set forth in this section and by regulation. In addition to those licensing requirements, the applicant shall:  (a) furnish a complete set of his fingerprints and the required fees and information in accordance with this subsection to the director or his designee. Failure to furnish the complete set of fingerprints and required fees constitutes grounds for denial of an application for licensure. However, the director may waive the fingerprinting requirements if it is impossible for the applicant to provide fingerprints due to a medically certified physical injury; and  (b) undergo a state criminal records check, supported by his fingerprints, by the South Carolina Law Enforcement Division (SLED) and a national criminal records check, supported by his fingerprints, by the Federal Bureau of Investigation (FBI). The results of these criminal records checks must be reported to the department. SLED is authorized to retain the fingerprints for use in identification purposes including, but not limited to, unsolved latent prints. The cost associated with the criminal history records checks must be borne by the applicant. The applicant's fingerprints must be certified by a law enforcement officer authorized by SLED.  (G)(1) A licensed insurance producer seeking to renew their current resident insurance producer license is exempt from the fingerprinting requirement set forth in subsection (F)(5) if the applicant complies with the requirements of this section and:  (a) has previously provided and has on file with the appropriate agency of the State an accessible, current, complete, and legible set of fingerprints submitted as part of an earlier application for a license or for renewal of a license which was either approved or granted; and  (b) all licenses issued to the applicant by the department are in good standing on the date of the subsequent application with all licenses.  (2) A resident producer who has allowed the license to lapse for failure to comply with the continuing education requirements set forth in Section 38-43-106 is not required to submit new fingerprint records if the applicant has:  (a) applied to reinstate the same license within six months from the compliance date;  (b) met the continuing insurance education requirements; and  (c) paid a penalty set forth by the director or his designee in full.  (3) The director may require an applicant to furnish a complete set of fingerprints and payment of all applicable fingerprint processing fees for licensure or renewal of a license if the previously submitted set of fingerprints is no longer usable for obtaining a criminal history check for any reason.  (H) The individual's producer license must contain the licensee's name, address, personal identification number, the date of issuance, the line or lines of authority, and other information the director or his designee considers necessary.  (I) An agency acting as an insurance producer is required to obtain an insurance producer license. Application must be made using the Uniform Business Entity Application. Before approving the application, the director or his designee shall find that:  (1) the agency has paid the fees as prescribed by Section 38-43-80; and  (2) the agency has designated a licensed producer or other person responsible for the business entity's compliance with the insurance laws, rules, and regulations of this State.  (J) The director or his designee may require any documents reasonably necessary to verify the information contained in an application.  (K) The agency's license must contain the licensee's name, address, personal identification number, the date of issuance, and other information the director or his designee considers necessary.  (L) Each insurer that sells, solicits, or negotiates any form of credit insurance shall provide to each individual whose duties include selling, soliciting, or negotiating credit insurance, a program of instruction that has been filed with the director or his designee.  HISTORY: Former 1976 Code Section 38-43-100 [1947 (45) 322; 1952 Code Section 37-659; 1962 Code Section 37-659] recodified as Section 38-73-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-110 [1947 (45) 322; 1950 (46) 2268; 1952 Code Section 37-236; 1962 Code Section 37-236; 1985 Act No. 139] recodified as Section 38-43-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 659; 2002 Act No. 323, Section 2, eff January 31, 2003; 2003 Act No. 73, Section 10, eff June 25, 2003; 2004 Act No. 291, Section 1.A, eff January 1, 2005; 2008 Act No. 326, Section 5, eff June 16, 2008; 2016 Act No. 194 (H.4817), Section 8, eff May 26, 2016; 2017 Act No. 55 (S.463), Section 2, eff May 19, 2017; 2018 Act No. 158 (H.4654), Section 1, eff April 17, 2018.  Effect of Amendment  2016 Act No. 194, Section 8, in (F), added (5), relating to background checks.  2017 Act No. 55, Section 2, amended (F)(5), authorizing the South Carolina Law Enforcement Division to retain fingerprints for use in identification purposes.  2018 Act No. 158, Section 1, in (F), in (2), substituted "act" for "crime involving moral turpitude" and added "or been convicted of a misdemeanor involving dishonesty, breach of trust, or other financial- or insurance-related crime within five years" at the end, and rewrote (5)(a); inserted (G), relating to exceptions to the fingerprinting requirement under certain circumstances, and redesignated (G) to (K) as (H) to (L).
 (A) An individual who applies for an insurance producer license in this State who was previously licensed for the same lines of insurance in another state is not required to complete an examination. This exemption only is available if the person is currently licensed in another state or if the application is received within ninety days of the cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's Producer Database records, maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries, indicate that the producer is or was licensed in good standing for the line of insurance requested.  (B) A person licensed as an insurance producer in another state who moves to this State shall make application within ninety days of establishing legal residence to become a resident licensee pursuant to Section 38-43-100. An examination is not required of a person to obtain any line of insurance previously held in another state. However, the director or his designee reserves the right to reciprocate standards imposed by other states and territories, or both, on this state's licensed producers.  (C) A person applying for a nonresident insurance producer license or a person applying on behalf of the applicant shall make application to the director or his designee on the Uniform Application and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the applicant's knowledge and belief.  HISTORY: 2002 Act No. 323, Section 2, eff January 31, 2003; 2004 Act No. 291, Section 2.A, eff January 1, 2005; 2008 Act No. 326, Section 6, eff June 16, 2008.
 (A) The director or his designee may issue a temporary insurance producer license for a period not to exceed one hundred eighty days without requiring an examination if the director or his designee considers the temporary license is necessary for the servicing of an insurance business in the following cases:  (1) to the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business;  (2) to a member or employee of an agency licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license;  (3) to the designee of a licensed insurance producer entering active service in the armed forces of the United States of America; or  (4) except for continuing education purposes, in any other circumstance where the director or his designee considers the public interest will best be served by the issuance of this license.  (B) The director or his designee may by order limit the authority of any temporary licensee in any way considered necessary to protect insureds and the public. The director or his designee may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The director or his designee may by order revoke a temporary license if the interest of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business for which the temporary license was issued.  HISTORY: 2002 Act No. 323, Section 2, eff January 31, 2003; 2008 Act No. 326, Section 7, eff June 16, 2008.
 (A)(1) An applicant or producer licensed to sell property and casualty insurance or to sell life, accident and health insurance, or both, or qualified for this licensure, shall complete biennially a minimum of twenty-four hours of continuing insurance education in order to be eligible for licensure for the following two years. A person who falsely represents that he or another person has met the continuing insurance education requirements of this section, after being afforded notice and an opportunity for a hearing by the Administrative Law Court, is subject to the penalties provided in Section 38-2-10.  (2) However, if a producer is licensed in both property and casualty and life, accident and health, the producer shall complete at least one-third of the twenty-four required biennial continuing insurance education hours in courses related to each of these types of licenses or qualification for licensure. Notwithstanding the provisions of this subsection or another provision of law, a maximum of eighteen credit hours earned may be carried forward to the next biennial continuing insurance education period, as long as the hours carried forward are in excess of the required minimum for a particular reporting period.  (3) However, a licensed resident producer who has obtained one of the following designations may use the credit hours earned to maintain the designation toward the fulfillment of the twenty-four hour requirement: Chartered Life Underwriter (CLU), Fellow, Life Management Institute (FLMI), Certified Financial Planner (CFP), Life Underwriter Training Council Fellow (LUTCF), Registered Health Underwriter (RHU), Registered Employee Benefit Consultant (REBC), or Chartered Financial Consultant (CHFC) for a life, accident, and health license, or Chartered Property and Casualty Underwriter (CPCU) or Certified Insurance Counselor (CIC) for a property and casualty license.  (4) A producer may repeat a continuing education course, but credit must not be given more than once for a course repeated during a biennial compliance period.  (B)(1) The director or his designee shall administer these continuing education requirements and shall approve courses of instruction which qualify for these purposes. However, the director may enter into reciprocal agreements with the insurance commissioners of other states regarding the approval of continuing education courses, sponsors, instructors, or proctors if, in his judgment, the arrangements or agreements are in the best interest of the State and if the proposed courses, sponsors, instructors, or proctors submitted meet the minimum statutory requirements of this State for approval. However, the director or his designee may not enter into or continue a reciprocal agreement unless the other state has requirements similar to this State in approving courses, sponsors, instructors, or proctors. In administering this program, the department, in its discretion, may promulgate regulations producers provide to a continuing education administrator established within the department proof of compliance with continuing education requirements as a condition of license renewal or, in the alternative, contract with an outside service provider to provide recordkeeping services as the continuing education administrator. The costs of the continuing education administrator must be paid from the continuing insurance education fees paid by producers in the manner provided by this section, except that course approval responsibilities may not be designated to the continuing education administrator. The continuing education administrator shall compile and maintain, in conjunction with insurers and producers, records reflecting the continuing insurance education status of all licensed or qualified producers subject to the requirements of this section. The continuing education administrator shall furnish to the insurer, as specified by regulation, a report of the continuing insurance education status of all of its producers. All licensed producers shall provide evidence of their continuing insurance education status to the continuing education administrator by the last day of the individual's month of birth. An individual born in an odd-numbered year shall comply every odd-numbered year. An individual born in an even-numbered year shall comply every even-numbered year.  (2) The department may promulgate regulations prescribing the overall parameters of continuing education requirements, and these regulations expressly must authorize the director or his designee to recognize product-specific training offered by insurers. The director shall appoint an advisory committee to make recommendations with respect to courses offered for approval, but the director or his designee shall retain authority with respect to course approvals. When the advisory committee is approved, it shall meet regularly as needed, but no less than semiannually, to review new course applications. Also, the advisory committee shall review modifications of courses previously approved and review previously promulgated regulations to make recommendations regarding any need for modifications, deletions, or new regulations. In making these appointments, the director may accept nominations for qualified individuals from the Professional Insurance Agents of South Carolina; the Independent Insurance Agents of South Carolina; the South Carolina Association of Automobile Insurance Agents; the South Carolina Association of Insurance and Financial Advisers; the Association of South Carolina Life Insurance Companies; the Direct Writers Insurance Companies; insurers that are not members of any national insurance trade association; and another individual, group, or trade or professional association.  (3) A vacancy on the advisory committee must be published in newspapers of general, statewide circulation. Each advisory committee member must be appointed for a term of two years and shall serve until his successor is appointed and qualified. A vacancy must be filled for the unexpired term only.  (C) The appointment of a producer may not be renewed unless the producer has completed the mandated continuing insurance education requirements during the previous two-year accreditation period. The license of a producer who fails to comply with the provisions of this section shall lapse in accordance with the provisions of Section 38-43-110. Each insurer is responsible, biennially before renewal, for furnishing to the department certification that its producers meet the continuing insurance education requirements. Each producer is responsible for payment to the continuing education administrator a reasonable annual fee for operation of the continuing insurance education program. These fees are not refundable nor proratable and must be used to administer the provisions of this section.  (D) This section also applies to nonresident producers unless otherwise provided in this section. However, a nonresident producer who successfully satisfies continuing insurance education requirements of his home state is considered to have satisfied the requirements of this section regardless of the requirements of that other state.  (E) An insurance producer licensed for limited lines insurance is exempt from the provisions of this section.  (F) The department is authorized to promulgate regulations to implement the provisions of this section.  (G) All information received by the advisory committee in the course and scope of its duties must be treated as confidential and proprietary and not used or disclosed outside the requirements of the duties imposed on it by law.  (H) A licensee with twenty-five years or more of licensure in South Carolina who is sixty-five years of age or more is exempt from the continuing education requirements of this chapter.  HISTORY: 1991 Act No. 141, Section 2; 1993 Act No. 181, Section 661; 1994 Act No. 374, Section 1; 1994 Act No. 399, Section 1; 2000 Act No. 273, Section 1; 2002 Act No. 199, Section 1, eff March 27, 2002; 2002 Act No. 323, Section 2, eff January 31, 2003; 2003 Act No. 73, Section 12, eff June 25, 2003; 2004 Act No. 291, Sections 4.A and 6.A, eff January 1, 2005, Section 5.A, eff July 1, 2004, Section 7.A, eff May 1, 2006; 2008 Act No. 326, Section 8, eff June 16, 2008; 2009 Act No. 69, Section 4, eff June 2, 2009; 2022 Act No. 167 (S.158), Section 3, eff May 16, 2022.  Editor's Note  2006 Act No. 332, Section 29, provides as follows:  "Section 7B of Act 291 of 2004 [which amended subsection (H) effective May 1, 2006] is amended to read:  "This section takes effect May 1, 2010."  Effect of Amendment  2022 Act No. 167, Section 3, added (H).
 (A) If an individual applies for an insurance producer's license, he shall supply the department his business, email, mailing, and residential street addresses. The producer also shall notify the department within thirty days of any change in legal name or in these addresses.  (B) Failure to inform the director or his designee of a change in legal name or address within this period is a violation of this title and the producer is subject to the penalties provided in Section 38-2-10.  HISTORY: 1988 Act No. 327, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003; 2004 Act No. 291, Section 8.A, eff January 1, 2005; 2008 Act No. 326, Section 9, eff June 16, 2008; 2016 Act No. 194 (H.4817), Section 2, eff May 26, 2016.  Effect of Amendment  2016 Act No. 194, Section 2, in (A), inserted "email," and substituted "residential street addresses" for "residence street address".
 (A) A producer's license continues on a biennial basis unless revoked or suspended subject to the following requirements:  (1) an individual producer license must be renewed by the last day of the licensee's month of birth based on the producer's year of birth as provided for in regulation;  (2) an individual producer license may not be renewed unless the continuing education requirements of Section 38-43-106 are met; and  (3) an individual producer license may not be renewed unless the biennial license renewal fee is paid as provided in Section 38-43-80.  (B) A producer who allows his license to lapse for failure to comply with Section 38-43-106, within six months from the compliance deadline, may reinstate the same license if continuing education requirements have been met and a penalty fee set forth by regulation is paid.  (C) A licensed insurance producer who is unable to comply with license renewal procedures due to active military service or some other extenuating circumstance (e.g., a long-term medical disability) may request a waiver of those procedures. The producer also may request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.  HISTORY: Former 1976 Code Section 38-43-110 [1947 (45) 322; 1952 Code Section 37-660; 1962 Code Section 37-660] recodified as Section 38-73-90 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-1-60 [1979 Act No. 63] and 38-51-130 [1947 (45) 322; 1952 Code Section 37-240; 1962 Code Section 37-240; 1976 Act No. 612 Section 4] recodified as Section 38-43-110 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11I; 1993 Act No. 181, Section 662; 2002 Act No. 323, Section 2, eff January 31, 2003; 2008 Act No. 326, Section 10, eff June 16, 2008; 2009 Act No. 69, Section 5, eff June 2, 2009.
 (A) The director or his designee may place on probation, revoke, or suspend a producer's license after ten days' notice or refuse to issue or reissue a license when it appears that a producer has been convicted of a crime involving moral turpitude, has violated this title or any regulation promulgated by the department, or has wilfully deceived or dealt unjustly with the citizens of this State.  (B) For purposes of this section, "convicted" includes a plea of guilty or a plea of nolo contendere, and the record of conviction, or a copy of it, certified by the clerk of court or by the judge in whose court the conviction occurred is conclusive evidence of the conviction.  (C) The words "deceived or dealt unjustly with the citizens of this State" include, but are not limited to, action or inaction by the producer as follows:  (1) providing incorrect, misleading, incomplete, or materially untrue information in the license application;  (2) violating insurance laws, or violating any regulation, subpoena, or order of the director or of another state's director or his designee;  (3) obtaining or attempting to obtain a license through misrepresentation or fraud;  (4) improperly withholding, misappropriating, or converting any monies or properties received in the course of doing insurance business;  (5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;  (6) having been convicted of a felony;  (7) having admitted or been found to have committed any insurance unfair trade practice or fraud;  (8) using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this State or elsewhere;  (9) having an insurance producer license, or its equivalent, denied, suspended, or revoked in another state, province, district, or territory;  (10) forging another's name to an application for insurance or to any document related to an insurance transaction;  (11) improperly using notes or any other reference material to complete an examination for an insurance license;  (12) knowingly accepting insurance business from an individual who is not licensed;  (13) failing to comply with an administrative or court order imposing a child support obligation; or  (14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.  (D) If upon investigation the director or his designee finds that a producer has obtained a license by fraud or misrepresentation, he may suspend immediately the license. The director or his designee, in an order suspending a license, shall specify the period during which the suspension is to be in effect. The period may not exceed two years. A licensee whose license has been revoked or an applicant who has been refused a license by the director or his designee may not reapply for another license until a two-year period of time has lapsed from the effective date of the revocation or refusal or, if judicial review before the Administrative Law Court of the revocation or refusal is sought, after two years from the date of a final court order or decree affirming the revocation or suspension.  (E) If, after notice of a hearing before the Administrative Law Court or notice of an opportunity for hearing before the Administrative Law Court, the director or his designee finds that one or more grounds exist for the revocation or suspension of, or the refusal to issue or reissue a license, the director or his designee, in his discretion, instead of revocation, suspension, or refusal, may impose upon the producer or applicant an administrative penalty as provided in Section 38-2-10 for each offense or ground.  (F) The director or his designee may allow the producer or applicant a reasonable period, not to exceed thirty days, within which to pay to the director or his designee the amount of the penalty imposed. If the producer or applicant fails to pay the penalty in its entirety to the director or his designee at his office in Columbia within the period allowed, the license or application stands revoked, suspended, or renewal refused, as the case may be, upon expiration of the period and without any further proceedings.  (G) Whenever the director or his designee nonrenews or denies an application for a license, the director or his designee shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license. The applicant or licensee may make written demand upon the Administrative Law Judge within thirty days for a hearing before the Administrative Law Judge to determine the reasonableness of the director or his designee's action. The hearing must be held pursuant to the Administrative Procedures Act.  (H) The license of an agency may be placed on probation, suspended, revoked or refused if the director or his designee finds, upon an investigation, that an individual licensee's violation was known or should have been known by one or more of the partners, officers, or managers acting on behalf of the agency and the violation was neither reported to the director or his designee nor corrective action taken.  (I) In addition to or in lieu of any applicable denial, probation, suspension, or revocation of a license, a person violating this title may, after a hearing, be subject to an administrative penalty according to Section 38-2-10.  (J) The director shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this chapter and title against any person who is under investigation for or charged with a violation of this title even if the person's license or registration has been surrendered or has lapsed by operation of law.  HISTORY: Former 1976 Code Section 38-43-130 [1947 (45) 322; 1952 Code Section 37-662; 1962 Code Section 37-662] recodified as Section 38-73-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-150 [1947 (45) 322; 1952 Code Section 37-241; 1962 Code Section 37-241; 1976 Act No. 455; 1981 Act No. 132, Section 1] recodified as Section 38-43-130 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 16; 1993 Act No. 181, Section 663; 2002 Act No. 323, Section 2, eff January 31, 2003; 2008 Act No. 326, Section 11, eff June 16, 2008.
 If any person unlawfully solicits, negotiates, sells, collects, or transmits a premium for a contract of insurance or acts in any way in the negotiation, solicitation, sale, or transaction of any insurance with an insurer not licensed to do business in this State, he is guilty of a misdemeanor.  HISTORY: Former 1976 Code Section 38-43-160 [1948 (45) 1961; 1952 Code Section 37-665; 1962 Code Section 37-665; 1978 Act No. 585 Section 1] recodified as Section 38-75-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-180 [1947 (45) 322; 1952 Code Section 37-249; 1962 Code Section 37-249] recodified as Section 38-43-160 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 17; 2002 Act No. 323, Section 2, eff January 31, 2003.
 An insurance producer is personally liable on all contracts of insurance unlawfully made by or through him, directly or indirectly, for an insurer not authorized to do business in this State. A person who writes or signs any open policy, certificate, blank, or coupon of, or furnished by, an unlicensed company, producer, or broker, the effect of which is to bind any insurance in an unlicensed insurer on property in this State, is the producer of the insurer and personally liable for all licenses and taxes due on account of the transaction.  HISTORY: Former 1976 Code Section 38-51-190 [1947 (45) 322; 1952 Code Section 37-250; 1962 Code Section 37-250] recodified as Section 38-43-170 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 Every insurance producer who sells an insurance policy written or issued by an insurer not licensed to do business in this State is personally liable for the limits of the coverage provided for in the policy if the producer fails to comply with the provisions of this title relating to policies issued by insurers not licensed to do business in this State.  HISTORY: Former 1976 Code Section 38-51-200 [1960 (51) 1630; 1962 Code Section 37-250.1] recodified as Section 38-43-180 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 An insurance producer who acts on behalf of another in negotiating a contract of insurance is the insurer's producer for the purpose of receiving the premium. A producer who knowingly procures the payment of a premium of insurance or the obligation for the payment of a premium of insurance by fraudulent representation is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years, or both.  HISTORY: Former 1976 Code Section 38-51-210 [1947 (45) 322; 1952 Code Section 37-251; 1962 Code Section 37-251] recodified as Section 38-43-190 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 18; 1993 Act No. 184, Section 214; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) A person may not sell, solicit, or negotiate insurance in this State for any line or lines of insurance unless the person is licensed for that line of authority in accordance with this chapter.  (B) No person may act as a producer for an insurer or for a fraternal benefit association unless a producer's license has been issued to him by the director or his designee.  (C) Nothing in this chapter may be construed to require an insurer to obtain an insurance producer license. In this section, the term "insurer" does not include an insurer's officers, directors, employees, subsidiaries, or affiliates.  (D) A license as an insurance producer is not required of the following:  (1) an officer, director, or employee of an insurer or of an insurance producer, provided that the officer, director, or employee does not receive any commission on policies written or sold to insure risks residing, located, or to be performed in this State and:  (a) the officer, director, or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation, or negotiation of insurance;  (b) the officer, director, or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance;  (c) the officer, director, or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance;  (d) an employee of a licensed producer who is under the producer's direct supervision or an employee of a licensed insurer, who performs only clerical duties, and who is paid on an hourly or salary basis and not on a commission basis; or an agency office employee acting within the confines of the producer's office, under the direction and supervision of the licensed producer and within the scope of the producer's license, in the acceptance of request for insurance and payment of premiums and the performance of clerical, stenographic, and similar office duties;  (2) a person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance; or for the purpose of enrolling individuals under plans; issuing certificates under plans or otherwise assisting in administering plans; or performs administrative services related to mass marketed property and casualty insurance; where no commission is paid to the person for the service;  (3) an employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, director, or trustees are engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts;  (4) employees of insurers or organizations employed by the insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance;  (5) a person whose activities in this State are limited to advertising without the intent to solicit on its own behalf insurance in this State through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the State, provided that the person does not sell, solicit, or negotiate insurance that would insure risks residing, located, or to be performed in this State;  (6) a person who is not a resident of this State who sells, solicits, or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract, provided that that person is otherwise licensed as an insurance producer to sell, solicit, or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state;  (7) a salaried full-time employee who counsels or advises his employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer provided that the employee does not sell, solicit, or negotiate insurance or receive any commission.  HISTORY: Former 1976 Code Section 38-43-20 [1947 (45) 322; 1952 Code Section 37-652; 1962 Code Section 37-652] recodified as Section 38-73-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-20 [1947 (45) 322; 1952 Code Section 37-231; 1957 (50) 280; 1962 Code Section 37-231; 1972 (57) 2468] recodified as Section 38-43-20 by 1987 Act No. 155, Section 1; 1988 Act No. 371, Section 2; 1988 Act No. 471; 1989 Act No. 140, Section 1; 1993 Act No. 181, Section 655; 2002 Act No. 196, Section 1, eff March 27, 2002; 2002 Act No. 323, Section 2, eff January 31, 2003; 2008 Act No. 326, Section 1, eff June 16, 2008.
 (A) An insurance company or insurance producer may not pay a commission, service fee, brokerage, or other valuable consideration to a person for selling, soliciting, or negotiating insurance in this State if that person is required to be licensed pursuant to the provisions of this chapter and is not licensed.  (B) A person may not accept a commission, service fee, brokerage, or other valuable consideration for selling, soliciting, or negotiating insurance in this State if that person is required to be licensed pursuant to the provisions of this chapter and is not licensed.  (C) A renewal or other deferred commission may be paid to a person for selling, soliciting, or negotiating insurance in this State if the person was required to be licensed pursuant to the provisions of this chapter at the time of the sale, solicitation, or negotiation and was licensed at that time.  (D) An insurer or insurance producer may pay or assign service fees or other valuable consideration to an insurance agency or to a person who does not sell, solicit, or negotiate insurance in this State, unless the payment violates another provision of Title 38. A payment made pursuant to the provisions of this subsection must not be based on completion of the sale of the insurance policy.  (E) Nothing in this section may be construed to prohibit a licensed insurance producer from rebating a portion of his commission collected on automobile insurance premiums to the insured upon that automobile insurance policy.  (F) This section does not prohibit the payment of a fee to a trade or professional association exempt from income tax under Section 501(c) of the Internal Revenue Code.  HISTORY: Former 1976 Code Section 38-51-200 [1960 (51) 1630; 1962 Code Section 37-250.1] recodified as Section 38-43-200 by 1987 Act No. 155, Section 1; 1990 Act No. 465, Section 1; 1997 Act No. 154, Section 25; 2002 Act No. 323, Section 2, eff January 31, 2003; 2004 Act No. 291, Section 9.A, eff January 1, 2005; 2009 Act No. 69, Section 6, eff June 2, 2009.
 It is unlawful for a licensed insurance producer to sell any stock in an insurer while engaged in selling insurance policies for the insurer or for thirty days from the time at which he last represented the insurer as an insurance producer.  HISTORY: Former 1976 Code Section 38-51-240 [1958 (50) 1685; 1962 Code Section 37-255] recodified as Section 38-43-210 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 It is unlawful for a licensed stock salesman to sell any policy for an insurer while engaged in selling stock for the insurer or for thirty days from the time at which he last represented the insurer in the sale of its stock.  HISTORY: Former 1976 Code Section 38-51-250 [1958 (50) 1685; 1962 Code Section 37-256] recodified as Section 38-43-220 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 A person violating Section 38-43-210 or 38-43-220 may, in the discretion of the director or his designee or the Securities Commissioner, as the case may be, be suspended as a licensed insurance producer or licensed stockbroker for the period of time he considers proper, or either the director, his designee, or the Securities Commissioner may revoke the license immediately if he considers the violation merits this action.  HISTORY: Former 1976 Code Section 38-51-260 [1958 (50) 1685; 1960 (51) 1563, 1646; 1962 Code Section 37-257] recodified as Section 38-43-230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 664; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) It is unlawful for a producer, collector, or other person to:  (1) undertake or pretend to represent an insurer licensed to do business in this State, or to collect or do business for the insurer without the authority of the insurer;  (2) secure cash advances by false statements; or  (3) fail to turn over or satisfactorily account for all collections of the insurer when required.  (B) A person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years.  HISTORY: Former 1976 Code Section 38-51-270 [1947 (45) 322; 1952 Code Section 37-253; 1962 Code Section 37-253] recodified as Section 38-43-240 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 215; 2002 Act No. 323, Section 2, eff January 31, 2003.
 A licensed insurance producer who, with the intent to injure, defraud, or deceive any insurance company or applicant for insurance:  (1) presents or causes to be presented to any insurance company an application for insurance, knowing that the application contains any false or misleading information or omissions concerning any fact or thing material to the underwriting of the insurance for which the application is submitted, or  (2) assists, abets, solicits, or conspires with another to prepare or make an application for insurance, knowing that the application contains any false or misleading information or omissions concerning any fact or thing material to the underwriting of the insurance for which the applicant is submitted, is guilty of a felony and, upon conviction, must be punished by imprisonment for not more than five years or a fine not to exceed five thousand dollars, or both.  HISTORY: 1988 Act No. 641, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) A producer shall report to the director or his designee any administrative action taken against the producer in another jurisdiction or by another governmental agency in this State within thirty days of the final disposition of the matter. This report shall include a copy of the order, consent to order, or other relevant legal documents.  (B) Within thirty days of a conviction, a producer shall report to the insurance director any criminal conviction of the producer taken in any jurisdiction. The report must include a copy of the order, sentencing document, or plea agreement and any other relevant legal documents.  HISTORY: 2002 Act No. 323, Section 2, eff January 31, 2003; 2019 Act No. 6 (S.360), Section 5, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 5, rewrote (B), requiring the reporting of only criminal convictions.
 (A) The director may issue a limited lines travel insurance producer license to an individual that has filed with the director an application for a limited lines travel insurance producer license in a form and manner prescribed by the director. A limited lines travel insurance producer must be licensed to sell, solicit, or negotiate travel insurance through a licensed insurer. A person may not act as a limited lines travel insurance producer or travel insurance retailer unless properly licensed or registered, respectively.  (B) A person licensed in a major line of authority as an insurance producer is authorized to sell, solicit, and negotiate travel insurance. A property and casualty insurance producer must be appointed by an insurer in order to sell, solicit, or negotiate travel insurance.  HISTORY: 2021 Act No. 50 (S.435), Section 1, eff May 17, 2021.
 All producers shall make and keep a full and correct record of the business done by them, showing the number, date, term, amount insured, premiums, and the person to whom issued of every policy or certificate of renewal. The information from these records must be furnished to the director or his designee on demand and the original books or records are open to the inspection of the director or his designee on demand. These records must be kept for a minimum of five years.  HISTORY: Former 1976 Code Section 38-5-1210 [1947 (45) 322; 1952 Code Section 37-290; 1962 Code Section 37-290] recodified as Section 38-43-250 by 1987 Act No. 155, Section 1; 1988 Act No. 357, Section 4; 1993 Act No. 181, Section 665; 2002 Act No. 323, Section 2, eff January 31, 2003.
 Except as provided in this section, no producer may sign any blank application, contract, or policy of insurance. Trip, travel, or transportation ticket policies of insurance covering accidental personal or property injury, loss, or damage may be signed in blank, or facsimile impression or stamp, for issuance only through coin-operated machines, subject to regulations prescribed by the department. A producer guilty of violating this section must, upon conviction, be fined for each offense not more than two hundred dollars.  HISTORY: Former 1976 Code Section 38-51-220 [1947 (45) 322; 1952 Code Section 37-252; 1956 (49) 2147; 1962 Code Section 37-252] recodified as Section 38-43-260 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 666; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) Every agency, whether corporation, partnership, association, person, or other aggregation of individuals, transacting or purporting to transact the business of an insurance producer under a corporate or trade name must be licensed by the director or his designee. The term "producer" as used in this title is considered to include an agency, unless the context requires otherwise. Single-owner, sole proprietorships are not required to be licensed as an agency.  (B) Every stockholder, officer, director, member, employee, or associate of an agency, performing any act of a producer as enumerated in Section 38-43-10, shall possess a current producer's license giving authority to transact that particular business.  HISTORY: Former 1976 Code Section 38-43-30 [1947 (45) 322; 1952 Code Section 37-653; 1962 Code Section 37-653] recodified as Section 38-73-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-30 [1962 Code Section 37-231.1; 1964 (53) 2290] recodified as Section 38-43-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 656; 2002 Act No. 323, Section 2, eff January 31, 2003.
 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. The notification to the director or his designee must give both the business address and residence addresses of the producer.  HISTORY: Former 1976 Code Section 38-43-40 [1947 (45) 322; 1952 Code Section 37-654; 1962 Code Section 37-654] recodified as Section 38-73-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-40 [1948 (45) 1734; 1952 Code Section 37-232; 1962 Code Section 37-232] recodified as Section 38-43-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 657; 2002 Act No. 323, Section 2, eff January 31, 2003; 2003 Act No. 73, Section 7, eff June 25, 2003.
 When, pursuant to the written or oral request of an insured or applicant for insurance, an insurance producer or agency advances all or any part of the premium for an insurance policy to the insurer in behalf of the insured or applicant for insurance, the producer or agency is entitled to recover from the insured or applicant for insurance, in addition to the amount advanced, a service charge equal to the greater of one and one-half percent or one dollar and fifty cents a month on any unpaid balance. The producer or agency has a lien equal to the amount of the unpaid balance and service charges upon any unearned premium on the policy held by the insurer and subject to refund by the insurer under the policy.  HISTORY: Former 1976 Code Section 38-43-410 [1947 (45) 322; 1952 Code Section 37-681; 1962 Code Section 37-681] recodified as Section 38-73-410 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-410 [1962 Code Section 37-259.10 1969 (56) 780; 1978 Act No. 496] recodified as Section 38-43-410 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 Advances made by a producer, agency, or producer of record in behalf of an insured or applicant for insurance and any lien arising therefrom under this must be confined to premiums for policies desired by the insured or applicant for insurance and no charges other than those set forth in this article may be made by any producer, agency, or producer of record in connection with, or related to, the advance of premiums. The producer, agency, or producer of record may not require, as a condition to the advancing of the premiums, that the insured purchase any other policy, commodity, product, or service.  HISTORY: Former 1976 Code Section 38-43-420 [1947 (45) 322; 1952 Code Section 37-682; 1962 Code Section 37-682] recodified as Section 38-73-420 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-420 [1962 Code Section 37-259.15; 1969 (56) 780] recodified as Section 38-43-420 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 Extension to the insured or applicant for insurance of his credit with an insurer by a producer, agency, or producer of record constitutes the advancing of premiums within the meaning of this article and the premiums are considered to have been advanced as of the effective date of the policy or binder of insurance notwithstanding that the producer, agency, or producer of record remitted to the insurer at a different time or remitted to the insurer net of commission.  HISTORY: Former 1976 Code Section 38-43-430 [1947 (45) 322; 1952 Code Section 37-683; 1962 Code Section 37-683] recodified as Section 38-73-430 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-430 [1962 Code Section 37-259.16; 1969 (56) 780] recodified as Section 38-43-430 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) If the insured or applicant for insurance fails to pay one or more installments within five days after the due date under any memorandum of the transaction delivered to him by the producer, agency, or producer of record, the producer, agency, or producer of record may call upon the insurer to cancel the policy and refund any unearned premiums on a pro rata basis to the producer, agency, or producer of record in discharge of the lien provided under Section 38-43-410. The insurer, upon paying any refund of unearned premiums accompanied by a statement detailing the computation, a copy of which is mailed to the insured at the address shown in the policy, has no further liability to the insured with respect to the return of unearned premiums.  (B) If there is any other refund of unearned premium resulting from termination of the policy, reduction in the premium, or otherwise, the refund of premium must be made to the producer, agency, or producer of record in recognition of his or its lien, and payment of the refund to the producer, agency, or producer of record by the insurer accompanied by a statement detailing the computation, a copy of which is mailed by the insurer to the insured at the address shown in the policy, except as to errors in the computation, discharges the insurer's obligation to the insured with respect to the refund.  (C) Failure of a producer, agency, or producer of record to declare a default or move to perfect his or its lien because of the insured's failure to pay when due one or more installments of his obligation for premium advanced does not constitute a waiver on the part of the producer, agency, producer of record, or insurer nor is the producer, agency, or producer of record estopped or precluded from asserting and perfecting the lien with respect to any subsequent default nor is the insurer estopped or precluded from recognizing and discharging the lien with respect to the subsequent default.  HISTORY: Former 1976 Code Section 38-43-440 [1947 (45) 322; 1952 Code Section 37-684; 1962 Code Section 37-684] recodified as Section 38-73-520 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-440 [1962 Code Section 37-259.11; 1969 (56) 780] recodified as Section 38-43-440 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 Any excess of return premium paid by the insurer to a producer, agency, or producer of record in discharge of the lien provided by this article over the amount of unpaid balance and accrued service charges must be held by the producer, agency, or producer of record in his or its fiduciary capacity and the excess must be paid to the insured within a reasonable time and in no event later than thirty days after receipt by the producer, agency, or producer of record of the return premium refunded by the insurer.  HISTORY: Former 1976 Code Section 38-43-450 [1947 (45) 322; 1952 Code Section 37-685; 1962 Code Section 37-685] recodified as Section 38-73-530 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-460 [1962 Code Section 37-259.14; 1969 (56) 780] recodified as Section 38-43-450 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 Insurance agencies owned, beneficially owned, or controlled, in whole or part, directly or indirectly, by an insurer, the management of an insurer, or related interests are not entitled to the provisions of this article. An insurer is not chargeable with knowledge that an insurance agency is owned, beneficially owned, or controlled by an insurer, the management of an insurer, or related interests unless it has actual knowledge of the fact.  HISTORY: Former 1976 Code Section 38-43-460 [1947 (45) 322; 1952 Code Section 37-686; 1962 Code Section 37-686] recodified as Section 38-73-540 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-470 [1962 Code Section 37-259.17; 1969 (56) 780] recodified as Section 38-43-460 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) Agreements or arrangements for the advancing of insurance premiums by an insurance producer, agency, or producer of record under this article are not subject to Section 38-55-50, relating to the incorporation of collateral agreements effecting the insurance into the policies or contracts of insurance so affected.  (B) A producer or agency which, pursuant to this article, advances premiums in behalf of an insured or applicant for insurance to an insurer for which the producer or agency is licensed is conclusively presumed to be acting in his or its own right and for the protection of his or its own financial interests with respect to the lien provided in this article. No request by the producer or agency to the insurer to cancel a policy, nor the assertion or perfection of the lien by the producer or agency, is considered to create a conflict in interest nor is any act of a producer, agency, or producer of record in causing cancellation of a policy because of the default of the insured in his obligation or in asserting or perfecting the lien void or voidable because of a claimed conflict in interest.  HISTORY: Former 1976 Code Section 38-51-480 [1962 Code Section 37-259.13; 1969 (56) 780] recodified as Section 38-43-470 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) The director or his designee may promulgate reasonable regulations that are necessary or proper to carry out the purposes of this chapter.  (B) If any provisions of this chapter, or the application of a provision to any person or circumstance, shall be held invalid, the remainder of the chapter, and the application of the provision to persons or circumstances other than those to which it is held invalid, is not affected.  HISTORY: 2002 Act No. 323, Section 2, eff January 31, 2003.
 (A) All applicants for a limited lines or special producer's license must be vouched for by an official or a licensed representative of the insurer for which the applicant proposes to act, who shall certify 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. When a contract of a producer is canceled by the insurer represented, that insurer shall notify the department of the cancellation within thirty days stating the cause of the termination. The records furnished by insurers are for the use of the department solely and not for public inspection.  (B) 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.  (C) To appoint a producer as its agent, the appointing insurer shall file, in a format approved by the director or his designee, a notice of appointment within fifteen days from the date the agency contract is executed or the first insurance application is submitted. An insurer also may elect to appoint a producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request. Each appointment must be accompanied by an appointment fee paid by the insurer as prescribed in Section 38-43-80.  (D) Upon receipt of the notice of appointment, the director or his designee shall verify within a reasonable time not to exceed thirty days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the insurance director or his designee shall notify the insurer within five days of its determination.  (E) When placing surplus lines insurance through a licensed insurance broker, a producer licensed for property and casualty insurance is not required to be appointed by the surplus lines insurer.  (F) An insurer shall remit a renewal appointment fee in the amount set forth in Section 38-43-80.  HISTORY: Former 1976 Code Section 38-43-50 [1947 (45) 322; 1952 Code Section 37-655; 1962 Code Section 37-655; 1974 (58) 2718] recodified as Section 38-73-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-50 [1947 (45) 322; 1952 Code Section 37-234; 1960 (51) 1646; 1962 Code Section 37-234] recodified as Section 38-43-50 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003; 2003 Act No. 73, Section 8, eff June 25, 2003; 2016 Act No. 137 (H.4660), Section 1, eff March 2, 2016.  Effect of Amendment  2016 Act No. 137, Section 1, in (C), substituted "An insurer also may elect" for "An insurer may also elect"; added (E); and redesignated former (E) as (F).
 (A) As used in this section:  (1) "Limited license" means the authority of a person or entity authorized to sell certain coverage relating to the rental of motor vehicles pursuant to the provisions of this section;  (2) "Rental agreement" means a written agreement setting forth the terms and conditions governing the use of a motor vehicle provided by a rental company for rental or lease;  (3) "Rental company" means a person or entity in the business of providing primarily motor vehicles to the public under a rental agreement for a period of not more than ninety days;  (4) "Renter" means a person obtaining the use of a motor vehicle from a rental company under the terms of a rental agreement for a period of not more than ninety days;  (5) "Vehicle" or "rental vehicle" means a motor vehicle of the private passenger type including passenger vans, minivans, sport utility vehicles, and vehicles of the cargo type, including cargo vans, pickup trucks with a gross vehicle weight of less than 26,000 pounds which do not require the operator to possess a commercial driver's license;  (6) "Rental period" means the term of the rental agreement.  (B) The Director of the Department of Insurance may issue to a rental company that has complied with the requirements of this section, a limited license authorizing the limited licensee to offer or sell insurance through a licensed insurer in connection with the rental of vehicles.  (C) Before issuing a limited license under this section, an application for a limited license must be filed with the director, signed by an officer of the applicant, on a form prescribed by the director. Each application must be accompanied by a forty-dollar limited license fee. In order to renew the limited license, payment of the fee must be made biennially.  (D) A rental company licensed pursuant to subsection (B) may offer or sell insurance through a licensed insurer only in connection with and incidental to the rental of vehicles, at the rental office or by pre-selection of coverage in a master, corporate, group rental, or individual agreement in any of the following categories:  (1) personal accident insurance covering the risks of travel including, but not limited to, accident and health insurance that provides coverage, as applicable, to renters and other rental vehicle occupants for accidental death or dismemberment and reimbursement for medical expenses resulting from an accident that occurs during the rental period;  (2) liability insurance which, at the exclusive option of the rental company, may include uninsured and underinsured motorist coverage offered separately or in combination with other liability insurance, that provides protection, as applicable, to renters and other authorized drivers of rental vehicles for liability arising from the operation of the rental vehicle;  (3) personal effects insurance that provides coverage, as applicable, to renters and other vehicle occupants for the loss of, or damage to, personal effects that occur during the rental period;  (4) roadside assistance and emergency sickness protection programs; and  (5) any other travel or vehicle related coverage that a rental company offers in connection with and incidental to the rental of vehicles.  (E) Insurance may not be offered or sold by a limited licensee pursuant to this section unless:  (1) the rental agreement does not exceed ninety consecutive days;  (2) the endorsee informs the renter that the renter may have insurance policies in place that already provide the coverage being offered by the rental vehicle company pursuant to this title;  (3) at every location where rental agreements are executed, brochures or other written materials are readily available to a prospective renter that:  (a) summarize clearly and correctly the material terms of coverage offered to renters, including the identity of the insurer;  (b) disclose that the coverage offered by the rental company may provide a duplication of coverage already provided by a renter's personal automobile insurance policy or other source of coverage;  (c) state that the purchase by the renter of the kinds of coverage specified in this section is not required in order to rent a vehicle; and  (d) describe the process for filing a claim if the renter elects to purchase coverage and in the event of a claim.  (4) evidence of coverage in the rental agreement is disclosed to every renter who elects to purchase this coverage.  (F) A limited license issued under this section also shall authorize an employee of the limited licensee to act individually on behalf, and under the supervision of, the limited licensee with respect to the kinds of coverage specified in this section.  (G) Each rental company licensed pursuant to this section shall conduct a training program in which employees being trained shall receive basic instruction about the kinds of coverage specified in this section and offered for purchase by prospective renters of rental vehicles.  (H) Notwithstanding any other provision of this section, or any rule adopted by the director, a limited licensee pursuant to this section is not to treat monies collected from renters purchasing this insurance as funds received in a fiduciary capacity or to hold the funds in separate trust accounts.  (I) A limited licensee under this section shall not advertise, represent, or otherwise hold itself or any of its employees out as licensed insurers, insurance agents, or insurance brokers.  (J) If a limited licensee violates a provision contained in this section, the director may:  (1) after notice and a hearing, revoke or suspend a limited license issued under this section in accordance with the provisions of Section 38-5-120; or  (2) after notice and hearing, impose other penalties, including suspending the transaction of insurance at specific rental locations where violations of this section have occurred, as the director determines to be necessary or convenient to carry out the purposes of this section.  HISTORY: 2002 Act No. 196, Section 2, eff March 27, 2002.
 (A) When a contract of a producer is canceled by the insurer represented, that insurer shall notify the department of the cancellation within the following guidelines and time period required of this section. The records furnished by insurers are for the use of the department solely and not for public inspection.  (B) An insurer or authorized representative of the insurer that terminates the appointment, employment, contract, or other insurance business relationship with a producer shall notify the Director of Insurance within thirty days following the effective date of the termination, using a format prescribed by the director or his designee, if the reason for termination is one of the reasons set forth in Section 38-43-130 or the insurer has knowledge the producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities in Section 38-43-130. Upon the written request of the director or his designee, the insurer shall provide additional information, documents, records, or other data pertaining to the termination or activity of the producer.  (C) An insurer or authorized representative of the insurer that terminates the appointment, employment, or contract with a producer for any reason not set forth in Section 38-43-130, shall notify the director or his designee within thirty days following the effective date of the termination, using a format prescribed by the director or his designee. Upon written request of the director or his designee, the insurer shall provide additional information, documents, records, or other data pertaining to the termination.  (D) The insurer or the authorized representative of the insurer shall promptly notify the Director of Insurance in a format acceptable to the director or his designee if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the Director of Insurance in accordance with subsection (B) of this section had the insurer then known of its existence.  (E)(1) Within fifteen days after making the notification required by subsections B, C, and D of this section, the insurer shall mail a copy of the notification to the producer at his or her last known address. If the producer is terminated for cause for any of the reasons listed in Section 38-43-130, the insurer shall provide a copy of the notification to the producer at his or her last known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using a nationally recognized carrier.  (2) Within thirty days after the producer has received the original or additional notification, the producer may file written comments concerning the substance of the notification with the director or his designee. The producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the director or his designee's file and accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subsection (G) of this section.  (F)(1) In the absence of actual malice, an insurer, the authorized representative of the insurer, a producer, the insurance director, or an organization of which the Director of Insurance is a member and that compiles the information and makes it available to other insurance commissioners or regulatory or law enforcement agencies shall not be subject to civil liability. No civil cause of action of any nature shall arise against these entities or their respective producers or employees, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the Director of Insurance, from an insurer or producer; or a statement by a terminating insurer or producer to an insurer or producer limited solely and exclusively to whether a termination for cause under subsection (B) of this section was reported to the Director of Insurance, provided that the propriety of any termination for cause under subsection (B) of this section is certified in writing by an officer or authorized representative of the insurer or producer terminating the relationship.  (2) In any action brought against a person that may have immunity under item (1) of this subsection for making any statement required by this subsection or providing any information relating to any statement that may be requested by the insurance director, the party bringing the action shall plead specifically in any allegation that item (1) of this subsection does not apply because the person making the statement or providing the information did so with actual malice.  (3) Item (1) or (2) of this subsection does not abrogate or modify any existing statutory or common law privileges or immunities.  (G)(1) Any documents, materials, or other information in the control or possession of the Department of Insurance that is furnished by an insurer, producer, or an employee or agent of it acting on behalf of the insurer or producer, or obtained by the Director of Insurance in an investigation pursuant to this section is confidential by law and privileged, is not subject to the Freedom of Information Act request, is not subject to subpoena, and is not subject to discovery or admissible in evidence in any private civil action. However, the Director of Insurance is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the director's duties.  (2) Neither the director or his designee nor any person who received documents, materials, or other information while acting under the authority of the Director of Insurance is permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to item (1) of this subsection.  (3) In order to assist in the performance of the director's duties under this chapter, the director or his designee:  (a) may share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to item (1), with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information;  (b) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and  (c) may enter into agreements governing sharing and use of information consistent with this subsection.  (4) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the director under subsection (B) or as a result of sharing as authorized in item (3).  (5) Nothing in this section shall prohibit the director or his designee from releasing final, adjudicated actions, including for cause terminations, that are open to public inspection pursuant to the Freedom of Information Act, to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries of the National Association of Insurance Commissioners.  (H) An insurer, the authorized representative of the insurer, or producer that fails to report as required under the provisions of this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with Section 38-2-10.  HISTORY: 2002 Act No. 323, Section 2, eff January 31, 2003.
 All business done in this State by insurers doing the business of insurance as defined in this title must be transacted by their regularly authorized producers licensed in this State or through applications of the producers. Except as provided in Section 38-43-70, it is unlawful for a salaried officer, manager, or other representative of an insurer to transact for his company any of the business of a licensed producer for which the licensed producer received a commission, unless he himself is a bona fide licensed producer. No provision of this section applies to direct insurance covering the rolling stock of railroad corporations or property in transit while in possession and custody of railroad corporations or other common carriers or applies to bid bonds issued by a surety insurer in connection with any public or private contract.  HISTORY: Former 1976 Code Section 38-43-60 [1947 (45) 322; 1952 Code Section 37-656; 1962 Code Section 37-656] recodified as Section 38-73-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-60 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-247; 1957 (50) 534; 1959 (51) 303; 1962 Code Section 37-247; 1964 (53) 2290; 1966 (54) 2666; 1981 Act No. 163, Section 1; 1986 Act No. 416] recodified as Section 38-43-60 by 1987 Act No. 155, Section 1; 1999 Act No. 30, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 For the purposes of this article:  (1) "Licensee" means a person who holds a limited license.  (2) "Limited license" means the authority of a person authorized to sell certain insurance pursuant to the provisions of this article.  (3) "Rental agreement" means a written agreement setting forth the terms and conditions governing the use of a storage space provided by a self-service storage facility for rental or lease.  (4) "Owner" means the owner of a self-service storage facility or his agent.  (5) "Occupant" means a person or his lessee, successor, or assignee entitled to the use of the storage space at a self-storage facility under a rental agreement to the exclusion of others.  (6) "Self-service storage facility" means real property designed and used for the sole purpose of renting or leasing individual storage space to occupants given access to this storage space for the sole purpose of storing and removing personal property.  (7) "Rental period" means the term of a rental agreement.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 The director or his designee may issue a limited license to an owner who has complied with the requirements of this article.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 (A) Before issuing a limited license, an application for a limited license must be filed with the director, signed by an officer of the applicant, on a form prescribed by the department. An applicant for a limited license must be approved and vouched for by an official or licensed representative of the insurer for which the applicant proposes to act pursuant to Section 38-43-40 and Section 38-43-50. An application must be accompanied by a forty dollar fee. A limited license must be renewed biennially before May first of odd numbered years on a renewal application form provided by the department, and this form must be accompanied by a forty dollar renewal fee. The department shall cancel a license that is not renewed as required by this section. The licensee may reinstate a license within six months after the renewal deadline by paying the forty dollar renewal fee and a forty dollar reinstatement fee. A limited license fee is not refundable.  (B) A limited license holder must not advertise, represent, or otherwise hold itself or its employee out as a licensed insurer, insurance agent, or insurance broker.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 (A) A licensee must be the owner of a self-service rental facility or his employee or agent.  (B) A licensee only may sell or offer to sell insurance in connection with, and incidental to, the rental of a self-storage space in the owner's facility. This insurance only may provide coverage for:  (1) casualty loss of the property contained in the self-storage space;  (2) liability insurance for personal injuries, excluding injuries compensable by workers' compensation, arising on the premises of the individual self-storage space; or  (3) both.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 (A) Prior to issuing a policy under the provisions of this chapter, a licensee shall provide a written document that:  (1) summarizes clearly and correctly the material terms of coverage offered to an occupant, including the identity of the insurer;  (2) discloses that the coverage offered by the self-service storage facility may provide a duplication of coverage already provided by a homeowners' insurance policy or other source of coverage in effect for the occupant;  (3) describes the process for filing a claim if the occupant elects to purchase coverage and in the event of a claim; and  (4) states that the charges for coverage are itemized and ancillary to the rental agreement.  (B) If the rental agreement requires the occupant to provide insurance of the type described in Section 38-43-640(B), this requirement may be satisfied if the occupant:  (1) purchases this coverage from a licensee; or  (2) provides evidence of this coverage from another source.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 (A) The employee or agent of an owner who is a licensee may act individually on behalf, and under the supervision of, the owner-licensee with respect to providing coverage for which the licensee is authorized to provide, but only if the owner instructs the employee or agent about the kinds of insurance sold pursuant to the owner's license.  (B) The provisions of this chapter do not prohibit:  (1) the payment or receipt of a commission for the sale of insurance that the licensee is authorized to sell; and  (2) the payment of a bonus, incentive payment, or compensation by a licensee to his employee or agent; provided, however, that these payments may not be made based on the completion of a sale of insurance coverage.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 Notwithstanding another provision of this chapter, a regulation promulgated by the department, or an order issued by the director, a licensee, his employee, and agent must not be required to:  (1) act as a fiduciary of money received from the sale of insurance authorized to be sold under the provisions of this chapter; or  (2) hold this money in a separate trust account if the insurer represented by the license holder provides written consent, signed by an officer of the insurer, that a premium is not required to be segregated from money received by the license holder because of the consumer transaction associated with the coverage.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 The director may, after notice and opportunity for a hearing, respond to a violation of a provision of this chapter under the provisions of Section 38-2-10 by:  (1) revoking or suspending a limited license; or  (2) imposing other penalties, including suspending the transaction of insurance at a specific rental location where a violation of this chapter occurred, as the director considers necessary or convenient to carry out the provisions of this chapter.  HISTORY: 2014 Act No. 226 (S.1065), Section 1, eff June 2, 2014.
 (A) Unless denied licensure pursuant to Section 38-43-130, a nonresident person shall receive a nonresident producer license with the same lines of authority held in the home state if the:  (1) person is currently licensed as a resident and in good standing in his home state;  (2) person has submitted the proper request for licensure and the fees have been paid as provided for in Section 38-43-80;  (3) person has submitted or transmitted to the director or his designee a certified copy of the application for licensure that the person submitted to his home state, or instead of the certified copy an original completed Uniform Application; and  (4) person's home state awards nonresident producer licenses to residents of this State on the same basis.  (B) The director or his designee may verify the producer's licensing status through the Producer Database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries.  (C) A nonresident producer who moves from one state to another state or a resident producer who moves from this State to another state shall file a change of address and provide certification from the new resident state within thirty days of the change of legal residence. No fee or license application is required.  (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 38-45-30.  (E) Notwithstanding any other provision of this section, a person licensed as a limited line credit insurer or other type of limited lines producer in his home state shall receive a nonresident limited lines producer license, pursuant to subsection (A) of this section, granting the same scope of authority as granted under the license issued by the producer's home state.  HISTORY: Former 1976 Code Section 38-43-70 [1947 (45) 322; 1952 Code Section 37-657; 1962 Code Section 37-657] recodified as Section 38-73-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-80 [1947 (45) 322; 1952 Code Section 37-246; 1957 (50) 534; 1962 Code Section 37-246; 1964 (53) 2290; 1966 (54) 2666; 1967 (55) 132] recodified as Section 38-43-70 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11G; 1993 Act No. 181, Section 658; 2002 Act No. 323, Section 2, eff January 31, 2003; 2003 Act No. 73, Section 9, eff June 25, 2003; 2008 Act No. 326, Section 2, eff June 16, 2008.
 This article must be known and may be cited as the "Limited Lines Travel Insurance Act".  HISTORY: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016; 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.  Effect of Amendment  2021 Act No. 50, Section 3, reenacted the section with no apparent change.
 (A) This article applies to travel insurance sold, solicited, negotiated, or offered in this State that covers a resident in this State and is delivered or issued for delivery in this State. It does not apply to cancellation fee waivers and travel assistance services except as expressly provided herein.  (B) All other applicable provisions of this title continue to apply to travel insurance. In the event of a conflict between a provision of this article and any other applicable provisions of this title, the provision of this article controls.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 For the purposes of this article:  (1) "Aggregator site" means a website that provides access to information regarding insurance products from more than one insurer, including product and insurer information, for use in purchasing an insurance product.  (2) "Blanket travel insurance" means a policy of travel insurance issued to an eligible group providing coverage for specific classes of persons defined in the policy with coverage provided to all members of the eligible group without a separate charge to each individual member of the eligible group.  (3) "Cancellation fee waiver" means a contractual agreement between a supplier of travel services and its customer to waive some or all of the nonrefundable cancellation fee provisions of the supplier's underlying travel contract with or without regard to the reason for the cancellation or form of reimbursement. A cancellation fee waiver is not insurance.  (4) "Director" means the Director of the Department of Insurance or his designee as set forth in Section 38-1-20(19).  (5) "Eligible group" means two or more persons who are engaged in a common enterprise, or have an economic, educational, or social affinity or relationship including, but not limited to:  (a) an entity engaged in the business of providing travel or travel services including, but not limited to, tour operators, lodging providers, vacation property owners, hotels and resorts, travel clubs, travel agencies, property managers, cultural exchange programs, and common carriers or the operator, owner, or lessor of a means of transportation of passengers such as airlines, cruise lines, railroads, steamship companies, and public bus carriers, wherein with regard to any particular travel or type of travel or travelers, all members or customers of the group must have a common exposure to risk attendant to such travel;  (b) a college, school, or other institution of learning covering students, teachers, employees, or volunteers;  (c) an employer covering a group of employees, volunteers, contractors, board of directors, dependents, or guests;  (d) a sports team, camp, or sponsor covering participants, members, campers, employees, officials, supervisors, or volunteers;  (e) a religious, charitable, recreational, educational, or civic organization or branch thereof covering a group of members, participants, or volunteers;  (f) a financial institution or financial institution vendor, parent holding company, trustee, or agent of or designated by one or more financial institutions or vendors, including accountholders, credit card holders, debtors, guarantors, or purchasers;  (g) an incorporated or unincorporated association, including labor unions, having a common interest, constitution, and bylaws, and organized and maintained in good faith for purposes other than obtaining insurance for members or participants of such association covering its members;  (h) a trust or the trustees of a fund established, created, or maintained for the benefit of and covering members, employees, or customers, subject to the director's permitting the use of a trust and this state's premium tax provisions in Section 38-7-20 of one or more associations meeting the requirements of subitem (g);  (i) an entertainment production company covering any group of participants, volunteers, audience members, contestants, or workers;  (j) a volunteer fire department, ambulance, rescue, police, court, or any first aid, civil defense, or other such volunteer group;  (k) a preschool, daycare institution for children or adults, and senior citizen club;  (l) an automobile or truck rental or leasing company covering a group of individuals who may become renters, lessees, or passengers defined by their travel status on the rented or leased vehicles. The common carrier, operator, owner, or lessor of a means of transportation, or the automobile or truck rental or leasing company, is the policyholder under a policy to which this section applies; or  (m) any other group where the director has determined that the members are engaged in a common enterprise, or have an economic, educational, or social affinity or relationship, and that issuance of the policy would not be contrary to the public interest.  (6) "Fulfillment materials" means documentation sent to the purchaser of a travel protection plan confirming the purchase and providing the travel protection plan's coverage and travel assistance service details.  (7) "Group travel insurance" means travel insurance issued to any eligible group.  (8) "Inland marine" means property coverage for products, materials, and equipment transported over land, including travel insurance coverage as well as coverage for equipment, fine art, precious stones, precious metals, jewelry, and personal watercraft, whether in the course of transportation or otherwise; coverage of personal property by all risk forms known as the 'Personal Property Floater'; and coverage of mobile machinery and equipment.  (9) "Limited lines travel insurance producer" means one of the following when designated by an insurer as the travel insurance supervising entity:  (a) a licensed managing general underwriter;  (b) a licensed managing general agent or third-party administrator; or  (c) a licensed insurance producer.  (10) "Offer and disseminate" means providing general information, including a description of the coverage and price, as well as processing the application, collecting premiums, and performing other nonlicensable activities permitted by the State.  (11) "Primary certificate holder" means, concerning premium taxes, an individual who elects and purchases travel insurance under a group policy.  (12) "Primary policyholder" means, concerning premium taxes, an individual who elects and purchases individual travel insurance.  (13) "Travel administrator" means a person who, directly or indirectly, underwrites, collects charges, collateral, or premiums from, or adjusts or settles claims on residents of this State, in connection with travel insurance, except that a person may not be considered a travel administrator if that person's only actions that would otherwise cause it to be considered a travel administrator are:  (a) a person working for a travel administrator to the extent that the person's activities are subject to the supervision and control of the travel administrator;  (b) an insurance producer selling insurance or engaged in administrative and claims-related activities within the scope of the producer's license;  (c) a travel retailer offering and disseminating travel insurance and registered under the license of a limited lines travel insurance producer;  (d) an individual adjusting or settling claims in the normal course of that individual's practice or employment as an attorney and who does not collect charges or premiums in connection with insurance coverage; or  (e) a business entity that is affiliated with a licensed insurer while acting as a travel administrator for the direct and assumed insurance business of an affiliated insurer.  (14) "Travel assistance services" means noninsurance services for which the consumer is not indemnified based on a fortuitous event, and where providing the service does not result in the transfer or shifting of risk that would constitute the business of insurance. Travel assistance services include, but are not limited to, security advisories, destination information, vaccination and immunization information services, travel reservation services, entertainment, activity and event planning, translation assistance, emergency messaging, international legal and medical referrals, medical case monitoring, coordination of transportation arrangements, emergency cash transfer assistance, medical prescription replacement assistance, passport and travel document replacement assistance, lost luggage assistance, concierge services, and any similar service that is furnished in connection with planned travel. Travel assistance services are not insurance and are not related to insurance.  (15) "Travel insurance" means insurance coverage for personal risks incident to planned travel including, but not limited to:  (a) interruption or cancellation of trip or event;  (b) loss of baggage or personal effects;  (c) damages to accommodations or rental vehicles;  (d) sickness, accident, disability, or death occurring during travel;  (e) emergency evacuation;  (f) repatriation of remains; or  (g) any other contractual obligations to indemnify or pay a specified amount to the traveler upon determinable contingencies related to travel as approved by the director.  Travel insurance does not include major medical plans that provide comprehensive medical protection for travelers with trips lasting longer than six months, including those working or residing overseas as an expatriate, or any other insurance that requires a specific insurance producer license.  (16) "Travel protection plan" means a plan that provides one or more of the following:  (a) travel insurance;  (b) travel assistance services; and  (c) cancellation fee waivers.  (17) "Travel retailer" means a business entity that makes, arranges, or offers travel services and may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer.  HISTORY: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016; 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.  Effect of Amendment  2021 Act No. 50, Section 3, rewrote the section.
 (A) Notwithstanding any other provision of this title, travel insurance must be classified and filed for purposes of rates and forms as inland marine insurance; provided, however, that travel insurance that provides coverage for sickness, accident, disability, or death occurring during travel, either exclusively or in conjunction with related coverages of emergency evacuation or repatriation of remains, or incidental limited property and casualty benefits such as baggage or trip cancellation, may be filed by an authorized insurer under either an accident and health line of insurance or an inland marine line of insurance.  (B) Travel insurance may be in the form of an individual, group, or blanket policy.  (C) Eligibility and underwriting standards for travel insurance may be developed and provided based on travel protection plans designed for individual or identified marketing or distribution channels, provided those standards also meet this state's underwriting standards for inland marine insurance.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 (A) A travel retailer only may offer and disseminate travel insurance under a limited lines travel insurance producer license if:  (1) the limited lines travel insurance producer or travel retailer provides purchasers of travel insurance the following information on a form prescribed by the director:  (a) a description of the material terms or the actual material terms of the insurance coverage;  (b) a description of the process for filing a claim;  (c) a description of the review or cancellation process for the travel insurance policy; and  (d) the identity and contact information of the insurer and limited lines travel insurance producer;  (2) the limited lines travel insurance producer, at the time of licensure, establishes and subsequently maintains and updates a register of each travel retailer that offers insurance on its behalf, including the name, address, and contact information of the travel retailer and an officer or person who directs or controls the operations of the travel retailer, and the federal employment identification number of the travel retailer;  (3) the limited lines travel insurance producer submits the register to the department upon reasonable request;  (4) the limited lines travel insurance producer certifies that the travel retailers registered comply with 18 U.S.C. Section 1033;  (5) the limited lines travel insurance producer designates one of its employees, who is a licensed individual producer, as the "Designated Responsible Producer" or "DRP" who is responsible for compliance of the limited lines travel insurance producer with the travel insurance laws, rules, and regulations of the State;  (6) the DRP, president, secretary, treasurer, and another officer or person who directs or controls the insurance operations of the limited lines travel insurance producer each comply with the fingerprinting requirements applicable to insurance producers in the resident state of the limited lines travel insurance producer;  (7) the limited lines travel insurance producer has paid all applicable insurance producer licensing fees; and  (8) the limited lines travel insurance producer requires each employee of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training, subject to review by the director, and which shall contain instructions on the types of insurance offered, ethical sales practices, and required disclosures to prospective customers, among other things.  (B) A travel retailer who offers or disseminates travel insurance shall make brochures or other written materials available to prospective purchasers, and these brochures or other written materials must:  (1) provide the identity and contact information of the insurer and the limited lines travel insurance producer;  (2) explain that the purchase of travel insurance is not required in order to purchase another product or service from the travel retailer; and  (3) explain that an unlicensed travel retailer is permitted to provide general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage.  (C) A travel retailer who is not licensed as an insurance producer may not:  (1) evaluate or interpret the technical terms, benefits, and conditions of the offered travel insurance coverage;  (2) evaluate or provide advice concerning a prospective purchaser's existing insurance coverage; or  (3) hold himself or itself out as a licensed insurer, licensed producer, or insurance expert.  HISTORY: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016; 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.  Effect of Amendment  2021 Act No. 50, Section 3, in (A), deleted "business entity" following "travel insurance producer".
 A travel retailer, whose insurance-related activities are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited lines travel insurance producer, may receive compensation for these activities upon registration by the limited lines travel insurance producer as provided in Section 38-43-730(A)(2).  HISTORY: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016; 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.  Effect of Amendment  2021 Act No. 50, Section 3, reenacted the section with no apparent changes.
 (A) Unless denied licensure pursuant to Section 38-43-130, persons who have met the requirements of Section 38-43-100 must be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the following lines of insurance:  (1) life insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income;  (2) accident and health insurance coverage for sickness, bodily injury, or accidental death and may include benefits for disability income;  (3) property insurance coverage for the direct or consequential loss or damage to property of every kind;  (4) casualty insurance coverage against legal liability, including that for death, injury, or disability or damage to real or personal property;  (5) variable life and variable annuity products-insurance coverage provided under variable life insurance contracts, or variable annuities;  (6) personal lines property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;  (7) limited line insurance;  (8) any other line of insurance permitted under state laws or regulations.  (B) The director or his designee shall waive any license application requirements for a nonresident license applicant with a valid license from his home state, except the requirements imposed by this section, if the applicant's home state awards nonresident licenses to residents of this State on the same basis.  (C) A nonresident producer's satisfaction of his home state's continuing education requirements for licensed insurance producers shall constitute satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this State on the same basis.  HISTORY: 2002 Act No. 323, Section 2, eff January 31, 2003; 2008 Act No. 326, Section 3, eff June 16, 2008.
 HISTORY: Former Section, titled Policy, had the following history: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016. Reserved by 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 As the insurer designee, the limited lines travel insurance producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with this article.  HISTORY: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016; 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.  Effect of Amendment  2021 Act No. 50, Section 3, reenacted the section with no apparent change.
 The director may, after notice and opportunity for a hearing, respond to a violation of a provision of this article by a limited lines travel insurance producer or by the travel retailer offering and disseminating travel insurance under the provisions of Section 38-2-10 by:  (1) revoking or suspending the license of the limited lines travel insurance producer; or  (2) imposing other penalties, including directing the suspension or termination of authority of the involved travel retailer to offer and disseminate travel insurance, as the director considers necessary or convenient to carry out the purposes of this article.  HISTORY: 2016 Act No. 159 (H.4141), Section 1, eff July 20, 2016; 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.  Effect of Amendment  2021 Act No. 50, Section 3, reenacted the section with no apparent change.
 (A) A travel insurer shall pay premium tax pursuant to Section 38-7-20 on travel insurance premiums paid by:  (1) an individual primary policyholder who is a resident of this State;  (2) a primary certificate holder who is a resident of this State who elects coverage under a group travel insurance policy; or  (3) a blanket travel insurance policyholder that is a resident in, or has its principal place of business or the principal place of business of an affiliate or subsidiary that has purchased blanket travel insurance in, this State for eligible blanket group members, subject to any apportionment rules which apply to the insurer across multiple taxing jurisdictions or that permits the insurer to allocate premiums on an apportioned basis in a reasonable and equitable manner in those jurisdictions.  (B) A travel insurer shall:  (1) document the state of residence or principal place of business of the policyholder or certificate holder, as required in subsection (A); and  (2) report as premium only the amount allocable to travel insurance and not any amounts received for travel assistance services or cancellation fee waivers.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 Travel protection plans may be offered for one price for the combined features that the travel protection plan offers in this State if:  (1) the travel protection plan clearly discloses to the consumer at or prior to the time of purchase that it includes travel insurance, travel assistance services, and cancellation fee waivers, as applicable, and provides information and an opportunity at or prior to the time of purchase for the consumer to obtain additional information regarding the features and pricing of each; and  (2) the fulfillment materials:  (a) describe and delineate the travel insurance, travel assistance services, and cancellation fee waivers in the travel protection plan; and  (b) include the travel insurance disclosures and the contact information for persons providing travel assistance services and cancellation fee waivers, as applicable.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 (A)(1) Unless otherwise changed by regulation or statute, the following fees are applicable to producer licenses, agency licenses, and insurer appointments:  (a) initial producer license fee: twenty-five dollars; biennial producer license renewal fee: twenty-five dollars;  (b) local appointment initial and biennial fee: forty dollars; special appointment initial and biennial fee: one hundred dollars; general appointment initial and biennial fee: one hundred dollars;  (c) agency initial and biennial license fee: forty dollars.  (2) However, the license and appointment fee applicable to a producer of a common carrier who sells only transportation ticket policies on accident and health insurance or baggage insurance on personal effects is twenty dollars.  (B) The fees provided for in subsection (A)(1)(b) are subject to the following requirements on each appointment basis:  (1) initial fees are due and payable in advance of the appointment;  (2) fees are due on a biennial basis and must be paid to the department by September thirtieth of an even-numbered year;  (3) if a fee is not paid by September thirtieth of an even-numbered year, the appointment must be canceled; and  (4) an appointment must be reactivated if by December first of the even-numbered year the appointment fee and a two hundred fifty-dollar penalty has been paid to the department.  (C) Fees must be paid in advance. The department shall promulgate regulations specifying the time and manner of payment of fees. If payment is rejected by the bank, the producer has thirty days from the rejection date to pay the license fee. If payment is not made to the department within this period, the license must be canceled. To reinstate the license, the producer is required to pay a license fee plus any charges resulting from rejection by the bank.  (D) Fees provided for in subsection (A)(1)(a) and (B)(4) are to be retained by the department as other funds for purposes of implementing and administering individual licensing requirements and the provisions of this title. License and appointment fees must be deposited into the general fund of this State.  (E) A fee provided for in this section may be paid by credit card.  HISTORY: Former 1976 Code Section 38-43-80 [1947 (45) 322; 1952 Code Section 37-658; 1962 Code Section 37-658] recodified as Section 38-73-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-90 [1947 (45) 322; 1952 Code Section 37-235; 1955 (49) 329; 1956 (49) 1841; 1962 Code Section 37-235; 1964 (53) 2290; 1986 Act No. 540, Part II, Section 31 M] recodified as Section 38-43-80 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11H; 2001 Act No. 82, Section 17, eff July 20, 2001; 2002 Act No. 323, Section 2, eff January 31, 2003; 2008 Act No. 326, Section 4, eff June 16, 2008; 2009 Act No. 69, Section 3, eff June 2, 2009.
 (A) A person offering travel insurance to residents of this State is subject to the provisions of Chapter 57 of this title, except as otherwise provided in this article. In the event of a conflict between this article and other provisions of this title regarding the sale and marketing of travel insurance and travel protection plans, the provisions of this article control.  (B) Offering or selling a travel insurance policy that could never result in payment of any claims for any insured under the policy is deemed an unfair trade practice.  (C)(1) All documents provided to consumers prior to the purchase of travel insurance including, but not limited to, sales materials, advertising materials, and marketing materials must be consistent with the travel insurance policy itself including, but not limited to, forms, endorsements, policies, rate filings, and certificates of insurance.  (2) For travel insurance policies or certificates that contain preexisting condition exclusions, information and an opportunity to learn more about the preexisting condition exclusions must be provided any time prior to the time of purchase and in the coverage's fulfillment materials.  (3) The fulfillment materials and the information described in Section 38-43-730(A)(1) must be provided to a policyholder or certificate holder as soon as practicable following the purchase of a travel protection plan. Unless the insured has either started a covered trip or filed a claim under the travel insurance coverage, a policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of a travel protection plan until at least:  (a) fifteen days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or  (b) ten days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail.  For the purposes of this section, "delivery" means handing fulfillment materials to the policyholder or certificate holder or sending fulfillment materials by postal mail or electronic means to the policyholder or certificate holder.  (4) The company must disclose in the policy documentation and fulfillment materials whether the travel insurance is primary or secondary to other applicable coverage.  (5) Where travel insurance is marketed directly to a consumer through an insurer's website or by others through an aggregator site, it shall not be an unfair trade practice or other violation of law where an accurate summary or short description of coverage is provided on the web page, so long as the consumer has access to the full provisions of the policy through electronic means.  (D) No person offering, soliciting, or negotiating travel insurance or travel protection plans on an individual or group basis may do so by using negative option or opt out, which would require a consumer to take an affirmative action to deselect coverage such as unchecking a box on an electronic form when the consumer purchases a trip.  (E) It is an unfair trade practice to market blanket travel insurance coverage as free.  (F) Where a consumer's destination jurisdiction requires insurance coverage, it shall not be an unfair trade practice to require that a consumer choose between the following options as a condition of purchasing a trip or travel package:  (1) purchasing the coverage required by the destination jurisdiction through the travel retailer or limited lines travel insurance producer supplying the trip or travel package; or  (2) agreeing to obtain and provide proof of coverage that meets the destination jurisdiction's requirements prior to departure.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 (A) Notwithstanding any other provisions of this title, no person may act or represent himself as a travel administrator for travel insurance in this State unless that person:  (1) is a licensed property and casualty insurance producer in this State for activities permitted under that producer license;  (2) holds a valid managing general agent license in this State;  (3) holds a valid third-party administrator license in this State; or  (4) holds a valid managing general underwriter license in this State.  (B) A travel administrator and its employees are exempt from the licensing requirements of Section 38-47-10 for the travel insurance it administers.  (C) An insurer is responsible for the acts of a travel administrator administering travel insurance underwritten by the insurer and is responsible for ensuring that the travel administrator maintains all books and records relevant to the insurer to be made available by the travel administrator to the director upon request.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 The department may promulgate regulations to implement the provisions of this article.  HISTORY: 2021 Act No. 50 (S.435), Section 3, eff May 17, 2021.
 No license fee may be charged by the State or any county or municipality to a resident, practicing physician in this State, duly licensed to practice by the State Board of Medical Examiners, for making medical examinations for life insurers or fraternal orders.  HISTORY: Former 1976 Code Section 38-43-90 [1960 (51) 1646; 1962 Code Section 37-658.1; 1969 (56) 239; 1972 (57) 2750] recodified as Section 38-73-910 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-51-100 [1947 (45) 322; 1952 Code Section 37-659; 1962 Code Section 37-659] recodified as Section 38-43-90 by 1987 Act No. 155, Section 1; 2002 Act No. 323, Section 2, eff January 31, 2003.
 This chapter may be cited as the "Managing General Agents Act".  HISTORY: 1992 Act No. 363, Section 1, eff December 31, 1992.
 As used in this chapter:  (1) "Actuary" means a person who is a member in good standing of the American Academy of Actuaries.  (2) "Insurer" means a domestic insurer as defined in Section 38-1-20(17).  (3)(a) "Managing general agent", MGA, means a person who:  (i) manages all or part of the insurance business of an insurer, including the management of a separate division, department, or underwriting office; and  (ii) acts as an agent for the insurer whether known as a MGA, a manager, or another similar term, who with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premium equal to or more than five percent of the policyholder surplus as reported in the last annual statement of the insurer in one quarter or year with one or both of the following activities related to the business produced:  a. adjusts or pays claims in excess of five thousand dollars;  b. negotiates ceding reinsurance contracts on behalf of the insurer.  (b) Notwithstanding subitem (a), the following are not considered as MGAs for the purposes of this chapter:  (i) an employee of the insurer;  (ii) a United States manager of the United States branch of an alien insurer;  (iii) an underwriting manager which, pursuant to contract, manages all or part of the insurance operations of the insurer, is under common control with the insurer, and is subject to the Insurance Holding Company Regulatory Act and whose compensation is not based on the volume of premiums written;  (iv) the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange under powers of attorney;  (4) "Underwrite" means the authority to accept or reject risk on behalf of the insurer.  HISTORY: 1992 Act No. 363, Section 1, eff December 31, 1992; 2004 Act No. 291, Section 10, eff July 29, 2004.
 (A) No person may act in the capacity of a MGA with respect to risks located in this State for an insurer licensed in South Carolina unless the person is licensed as an agent for that insurer in this State.  (B) No person may act in the capacity of a MGA representing an insurer domiciled in this State with respect to risks located outside South Carolina unless the person is licensed properly as an agent or broker in that state and licensed as an insurance agent in this State for that insurer. The license may be a nonresident license.  (C) For the protection of the insurer, the director or his designee shall require the MGA to obtain a bond of fifty thousand dollars for each insurer represented.  HISTORY: 1992 Act No. 363, Section 1; 1993 Act No. 181, Section 667.
 No person acting in the capacity of a MGA may place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party with both parties sharing responsibility for a particular function, specifies the division of responsibilities, and contains the following minimum provisions:  (1) The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting authority of the MGA during the pendency of a dispute regarding the cause for termination. If the contract is terminated or the MGA's underwriting authority is suspended, notification must be given by the insurer within thirty days of the action to agents or brokers who have placed business with the MGA within the last twelve months.  (2) The MGA shall render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer within thirty days.  (3) All funds collected for the account of an insurer must be held by the MGA in a fiduciary capacity in a bank which is a member of the Federal Reserve System. This account must be used for all payments on behalf of the insurer. The MGA may retain no more than ninety days estimated claims payments and allocated loss adjustment expenses.  (4) Separate records of business written by the MGA must be maintained. The insurer must have access to and the right to copy all accounts and records related to its business in a form usable by the insurer. The director or his designee must have access to all books, bank accounts, and records of the MGA in a form usable to the director or his designee. The records must be retained according to Section 38-43-250.  (5) The contract must not be assigned in whole or part by the MGA.  (6) Appropriate underwriting guidelines must be included such as:  (a) maximum annual premium volume;  (b) basis of the rates to be charged;  (c) types of risks which may be written;  (d) maximum limits of liability;  (e) applicable exclusions;  (f) territorial limitations;  (g) policy cancellation provisions;  (h) maximum policy period.  (7) The insurer must have the right to cancel or not renew a policy of insurance subject to the applicable laws and regulations.  (8) If the contract permits the MGA to settle claims on behalf of the insurer:  (a) All claims must be reported to the company in a timely manner.  (b) A copy of the claim file must be sent to the insurer at its request or as soon as it becomes known that the claim:  (i) has the potential to exceed five thousand dollars or exceeds the limit set by the company, whichever is less;  (ii) involves a coverage dispute;  (iii) may exceed the MGA's claims settlement authority;  (iv) is open for more than six months; or  (v) is closed by payment of five thousand dollars or an amount set by the company, whichever is less.  (c) All claim files are the joint property of the insurer and the MGA. However, upon an order of liquidation of the insurer the files become the sole property of the insurer or its estate. The MGA must have reasonable access to and the right to copy the files on a timely basis.  (d) Settlement authority granted to the MGA may be terminated for cause upon the insurer's written notice to the MGA or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of a dispute regarding the cause for termination. If a contract is terminated or the MGA's settlement authority is suspended, notification must be given by the insurer within thirty days of the action to agents or brokers who have placed business with the MGA within the last twelve months.  (9) Where electronic claims files are in existence, the contract must address the timely transmission of the data.  (10) If the contract provides for a sharing of interim profits by the MGA and the MGA has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in another manner, interim profits must not be paid to the MGA until one year after they are earned for property insurance business and five years after they are earned on casualty business and not until the profits have been verified pursuant to Section 38-44-50.  (11) The MGA may not:  (a) bind assumed reinsurance or retrocessions on behalf of the insurer, except the MGA may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines, including, for reinsurance assumed and ceded, a list of reinsurers with which the automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured, and commission schedules;  (b) commit the insurer to participate in insurance or reinsurance syndicates;  (c) appoint an agent without assuring that the agent is licensed lawfully to transact the type of insurance for which he is appointed;  (d) without prior approval of the insurer, pay or commit the insurer to pay a claim over five thousand dollars, net of reinsurance, or one percent of the insurer's policyholder's surplus as of December 31 of the last completed calendar year, whichever is less;  (e) collect payment from a reinsurer or commit the insurer to a claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be forwarded promptly to the insurer;  (f) permit its agent to serve on the insurer's board of directors;  (g) jointly employ an individual who is employed with the insurer;  (h) appoint a sub-MGA.  HISTORY: 1992 Act No. 363, Section 1; 1993 Act No. 181, Section 668.
 (A) The insurer shall file annually with the department not later than June first an annual independent financial examination of each MGA with which it has done business, prepared by a certified public accountant in a form acceptable to the director or his designee.  (B) If a MGA establishes loss reserves, the insurer annually shall obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the MGA. The opinion must be filed not later than March first. This is in addition to other required loss reserve certification.  (C) The insurer at least semiannually by July thirty-first and December thirty-first shall conduct an on-site review of the underwriting and claims processing operations of the MGA.  (D) Binding authority for all assumed reinsurance contracts or participation in insurance or reinsurance syndicates rests with an officer of the insurer who must not be affiliated with the MGA.  (E) Within thirty days of entering into or termination of a contract with a MGA the insurer shall provide written notification of the appointment or termination to the department. Notices of appointment of a MGA must include a statement of duties which the applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and other information the director or his designee may request. If the contract is terminated, notification must be given by the insurer within thirty days of the action to agents or brokers who have placed business with the MGA within the last twelve months.  (F) An insurer shall review its books and records each quarter to determine if an agent, as defined by Section 38-44-20(3), has become, by operation of that section, a MGA. If the insurer determines that an agent has become a MGA, the insurer promptly shall notify the agent and the department of the determination, and the insurer and agent shall comply fully with this chapter within thirty days.  (G) An insurer may not appoint to its board of directors an officer, a director, an employee, an agent, or a broker or a controlling shareholder of its MGAs. This subsection does not apply to relationships governed by the Insurance Holding Company Regulatory Act or, if applicable, Section 38-21-95.  HISTORY: 1992 Act No. 363, Section 1; 1993 Act No. 181, Section 669; 2002 Act No. 228, Section 7, eff May 1, 2002; 2019 Act No. 6 (S.360), Section 6, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 6, in (A), substituted "not later than June" for "not later than March".
 The acts of the MGA are considered to be the acts of the insurer on whose behalf it is acting. A MGA may be examined as if it were the insurer.  HISTORY: 1992 Act No. 363, Section 1.
 (A) If the director or his designee finds after a hearing conducted in accordance with Insurance Department Regulation 69-31 that a person has violated this chapter, the director or his designee may order:  (1) for each separate violation, a penalty as provided in Section 38-2-10;  (2) revocation or suspension of the agent's license of the MGA;  (3) the MGA to reimburse the insurer, the rehabilitator, or liquidator of the insurer for losses incurred by the insurer caused by a violation of this chapter committed by the MGA.  (B) The decision, determination, or order of the director or his designee pursuant to subsection (A) is subject to judicial review pursuant to Section 38-3-210, and the Administrative Procedures Act before the Administrative Law Court.  (C) Nothing contained in this section affects the right of the director or his designee to impose other penalties in Title 38.  (D) Nothing contained in this chapter limits or restricts the rights of policyholders, claimants, and auditors.  HISTORY: 1992 Act No. 363, Section 1; 1993 Act No. 181, Section 670.
 The department may promulgate reasonable regulations for the implementation and administration of this chapter.  HISTORY: 1992 Act No. 363, Section 1; 1993 Act No. 181, Section 671.  
 As used in this chapter:  (1) "Admitted insurer" means an insurer licensed to engage in the business of insurance in this State.  (2) "Affiliate" means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured.  (3) "Affiliated group" means any group of entities that are all affiliated.  (4) "Control" means:  (a) the entity directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote twenty-five percent or more of any class of voting securities of the other entity; or  (b) the entity controls in any manner the election of a majority of the directors or trustees of the other entity.  (5) "Exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:  (a) the person employs or retains a qualified risk manager to negotiate insurance coverage;  (b) the person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of one hundred thousand dollars in the immediately preceding twelve months; and  (c)(i) the person meets at least one of the following criteria:  (A) the person possesses a net worth in excess of twenty million dollars, as that amount is adjusted pursuant to subsubitem (ii);  (B) the person generates annual revenues in excess of fifty million dollars, as that amount is adjusted pursuant to subsubitem (ii);  (C) the person employs more than five hundred full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than one thousand employees in the aggregate;  (D) the person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least thirty million dollars as that amount is adjusted pursuant to subsubitem (ii); or  (E) the person is a municipality with a population in excess of fifty thousand persons.  (ii) Effective on the January 1, 2017, and each fifth January first thereafter, the amounts in sub-subitems (i)(A), (B), and (D) of subitem (c) shall be adjusted to reflect the percentage change for the five-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.  (6)(a) "Home state", with respect to an insured, means:  (i) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or  (ii) if one hundred percent of the insured risk is located out of the state referred to in subsubitem (i), the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.  (b) Notwithstanding the provisions of subitem (a), if more than one insured from an affiliated group are named insureds on a single surplus lines insurance contract, the term "home state" means the home state, as determined pursuant to subitem (a), of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract.  (7) "Independently procured insurance" means insurance procured directly by an insured from a surplus lines insurer.  (8)(a) "Insurance broker" means a property and casualty insurance producer licensed by the director or his designee who:  (i) sells, solicits, or negotiates insurance on behalf of an insured;  (ii) takes or transmits other than for himself an application for insurance or a policy of insurance to or from an insured;  (iii) advertises or otherwise gives notice that he receives or transmits a surplus lines application or policy;  (iv) receives or delivers a policy of surplus lines insurance for an insured on behalf of a surplus lines insurer;  (v) receives, collects, or transmits a premium of surplus lines insurance; or  (vi) performs another act in the making of a surplus lines insurance contract for or with an insured.  (b) An insurance broker's license is not required of:  (i) a broker's office employee acting within the confines of the broker's office, under the direction and supervision of the licensed broker and within the scope of the broker's license, in the acceptance of request for insurance and payment of premiums and the performance of clerical, stenographic, and similar office duties; or  (ii) a producer licensed for property and casualty insurance who places surplus lines insurance through a licensed insurance broker.  (c) An insurance broker, or an insurance producer as provided in subitem (b)(ii), may place that insurance either with an eligible surplus lines insurer or with a licensed insurance producer appointed by an insurance carrier licensed in this State.  (9) "Municipal agent" means the Municipal Association of South Carolina or other designated agent of the municipality for the purpose set forth in this chapter.  (10) "Surplus lines insurance" means any property and casualty insurance permitted to be placed directly or through a surplus lines broker, or an insurance producer as provided in subitem (b)(ii), with a surplus lines insurer eligible to accept the insurance as defined in Section 38-1-20(56).  (11) "Surplus lines insurer" means an insurer not licensed to engage in the business of insurance in this State, but does not include a risk retention group, as that term is defined in Section 2(a)(4) of the Liability Risk Retention Act of 1986 (15 U.S.C. 3901(a)(4)).  (12) "Premium tax" means, with respect to surplus lines or independently procured insurance coverage, any tax, fee, assessment, or other charge imposed by a governmental entity directly or indirectly based on any payment made as consideration for an insurance contract, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance.  (13) "Broker's premium tax rate" means a blended tax rate of six percent. The rate is comprised of a four percent state broker's premium tax and a two percent municipal broker's premium tax.  (14) "Qualified risk manager" means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:  (a) the person is an employee of, or third-party consultant retained by, the commercial policyholder;  (b) the person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance; and  (c)(i)(A) the person has a bachelor's degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the director or other state regulatory official or entity to demonstrate minimum competence in risk management; and  (B) has three years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or  (aa) has a designation as a Chartered Property and Casualty Underwriter (CPCU) issued by the American Institute for CPCU/Insurance Institute of America;  (bb) has a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;  (cc) has a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research;  (dd) has a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or  (ee) any other designation, certification, or license determined by the director or other state insurance regulatory official or entity to demonstrate minimum competency in risk management;  (ii)(A) has at least seven years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; and  (B) has any one of the designations specified in subitems (c)(i)(B)(aa) through (c)(i)(B)(ee);  (iii) has at least ten years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or  (iv) has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the director or other state regulatory official or entity to demonstrate minimum competence in risk management.  (15) "State" includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa.  HISTORY: Former 1976 Code Section 38-45-10 [1947 (45) 322; 1952 Code Section 37-801; 1962 Code Section 37-801] recodified as Section 38-17-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-10 [1947 (45) 322; 1952 Code Section 37-201; 1962 Code Section 37-201] recodified as Section 38-45-10 by 1987 Act No. 155, Section 1; 1990 Act No. 524, Section 3; 1993 Act No. 181, Section 672; 2009 Act No. 69, Section 7, eff June 2, 2009; 2012 Act No. 283, Section 1, eff January 1, 2012; 2016 Act No. 137 (H.4660), Section 3, eff March 2, 2016.  Effect of Amendment  2016 Act No. 137, Section 3, in (8)(a)(iii), substituted "policy" for "policies"; in (8)(b), added paragraph identifiers (i) and (ii), and deleted "However" at the beginning of the first sentence; in (8)(c) and (10), inserted ", or an insurance producer as provided in subitem (b)(ii),"; and made other nonsubstantive changes.
 A licensed insurance broker may divide commissions with producers or brokers in other states or with a producer licensed in this State for an insurer doing the particular class of insurance desired to be placed through the broker.  HISTORY: Former 1976 Code Section 38-45-100 [1947 (45) 322; 1952 Code Section 37-810; 1962 Code Section 37-810; 1964 (53) 2054] recodified as Section 38-17-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-110 [1947 (45) 322; 1952 Code Section 37-211; 1962 Code Section 37-211] recodified as Section 38-45-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 The broker shall write or stamp upon the face of each policy of an eligible surplus lines insurer the words, "This company has been approved by the director or his designee of the South Carolina Department of Insurance to write business in this State as an eligible surplus lines insurer, but it is not afforded guaranty fund protection".  HISTORY: Former 1976 Code Section 38-45-110 [1947 (45) 322; 1952 Code Section 37-811; 1962 Code Section 37-811] recodified as Section 38-17-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-130 [1947 (45) 322; 1952 Code Section 37-210; 1962 Code Section 37-210; 1981 Act No. 131, Section 1] recodified as Section 38-45-110 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 8; 1993 Act No. 181, Section 672; 1998 Act No. 260, Section 1; 2000 Act No. 312, Section 11; 2002 Act No. 228, Section 8, eff May 1, 2002; 2012 Act No. 283, Section 1, eff January 1, 2012; 2016 Act No. 194 (H.4817), Section 4, eff May 26, 2016.  Effect of Amendment  2016 Act No. 194, Section 4, deleted "and application" following "each policy".
 Every insurance broker who sells an insurance policy written or issued by an insurer not licensed to do business in this State is personally liable for the limits of the coverage provided for in the policy if the broker fails to comply with the provisions of this title relating to policies issued by insurers not licensed to do business in this State.  HISTORY: Former 1976 Code Section 38-45-120 [1947 (45) 322; 1952 Code Section 37-812; 1962 Code Section 37-812] recodified as Section 38-17-120 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-140 [1960 (51) 1630; 1962 Code Section 37-210.1] recodified as Section 38-45-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 All losses occurring under policies placed through an insurance broker may be adjusted by a licensed producer or adjuster in this State. All inspections of property and endorsements on policies may be made by a licensed broker or any other licensed insurance producer in this State authorized to do so.  HISTORY: Former 1976 Code Section 38-45-130 [1947 (45) 322; 1952 Code Section 37-813; 1962 Code Section 37-813] recodified as Section 38-17-130 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-120 [1947 (45) 322; 1952 Code Section 37-212; 1962 Code Section 37-212] recodified as Section 38-45-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 When the director or his designee determines after investigation that a broker has violated this title, he may, upon ten days' notice, impose the penalties provided in Section 38-2-10.  HISTORY: Former 1976 Code Section 38-45-140 [1947 (45) 322; 1952 Code Section 37-814; 1962 Code Section 37-814] recodified as Section 38-17-140 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-150 [1947 (45) 322; 1952 Code Section 37-204; 1962 Code Section 37-204] recodified as Section 38-45-140 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 19; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 Any person violating this chapter is guilty of a misdemeanor. Each risk written in violation of this chapter is considered a separate offense.  HISTORY: Former 1976 Code Section 38-45-150 [1947 (45) 322; 1952 Code Section 37-815; 1962 Code Section 37-815] recodified as Section 38-17-150 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-160 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-213; 1962 Code Section 37-213] recodified as Section 38-45-150 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 20; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 No policy fee may be charged by a broker unless it is a reasonable fee, it is made part of the contract, and the broker's premium tax rate is paid upon the policy fee. If for any reason the director or his designee disapproves the placement or the insurer ultimately refuses to write the risk, the broker shall immediately refund the full policy fee to the policyholder.  HISTORY: Former 1976 Code Section 38-45-160 [1947 (45) 322; 1952 Code Section 37-816; 1962 Code Section 37-816; 1971 (57) 709; 1976 Code Section 38-45-160; 1980 Act No. 306, Section 3] recodified as Section 38-17-160 by 1987 Act No. 155, Section 1; New Section 38-45-160 enacted by 1988 Act No. 314, Section 9; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 Before the director or his designee approves a nonadmitted insurer as an eligible surplus lines insurer, the insurer shall appoint in writing the director and his successors in office to be its true and lawful attorney upon whom all legal process in any action or proceeding against it must be served and in this writing shall agree that any lawful process against it which is served upon this attorney is of the same legal force and validity as if served upon the insurer and that the authority continues in force so long as any liability remains outstanding in the State. Copies of the appointment, certified by the director, are sufficient evidence of the appointment and must be admitted in evidence with the same force and effect as the original might be admitted.  HISTORY: Former 1976 Code Section 38-45-170 [1947 (45) 322; 1952 Code Section 37-817; 1962 Code Section 37-817] recodified as Section 38-17-170 by 1987 Act No. 155, Section 1; New Section 38-45-170 enacted by 1988 Act No. 314, Section 10; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 The department may promulgate regulations and prescribe forms and procedures necessary to implement this chapter.  HISTORY: 2012 Act No. 283, Section 1, eff January 1, 2012.
 (A) For the purposes of carrying out the Nonadmitted and Reinsurance Reform Act of 2010, the director or his designee may enter into an agreement with a single state to facilitate the collection, allocation, and disbursement of premium taxes attributable to the placement of surplus lines insurance, provide for uniform methods of allocation and reporting among surplus lines insurance risk classifications, and share information among states relating to surplus lines insurance premium taxes. The General Assembly may approve, modify, or rescind any such agreement.  (B) The director or his designee is authorized to participate in a clearing house established through a multistate agreement approved by the General Assembly for the purpose of collecting and disbursing to reciprocal states any funds collected pursuant to subsection (A) applicable to properties, risks, or exposures located or to be performed outside of this State. To the extent that other states where portions of the properties, risks, or exposures reside have failed to enter into an agreement or reciprocal allocation procedure with this State, the net premium tax collected shall be retained by this State.  HISTORY: 2012 Act No. 283, Section 1, eff January 1, 2012.
 Nothing in this chapter precludes the director or his designee from collecting one hundred percent of the taxes due under this chapter for all risks placed in the surplus lines market.  HISTORY: 2012 Act No. 283, Section 1, eff January 1, 2012.  
 A resident property and casualty-licensed insurance producer 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 producer for the same lines of insurance for which he proposes to apply as a broker of this State;  (2) successfully passed the South Carolina broker licensing examination;  (3) payment of a biennial license fee of two hundred dollars which is earned fully when received, not refundable;  (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. 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;  (5) payment to the department, within thirty days after March thirty-first, June thirtieth, September thirtieth, and December thirty-first each year, of the broker's premium tax rate upon premiums for policies of insurers not licensed in this State. In computing total premiums, return premiums on risks and dividends paid or credited to policyholders are excluded. The credit must be refunded to the policyholder.  HISTORY: Former 1976 Code Section 38-45-20 [1947 (45) 322; 1952 Code Section 37-802; 1962 Code Section 37-802] recodified as Section 38-17-20 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-47-20 [1947 (45) 322; 1952 Code Section 37-202; 1962 Code Section 37-202] and Section 38-47-30 [1947 (45) 322; 1952 Code Section 37-203; 1960 (51) 1646; 1962 Code Section 37-203; 1969 (56) 240; 1970 (56) 2497; 1981 Act No. 11, Section 1; 1981 Act No. 44, Section 1] recodified as Section 38-45-20 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 5; 1989 Act No. 52, Section 3; 1990 Act No. 379, Section 1; 1992 Act No. 501, Part II Section 11J; 1993 Act No. 181, Section 672; 2000 Act No. 312, Section 9; 2003 Act No. 73, Section 13, eff January 31, 2004; 2004 Act No. 291, Section 11, eff July 29, 2004; 2008 Act No. 326, Section 12, eff June 16, 2008; 2009 Act No. 69, Section 8, eff June 2, 2009; 2012 Act No. 283, Section 1, eff January 1, 2012.
 A nonresident may be licensed as an insurance broker by the director or his designee if the following requirements are met:  (1) filing an application on a form prescribed by the director or his designee;  (2) paying a biennial license fee of two hundred dollars fully earned when received, not refundable;  (3) an aggrieved person may institute an action in the county of his residence against the broker to recover damages. 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) paying the department, within thirty days after March thirty-first, June thirtieth, September thirtieth, and December thirty-first each year, the broker's premium tax rate upon premiums for policies of insurers not licensed in this State. In computing total premiums, return premiums on risks and dividends paid or credited to policyholders are excluded. The credit must be refunded to the policyholder.  HISTORY: Former 1976 Code Section 38-45-30 [1947 (45) 322; 1952 Code Section 37-803; 1962 Code Section 37-803] recodified as Section 38-17-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-30 [1947 (45) 322; 1952 Code Section 37-203; 1960 (51) 1646; 1962 Code Section 37-203; 1969 (56) 240; 1970 (56) 2497; 1981 Act No. 11, Section 1; 1981 Act No. 44, Section 1]; Section 38-47-40 [1947 (45) 322; 1952 Code Section 37-203.1; 1962 Code Section 37-203.1] recodified as Section 38-45-30 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 6; 1989 Act No. 52, Section 4; 1990 Act No. 379, Section 2; 1992 Act No. 501, Part II Section 11K; 1993 Act No. 181, Section 672; 1999 Act No. 30, Section 2; 2000 Act No. 312, Section 10; 2003 Act No. 73, Section 14, eff June 25, 2003; 2008 Act No. 326, Section 13, eff June 16, 2008; 2012 Act No. 283, Section 1, eff January 1, 2012; 2016 Act No. 194 (H.4817), Section 3, eff May 26, 2016.  Effect of Amendment  2016 Act No. 194, Section 3, deleted former (2) and (3), relating to affidavit requirements, and redesignated former (4) through (6) as (2) through (4).
 When an individual applies for an insurance broker's license, he shall supply the department his business and residence address. The broker shall notify the department within thirty days of any change in these addresses.  HISTORY: 1988 Act No. 327, Section 2; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 The director or his designee may enter into reciprocal agreements with the insurance commissioners of other states in regard to licensing of nonresident brokers if in his judgment the arrangements or agreements are in the best interest of the State and if the applicant for the license meets the minimum statutory requirements of this State for the issuance of a broker's license. However, the director or his designee may not enter into or continue any reciprocal agreement unless the other state is as liberal as this State in licensing nonresident brokers.  HISTORY: Former 1976 Code Section 38-45-40 [1947 (45) 322; 1952 Code Section 37-804; 1962 Code Section 37-804; 1964 (53) 2054] recodified as Section 38-17-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-50 [1957 (50) 534; 1962 Code Section 37-203.2] recodified as Section 38-45-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 Each license issued is for an indefinite term unless revoked or suspended. If the biennial license fee of a broker is not paid at the time and in the manner the department provides by regulation, the license must be canceled. If the license is to be reinstated, an original application must be filed and a reinstatement fee equal to the biennial license fee unpaid must be paid in addition to the regular biennial license fee.  HISTORY: Former 1976 Code Section 38-45-50 [1947 (45) 322; 1952 Code Section 37-805; 1962 Code Section 37-805; 1964 (53) 2054] recodified as Section 38-17-50 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-1-60 [1979 Act No. 63], and 38-47-90 [1947 (45) 322; 1952 Code Section 37-205; 1962 Code Section 37-205; 1976 Act No. 612 Section 2] recodified as Section 38-45-50 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11L; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 The revenue collected from the broker's premium tax rate imposed pursuant to the provisions of Sections 38-45-20(5), 38-45-30(4), and 38-45-190, must be credited to a special earmarked fund, distinct from the general fund, and expended only for the purposes provided in this chapter.  HISTORY: 2012 Act No. 283, Section 1, eff January 1, 2012.  Code Commissioner's Note  At the direction of the Code Commissioner, the reference to "38-45-30(6)" was corrected to reference "38-45-30(4)" to reflect the amendment of Section 38-45-30 by 2016 Act No. 194.
 (A) As soon after December thirty-first of each year as may be convenient, the director or his designee shall render an accounting to the State Treasurer of the state portion of the broker's premium tax rate payment collected showing the counties in which the risk covered by the insurance is located and shall furnish a duplicate of the accounting to the Comptroller General. The Comptroller General shall draw his warrant on the State Treasurer for one-fourth of the state's portion of the broker's premium tax rate payment collected by the department on property insurance, payable to the county treasurer of the county in which the property is located. The county treasurer shall distribute the broker's premium tax collected on property insurance in accordance with the requirements of Sections 23-9-360 and 23-9-470 and Sections 38-7-70 and 38-7-80.  (B) As soon as practical after December thirty-first, but no later than July first of each year, the department shall distribute from the special earmarked fund, distinct from the general fund, the municipal portion of the broker's premium tax rate payment collected for the prior tax year in accordance with the requirements of Sections 38-45-20(5) and 38-45-30(4). This amount must be paid to the municipal agent with a full accounting, provided by the department, including, but not limited to, the name and address of the broker, and amount of the broker's premium tax rate payment collected from each broker, and showing the counties in which the risk covered by the insurance is located. The municipal agent shall distribute the funds annually to each municipality with which it contracts based on the data submitted by the department.  HISTORY: Former 1976 Code Section 38-45-60 [1947 (45) 322; 1952 Code Section 37-806; 1962 Code Section 37-806] recodified as Section 38-17-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-70 [1947 (45) 322; 1952 Code Section 37-207; 1962 Code Section 37-207; 1978 Act No. 585 Section 2; 1981 Act No. 11, Section 2] recodified as Section 38-45-60 by 1987 Act No. 155, Section 1; 1991 Act No. 171, Part II, Section 22J; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.  Code Commissioner's Note  At the direction of the Code Commissioner, the reference to "38-45-30(6)" was corrected to reference "38-45-30(4)" to reflect the amendment of Section 38-45-30 by 2016 Act No. 194.
 A broker's license entitles the holder to solicit insurance in any county of this State. However, municipalities may impose license fees in accordance with this title.  HISTORY: Former 1976 Code Section 38-45-70 [1947 (45) 322; 1952 Code Section 37-807; 1962 Code Section 37-807] recodified as Section 38-17-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-80 [1947 (45) 322; 1952 Code Section 37-208; 1962 Code Section 37-208] recodified as Section 38-45-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 All brokers doing any kind of insurance business in this State shall make and keep a full and correct record of the business done by them, showing the number, date, term, amount insured, premiums, and the person to whom issued of every policy or certificate of renewal. The information from these records must be furnished to the director or his designee on demand and the original books or records are open to the inspection of the director or his designee on demand. These records must be kept for a minimum of five years. The director or his designee also may conduct examinations of broker records. Examinations must be conducted in accordance with the requirements of Chapter 13 of this title. The broker is responsible for the costs of any examination.  HISTORY: Former 1976 Code Section 38-45-80 [1947 (45) 322; 1952 Code Section 37-808; 1962 Code Section 37-808] recodified as Section 38-17-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1210 [1947 (45) 322; 1952 Code Section 37-290; 1962 Code Section 37-290] recodified as Section 38-45-80 by 1987 Act No. 155, Section 1; 1988 Act No. 357, Section 5; 1993 Act No. 181, Section 672; 2012 Act No. 283, Section 1, eff January 1, 2012.
 (A) At the request of a licensed resident broker, the director or his designee may approve certain nonadmitted insurers as eligible surplus lines insurers to write business on risks located in this State that one or more insurers licensed in this State to write that line of business in this State have declined to write. The director or his designee may require the broker to submit, on behalf of the insurer, documents necessary to satisfy him that the insurer is licensed in his domiciliary state, that meets at least the minimum capital and surplus requirements of this State, and that its operation is not hazardous to the policyholders. The director or his designee may require the broker or the insurer to file additional documents at any time to maintain the insurer's status as an eligible surplus lines insurer. For the purposes of this section, "domiciliary state" means the state or jurisdiction in which an insurer is incorporated or organized. The director or his designee may withdraw his approval at any time the insurer fails to meet any of the requirements. While the insurer maintains his status as an eligible surplus lines insurer, a duly licensed broker, under the terms of this chapter, may place business with the insurer. An insurance broker shall exercise due care in the placing of insurance, except as provided in subsection (B). Each broker transacting business in the State during a calendar year shall file annually with the department within thirty days after December thirty-first a detailed report of this business. The report must be in the form the director or his designee prescribes. The broker's books, papers, and accounts must be open at all times to the inspection of the director or his designee.  (B) A surplus lines broker is not required to search with due diligence to determine whether the full amount or type of insurance can be obtained from an admitted insurer when the broker is seeking to procure or place nonadmitted insurance for an exempt commercial purchaser provided the:  (1) broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that the insurance may or may not be available from the admitted market and that insurance obtained from the admitted market may provide greater protection with more regulatory oversight; and  (2) exempt commercial purchaser has subsequently requested in writing for the broker to procure or place such insurance from a nonadmitted insurer.  HISTORY: Former 1976 Code Section 38-45-90 [1947 (45) 322; 1952 Code Section 37-809; 1962 Code Section 37-809] recodified as Section 38-17-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-47-100 [1947 (45) 322; 1952 Code Section 37-209; 1962 Code Section 37-209; 1981 Act No. 13, Section 1] recodified as Section 38-45-90 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 7; 1993 Act No. 181, Section 672; 1998 Act No. 411, Section 4; 2008 Act No. 326, Section 14, eff June 16, 2008; 2012 Act No. 283, Section 1, eff January 1, 2012; 2013 Act No. 66, Section 1, eff June 13, 2013.
 This chapter may be cited as the "Reinsurance Intermediary Act".  HISTORY: 1992 Act No. 332, Section 1.
 (A) A reinsurance intermediary is subject to examination by the director or his designee. The director or his designee must have access to all books, bank accounts, and records of the reinsurance intermediary in a form usable to the director or his designee.  (B) A reinsurance intermediary-manager may be examined as if he were the reinsurer.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 678.
 (A) A reinsurance intermediary, insurer, or reinsurer found by the director or his designee after a hearing conducted in accordance with Insurance Department Regulation 69-31 to be in violation of this chapter:  (1) for each separate violation, shall pay a penalty of not more than fifteen thousand dollars and thirty thousand dollars if the violation is wilful;  (2) is subject to revocation or suspension of its license;  (3) for a violation committed by the reinsurance intermediary, make restitution to the insurer, reinsurer, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to the violation.  (B) The decision, determination, or order of the director or his designee pursuant to subsection (A) is subject to judicial review pursuant to Section 38-3-210.  (C) This section does not affect the right of the director or his designee to impose other penalties provided by Title 38.  (D) This chapter does not limit or restrict the rights of policyholders, claimants, creditors, or other third parties or confer rights to those persons.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 679.
 The department may promulgate reasonable regulations for the implementation and administration of this chapter.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 680.  
 As used in this chapter:  (1) "Actuary" means a person who is a member in good standing of the American Academy of Actuaries.  (2) "Controlling person" means a person, a firm, an association, or a corporation who directly or indirectly has power to direct or cause to be directed the management, control, or activities of the reinsurance intermediary.  (3) "Insurer" means a corporation, a fraternal organization, a burial association, another association, a partnership, a society, an order, an individual, or an aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations.  (4) "Licensed producer" means an agent, broker, or reinsurance intermediary licensed pursuant to the applicable provision of the insurance law.  (5) "Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager defined in this section.  (6) "Reinsurance intermediary-broker" means a person, other than an officer or employee of the ceding insurer, who solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of the insurer.  (7) "Reinsurance intermediary-manager" means a person who has authority to bind or manage all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department, or underwriting office, and acts as an agent for the reinsurer whether known as a reinsurance intermediary-manager or other similar term. The following persons are not reinsurance intermediary-managers with respect to the reinsurer for the purposes of this chapter:  (a) an employee of the reinsurer;  (b) a United States reinsurance intermediary-manager of the United States branch of an alien reinsurer;  (c) an underwriting reinsurance intermediary-manager which, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, is subject to the Insurance Holding Company Regulatory Act, and whose compensation is not based on the volume of premiums written.  (d) the reinsurance intermediary-manager of a group, association, pool, or organization of insurers which engage in joint underwriting or joint reinsurance and who are subject to examination by the insurance commissioner of the state in which the reinsurance intermediary-manager's principal business office is located.  (8) "Reinsurer" means a person, a firm, an association, or a corporation licensed in this State pursuant to the applicable provisions of the insurance law as an insurer with the authority to assume reinsurance.  (9) "To be in violation" means that the reinsurance intermediary, insurer, or reinsurer for whom the reinsurance intermediary was acting failed to comply substantially with this chapter.  (10) "Qualified United States financial institution" means an institution that:  (a) is organized or, for a United States office of a foreign banking organization, licensed under the laws of the United States or its states;  (b) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies;  (c) has been determined by either the director or his designee or the Securities Valuation Office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit are acceptable to the director or his designee.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 673.
 (A) No person may act as a reinsurance intermediary-broker in this State if he maintains an office directly or as a member or an employee of a firm or an association or as an officer, a director, or an employee of a corporation in:  (1) this State unless the reinsurance intermediary-broker is a licensed producer in this State; or  (2) another state unless the reinsurance intermediary-broker is a licensed producer in that state and is licensed in this State as a reinsurance intermediary. The license may be a nonresident license.  (B) No person may act as a reinsurance intermediary-manager:  (1) for a reinsurer domiciled in this State, unless the reinsurance intermediary-manager is a licensed producer in this State;  (2) in this State if the reinsurance intermediary-manager maintains an office directly or as a member or an employee of a firm or an association or an officer, a director, or an employee of a corporation in this State unless the reinsurance intermediary-manager is a licensed producer in this State;  (3) in another state for a foreign insurer, unless the reinsurance intermediary-manager is a licensed producer in that state and is licensed in this State as a reinsurance intermediary. The license may be a nonresident license.  (C) For the protection of the reinsurer, the director or his designee shall require a reinsurance intermediary-manager subject to subsection (B) to file a fifty thousand dollar bond for each reinsurer represented. The bond must be issued by an insurer acceptable to the director or his designee.  (D)(1) The director or his designee may issue a reinsurance intermediary license to a person who has:  (a) demonstrated compliance with the requirements of this chapter;  (b) completed satisfactorily an application for a license on forms prepared by the director or his designee;  (c) paid a licensing fee of one hundred dollars in connection with the issuance or annual renewal of the license.  (2) If the applicant for a reinsurance intermediary license is a nonresident, the applicant, as a condition precedent to receiving or holding a license, shall designate a resident of this State upon whom notices or orders of the director or his designee or process affecting the nonresident reinsurance intermediary may be served. The licensee shall notify the department in writing within thirty days of every change in its designated agent for service of process, and the change does not become effective until acknowledged by the director or his designee.  (E) The director or his designee may refuse to issue a reinsurance intermediary license if, in his judgment, the applicant, a person named on the application, or a member, a principal, an officer, or a director of the applicant is not trustworthy or a controlling person of the applicant is not trustworthy to act as a reinsurance intermediary or if one or more of the foregoing has given cause for revocation or suspension of the license or has failed to comply with a prerequisite for the issuance of the license. Upon written request the director or his designee shall furnish a summary of the basis for refusal to issue a license. No reinsurance intermediary license may be refused except on reasonable notice and opportunity to be heard afforded the applicant. An applicant whose application has been denied may appeal as provided in Section 38-3-210.  (F) Licensed attorneys of this State when acting in their professional capacity are exempt from this section.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 674.
 Transactions between a reinsurance intermediary-broker and the insurer it represents in that capacity only may be entered into pursuant to a written contract specifying the responsibilities of each party. The contract, at a minimum, must provide that:  (1) The insurer may terminate the reinsurance intermediary-broker's authority at any time.  (2) The reinsurance intermediary-broker shall render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owing to the reinsurance intermediary-broker, and remit all funds due to the insurer within thirty days of receipt.  (3) Funds collected for the insurer's account must be held by the reinsurance intermediary-broker in a fiduciary capacity in a bank which is a qualified United States financial institution.  (4) The reinsurance intermediary-broker shall comply with Section 38-46-50.  (5) The reinsurance intermediary-broker shall comply with the written standards established by the insurer for the cession or retrocession of all risks.  (6) The reinsurance intermediary-broker shall disclose to the insurer a relationship with a reinsurer to which business will be ceded or retroceded.  HISTORY: 1992 Act No. 332, Section 1.
 (A) For at least ten years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-broker, he shall keep a complete record for each transaction showing:  (1) the type of contract, limits, underwriting restrictions, classes or risks, and territory;  (2) the period of coverage, including effective and expiration dates, cancellation provisions, and notice required for cancellation;  (3) reporting and settlement requirements of balances;  (4) the rate used to compute the reinsurance premium;  (5) the names and addresses of assuming reinsurers;  (6) the rates of all reinsurance commissions, including the commissions on retrocessions handled by the reinsurance intermediary-broker;  (7) related correspondence and memoranda;  (8) proof of placement;  (9) the details regarding retrocessions handled by the reinsurance intermediary-broker, including the identity of retrocessionaries and percentage of each contract assumed or ceded;  (10) financial records, including, but not limited to, premium and loss accounts;  (11) when the reinsurance intermediary-broker procures a reinsurance contract on behalf of an insurer:  (a) directly from an assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or  (b) if placed through a representative of the assuming reinsurer other than an employee, written evidence that the reinsurer has delegated binding authority to the representative.  (B) The insurer must have access and the right to copy and audit all accounts and records maintained by the reinsurance intermediary-broker related to its business in a form usable by the insurer.  HISTORY: 1992 Act No. 332, Section 1.
 (A) An insurer may not engage the services of a person, a firm, an association, or a corporation to act as a reinsurance intermediary-broker on its behalf unless the person is licensed as required by Section 38-46-30.  (B) An insurer may not employ an individual who is employed by a reinsurance intermediary-broker with which it transacts business unless the reinsurance intermediary-broker is under common control with the insurer and subject to the Insurance Holding Company Regulatory Act.  (C) The insurer annually shall file with the department not later than June first a copy of the statements of the financial condition of each reinsurance intermediary-broker which the insurer has engaged. The statements must be prepared by an independent certified accountant in a form acceptable to the director or his designee.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 675; 2019 Act No. 6 (S.360), Section 7.A, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 7.A, in (C), in the first sentence, substituted "not later than June" for "not later than March".
 Transactions between a reinsurance intermediary-manager and the reinsurer it represents in that capacity only may be entered into pursuant to a written contract specifying the responsibilities of each party, which must be approved by the reinsurer's board of directors. No contract by which a reinsurer assumes or cedes business through a reinsurance intermediary-manager may be entered into unless the insurer has notified the department in writing at least thirty days in advance of its intention to enter into the contract, has furnished a true copy of the contract to the director or his designee, and the director or his designee has not disapproved it within the thirty days. The contract, at a minimum, must provide:  (1) The reinsurer may terminate the contract for cause upon written notice to the reinsurance-intermediary manager. The reinsurer immediately may suspend the authority of the reinsurance intermediary-manager to assume or cede business during the pendency of a dispute regarding the cause for termination.  (2) The reinsurance intermediary-manager shall render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owing to the reinsurance intermediary-manager and remit all funds due under the contract to the reinsurer within thirty days.  (3) All funds collected for the reinsurer's account must be held by the reinsurance intermediary-manager in a fiduciary capacity in a bank which is a qualified United States financial institution. The reinsurance intermediary-manager may retain no more than ninety days estimated claims payments and allocated loss adjustment expenses. The reinsurance intermediary-manager shall maintain a separate bank account for each reinsurer that it represents.  (4) For at least ten years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-manager, he shall keep a complete record for each transaction showing:  (a) the type of contract, limits, underwriting restrictions, classes or risks, and territory;  (b) the period of coverage, including effective and expiration dates, cancellation provisions, notice required of cancellation, and disposition of outstanding reserves on covered risks;  (c) reporting and settlement requirements of balances;  (d) the rate used to compute the reinsurance premium;  (e) the names and addresses of reinsurers;  (f) the rates of all reinsurance commissions, including the commissions on retrocessions handled by the reinsurance intermediary-manager;  (g) related correspondence and memoranda;  (h) proof of placement;  (i) the details regarding retrocessions handled by the reinsurance intermediary-manager, as permitted by Section 38-46-90(D), including the identity of retrocessionaires and percentage of each contract assumed or ceded;  (j) financial records, including, but not limited to, premium and loss accounts;  (k) when the reinsurance intermediary-manager places a reinsurance contract on behalf of a ceding insurer:  (i) directly from an assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or  (ii) if placed through a representative of the assuming reinsurer other than an employee, written evidence that the reinsurer has delegated binding authority to the representative.  (5) The reinsurer must have access and the right to copy all accounts and records maintained by the reinsurance intermediary-manager related to its business in a form usable by the reinsurer.  (6) The contract must not be assigned in whole or in part by the reinsurance intermediary-manager.  (7) The reinsurance intermediary-manager shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks.  (8) The rates, terms, and purposes of commissions, charges, and other fees which the reinsurance intermediary-manager may levy against the reinsurer must be set forth.  (9) If the contract permits the reinsurance intermediary-manager to settle claims on behalf of the reinsurer:  (a) All claims must be reported to the reinsurer in a timely manner.  (b) A copy of the claim file must be sent to the reinsurer at its request or as soon as it becomes known that the claim:  (i) has the potential to exceed fifty thousand dollars or the limit set by the reinsurer, whichever is less;  (ii) involves a coverage dispute;  (iii) may exceed the reinsurance intermediary-manager's claims settlement authority;  (iv) is open for more than six months; or  (v) is closed by payment of fifty thousand dollars or an amount set by the reinsurer, whichever is less;  (c) All claim files must be the joint property of the reinsurer and reinsurance intermediary-manager. However, upon an order of liquidation of the reinsurer the files become the sole property of the reinsurer or its estate. The reinsurance intermediary-manager must have reasonable access to and the right to copy the files on a timely basis.  (d) Settlement authority granted to the reinsurance intermediary-manager may be terminated for cause upon the reinsurer's written notice to the reinsurance intermediary-manager or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination.  (10) If the contract provides for a sharing of interim profits by the reinsurance intermediary-manager, interim profits must not be paid until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business, or a later period set by the director or his designee for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to Section 38-46-90(C).  (11) The reinsurance intermediary-manager annually shall provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.  (12) The reinsurer at least semi-annually shall conduct an on-site review of the underwriting and claims processing operations of the reinsurance intermediary-manager.  (13) The reinsurance intermediary-manager shall disclose to the reinsurer relationships it has with an insurer before ceding or assuming business with the insurer pursuant to this contract.  (14) Within the scope of its actual or apparent authority the acts of the reinsurance intermediary-manager are considered to be the acts of the reinsurer on whose behalf it is acting.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 676.
 The reinsurance intermediary-manager may not:  (1) cede retrocessions on behalf of the reinsurer, except the reinsurance intermediary-manager may cede facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for the retrocessions. The guidelines must include a list of reinsurers with which the automatic agreements are in effect and for each reinsurer, the coverages and amounts or percentages that may be reinsured and commission schedules;  (2) commit the reinsurer to participate in reinsurance syndicates;  (3) appoint a licensed producer without assuring that the licensed producer is licensed lawfully to transact the type of reinsurance for which he is appointed;  (4) without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds fifty thousand dollars or one percent of the reinsurer's policyholder's surplus as of December thirty-first of the last completed calendar year, whichever is less;  (5) collect payment from a retrocessionaire or commit the reinsurer to a claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be forwarded to the reinsurer within ten days;  (6) jointly employ an individual who is employed by the reinsurer unless the reinsurance intermediary-manager is under common control with the reinsurer subject to the Insurance Holding Company Regulatory Act;  (7) appoint a reinsurance intermediary-submanager.  HISTORY: 1992 Act No. 332, Section 1.
 (A) A reinsurer may not engage the services of a person, a firm, an association, or a corporation to act as a reinsurance intermediary-manager on its behalf unless the person is licensed as required by Section 38-46-30.  (B) The reinsurer annually shall file with the department not later than June first a copy of statements of the financial condition of each reinsurance intermediary-manager, which the reinsurer has engaged, prepared by an independent certified accountant in a form acceptable to the director or his designee.  (C) If a reinsurance intermediary-manager establishes loss reserves, the reinsurer annually shall obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the reinsurance intermediary-manager. The opinion must be filed not later than June first. This opinion is in addition to other required loss reserve certification.  (D) Binding authority for all retrocessional contracts or participation in reinsurance syndicates rests with an officer of the reinsurer who must not be affiliated with the reinsurance intermediary-manager.  (E) Within thirty days of termination of a contract with a reinsurance intermediary-manager, the reinsurer shall provide written notification of termination to the department.  (F) A reinsurer may not appoint to its board of directors an officer, a director, an employee, a controlling shareholder, or a subproducer of its reinsurance intermediary-manager. This subsection does not apply to relationships governed by the Insurance Holding Company Regulatory Act or, if applicable, the Broker Controlled Insurer Act.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 677; 2019 Act No. 6 (S.360), Section 7.B, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 7.B, in (B), substituted "not later than June" for "not later than March"; and in (C), in the second sentence, substituted "not later than June first" for "not later than March first".
 (A) An individual commonly called an adjuster, adjusting losses for an insurer licensed to do business in this State, must be licensed by the director or his designee. These individuals shall apply for a license on a form prescribed by the director or his designee. The director or his designee shall satisfy himself that each applicant for an adjuster's license is an individual of good moral character, has sufficient knowledge of the insurance business and his duties as an adjuster, has not violated the insurance laws of the State, and is a fit and proper individual for the position. No license may be issued to a nonresident adjuster who resides in a state refusing to license South Carolina adjusters.  (B) The following individuals are exempt from licensure as an adjuster:  (1) A producer licensed under Chapter 43 is not required to comply with this section.  (2) An individual who, for portable electronics insurance, collects claim information from, or furnishes claim information to, insureds or claimants and who conducts data entry, including entering data into an automated claims adjudication system, provided that no more than twenty-five such persons are under the supervision of a licensed adjuster or a licensed producer who is otherwise exempt from licensure pursuant to item (1).  (C) For purposes of this section, "automated claims adjudication system" means a preprogrammed computer system designed for the collection, data entry, calculation, and final resolution of portable electronics insurance claims that:  (1) only may be used by a licensed adjuster, licensed producer, or supervised individuals operating pursuant to this paragraph;  (2) must comply with all claims payment requirements of the insurance code; and  (3) must be certified as compliant with this section by a licensed independent adjuster who is an officer of the entity or an affiliate of the entity that employs an individual operating pursuant to this section.  (D) If the insured's claim is denied and the insured contests the denial, an individual licensed under this section must review the denial with the insured.  HISTORY: Former 1976 Code Section 38-47-10 [1947 (45) 322; 1952 Code Section 37-201; 1962 Code Section 37-201] recodified as Section 38-45-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-49-10 [1947 (45) 322; 1952 Code Section 37-221; 1962 Code Section 37-221] recodified as Section 38-47-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 681; 2012 Act No. 281, Section 1, eff June 26, 2012.
 When an individual applies for an adjuster's license he shall supply the department his business, email, and residential addresses. The adjuster shall notify the department within thirty days of any change in these addresses.  HISTORY: 1988 Act No. 327, Section 3; 1993 Act No. 181, Section 681; 2016 Act No. 194 (H.4817), Section 5, eff May 26, 2016.  Effect of Amendment  2016 Act No. 194, Section 5, inserted ", email," and substituted "residential addresses" for "residence address".
 The director or his designee may enter into reciprocal agreements with the insurance commissioners of other states in regard to licensing of nonresident adjusters if in his judgment such arrangements or agreements are in the best interest of the state and if the applicant for an adjuster's license meets the minimum statutory requirements of this State for the issuance of a license. However, the director or his designee may not enter into or continue any reciprocal agreement unless the other state is just as liberal as this State in licensing nonresident adjusters.  HISTORY: Former 1976 Code Section 38-47-20 [1947 (45) 322; 1952 Code Section 37-202; 1962 Code Section 37-202] recodified as Section 38-45-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-49-20 [1957 (50) 534; 1962 Code Section 37-221.1] recodified as Section 38-47-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 681.
 The fee for an adjuster's license is eighty dollars payable in advance and fully earned when received, not refundable, transferable, nor proratable. However, when the laws of another state of the United States require South Carolina adjusters to pay a license fee greater than the fee required in this State of nonresident adjusters, the nonresident adjuster shall pay an amount equal to the amount of charges imposed by the laws of his state upon adjusters of this State.  HISTORY: Former 1976 Code Section 38-47-30 [1947 (45) 322; 1952 Code Section 37-203; 1960 (51) 1646; 1962 Code Section 37-203; 1969 (56) 240; 1970 (56) 2497; 1981 Act No. 11, Section 1; 1981 Act No. 44, Section 1] recodified as Sections 38-45-20 and 38-45-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-49-30 [1947 (45) 322; 1952 Code Section 37-222; 1962 Code Section 37-222; 1981 Act No. 44 Section 2] recodified as Section 38-47-30 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11M; 1993 Act No. 181, Section 681.
 An adjuster's license is for an indefinite term unless sooner revoked or suspended if the biennial license fee is paid at the time and in the manner which the department provides by regulation. If the license fee for an adjuster is not received when due, the license must be canceled. If the license is to be reinstated, an original application must be filed and a reinstatement fee equal to the biennial license fee unpaid must be paid in addition to the regular biennial license fee.  HISTORY: Former 1976 Code Section 38-47-40 [1947 (45) 322; 1952 Code Section 37-203.1; 1962 Code Section 37-203.1] recodified as Section 38-45-30 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-1-60 [1979 Act No. 63] and 38-49-30 [1947 (45) 322; 1952 Code Section 37-222; 1962 Code Section 37-222] recodified as Section 38-47-40 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11N. 181, Section 681.
 Adjusters are declared to be acting as the agents for the company or companies represented by them in the adjustment of any loss.  HISTORY: Former 1976 Code Section 38-47-50 [1957 (50) 534; 1962 Code Section 37-203.2] recodified as Section 38-45-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-49-50 [1947 (45) 322; 1952 Code Section 37-224; 1962 Code Section 37-225] recodified as Section 38-47-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 681.
 (1) This chapter may not be construed to prevent an executive officer of an insurer, an employee of an insurer handling claims, the duly designated attorney, or producer authorized and acting for subscribers to reciprocal insurers with respect to residential property insurance from adjusting food spoilage claim loss or damages under any insurance contract of such insurer in which the amount of coverage for the applicable type of loss is contractually limited to five hundred dollars or less.  (2) Such officer, employee, attorney, or producer is not required to have an adjuster's license to adjust food spoilage claims referenced in this section. If any such officer, employee, attorney, or producer in connection with the adjustment of any such food spoilage claim, loss, or damage engages in improper claims practices pursuant to the provisions of Chapter 59 or violates any other provision of this title, the director or his designee may suspend or revoke the insurer's certificate of authority.  HISTORY: 2019 Act No. 6 (S.360), Section 1, eff July 1, 2019.
 It is unlawful for a person to:  (1) act as adjuster on a contract made other than as authorized by the laws of this State or made by an insurer who is not regularly licensed to do business in this State; or  (2) adjust or aid in the adjustment, either directly or indirectly, of a claim arising under a contract of insurance not authorized by the laws of this State.  A person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years, or both.  HISTORY: Former 1976 Code Section 38-47-60 [1947 (45) 322; 1952 Code Section 37-206; 1962 Code Section 37-206] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-49-60 [1947 (45) 322; 1952 Code Section 37-226; 1962 Code Section 37-226] recodified as Section 38-47-60 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 21; 1993 Act No. 184, Section 216; 1993 Act No. 181, Section 681.
 When the director or his designee determines after investigation that there has been a violation of this title by an adjuster, upon ten days' notice, he may impose the penalties provided in Section 38-2-10.  HISTORY: Former 1976 Code Section 38-47-70 [1947 (45) 322; 1952 Code Section 37-207; 1962 Code Section 37-207; 1978 Act No. 585 Section 2; 1981 Act No. 11, Section 2] recodified as Section 38-45-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-49-70 [1947 (45) 322; 1952 Code Section 37-223; 1962 Code Section 37-223] recodified as Section 38-47-70 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 22; 1993 Act No. 181, Section 681.  
 As used in this chapter:  (1) "Public insurance adjuster" means any individual who, for salary, fee, commission, or other compensation, engages in public adjusting and who is licensed under Section 38-48-20. A public insurance adjuster is not an attorney licensed to practice by the South Carolina Supreme Court who adjusts insurance losses in the course of the practice of law. A public insurance adjuster is not an adjuster representing an insurer and is not licensed in accordance with the provisions of Chapter 47.  (2) "Public adjusting" means investigating, appraising or evaluating, and reporting to an insured in relation to a first party claim arising under insurance contracts, that insure the real or personal property, or both, of the insured. Public adjusting does not include acting in any manner in relation to claims for damages to or arising out of the operation of a motor vehicle. Public adjusting does not include any activities which may constitute the unauthorized practice of law. Nothing in this chapter shall be construed as permitting the unauthorized practice of law.  HISTORY: 2000 Act No. 380, Section 1.
 All advertising by a public adjuster shall fairly and accurately describe the services to be rendered and shall not misrepresent either the public adjuster or the public adjuster's abilities and shall comply with the following requirements:  (a) Advertisements must comply with all the requirements of Title 38 and the Unfair Trade Practices law.  (b) All advertisements must state the full name of the public adjuster and the public adjuster's firm, if applicable, and the complete business address and phone numbers.  (c) Advertisements shall not create an unjust expectation about results the public adjuster can achieve.  HISTORY: 2000 Act No. 380, Section 1.
 The insured shall have until the close of business on the fifth business day after signing the contract to rescind the agreement. The exercise of the right to rescind the agreement must be in writing and delivered to the public adjuster at the address shown on the agreement.  If the insured property that is the subject of the claim is not the primary residence of the insured or used by the insured primarily for personal, family, or household purposes, the insured may waive the right to rescind the agreement. The waiver shall be in writing and signed and dated by the insured.  HISTORY: 2000 Act No. 380, Section 1.
 Every public adjuster shall maintain all records of losses and claims adjusted for three years after the settlement or closing of each claim.  HISTORY: 2000 Act No. 380, Section 1.
 It is unlawful for a person to:  (a) act as a public adjuster on a contract made other than as authorized by the laws of this State or made by an insurer who is not licensed to do business in this State; or  (b) adjust or aid in the adjustment, either directly or indirectly, of a claim arising under a contract of insurance not authorized by the laws of this State; or  (c) engage in the unauthorized transaction of insurance business as defined in this article and Chapter 25; or  (d) act as both a contractor and a public adjuster in the adjustment of a claim for an insured; or  (e) violate any provision of this title.  A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years, or both.  HISTORY: 2000 Act No. 380, Section 1.
 When the director or his designee determines after investigation that there has been a violation of this chapter by a public adjuster, the director or his designee, after providing notice and an opportunity for a hearing in accordance with the Administrative Procedures Act, may impose penalties provided for in Section 38-2-10.  HISTORY: 2000 Act No. 380, Section 1.
 Any provision of this statute that is deemed to be void, unenforceable, unconstitutional, or illegal by any court of competent jurisdiction shall be deemed severable and shall not affect the constitutionality, enforceability, or legality of the remaining provisions. The remaining provisions shall continue in full force and effect.  HISTORY: 2000 Act No. 380, Section 1.
 The Department of Insurance shall promulgate regulations necessary to carry out the provisions of this chapter.  HISTORY: 2000 Act No. 380, Section 1.  
 Every individual commonly called a public adjuster, adjusting losses for an insured, must be licensed by the director or his designee. These individuals shall apply for a license on a form prescribed by the director or his designee. The written examination for a public adjuster license shall be the same as that prescribed for insurance adjusters. The director or his designee shall satisfy himself that each applicant for a public adjuster's license is an individual of good moral character, has sufficient knowledge of the insurance business and duties as a public adjuster, has not violated the insurance laws of the State, and is a fit and proper individual for the position. No license may be issued pursuant to reciprocal arrangements or agreements as provided in Section 38-48-40 to a nonresident public adjuster who resides in a state which has enacted a statute requiring the licensing of public adjusters and which refuses to license South Carolina public adjusters; however, a license may be issued to such applicants upon a successful completion of the examination for public adjusters prescribed by the director or his designee. Only licensed public adjusters may solicit business from an insured who has sustained an insured loss. Individuals engaged in providing public adjusting services without a license shall be deemed to be engaged in unauthorized transaction of insurance business and subject to the remedies provided in Chapter 25, as well as the disgorgement of fees or restitution to the insured for any fees paid.  HISTORY: 2000 Act No. 380, Section 1.
 When an individual applies for a public adjuster's license, he shall supply the department his business, email, and residential addresses and telephone numbers. The public adjuster shall notify the department within thirty days of any change in these addresses.  HISTORY: 2000 Act No. 380, Section 1; 2016 Act No. 194 (H.4817), Section 6, eff May 26, 2016.  Effect of Amendment  2016 Act No. 194, Section 6, inserted ", email," and substituted "residential addresses" for "residence address".
 The director or his designee may enter into reciprocal agreements with the insurance commissioners or directors of other states in regard to licensing of nonresident public adjusters if in his judgment these arrangements or agreements are in the best interests of the State and if the applicant for a public adjuster's license meets the minimum statutory requirements in this State for the issuance of a license.  HISTORY: 2000 Act No. 380, Section 1.
 The biennial fee for a public adjuster's license is eighty dollars payable in advance and fully earned when received, not refundable, transferable, nor proratable. However, when the laws of another state of the United States required in this State of nonresident public adjusters, the nonresident public adjusters shall pay an amount equal to the amount of charges imposed by the laws of this State upon public adjusters of this State.  HISTORY: 2000 Act No. 380, Section 1.
 A public adjuster's license is for an indefinite term, unless sooner revoked or suspended, if the biennial license fee is paid at the time and in the manner which the department provides by regulation. If the license fee for a public adjuster is not received when due, the license must be canceled. If the license is to be reinstated, an original application must be filed and a reinstatement fee equal to the biennial license fee unpaid must be paid in addition to the regular biennial license fee.  HISTORY: 2000 Act No. 380, Section 1.
 Public insurance adjusters are declared to be acting as the agents of the insureds they represent in the adjustment of any loss. A public insurance adjuster shall:  (a) be honest and fair in all communications with the insured and with the insurer or its representatives;  (b) have no financial interests in any aspect of the insured's claim, other than the salary, fee, commission, or other compensations that may be established in the written contract between the insured and the public insurance adjuster;  (c) not refer or direct any insured needing repairs or other services in connection with a loss to any person with whom the public insurance adjuster has a financial interest; nor to any person who will or is reasonably anticipated to provide the public adjuster any direct or indirect compensation for the referral of any resulting business;  (d) not prevent or attempt to dissuade an insured from communicating with an insurer, the insurer's adjuster, an independent adjuster representing the insurer, an attorney, or any other person regarding the settlement of the insured's claim;  (e) not engage in any conduct which constitutes the unauthorized practice of law;  (f) not acquire any interest in salvage of property subject to his contract, except with the express written permission of the insured, after settlement with the insurer;  (g) not solicit or enter into any agreement for the repair or replacement of damaged property on which the public adjuster has been engaged to adjust or settle claims; and  (h) not offer or provide advice as to whether the insured's claim is covered by the insured's contract with the insurer.  HISTORY: 2000 Act No. 380, Section 1.
 Any agreement between the insured and the public insurance adjuster for the services described in this chapter shall be in writing and signed by both parties. The contract shall:  (a) state the full consideration for the public adjuster's services;  (b) specify in bold and conspicuous language that the consideration, compensation, commission, fee, percentage, or salary due to the public adjuster shall be paid by the insured from any sums the public adjuster assists the insured in recovering and not paid by the insurer;  (c) legibly state the full name and address as specified in the department's record of the licensed public adjuster;  (d) state the insured's full name and street address, the address and description of the loss, and the name of the insured's insurance company and policy number;  (e) disclose to the insured in bold, conspicuous language that (1) it is not necessary for the insured to hire a public adjuster; (2) the insured has the right to communicate directly with the insurer, the insurer's adjuster(s), the insured's counsel, or counsel for the insurer; and (3) the public adjuster is not an agent or employee of the insurer;  (f) show the date on which the contract was signed by both parties;  (g) clearly and conspicuously disclose the insured's right to rescind the contract within five working days or otherwise cancel it as provided by South Carolina law; and  (h) clearly and conspicuously outline the services to be provided by the public adjuster to the insured.  Promptly after the contract of the insured with the public adjuster has been executed, and after the time to rescind has elapsed, the public adjuster shall give written notice to the insurer or its adjuster or representative that the public adjuster has entered into a written contract with the insured.  HISTORY: 2000 Act No. 380, Section 1.
 (A) No public adjuster shall compensate or provide anything of value except as provided in Section 38-57-160 to a person who is not licensed as a public adjuster in return for the referral of a business prospect to the public adjuster; provided, however, a public adjuster may enter into an agreement with another licensed public adjuster for the referral of business and sharing of commissions or compensation. Such an arrangement must be disclosed to the insured in the written agreement.  (B) No public adjuster shall represent or act as an adjuster representing an insurance company, either as an employee of the insurer or as an independent adjuster. No independent adjuster or adjuster licensed in accordance with the provisions of Chapter 47 shall act as a public insurance adjuster.  HISTORY: 2000 Act No. 380, Section 1.
 As used in this chapter, "motor vehicle physical damage appraiser" means a person, partnership, association, or corporation which practices as a business the appraising of damages to motor vehicles insured under automobile physical damage policies or on behalf of third party claimants.  HISTORY: Former 1976 Code Section 38-49-10 [1947 (45) 322; 1952 Code Section 37-221; 1962 Code Section 37-221] recodified as Section 38-47-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 56-13-10 [1962 Code Section 46-750.91; 1972 (57) 2527] recodified as Section 38-49-10 by 1987 Act No. 155, Section 1.
 No person may act as an appraiser for motor vehicle physical damage claims on behalf of an insurer or firm or corporation engaged in the adjustment or appraisal of motor vehicle claims unless he has secured first a license from the director or his designee and has paid a biennial license fee of eighty dollars fully earned when received, not refundable, transferable, nor proratable. The department may prescribe reasonable regulations concerning standards for qualification, suspension, or revocation of licenses and the methods by which licensees shall conduct their business.  HISTORY: Former 1976 Code Section 38-49-20 [1957 (50) 534; 1962 Code Section 37-221.1] recodified as Section 38-47-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 56-13-20 [1962 Code Section 46-750.92; 1972 (57) 2527] recodified as Section 38-49-20 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11O; 1993 Act No. 181, Section 682.
 When an individual applies for a motor vehicle physical damage appraiser's license he shall supply the department his business, email, and residential addresses. The appraiser shall notify the department within thirty days of any change in these addresses.  HISTORY: 1988 Act No. 327, Section 4; 2016 Act No. 194 (H.4817), Section 7, eff May 26, 2016.  Effect of Amendment  2016 Act No. 194, Section 7, inserted ", email,", substituted "residential addresses" for "residence address", and twice substituted "department" for "Department".
 If the biennial continuation license fee for an appraiser is not received when due, the license must be canceled. If the license is to be reinstated, an original application must be filed and a reinstatement fee equal to the biennial license fee unpaid must be paid in addition to the regular biennial license fee.  HISTORY: Former 1976 Code Section 38-49-30 [1947 (45) 322; 1952 Code Section 37-222; 1962 Code Section 37-222; 1981 Act No. 44 Section 2] recodified as Section 38-47-30 by 1987 Act No. 155, Section 1; New Section 38-49-30 enacted by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11P.
 Any person who violates this chapter is guilty of a misdemeanor and must, upon conviction, be fined an amount not to exceed five hundred dollars or imprisoned for a period not to exceed one year, or both.  HISTORY: Former 1976 Code Section 38-49-40 [1947 (45) 322; 1952 Code Section 37-225; 1962 Code Section 37-224; 1976 Act No. 612 Section 3] recodified as Section 38-47-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 56-13-40 [1962 Code Section 46-750.94; 1972 (57) 2527] recodified as Section 38-49-40 by 1987 Act No. 155, Section 1.  
 Every insurer doing business in this State must be licensed and supervised by the director or his designee, with the following exceptions:  (a) Without excluding other activities which may not constitute doing business in this State, a foreign or alien insurer is not considered to be doing business in this State, for purposes of this chapter, or Chapter 7, 13, 25, or 27, solely by reason of carrying on in this State any one or more of the following activities:  (1) Maintaining bank accounts.  (2) Creating or acquiring evidences of debt, mortgages, or liens on real or personal property, and enforcing rights in connection therewith in any action or proceeding, whether judicial, administrative, or otherwise.  (3) Owning and controlling a subsidiary corporation incorporated in or transacting business within this State.  (b) [Reserved]  HISTORY: 1947 (45) 322; 1952 Code Section 37-101; 1962 Code Section 37-101; 1964 (53) 1796; 1976 Code Section 38-5-10; 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 No foreign or alien insurer may be licensed to do business in this State when its name is identical with that of any active insurer previously licensed to do business in this State which has engaged in business therein for one year or more. No foreign or alien insurer may be licensed to do business in this State when its name is so nearly similar to that of any active insurer previously licensed to do business in this State which has engaged in business therein for one year or more so as to lead to confusion and uncertainty.  HISTORY: Former 1976 Code Section 38-5-100 [1962 Code Section 37-106.1; 1971 (57) 314] recodified as Section 38-5-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-130 [1947 (45) 322; 1952 Code Section 37-108; 1962 Code Section 37-108] recodified as Section 38-5-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 It is unlawful for the Secretary of State to issue any charter or grant any amendments of charter to any insurer or permit any foreign or alien insurer to do business within this State without the written approval of the director or his designee.  HISTORY: Former 1976 Section 38-5-110 [1947 (45) 322; 1952 Code Section 37-107; 1962 Code Section 37-107] recodified as Section 38-5-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-140 [1947 (45) 322; 1952 Code Section 37-110; 1957 (50) 92; 1962 Code Section 37-110] recodified as Section 38-5-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 (A) The director or his designee shall revoke or suspend certificates of authority granted to an insurer and its officers and agents if he is of the opinion upon examination or other evidence that one or more of the following exist:  (1) The insurer is in an unsound condition.  (2) The insurer has not complied with the law or with the provisions of its charter.  (3) The officers or agents of an insurer refuse to submit to examination or to perform a legal obligation relative to an examination.  (4) The insurer has not complied with a lawful order of the director or his designee.  (5) The condition of the insurer renders the continuance of its business hazardous to the general public, its creditors, or its policyholders. The director or his designee may consider one or more of the following standards to determine whether the continued operation of an insurer transacting insurance business in this State is hazardous to the general public, its creditors, or its policyholders:  (a) adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports, or summaries;  (b) the National Association of Insurance Commissioners Insurance Regulatory Information System and its other financial analysis solvency tools and reports;  (c) whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts;  (d) whether the ability of an assuming reinsurer to perform and the reinsurance program of the insurer provides sufficient protection for the remaining surplus of the insurer after taking into account the cash flow of the insurer, the classes of business written, and the financial condition of the assuming reinsurer;  (e) whether the operating loss of the insurer in the immediately preceding twelve month period or less is greater than fifty percent of the remaining surplus of the insurer regarding policyholders in excess of the minimum required, provided that for the purposes of this section, the operating loss of an insurer includes, but is not limited to, net capital gain or loss, change in nonadmitted assets, and cash dividends paid to shareholders;  (f) whether the operating loss, excluding net capital gains, of the insurer in the immediately preceding twelve month period or less is greater than twenty percent of the remaining surplus of the insurer regarding policyholders in excess of the minimum required;  (g) whether a reinsurer, obligor, or any entity within the insurance holding company system of the insurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations, and which in the opinion of the director or his designee may affect the solvency of the insurer;  (h) contingent liabilities, pledges, or guaranties which individually or collectively involve a total amount which in the opinion of the director or his designee may affect the solvency of the insurer;  (i) whether a controlling person of an insurer is delinquent in the transmitting to or payment of net premiums to the insurer;  (j) the age and collectability of receivables;  (k) whether the management of an insurer, including officers, directors, or other people who directly or indirectly control the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation necessary to serve the insurer in that position;  (l) whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;  (m) whether management of an insurer has filed a false or misleading sworn financial statement, released a false or misleading financial statement to lending institutions or to the general public, made a false or misleading entry, or omitted an entry of a material amount in the books of the insurer;  (n) whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the director or his designee;  (o) whether the insurer has grown so rapidly and to an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;  (p) whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems;  (q) whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles, and standards of practice;  (r) whether management persistently engages in material underreserving that results in adverse development;  (s) whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity, or diversity to assure the ability of the insurer to meet its outstanding obligations as they mature; and  (t) any other finding determined by the director or his designee to be hazardous to the insurer's policyholders, creditors, or general public.  (B) For the purposes of making a determination of the financial condition of an insurer under this section, the director or his designee may:  (1) disregard any credit or amount receivable resulting from transactions with a reinsurer that is insolvent, impaired, or otherwise subject to a delinquency proceeding;  (2) make appropriate adjustments including disallowance to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates consistent with the NAIC Accounting Policies and Procedures Manual, state laws, and state regulations;  (3) refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; or  (4) increase the liability of the insurer in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next twelve month period.  (C) The department must publish notice of revocation and suspension in a newspaper of general circulation in this State. The insurer and its agents may not conduct any new business in this State while the default or disability continues and until the director or his designee restore the authority of the insurer to transact business in this State.  (D)(1) The insurer may request a hearing on an order or a decision made by the director or his designee pursuant to the provisions of this title. The insurer or other parties must be served with notice of the hearing stating the time and place of the hearing and the grounds upon which the director based the order; the hearing must occur not less than ten days nor more than thirty days following the notice and must be conducted at the offices of the South Carolina Department of Insurance unless otherwise designated by the director. The director or his designee shall hold all hearings in private unless the insurer requests a public hearing. After a hearing by the director or his designee, an order or a decision made, issued, or executed by the director or his designee is subject to review in accordance with Section 38-3-210 under the appellate procedures of the South Carolina Administrative Law Court, as provided by law.  (2) Notwithstanding the provisions of subsection (A), if the director or his designee determines that an insurer is in an unsound condition or in a hazardous condition as provided in subsection (A)(1) or (A)(5), he may issue an order requiring the insurer to:  (a) reduce the total amount of present and potential liability for policy benefits by reinsurance;  (b) reduce, suspend, or limit the volume of business being accepted or renewed;  (c) reduce general insurance and commission expenses by specified methods;  (d) increase the insurer's capital and surplus;  (e) suspend or limit the declaration and payment of dividends by an insurer to its stockholders or to its policyholders;  (f) file reports in a form acceptable to the director or his designee concerning the market value of an insurer's assets;  (g) limit or withdraw from certain investments or discontinue certain investment practices to the extent the director or his designee considers necessary;  (h) document the adequacy of premium rates in relation to the risks insured;  (i) file, in addition to regular annual statements, interim financial reports on the form adopted by the National Association of Insurance Commissioners or in a format approved by the director or his designee;  (j) correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the director or his designee;  (k) provide a business plan to the director or his designee in order to continue to transact business in the State; or  (l) adjust rates for any nonlife insurance product written by the insurer that the director or his designee considers necessary to improve the financial condition of the insurer, notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments.  (3) The order of the director or his designee may be limited to the extent provided by law if the insurer is a foreign insurer.  HISTORY: Former 1976 Code Section 38-5-120 [1962 Code Section 37-107.1; 1971 (57) 131] recodified as Section 38-5-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-160 [1947 (45) 322; 1952 Code Section 37-112; 1962 Code Section 37-112] recodified as Section 38-5-120 by 1987 Act No. 155, 1; 1988 Act No. 374, Section 3; 1991 Act No. 13, Section 5; 1992 Act No. 277, Section 1; 1993 Act No. 181, Section 53; 2009 Act No. 27, Section 2, eff June 2, 2009; 2013 Act No. 19, Section 1, eff April 23, 2013.
 The director or his designee may, in lieu of license revocation or suspension as provided by Section 38-5-120, impose a monetary penalty as provided in Section 38-2-10 for each violation or failure of compliance or refusal to submit or perform as prescribed therein. Series of acts by an insurer which merely implement a basic violation and are not separate and distinct violations of an independent nature are considered to be part of the basic violation and only one penalty may be imposed thereon.  HISTORY: Former 1976 Code Section 38-5-130 [1947 (45) 322; 1952 Code Section 37-108; 1962 Code Section 37-108] recodified as 38-5-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-165 [1962 Code 37-112.1; 1977 Act No. 61] recodified as Section 38-5-130 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 4; 1993 Act No. 181, Section 533.
 Unless the grounds for revocation relate only to the financial condition or soundness of the insurer or to a deficiency in its assets, the director or his designee shall notify the insurer not less than thirty days before revoking its authority to do business in this State and he must specify in the notice the particulars of the alleged violation of the law or its charter or grounds for revocation and a proper opportunity must be offered the insurer to be heard.  HISTORY: Former 1976 Code Section 38-5-140 [1947 (45) 322; 1952 Code Section 37-110; 1957 (50) 92; 1962 Code Section 37-110] recodified as Section 38-5-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-170 [1947 (45) 322; 1952 Code Section 37-113; 1962 Code Section 37-113] recodified as Section 38-5-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 While the certificate of authority is suspended, no domestic insurer or any of its officers may pay out any funds belonging to the insurer without first receiving the director's or his designee's approval.  HISTORY: Former 1976 Code Section 38-5-150 [1947 (45) 322; 1952 Code Section 37-111; 1962 Code Section 37-111] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-180 [1947 (45) 322; 1952 Code Section 37-114; 1962 Code Section 37-114] recodified as Section 38-5-150 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 If he considers it necessary, the director or his designee may apply to a judge of the circuit court to issue an injunction restraining a domestic insurer whose certificate of authority has been suspended, in whole or in part, from proceeding further with its business. The judge may immediately issue the injunction and, upon notice and after a full hearing of the matter, may (a) dissolve or modify the injunction or make it permanent, (b) make all orders and judgments necessary in the matter, and (c) appoint agents or a receiver to take possession of the property and effects of the insurer and to settle its affairs, subject to any rules and orders the court prescribes.  HISTORY: Former 1976 Code Section 38-5-160 [1947 (45) 322; 1952 Code Section 37-112; 1962 Code Section 37-112] recodified as Section 38-5-120 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-190 [1947 (45) 322; 1952 Code Section 37-115; 1962 Code Section 37-115] recodified as Section 38-5-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 The certificate of authority, agents' appointments and licenses, rates, and other items which the director or his designee may allow which are in existence at the time any insurer licensed to transact the business of insurance in this State transfers its corporate domicile to this or any other state by merger, consolidation, or any other lawful method shall continue in effect upon such transfer if the insurer remains duly qualified to transact the business of insurance in this State. All outstanding policies of any transferring insurer shall remain in effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the director or his designee. Every transferring insurer shall file new policy forms with the department on or before the effective date of the transfer but may use existing policy forms with appropriate endorsements if allowed by, and under conditions as approved by, the director or his designee. Every transferring insurer shall notify the director or his designee of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the department.  HISTORY: Former 1976 Code Section 38-5-170 [1947 (45) 322; 1952 Code Section 37-113; 1962 Code Section 37-113] recodified as Section 38-5-140 by 1987 Act No. 155, Section 1; New Section 38-5-170 enacted by 1987 Act No. 8, Section 1; 1993 Act No. 181, Section 533.
 No insurer may operate from a location within South Carolina unless it is licensed as an insurer as provided in Section 38-5-10, or permitted to operate as an approved reinsurer as provided in Section 38-5-60, or qualified to operate as an eligible surplus lines insurer as provided in Section 38-45-90.  HISTORY: 1994 Act No. 372, Section 2.
 Any member of South Carolina Property and Casualty Insurance Guaranty Association or South Carolina Life and Accident and Health Guaranty Association, any eligible surplus lines insurer, any insurance premium service company, any authorized reinsurer, any title insurance company, any licensed adjuster, any licensed insurance agent, any licensed insurance broker, any insurance rating or statistical agent, South Carolina Reinsurance Facility, South Carolina Wind and Hail Underwriting Association, South Carolina Property and Casualty Insurance Guaranty Association, South Carolina Health Insurance Pool, South Carolina Commercial Auto Insurance Plan, South Carolina Medical Malpractice Joint Underwriting Association, South Carolina Workers' Compensation Commission, Second Injury Fund, South Carolina Department of Insurance, or South Carolina State Fiscal Accountability Authority Insurance Reserve Fund may cause records relating to policy applications, changes, refunds, terminations, claims, or premium payments kept by the insurer, premium service company, adjuster, agent, or broker to be copied or reproduced by:  (1) photostatic, photographic, or microfilming process; or  (2) electronic or graphic imaging through scanning, digitizing, or other means.  These processes or means must correctly copy, reproduce, or form a medium for copying or reproducing the original record so that an accurate facsimile of the original can be printed or otherwise reproduced on paper, film, or similar medium. The printed reproduction must be considered an original record for all purposes and must be treated as an original record in all courts or administrative agencies for the purpose of its admissibility into evidence, regardless of whether the institution retains or disposes of the original; provided, that:  (a) the original document otherwise qualifies as a business record pursuant to the South Carolina Uniform Business Records as Evidence Act or the appropriate state or federal rules of evidence; and  (b) a custodian or other qualified witness, as those terms are used in the appropriate state or federal rules of evidence, certifies that the printed reproduction is a true and correct copy of the original.  The Director of the Department of Insurance may, by order, apply the provisions of this section to any additional insurance or insurance-related organizations or entities or insurance or insurance-related records, as the director in his discretion considers necessary.  HISTORY: 1996 Act No. 397, Section 1.  Code Commissioner's Note  At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1), effective July 1, 2015.
 A charitable, religious, benevolent, or educational corporation, not operating for profit and in active operation for at least five years, may receive transfers of property conditioned upon its agreement to pay an annuity or lump-sum benefit to the transferor or his nominee without being subject to the insurance laws of this State. No corporation operating for profit, including nursing homes or any other type of business, is permitted to issue charitable or gift annuities without the director's or his designee's approval.  HISTORY: Former 1976 Code Section 38-5-20 [1962 Code Section 37-109; 1964 (53) 2051; 1968 (55) 2497; 1979 Act No. 40, Section 1; 1979 Act No. 120, Section 1] recodified as Sections 38-1-20, 38-5-30, and 38-75-510 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-1-40 [1962 Code Section 37-4; 1967 (55) 399; 1981 Act No. 182] recodified as Section 38-5-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 (A) An insurer, its agent, or an insurance broker doing business in this State may not require a person to use a particular insurance premium finance company or other installment plan for which a finance charge or other fee in connection with an installment payment has been or will be imposed.  (B) An insurer, its agent, or an insurance broker doing business in this State may not refuse to issue a policy of insurance solely because the premiums for the policy have been advanced by a premium finance company licensed in this State.  (C) An insurer or its agent doing business in this State shall not reduce commission or intimidate or retaliate against a producer, agent, broker, or insured who uses premium financing by denying the producer, agent, broker, or insured the same rights accorded producers, agents, brokers, or insureds who pay premiums in a different manner.  HISTORY: 1997 Act No. 154, Section 24.  
 The director or his designee may license insurers, subject to other requirements of existing insurance laws, to transact the following kinds of insurance in this State:  (a) life insurance and annuities;  (b) accident and health insurance;  (c) property insurance;  (d) casualty insurance;  (e) surety insurance;  (f) marine insurance;  (g) title insurance;  (h) multiple lines insurance, meaning any two or more of the kinds of insurance listed in items (b), (c), (d), (e), and (f).  Each license issued is for an indefinite term unless revoked or suspended.  HISTORY: Former 1976 Code Section 38-5-30 [1962 Code Section 37-109.1; 1964 (53) 2051] recodified as Section 38-5-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-20 [1962 Code Section 37-109; 1964 (53) 2051; 1968 (55) 2407; 1979 Act No. 40, Section 1] and former Section 38-5-210 [1986 Act No. 540, Part II, Section 31 (H)] recodified as Section 38-5-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533; 2002 Act No. 228, Section 2, eff May 1, 2002.
 No life insurer may be licensed to write any other kinds of insurance listed in Section 38-5-30 except accident and health insurance. However, any life insurer licensed to transact other kinds of insurance immediately prior to March 18, 1964, shall continue to be so licensed if otherwise qualified.  HISTORY: Former 1976 Code Section 38-5-40 [1962 Code Section 37-109.2; 1964 (53) 2051] recodified as Section 38-5-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-30 [1962 Code Section 37-109.1; 1964 (53) 2051] recodified as Section 38-5-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 No insurer licensed to write any of the kinds of insurance listed in items (c), (d), (e), (f), (g), and (h) of Section 38-5-30 may be licensed to write life insurance. However, any life insurer licensed to transact other kinds of insurance immediately prior to March 18, 1964, shall continue to be so licensed if otherwise qualified.  HISTORY: Former 1976 Code Section 38-5-50 [1947 (45) 322; 1952 Code Section 37-102; 1962 Code Section 37-102] recodified as Section 38-5-80 and Section 38-5-90 by 1987 Act No. 155 Section 1; Former 1976 Code Section 38-5-40 [1962 Code Section 37-109.2; 1964 (53) 2051] recodified as Section 38-5-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 For purposes of calculating deductions for reserves, insurers not licensed in this State may be approved as reinsurers by the director or his designee for an indefinite term only if:  (1) Upon initial application a fee of four hundred dollars is enclosed, and, every two years after that time, a fee of four hundred dollars is paid by March first.  (2) There is filed with the department a power of attorney approved as to form by the director or his designee and authorizing the director to accept service of process in behalf of the reinsurer.  (3) There is filed with the department the reinsurer's annual statement and the reinsurer's most recent report of examination, and after that time each annual statement and report of examination is filed.  (4) The reinsurer meets the capital and surplus requirements of South Carolina law with respect to the lines to be reinsured.  HISTORY: Former 1976 Code Section 38-5-60 [1947 (45) 322; 1952 Code Section 37-103; 1962 Code Section 37-103] recodified as Section 38-5-80 and Section 38-5-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-770 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1958 (50) 1608; 1960 (51) 1554; 1962 Code Section 37-188; 1964 (53) 1835; 1964 (53) 1835; 1969 (56) 210; 1975 (59) 182; 1978 Act No. 601; 1979 Act No. 18; 1982 Act No. 373] recodified as Section 38-5-60 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11C; 1993 Act No. 181, Section 533.
 Every insurer shall, before being licensed, appoint in writing the director and his successors in office to be its true and lawful attorney upon whom all legal process in any action or proceeding against it must be served and in this writing shall agree that any lawful process against it which is served upon this attorney is of the same legal force and validity as if served upon the insurer and that the authority continues in force so long as any liability remains outstanding in the State. Copies of the appointment, certified by the director, are sufficient evidence of the appointment and must be admitted in evidence with the same force and effect as the original might be admitted.  HISTORY: Former 1976 Code Section 38-5-70 [1952 Code Section 37-104; 1947 (45) 322; 1962 Code Section 37-104] recodified as Section 38-5-80 and Section 38-5-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-80 [1947 (45) 322; 1952 Code Section 37-105; 1962 Code Section 37-105] recodified as Section 38-5-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533.
 Before granting the original certificate of authority or license to a domestic insurer to do business in this State, the director or his designee must be satisfied by proper evidence that:  (a) The insurer is duly qualified to transact business under the laws of this State.  (b) The insurer has filed with him an affidavit of its president or other chief officer that it has not violated this title in the past year and that it accepts the terms and obligations of this title as part of the consideration for license.  (c) The insurer pays all taxes and performs all duties required by law.  (d) The reserves of the insurer are adequate for the protection of policyholders of this State.  (e) The insurer's directors and officers are competent, trustworthy, and have a good business reputation and that none of the directors and officers have been convicted of a crime in any jurisdiction involving fraud, dishonesty, or like moral turpitude or convicted of violating an insurance statute of any jurisdiction.  (f) The insurer has employed one or more persons residing in this State with adequate experience and training to manage properly its business and affairs.  (g) The insurer has not entered into any management contract, agency agreement, or other agreement which may materially affect its financial condition so as to render its proceedings hazardous to the public or to its policyholders.  (h) The insurer has made adequate reinsurance arrangements if required.  (i) The insurer's proposed method of operation, when considered in light of its financial condition and the absence of any prior operating experience, will not likely render its proceedings hazardous to the public or to its policyholders.  (j) The reserve basis to be used by the insurer will be adequate for the protection of policyholders in this State.  (k) The insurer's principal place of business and primary executive, administrative, and home offices and all original books and records of the insurer are located and maintained in this State. The provisions of this subsection apply to domestic health maintenance organizations. For purposes of this section, original books and records mean corporate bylaws, charters, articles of incorporation, and any other records deemed to constitute original records by the director or his designee. Insurers desiring to move business records or operations outside of the State shall apply to the director or his designee for approval. Approvals or denials of request to move records or operations fall within the discretion of the director or his designee. The director may also rescind approval of a request if in his discretion it is considered to be in the best interest of the consumers and citizens of the State. Insurers must comply with the records requirements of Section 38-5-190 and the requirements for domestic insurers set forth in this chapter. The director or his designee shall outline via bulletin or order the information required in such an application. Item (k) of this section does not apply to any domestic insurer whose primary executive, administrative, and home offices were located outside this State on July 1, 1987. If subsequently the director or his designee is of the opinion that a condition exists which would have prohibited him from issuing the original certificate of authority or license to the insurer, then that condition also constitutes a ground for license revocation under Section 38-5-120.  HISTORY: Former 1976 Code Section 38-5-80 [1947 (45) 322; 1952 Code Section 37-105; 1962 Code Section 37-105, recodified as Section 38-5-70 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-5-50 [1947 (45) 322; 1952 Code Section 37-102; 1962 Code Section 37-102], 38-5-60 [1947 (45) 322; 1952 Code Section 37-103; 1962 Code Section 37-103], 38-5-70 [1947 (45) 322; 1952 Code Section 37-104; 1962 Code Section 37-104], 38-5-90 [1947 (45) 322; 1952 Code Section 37-106; 1962 Code Section 37-106], and 38-5-100 [1962 Code Section 37-106.1; 1971 (57) 314] recodified as Section 38-5-80 by 1987 Act No. 155, Section 1; 1987 Act No. 8, Section 2; 1990 Act No. 364, Section 1; 1993 Act No. 181, Section 533; 2001 Act No. 82, Section 7, eff July 20, 2001.
 Before granting the original certificate of authority or license to a foreign or alien insurer to do business in this State, the director or his designee must be satisfied by proper evidence that:  (a) The insurer is duly qualified to transact business under the laws of this State.  (b) The insurer has filed with him an affidavit of its president or other chief officer that it has not violated this title in the past year and that it accepts the terms and obligations of this title as part of the consideration for license.  (c) The insurer pays all taxes and performs all duties required by law.  (d) The reserves of the insurer are adequate for the protection of policyholders of this State.  (e) The insurer's directors and officers are competent, trustworthy, and have a good business reputation.  (f) The insurer has employed one or more persons with adequate experience and training to manage properly its business and affairs relating to its policies in South Carolina.  (g) The insurer has not entered into any management contract, agency agreement, or other agreement which may materially affect its financial condition so as to render its proceedings hazardous to the public or to its policyholders.  (h) The insurer has made adequate reinsurance arrangements if required.  (i) The insurer's proposed method of operation, when considered in light of its financial condition and the absence of any prior operating experience, will not likely render its proceedings hazardous to the public or to its policyholders.  (j) The insurer is safe and solvent.  (k) The insurer's dealings are fair and equitable.  (l) The insurer conducts its business in a manner not contrary to the public interest.  If subsequently the director or his designee is of the opinion that a condition exists which would have prohibited him from issuing a certificate of authority or license to the insurer, then that condition also constitutes a ground for license revocation under Section 38-5-120.  HISTORY: Former 1976 Code Section 38-5-90 [1947 (45) 322; 1952 Code Section 37-106; 1962 Code Section 37-106, recodified as Section 38-5-80 and Section 38-5-90 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-5-50 [1947 (45) 322; 1952 Code Section 37-102; 1962 Code Section 37-102], 38-5-60 [1947 (45) 322; 1952 Code Section 37-103; 1962 Code Section 37-103], 38-5-70 [1947 (45) 322; 1952 Code Section 37-104; 1962 Code Section 37-104], 38-5-90 [1947 (45) 322; 1952 Code Section 37-106; 1962 Code Section 37-106], 38-5-110 [1947 (45) 322; 1952 Code Section 37-107; 1962 Code Section 37-107], and 38-5-120 [1962 Code Section 37-107.1; 1971 (57) 131] recodified as Section 38-5-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 533; 2000 Act No. 312, Section 2.
 As used in this chapter, "administrator" means any person who collects charges or premiums from, or who adjusts or settles claims on, residents of this State in connection with life or health insurance coverage or annuities other than:  (1) an employer on behalf of its employees or the employees of one or more subsidiaries or affiliated corporations of an employer;  (2) a union on behalf of its members;  (3) an insurer which is either licensed in this State or acting as an insurer with respect to a policy lawfully issued and delivered by it pursuant to the laws of a state in which the insurer was authorized to do insurance business, or a health maintenance organization licensed in this State;  (4) a life or health agent or broker licensed in this State whose activities are limited exclusively to the sale of insurance;  (5) a creditor on behalf of its debtors with respect to insurance covering a debt between the creditor and its debtors;  (6) a trust, its trustees, agents, and employees acting thereunder, established in conformity with 29 U.S.C. 186;  (7) a trust exempt from taxation under Section 501(a) of the Internal Revenue Code, its trustees, and employees acting thereunder, or a custodian, its agents and employees acting pursuant to a custodian account which meets the requirements of Section 401(f) of the Internal Revenue Code;  (8) a bank, credit union, or other financial institution which is subject to supervision or examination by federal or state banking authorities;  (9) a credit card issuing company which advances for and collects premiums or charges from its credit card holders who have authorized it to do so if the company does not adjust or settle claims;  (10) a person who adjusts or settles claims in the normal course of his practice or employment as an attorney at law and who does not collect charges or premiums in connection with life or health insurance coverage or annuities; or  (11) the South Carolina Life and Accident and Health Insurance Guaranty Association and any person who adjusts or settles claims as its employee or agent.  HISTORY: Former 1976 Code Section 38-51-10 [1947 (45) 322; 1952 Code Section 37-233; 1962 Code Section 37-233] recodified as Section 38-43-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-10 [1985 Act No. 133, Section 1] recodified as Section 38-51-10 by 1987 Act No. 155, Section 1; 1988 Act No. 379, Sections 1, 2.
 All claims paid by the administrator from funds collected on behalf of the insurer must be paid only on drafts of and as authorized by the insurer.  HISTORY: Former 1976 Code Section 38-51-100 [1947 (45) 322; 1952 Code Section 37-243; 1962 Code Section 37-243] recodified as Section 38-43-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-80 [1985 Act No. 133, Section 8] recodified as Section 38-51-100 by 1987 Act No. 155, Section 1.
 With respect to any policies where an administrator adjusts or settles claims, the compensation to the administrator with regard to these policies may in no way be contingent on claim experience. This section does not prevent the compensation of an administrator from being based on premiums or charges collected or number of claims paid or processed.  HISTORY: Former 1976 Code Section 38-51-110 [1947 (45) 322; 1950 (46) 2268; 1952 Code Section 37-236; 1962 Code Section 37-236; 1964 (53) 2290; 1967 (55) 704; 1969 (56) 633; 1985 Act No. 139, Section 6] recodified as Section 38-43-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-90 [1985 Act No. 133, Section 9] recodified as Section 38-51-110 by 1987 Act No. 155, Section 1.
 Where the services of an administrator are utilized, the administrator shall provide a written notice approved by the insurer to insured individuals, advising them of the identity of and relationship among the administrator, the policyholder, and the insurer.  HISTORY: Former 1976 Code Section 38-51-120 [1962 Code Section 37-236.1; 1972 (57) 2468] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-67-100 [1985 Act No. 133, Section 10] recodified as Section 38-51-120 by 1987 Act No. 155, Section 1.  
 No person may act as an administrator in this State without first being licensed by the director or his designee.  Any person who acts as an administrator without a license is guilty of a misdemeanor and, upon conviction, must be fined not more than ten thousand dollars or imprisoned for not more than two years, or both, and is subject to revocation of any insurance licenses issued by the director or his designee.  Application for a license must be upon forms prescribed by the director or his designee and must be accompanied by an initial license fee of one hundred dollars, annual financial statements or reports for the two preceding calendar years, and any other documents that the director or his designee may require to ensure that the administrator meets the requirements for licensure set forth in this section. Thereafter, the administrator shall pay to the department a license renewal fee of one hundred dollars by March first of each year.  Before granting any license, the director or his designee must be satisfied that the administrator is competent, trustworthy, financially responsible, has a good personal and business reputation, has not had an insurance license revoked, suspended, or denied in any jurisdiction within the preceding five years, and has not been convicted of a crime involving fraud, dishonesty, or moral turpitude in any jurisdiction. For purposes of this section, "convicted" includes a plea of guilty or a plea of nolo contendere.  The director or his designee may revoke or suspend any license issued to an administrator when he finds that any condition exists which would have prohibited issuance of the original license, that the administrator has violated any provision of this chapter, or that the administrator has deceived or dealt unjustly with the citizens of this State. In lieu of revocation or suspension of license, the director or his designee may impose an administrative monetary penalty not to exceed one thousand dollars for each offense.  HISTORY: Former 1976 Code Section 38-51-20 [1947 (45) 322; 1952 Code Section 37-231; 1957 (50) 280; 1962 Code Section 37-231; 1972 (57) 2468] recodified as Section 38-43-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-120 [1985 Act No. 133, Section 12] recodified as Section 38-51-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 683; 2018 Act No. 219 (H.4657), Section 7, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 7, made nonsubstantive changes in the second undesignated paragraph, and in the third undesignated paragraph, in the first sentence, inserted ", annual financial statements or reports for the two preceding calendar years, and any other documents that the director or his designee may require to ensure that the administrator meets the requirements for licensure set forth in this section" following "one hundred dollars".
 Every administrator shall file and maintain with the department 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 department 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 director or his designee deems appropriate. The director or his designee 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 director or his designee requires. The director or his designee 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 director or his designee deems appropriate, filed with the department must be in the amount of seventy-five thousand dollars for initial applicants. Upon renewal, the applicant shall submit a surety bond in an amount that represents ten percent of the total premiums handled or managed in South Carolina for the previous calendar year. The amount of the surety bond for renewal applications must not be less than seventy-five thousand dollars and may not exceed five hundred thousand dollars. All bonds must include a provision requiring a thirty-day advance notification of cancellation to the department. The bond must be on a form approved by the director or his designee. 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 director or his designee 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 director or his designee waive the bonding requirements of this section with respect to funds handled by the administrator on behalf of self-insured persons, groups, or entities.  HISTORY: Former 1976 Code Section 38-51-30 [1962 Code Section 37-231.1; 1964 (53) 2290] recodified as Section 38-43-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-110 [1985 Act No. 133, Section 11] recodified as Section 38-51-30 by 1987 Act No. 155, Section 1; 1988 Act No. 434; 1993 Act No. 181, Section 684; 2018 Act No. 219 (H.4657), Section 7, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 7, in the sixth sentence, inserted "for initial applicants" at the end, and inserted the seventh, eighth, and ninth sentences, relating to the submission of a surety bond for the renewal of an administrator's license.
 No administrator may act as such without a written agreement between the administrator and the insurer, and the written agreement must be retained as part of the official records of both the insurer and the administrator for the duration of the agreement and five years thereafter. The written agreement shall contain provisions which include the requirements of Sections 38-51-60 through 38-51-110, except insofar as those requirements do not apply to the functions performed by the administrator.  Where a policy is issued to a trustee, a copy of the trust agreement and any amendments thereto must be furnished to the insurer by the administrator and must be retained as part of the official records of both the insurer and the administrator for the duration of the policy and five years thereafter.  HISTORY: Former 1976 Code Section 38-51-40 [1948 (45) 1734; 1952 Code Section 37-232; 1962 Code Section 37-232] recodified as Section 38-43-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-20 [1985 Act No. 133, Section 2] recodified as Section 38-51-40 by 1987 Act No. 155, Section 1.
 Whenever an insurer utilizes the services of an administrator under the terms of a written agreement as required in Section 38-51-40, the payment to the administrator of any premiums or charges for insurance by or on behalf of the insured is considered to have been received by the insurer, and the payment of return premiums or claims by the insurer to the administrator is not considered payment to the insured or claimant until the payments are received by the insured or claimant. Nothing herein limits any right of the insurer against the administrator resulting from his failure to make payments to the insurer, insureds, or claimants.  HISTORY: Former 1976 Code Section 38-51-50 [1947 (45) 322; 1952 Code Section 37-234; 1960 (51) 1646; 1962 Code Section 37-234] recodified as Section 38-43-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-30 [1985 Act No. 133, Section 3] recodified as Section 38-51-50 by 1987 Act No. 155, Section 1.
 Every administrator shall maintain at its principal administrative office for the duration of the written agreement referred to in Section 38-51-40 and five years thereafter adequate books and records of all transactions among the administrator, insurers, and insured persons. The books and records must be maintained in accordance with prudent standards of insurance record keeping. The director or his designee shall have access to the books and records for the purpose of examination, audit, and inspection, and information from the records must be furnished to the director or his designee on demand. Any trade secrets contained therein, including, but not limited to, the identity and addresses of policyholders and certificate holders, are confidential, except that the director or his designee may use the information in any proceedings instituted against the administrator. The insurer shall retain the right to continuing access to the books and records of the administrator sufficient to permit the insurer to fulfill all of its contractual obligations to insured persons, subject to any restrictions in the written agreement between the insurer and administrator on the proprietary rights of the parties in such books and records.  HISTORY: Former 1976 Code Section 38-51-60 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-247; 1957 (50) 534; 1959 (51) 303; 1962 Code Section 37-247; 1964 (53) 2290; 1966 (54) 2666; 1981 Act No. 163, Section 1; 1986 Act No. 416] recodified as Section 38-43-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-40 [1985 Act No. 133, Section 4] recodified as Section 38-51-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 685.
 An administrator may use only the advertising pertaining to the business underwritten by an insurer as has been approved by the insurer in advance of its use.  HISTORY: Former 1976 Code Section 38-67-50 [1985 Act No. 133, Section 5] recodified as Section 38-51-70 by 1987 Act No. 155, Section 1.
 The agreement shall make provision with respect to the underwriting or other standards pertaining to the business underwritten by the insurer.  HISTORY: Former 1976 Code Section 38-51-80 [1947 (45) 322; 1952 Code Section 37-246; 1957 (50) 534; 1962 Code Section 37-246; 1964 (53) 2290; 1966 (54) 2666; 1967 (55) 132] recodified as Section 38-43-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-60 [1985 Act No. 133, Section 6] recodified as Section 38-51-80 by 1987 Act No. 155, Section 1.
 All insurance charges or premiums collected by an administrator on behalf of or for an insurer and return premiums received from the insurer must be held by the administrator in a fiduciary capacity. The funds must be immediately remitted to the person entitled thereto or deposited promptly in a fiduciary bank account established and maintained by the administrator. If charges or premiums so deposited are collected on behalf of or for more than one insurer, the administrator shall cause the bank in which the fiduciary account is maintained to keep records clearly recording the deposits in and withdrawals from the account on behalf of or for each insurer. The administrator shall promptly obtain and keep copies of all records and, upon request of an insurer, furnish the insurer with copies of the records pertaining to deposits and withdrawals on behalf of or for the insurer. The administrator may not pay any claim by withdrawals from the fiduciary account. Withdrawals from the account may be made, as provided in the written agreement between the administrator and the insurer, for (1) remittance to an insurer entitled thereto; (2) deposit in an account maintained in the name of the insurer; (3) transfer to and deposit in a claims-paying account with claims to be paid as provided in Section 38-51-100; (4) payment to a group policyholder for remittance to the insurer entitled thereto; (5) payment to the administrator of its commission, fees, or charges; or (6) remittance of return premiums to the person entitled thereto.  HISTORY: Former 1976 Code Section 38-51-90 [1947 (45) 322; 1952 Code Section 37-235; 1955 (49) 329; 1956 (49) 1841; 1962 Code Section 37-235; 1964 (53) 2290; 1986 Act No. 540, Part II, Section 31 M] recodified as Section 38-43-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-67-70 [1985 Act No. 133, Section 6] recodified as Section 38-51-90 by 1987 Act No. 155, Section 1.
 As used in this chapter:  (1) "Accommodation bondsman" means a person who has reached the age of eighteen years, is a resident of this State, who, aside from love and affection and release of the person concerned, receives no consideration for action as surety, and who endorses the bail bond after providing satisfactory evidence of ownership, value, and marketability of real property to the extent necessary to reasonably satisfy the official taking bond that the real or personal property will in all respects be sufficient to assure that the full principal sum of the bond will be realized in the event of breach of the conditions of the bond. "Consideration" as used in this item does not include the legal rights of a surety against a defendant by reason of breach of the conditions of a bail bond nor does it include collateral furnished to and securing the surety so long as the value of the surety's rights in the collateral does not exceed the defendant's liability to the surety by reason of a breach in the conditions of the bail bond.  (2) "Bail bond" means an undertaking by the defendant to appear in court as required upon penalty of forfeiting bail to the State in a stated amount and may include an unsecured appearance bond, a premium-secured appearance bond, an appearance bond secured by a cash deposit of the full amount of the bond, an appearance bond secured by a mortgage, and an appearance bond secured by at least one surety.  (3) "Bail bondsman" means a surety bondsman, professional bondsman, or an accommodation bondsman as defined in this chapter.  (4) "Clerk of court", unless otherwise specified, means the clerk of the circuit court of the county in the state where the bondsman is currently writing or obligated on the majority of those bail bonds which he has written or on which he is obligated.  (5) "Court", unless otherwise specified, means circuit, magistrate's, or municipal court.  (6) "Insurer" means any domestic, foreign, or alien surety company which has qualified generally to transact surety business and specifically to transact bail bond business in this State.  (7) "Obligor" means a principal or a surety on a bail bond.  (8) "Principal" means a defendant or witness obligated to appear in court as required upon penalty of forfeiting bail under a bail bond.  (9) "Professional bondsman" means any person who is approved and licensed under the provisions of this chapter and who pledges cash or approved securities with the clerk of court as security for bail bonds written in connection with a judicial proceeding and receives or is promised money or other things of value for the pledge.  (10) "Runner" means a person employed by a bail bondsman for the purpose of assisting the bail bondsman in presenting the defendant in court when required, assisting in the apprehension and surrender of the defendant to the court, keeping the defendant under necessary surveillance, and executing bonds on behalf of the licensed bondsman when the power of attorney has been recorded. "Runner" does not include an attorney or a law enforcement officer assisting a bondsman.  (11) "Surety" means one who, with the defendant, is liable for the amount of the bail bond upon forfeiture of bail.  (12) "Surety bondsman" means any person who is approved by and licensed by the director or his designee as an insurance agent, appointed by an insurer by power of attorney to execute or countersign bail bonds for the insurer in connection with judicial proceedings, and receives or is promised money or other things of value for the execution or countersignature.  (13) "Appropriate judge" means a magistrate, municipal, or circuit court judge who has jurisdiction over the defendant.  (14) "Good cause" means the violation of a specific term of the bail bond not to include the nonpayment of fees.  HISTORY: Former 1976 Code Section 38-53-10 [1975 (59) 127] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-63-10 [1985 Act No. 189, Section 1] recodified as Section 38-53-10 by 1987 Act No. 155, Section 1; 1989 Act No. 179, Section 1; 1993 Act No. 181, Section 686; 1998 Act No. 425, Section 2; 1999 Act No. 127, Section 1.
 (A) A license fee of four hundred dollars must be paid to the director or his designee with each application for a license as a professional bondsman. The director or his designee shall forward four hundred dollars to the State Treasurer to be placed in the general fund; however, of the four hundred dollars, two hundred dollars must be paid over to the director or his designee to offset the costs he incurs under the provisions of this chapter, and two hundred dollars must be paid over to the State Law Enforcement Division to offset the costs it may incur under the provisions of this chapter.  (B) A license fee of two hundred dollars must be paid to the director or his designee with each application for a license as a runner. The director or his designee shall forward two hundred dollars to the State Treasurer to be placed in the general fund; however, of the two hundred dollars, one hundred dollars must be paid over to the director or his designee to offset the costs he incurs under the provisions of this chapter, and one hundred dollars must be paid over to the State Law Enforcement Division to offset the costs it incurs under the provisions of this chapter.  (C) The director or his designee shall forward forty percent of all fees collected under subsections (A) and (B) of this section to the clerk of court of the county where the principal place of business of the bondsman or runner is located. The remaining sixty percent of collected fees must be forwarded to the State Treasurer to be placed in the general fund, of which one-third must be paid to the State Law Enforcement Division, and two-thirds must be paid to the director or his designee to offset expenses incurred under the provisions of this chapter.  (D) In addition to the fees herein provided, a professional or surety bondsman shall pay to the clerk of court of his home county the sum of one hundred fifty dollars annually for each licensee to be paid directly to and retained by the clerk. In addition, each bondsman and runner shall pay to any other county where he is doing business the sum of one hundred dollars to be paid to and retained by the clerk. The fee must be paid annually and directly to the clerk of court who shall deposit it in an account maintained by the clerk.  HISTORY: Former 1976 Code Section 38-63-110 [1985 Act No. 189, Section 1; 1986 Act No. 356, Section 1] recodified as Section 38-53-100 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 690; 1998 Act No. 425, Section 2.
 Notwithstanding any other provision of law, the department must suspend for a period of five years the license of a bail bondsman, his associates, affiliates, or runners who refer defendants to attorneys. However, nothing contained in this section shall be construed to prohibit a bail bondsman, his associates, affiliates, or runners from indicating to a defendant that he should contact an attorney for professional assistance, as long as the bail bondsman, his associates, affiliates, or runners do not mention or in any other manner suggest or indicate a particular attorney or law firm by name.  HISTORY: 1999 Act No. 127, Section 3.
 In addition to the other requirements of this chapter, every year, by March first, an applicant for a professional bondsman's license shall furnish a detailed financial statement under oath and in a form as the director or his designee may require. The statement is subject to the same examination as is prescribed by law for domestic insurance companies.  HISTORY: Former 1976 Code Section 38-63-120 [1985 Act No. 189, Section 1] recodified as Section 38-53-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 691; 1998 Act No. 425, Section 2; 2021 Act No. 13 (H.3585), Section 4, eff April 12, 2021.  Effect of Amendment  2021 Act No. 13, Section 4, in the first sentence, substituted "every year, by March first, an applicant for a professional bondsman's license shall furnish" for "an applicant for a professional bondsman's license shall furnish annually".
 In addition to the other requirements of this chapter, an applicant for a license to be a runner shall show affirmatively that:  (a) the applicant will be employed by only one bail bondsman who shall supervise the work of the applicant and is responsible for the runner's conduct in the bail bond business;  (b) the application is endorsed by the appointing bail bondsman who shall obligate himself in the application to supervise the runner's activities.  HISTORY: Former 1976 Code Section 38-63-130 [1985 Act No. 189, Section 1] recodified as Section 38-53-120 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 All licenses issued pursuant to the provisions of this chapter expire annually on June thirtieth unless revoked or suspended prior to that time by the director or his designee or upon notice served upon the director or his designee that the employer of any runner has canceled the licensee's authority to act for the employer.  A renewal license must be issued by the director or his designee to a licensee who has met the continuing education requirements in Section 38-53-85(A) upon the payment of a renewal fee of two hundred dollars for runners and four hundred dollars for professional bondsmen, but the licensees are required in all other respects to comply with the provisions of this chapter. After the receipt of the licensee's application for renewal, the current license continues in effect until the renewal license is issued or denied for cause.  HISTORY: Former 1976 Code Sections 38-63-90 [1985 Act No. 189, Section 1] and 38-63-150 [1985 Act No. 189, Section 1] recodified as Section 38-53-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 693; 1998 Act No. 425, Section 2.
 (A) The director or his designee may deny, suspend, revoke, or refuse to renew any license issued under this chapter for any of the following causes:  (1) for any cause sufficient to deny issuance of the original license;  (2) violation of any laws of this State relating to bail in the course of dealings under the license issued to a bondsman or runner by the director or his designee;  (3) material misstatement, misrepresentation, or fraud in obtaining the license;  (4) misappropriation, conversion, or unlawful withholding of monies belonging to insurers or others and received in the conduct of business under the license;  (5) fraudulent or dishonest practices while conducting business as a licensee;  (6) conviction of a felony within the last ten years regardless of whether the conviction resulted from conduct in or related to the bail bond business;  (7) failure to comply with or violation of the provisions of this chapter or of any order of the director or his designee or regulation of the department;  (8) when in the judgment of the director or his designee the licensee has in the conduct of his affairs under the license demonstrated incompetency or untrustworthiness, that he is no longer in good faith carrying on the bail bond business, or that he is guilty of rebating, offering to rebate, or offering to divide the premiums received for the bond;  (9) for failing to pay any judgment or decree rendered on any forfeited undertaking in any court of competent jurisdiction;  (10) for charging or receiving as premium or compensation for the making of any deposit or bail bond any sum in excess of that permitted by this chapter;  (11) for requiring as a condition of his executing a bail bond that the defendant agree to engage the services of a specified attorney.  (B) The director or his designee, in lieu of revoking or suspending a license in accordance with the provisions of this chapter, in any one proceeding, by order, may require the licensee to pay to the director or his designee to be deposited in the general fund of the State a monetary penalty as provided in Section 38-2-10(2) for each offense. Upon failure of the licensee to pay the penalty within twenty days after the mailing of the order, postage prepaid, registered, and addressed to the last known place of business of the licensee, unless the order is stayed by an order of a court of competent jurisdiction, the director or his designee may revoke the license of the licensee or may suspend the license for a period as he determines.  (C) A professional or surety bondsman or runner whose license has been revoked cannot be issued another license for a period of one year and must meet all requirements under this chapter prior to relicensing by the department.  HISTORY: Former 1976 Code Section 38-63-160 [1985 Act No. 189, Section 1] recodified as Section 38-53-150 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 23; 1993 Act No. 181, Section 694; 1998 Act No. 425, Section 2.
 No license may be refused, suspended, or revoked, or renewal refused, except on reasonable notice and opportunity to be heard afforded the person licensed or seeking renewal of the license. Any applicant for a license as a professional or surety bondsman or runner whose application has been denied or whose license has been suspended or revoked, or renewal of the license denied, has the right of appeal from the final order of the director or his designee to the Administrative Law Court as provided by law.  HISTORY: Former 1976 Code Section 38-63-170 [1985 Act No. 189, Section 1] recodified as Section 38-53-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 695; 1998 Act No. 425, Section 2.
 No bondsman or runner may:  (a) pay a fee or rebate or give or promise anything of value, directly or indirectly, to a jailer, law enforcement officer, committing magistrate, or any other person who has power to arrest or hold in custody, or to any public official or public employee in order to secure a settlement, compromise, remission, or reduction of the amount of any bail bond or the forfeiture of the bail bond, including the payment to the law enforcement officers, directly or indirectly, for the arrest or apprehension of a principal or principals who have caused a forfeiture;  (b) pay a fee or rebate or give anything of value to an attorney in bail bond matters, except in defense of any action on a bond;  (c) pay a fee or rebate or give or promise anything of value to the principal or anyone in his behalf;  (d) participate in the capacity of an attorney at a trial or hearing of one on whose bond he is surety, nor suggest or advise the employment of or name for employment any particular attorney to represent the principal;  (e) accept anything of value from a principal except the premium, which may not exceed fifteen percent of the face amount of the bond, with a minimum fee of twenty-five dollars. However, the bondsman is permitted to accept collateral security or other indemnity from the principal which must be returned upon final termination of liability on the bond. The bondsman shall identify who is paying the premium and shall represent that the collateral security or other indemnity has not been obtained from any person who has a greater interest in the principal's disappearance than appearance for trial. The collateral security or other indemnity required by the bondsman must be reasonable in relation to the amount of the bond;  (f) solicit business in any of the courts or on the premises of any of the courts of this State, in the office of any magistrate, or in or about any place where prisoners are confined. Law enforcement officers and jailers shall report any violations of this provision to the court. Any action taken pursuant to this provision resulting in a conviction, guilty plea, or plea of nolo contendere pursuant to Section 38-53-340 must be reported to the director or his designee by the court within thirty days;  (g) advise or assist the principal for the purpose of forfeiting bond.  HISTORY: Former 1976 Code Section 38-63-180 [1985 Act No. 189, Section 1] recodified as Section 38-53-170 by 1987 Act No. 155, Section 1; 1988 Act No. 476; 1993 Act No. 181, Section 696; 1998 Act No. 425, Section 2.
 When a professional or surety bondsman accepts collateral, he shall give a written receipt for the collateral. This receipt shall give in detail a full description of the collateral received.  HISTORY: Former 1976 Code Section 38-63-190 [1985 Act No. 189, Section 1] recodified as Section 38-53-180 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 No sheriff, deputy sheriff, other law enforcement officer, judicial official, attorney, parole officer, probation officer, jailer, assistant jailer, employee of any court of this State, or other public employee assigned to duties relating to the administration of the court may become a surety on a bail bond for any person. No person covered by this section may act as agent for any bonding company or professional bondsman, nor may he have an interest, directly or indirectly, in the financial affairs of any firm or corporation whose principal business is acting as bondsmen. Nothing in this section prohibits any person designated above from being a surety upon the bond of his spouse, parent, brother, sister, child, or descendant.  HISTORY: Former 1976 Code Section 38-63-200 [1985 Act No. 189, Section 1] recodified as Section 38-53-190 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 The director or his designee, clerks of court, and the State Law Enforcement Division have full power and authority to administer the provisions of this chapter for which they are charged with implementing. The director shall promulgate regulations to enforce the purposes and provisions of this chapter. The director may hire employees, examiners, investigators, and other assistants as he considers necessary and shall prescribe their duties.  HISTORY: Former 1976 Code Section 38-53-20 [1975 (59) 127] recodified as Section 38-25-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-20 [1985 Act No. 189, Section 1] recodified as Section 38-53-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 687; 1998 Act No. 425, Section 2.
 A professional or surety bondsman may not sign or countersign blank bail bonds, nor may he give a power of attorney to, or otherwise authorize, anyone to countersign his name to bonds unless the authorized person is a licensed bondsman or runner directly employed by the bondsman giving power of attorney. Copies of all the powers of attorney and revocations of the powers of attorney must be filed immediately with the department and the clerk of the circuit court of the county in the state where the bondsman giving the power of attorney is currently writing or is obligated on bail bonds.  HISTORY: Former 1976 Code Section 38-63-210 [1985 Act No. 189, Section 1] recodified as Section 38-53-200 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 697; 1998 Act No. 425, Section 2; 1999 Act No. 127, Section 2.
 Each insurer appointing surety bondsmen, shall, prior to July first of each year, furnish the clerk of court a list of all surety bondsmen appointed by the insurer to write bail bonds on its behalf. Each insurer who subsequently appoints a surety bondsman in the State shall give notice of the appointment to the director or his designee and clerk of court of any county where the bondsman is doing business. All appointments are subject to the issuance of the proper insurance agent's license to the appointee.  An insurer terminating the appointment of a surety bondsman shall file written notice of the termination with the department, together with a statement that it has given or mailed notice to the surety bondsman and to the clerks of the circuit courts of the counties in the State where the insurer has been obligated on bail bonds through the agent within the past three years. Notice filed with the department shall state the reasons, if any, for termination. Information so furnished the director or his designee is privileged and may not be used as evidence in, or as the basis for, any action against the insurer or any of its representatives. All bonds written by a surety bondsman shall have attached the individual power of attorney in the amount of the bond.  HISTORY: Former 1976 Code Section 38-63-220 [1985 Act No. 189, Section 1] recodified as Section 38-53-210 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 698; 1998 Act No. 425, Section 2.
 A professional or surety bondsman who discontinues writing bail bonds during the period for which he is licensed shall notify the clerks of the circuit courts with whom he is registered and return his license to the director or his designee for cancellation within thirty days after discontinuance.  HISTORY: Former 1976 Code Section 38-63-230 [1985 Act No. 189, Section 1] recodified as Section 38-53-220 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 699; 1998 Act No. 425, Section 2.
 Every person licensed as a professional bondsman may appoint as runner any person who has been issued a runner's license. Each bondsman shall before July second of each year furnish to the clerk of court of each county where he is doing business and the director or his designee a list of all runners appointed by him. Each bondsman who, subsequent to the filing of this list, appoints additional persons as runners shall file written notice with the clerk of court of each county where he is doing business and the director or his designee of the appointment.  A bondsman terminating the appointment of a runner shall file written notice of the termination with the clerk of court and the director or his designee together with a statement that he has given or mailed notice to the runner. Notice filed with the clerk of court and the director or his designee shall state the reasons, if any, for termination. Information so furnished the director or his designee is privileged and may not be used as evidence in any action against the bondsman.  HISTORY: Former 1976 Code Section 38-63-240 [1985 Act No. 189, Section 1] recodified as Section 38-53-230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 700; 1998 Act No. 425, Section 2.
 If money or bonds have been deposited, bail by sureties may be substituted for deposit at any time before a breach of the undertaking by filing a new undertaking with the court executed by the defendant and the sureties. The official taking the new bail shall make an order that the money or bonds be refunded to the person depositing them. They must be refunded accordingly, and the original undertakings must be canceled.  HISTORY: Former 1976 Code Section 38-63-250 [1985 Act No. 189, Section 1] recodified as Section 38-53-240 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 When the defendant has been admitted to bail, he, or another in his behalf, may deposit with an official authorized to take bail a sum of money or nonregistered bonds of the United States, of the State, or of any county, city, or town within the State, equal in market value to the amount of the bail, together with his personal undertaking, and an undertaking of any other person, if the money or bonds are deposited by that person. Upon delivery to the official, in whose custody the defendant is, of a certificate of deposit, he must be discharged from custody.  When bail other than a deposit of money or bonds has been given, the defendant or the surety may, at any time before a breach of the undertaking, deposit the sum mentioned in the undertaking, and, upon deposit being made, accompanied by a new undertaking, the original undertaking is canceled.  HISTORY: Former 1976 Code Section 38-63-260 [1985 Act No. 189, Section 1] recodified as Section 38-53-250 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 No professional or surety bondsman may become a surety on an undertaking unless he has registered his current license in the office of the clerk of the circuit court in the county in which he resides and registered a certified copy of the license with the clerk of the circuit court in any other county in which he writes bail bonds.  A surety bondsman shall also annually register a certified copy of his current power of appointment with the clerk of the circuit court where he resides and in any other county where he writes bail bonds on behalf of an insurer.  HISTORY: Former 1976 Code Section 38-63-270 [1985 Act No. 189, Section 1] recodified as Section 38-53-260 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 Each professional bondsman acting as surety on bail bonds in this State shall maintain security deposits with the clerk of court of the county in which the bondsman has his primary place of business equal to at least one-fourth of the amount of all bonds or undertakings written in this State on which he is absolutely or conditionally liable as of the first day of the current month. A minimum of ten thousand dollars of this collateral shall be in the form of cash deposited with the clerk of court or certificates of deposit pledged to the clerk of court. Any remaining collateral shall be pledges of real estate, the value of which shall be based upon the appraised value by the county tax assessor. The real estate shall be free and clear of any encumbrances based upon a title opinion furnished to the clerk of court by the bondsman.  HISTORY: Former 1976 Code Section 38-63-280 [1985 Act No. 189, Section 1] recodified as Section 38-53-270 by 1987 Act No. 155, Section 1; 1995 Act No. 118, Section 1; 1998 Act No. 425, Section 2.
 The securities deposited by a professional bondsman with the clerk of court must be held in trust for the sole protection and benefit of the holder of bail bonds executed by or on behalf of the undersigned bondsman in this State. A pro rata portion of the securities must be returned to the bondsman when the clerk of court is satisfied that the deposit of securities is in excess of the amount required to be maintained with him by the bondsman. All the securities must be returned if the clerk of court is satisfied that the bondsman has satisfied, or satisfactory arrangements have been made to satisfy, the obligations of the bondsman on all of his bail bonds written in the State. The clerk of court may sell or transfer any of the securities or utilize the proceeds of the securities for the purpose of satisfying the liabilities of the professional bondsman on bail bonds given in this State on which he is liable.  HISTORY: Former 1976 Code Section 38-63-290 [1985 Act No. 189, Section 1] recodified as Section 38-53-280 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 With the securities deposited with the clerk of court, the professional bondsman shall at the same time deliver to the clerk of court a power of attorney on a form supplied by the clerk of court, executed and acknowledged by the professional bondsman, authorizing the sale or transfer of the securities or any part of the securities. The power of attorney must read as follows:  "Know all men by these presents that I, __________, a professional bondsman, located in the County of __________, in the State of __________, do authorize and appoint for myself and my successors, heirs, and assigns the clerk of court of this county, in the name and in behalf of myself as professional bondsman, my attorney to sell or transfer any securities deposited or that may be deposited by me as professional bondsman with the clerk of court, under the laws and regulations requiring a deposit of securities to be made by professional bondsmen doing business in the State of South Carolina if the sale or transfer is considered necessary by the clerk of court to pay any liability arising under a bond which purports to be given by the undersigned bondsman in any county in this State, and execution has been issued against me as bondsman pursuant to a judgment on the bond, and the judgment has not been satisfied. The securities so deposited are to be held in trust by the clerk of court for the sole protection and benefit of the holder of bail bonds executed by or on behalf of the undersigned bondsman.  In witness whereof, I have set my hand and affixed my seal this ___ day of __________, 19___.  _ (L.S.)  Notary Public  __________  My commission expires:  __________."  HISTORY: Former 1976 Code Section 38-63-300 [1985 Act No. 189, Section 1] recodified as Section 38-53-290 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 No undertaking is invalid, nor may any person be discharged from his undertaking, a forfeiture be stayed, the judgment on the undertaking be stayed, set aside, or reversed, nor the collection of the judgment be barred or defeated by reason of any defect, omission, or failure to note or record the default of any defendant or surety, because the undertaking was entered into on a Sunday or other holiday or because of any other irregularity, if it appears from the tenor of the undertaking that the official before whom it was entered into was legally authorized to take it and if the amount of bail was stated.  The liability of a person on an undertaking is not affected by reason of the lack of any qualifications, sufficiency, or competency provided in any other law in this State, by reason of any other agreement whether or not the agreement is expressed in the undertaking, or because the defendant has not joined in the undertaking.  HISTORY: Former 1976 Code Section 38-53-30 [1975 (59) 127; 1976 Act No. 732 Section 8] recodified as Sections 38-25-110, 38-25-150, 38-25-160, 38-25-360 and 38-25-540 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-30 [1985 Act No. 189, Section 1] recodified as Section 38-53-30 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 A professional bondsman whose security deposits with the clerk of court are reduced in value below the requirements of Section 38-53-270 shall, immediately upon notice of the deficiency, pledge with the court the additional collateral necessary to comply with Section 38-53-270. No professional bondsman may sign, endorse, execute, or become a surety on any additional bail bonds in any county in this State until he has made the additional deposit of securities as required by the notice of deficiency. The clerk of court has the authority to suspend bonding privileges until the bondsman complies with Section 38-53-270. If the bondsman has any outstanding forfeitures including, but not limited to, license fees and bond estreatments, the clerk of court has the authority to suspend bonding privileges until the bondsman complies with this section. The clerk shall immediately notify all parties who were originally notified of the suspension of the bondsman's compliance with this section.  HISTORY: Former 1976 Code Section 38-63-310 [1985 Act No. 189, Section 1] recodified as Section 38-53-300 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 Each professional bondsman shall by the fifteenth of each month file with the clerk of court of the county of his principal place of business and any other county where he is doing business a written report in a form prescribed by the director or his designee regarding all bail bonds on which he is liable as of the first day of each month showing:  (a) each individual bonded;  (b) the date the bond was given;  (c) the principal sum of the bond;  (d) the state or local official with whom the bond was filed;  (e) the fee charged for the bonding service in each instance; and  (f) all pending bonds.  HISTORY: Former 1976 Code Section 38-63-320 [1985 Act No. 189, Section 1] recodified as Section 38-53-310 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 701; 1998 Act No. 425, Section 2.
 Whenever the director or his designee considers it necessary, he shall visit and examine or cause to be visited and examined by some competent person appointed by him for that purpose any professional bondsman subject to the provisions of this chapter. For this purpose, the director or his designee or person making the examination has free access to all books and papers of the bondsman that relate to his business and to the books and papers kept by any of his agents or runners.  HISTORY: Former 1976 Code Section 38-63-330 [1985 Act No. 189, Section 1] recodified as Section 38-53-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 702; 1998 Act No. 425, Section 2.
 No professional bondsman may act as a surety on any bail bond whose principal sum is in excess of one-half of the value of the securities deposited with the clerk of court at that time.  HISTORY: Former 1976 Code Section 38-63-340 [1985 Act No. 189, Section 1] recodified as Section 38-53-330 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 A person violating any of the provisions of this chapter is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned for not more than thirty days, or both.  HISTORY: Former 1976 Code Section 38-63-350 [1985 Act No. 189, Section 1] recodified as Section 38-53-340 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 24; 1998 Act No. 425, Section 2.  
 Each surety for the release of a person on bail must be qualified as:  (a) an insurer and represented by a surety bondsman;  (b) a professional bondsman; or  (c) an accommodation bondsman.  HISTORY: Former 1976 Code Section 38-53-40 [1975 (59) 127] recodified as Section 38-25-310 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-40 [1985 Act No. 189, Section 1] recodified as Section 38-53-40 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 (A) A surety desiring to be relieved on a bond for good cause shall file with the clerk of court a motion to be relieved on the bond. A copy of the motion must be served upon the defendant, his attorney, and the solicitor's office. The court then shall schedule a hearing to determine if the surety should be relieved on the bond and notify all parties of the hearing date. At the time of the filing of the motion, a fee of twenty dollars must be paid to the clerk of court to be retained by the clerk for use in the operation of the clerk's office. The fee will cover the cost of copies of the motion required by the surety.  (B) If the circumstances warrant immediate incarceration of the defendant to prevent imminent violation of one of the specific terms of the bail bond, or if the defendant has violated one of the specific terms of the bond, the surety may take the defendant to the appropriate detention facility for holding until the court orders that the surety be relieved. The surety, within three business days following recommitment, must file with the detention facility and the court an affidavit clocked in with the clerk of court on a form provided by the Division of Court Administration stating the facts to support the surrender of the defendant for good cause. Nonpayment of fees alone is not sufficient cause to warrant immediate incarceration of the defendant. When the defendant and the affidavit are presented at the appropriate detention facility, the facility shall take custody of the defendant. When the affidavit is filed with the court, the surety also shall file a motion to be relieved on the bond pursuant to subsection (A). A surety who surrenders a defendant and files an affidavit which does not show good cause is subject to penalties imposed for perjury as provided for in Article 1, Chapter 9, Title 16.  (C) If the defendant is incarcerated by the surety or a law enforcement agency as a result of a bench warrant, the surety shall file an affidavit with the court stating that the defendant is incarcerated in the appropriate detention facility as a result of the bench warrant as well as the violation of the specific term or terms of the bail bond stated in the bench warrant. Once the affidavit pursuant to the provisions of this subsection has been filed and served on the defendant, the surety is relieved of all liability on the bail bond by the court unless otherwise ordered by the circuit court within fourteen calendar days of the filing of the affidavit, or, if there is no term of court within the fourteen day period, at the ensuing term of court.  (D) After the surety has been relieved by order of the court, a new undertaking must be filed with the appropriate court in order to secure the subsequent release of the defendant. The undertaking must contain the same conditions included in the original bond unless the conditions have been changed by the court.  HISTORY: Former 1976 Code Section 38-53-50 [1975 (59) 127] recodified as Section 38-25-510 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-50 [1985 Act No. 189, Section 1] recodified as Section 38-53-50 by 1987 Act No. 155, Section 1; 1989 Act No. 179, Section 2; 1998 Act No. 425, Section 2; 2008 Act No. 346, Section 3, eff June 25, 2008; 2012 Act No. 286, Section 6, eff June 29, 2012.
 For the purpose of surrendering the defendant, the surety may arrest him before the forfeiture of the undertaking or, by his written authority endorsed on a certified copy of the undertaking, may request any judicial officer to order the arrest of the defendant by the surety.  HISTORY: Former 1976 Code Section 38-53-60 [1975 (59) 127] recodified as Sections 38-25-550 and 38-25-560 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-60 [1985 Act No. 189, Section 1] recodified as Section 38-53-60 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2.
 If a defendant fails to appear at a court proceeding to which he has been summoned, the court shall issue a bench warrant for the defendant. The court shall make available for pickup by the surety or the representative of the surety who executed the bond on their behalf, a true copy of the bench warrant within seven days of its issuance at the clerk of court's office. If the surety fails to surrender the defendant or place a hold on the defendant's release from incarceration, commitment, or institutionalization within ninety days of the issuance of the bench warrant, the bond is forfeited. At any time before execution is issued on a judgment of forfeiture against a defendant or his surety, the court may direct that the judgment be remitted in whole or in part, upon conditions as the court may impose, if it appears that justice requires the remission of part or all of the judgment. In making a determination as to remission of the judgment, the court shall consider the costs to the State or a county or municipality resulting from the necessity to continue or terminate the defendant's trial and the efforts of law enforcement officers or agencies to locate the defendant. The court, in its discretion, may permit the surety to pay the estreatment in installments for a period of up to six months; however, the surety shall pay a handling fee to the court in an amount equal to four percent of the value of the bond. If at any time during the period in which installments are to be paid the defendant is surrendered to the appropriate detention facility and the surety complies with the recommitment procedures, the surety is relieved of further liability.  HISTORY: Former 1976 Code Section 38-53-70 [1975 (59) 127] recodified as Section 38-25-570 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-70 [1985 Act No. 189, Section 1] recodified as Section 38-53-70 by 1987 Act No. 155, Section 1; 1998 Act No. 425, Section 2; 2002 Act No. 329, Section 3F, eff July 1, 2002; 2008 Act No. 346, Section 4, eff June 25, 2008.
 No person may act in the capacity of a professional bondsman, surety bondsman, or runner or perform any of the functions, duties, or powers prescribed for professional or surety bondsmen or runners under the provisions of this chapter unless that person is qualified, except for an accommodation bondsman, licensed in accordance with the provisions of this chapter. No license may be issued to a professional bondsman, surety bondsman, or runner except as provided in this chapter.  The applicant shall apply for a license or renewal of a license on forms prepared and supplied by the director or his designee. The director or his designee may ask the applicant any questions, written or otherwise, relating to his qualifications, residence, prospective place of business, and any other inquiries which, in the opinion of the director or his designee, are necessary in order to protect the public and ascertain the qualifications of the applicant. The director or his designee shall request that the State Law Enforcement Division conduct any reasonable investigation relative to the determination of the applicant's fitness to be licensed or to continue to be licensed.  The failure of the applicant to secure approval of the director or his designee does not preclude him from applying as many times as he desires, but no application may be considered by the director or his designee within one year subsequent to the date upon which the director or his designee denied the applicant's last application.  HISTORY: Former 1976 Code Section 38-53-80 [1975 (59) 127] recodified as Section 38-25-320 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-63-80 [1985 Act No. 189, Section 1] recodified as Section 38-53-80 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 688; 1998 Act No. 425, Section 2.
 (A)(1) An applicant for a license to work as a professional bondsman, surety bondsman, or runner must complete not less than thirty hours of education in subjects pertinent to the duties and responsibilities of a professional and surety bondsman or runner, including all laws and regulations related to being a professional or surety bondsman or runner. A written examination must be administered at the conclusion of the course work. An applicant must pass the examination before he can be licensed.  (2) A person licensed as a professional bondsman, surety bondsman, or runner annually must complete not less than eight hours of continuing education in subjects related to the duties and responsibilities of a professional and surety bondsman or runner before his license may be renewed. The continuing education courses may not include a written or oral examination. The eight-hour annual requirement is in addition to the twenty-four hour continuing education requirement for surety insurance agents required in Section 38-43-106.  (B) A person licensed as a professional bondsman, surety bondsman, or runner before the effective date of this section is not required to complete the requisite thirty hours of education but must complete eight hours of continuing education courses to have his license renewed.  (C) The South Carolina Bail Agent's Association or another group or association approved by the Department of Insurance to provide educational courses to bondsmen must establish an educational curriculum for bondsman licensure. The department must approve the courses offered and ensure that the courses meet the standards for education established by this section and the department. The course work requirement for licensure may not be satisfied by a mail order course. The department also must approve a written examination to be administered by a group that provides educational courses administered at the conclusion of the thirty-hour course work.  (D) A person who falsely represents that he has met the educational requirements of this section is subject, after being afforded notice and an opportunity for a due process hearing by the Administrative Law Court, to the penalty provided in Section 38-53-340.  (E) A professional bondsman, surety bondsman, or runner who is more than sixty years of age and who has at least twenty years of licensure is exempt from the continuing education requirements in this section.  (F) The director shall establish rules and regulations for the effective administration of this section.  HISTORY: 1998 Act No. 425, Section 2; 2000 Act No. 358, Section 1; 2016 Act No. 240 (H.4931), Section 1, eff June 5, 2016.  Effect of Amendment  2016 Act No. 240, Section 1, amended the section, increasing the number of hours of education required for licensure and for continuing education.
 (A) Before a license is issued to an applicant permitting him to act as a professional bondsman or runner, the applicant shall furnish to the director or his designee a complete set of his fingerprints and a recent passport size full-face photograph in the manner prescribed by the director. Before a license is issued to a new or renewal applicant permitting him to act as a professional surety bondsman or runner, the applicant must undergo a state criminal records check, supported by his fingerprints, by the South Carolina Law Enforcement Division (SLED) and a national criminal records check, supported by his fingerprints, by the Federal Bureau of Investigation (FBI). The results of these criminal records checks must be reported by the department. The cost associated with the criminal history record must be borne by the applicant. The applicant's fingerprints must be certified by an authorized law enforcement officer.  (B) Before being issued the license, every applicant for a license as a professional bondsman, surety bondsman, or runner shall certify to the director that he:  (1) is eighteen years of age or older;  (2) is a resident of this State;  (3) is a person of good moral character and has not been convicted of a felony or any crime involving moral turpitude within the last ten years;  (4) has knowledge, training, or experience of sufficient duration and extent to satisfy reasonably the director or his designee that he possesses the competence necessary to fulfill the responsibilities of a licensee.  HISTORY: Former 1976 Code Section 38-63-100 [1985 Act No. 189, Section 1]; recodified as Section 38-53-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 689; 1998 Act No. 425, Section 2; 2013 Act No. 67, Section 1, eff June 13, 2013.
 (A) If an individual applies for a professional or surety bondsman or runner license, he shall supply the department his business, email, mailing, and residential street addresses. The bondsman or runner also shall notify the department within thirty days of any change in legal name or any of these addresses.  (B) Failure to inform the director or his designee of a change in legal name or addresses within thirty days is a violation of this title and the bondsman or runner is subject to the penalties provided in Section 38-2-10.  HISTORY: 2016 Act No. 194 (H.4817), Section 1, eff May 26, 2016.
 It is unlawful for an insurer to make a contract of insurance or annuity upon or concerning any property, interest, or lives in this State or with any resident of this State or for any person as insurance agent or insurance broker to make, negotiate, solicit, or in any manner aid in the transaction of these insurance contracts unless and except as authorized under this title.  HISTORY: Former 1976 Code Section 38-55-10 [1947 (45) 322; 1952 Code Section 37-1223; 1962 Code Section 37-1202; 1964 (53) 2293] recodified as Section 38-57-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-10 [1947 (45) 322; 1952 Code Section 37-142; 1962 Code Section 37-142] recodified as Section 38-55-10 by 1987 Act No. 155, Section 1.
 A life insurer, mutual aid association, or fraternal benefit association operating prior to May 12, 1947, on a plan prohibited by Section 38-55-90 in this State may continue so to do upon condition that the life insurer, fraternal benefit association, or mutual aid association does not establish its policyholders or members into divisions or classes other than the divisions or classes in this State actually existing on May 12, 1947. However, a life insurer, fraternal benefit association, or mutual aid association is not permitted to operate on an endowment plan unless it has a paid-in capital stock, if a stock company, or a surplus, if a mutual company or fraternal benefit association, of at least fifty thousand dollars.  HISTORY: Former 1976 Code Section 38-55-100 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1210; 1964 (53) 2293] recodified as Section 38-57-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-160 [1947 (45) 322; 1952 Code Section 37-151; 1962 Code Section 37-151] recodified as Section 38-55-100 by 1987 Act No. 155, Section 1.
 In order to pay endowments as they severally mature, as well as to pay all other benefits incorporated in the policies, certificates, or contracts of insurance, a life insurer, fraternal benefit society, or mutual aid association operating in this State upon a plan described in Section 38-55-90 shall establish and maintain on each policy a reserve upon a basis not lower than the American Experience Table of Mortality, full preliminary term, Illinois Standard, and interest assumption of three and one-half percent, covering each contingency provided for in the policy.  HISTORY: Former 1976 Code Section 38-55-110 [1962 Code Section 37-1211; 1964 (53) 2293; 1969 (56) 214, 760] recodified as Section 38-57-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-170 [1947 (45) 322; 1952 Code Section 37-152; 1962 Code Section 37-152] recodified as Section 38-55-110 by 1987 Act No. 155, Section 1.
 If an insurer fails to pay a final judgment rendered against it within fifteen days after the judgment becomes final, upon written application of the holder of the judgment the director or his designee shall give fifteen days' written notice to the insurer to pay the judgment and, upon the insurer's failure to pay the judgment within the time, shall revoke the license of the insurer to do business in this State and impound its bond or securities required to be deposited under Sections 38-9-80 through 38-9-140 or Section 38-15-30. In the event the director or his designee revokes the license of the insurer, he shall take any steps he considers necessary for the protection of the insurer's policyholders in this State. A judgment creditor may proceed with the collection of his judgment out of the securities in the possession of the director or his designee or the bond filed with him.  HISTORY: Former 1976 Code Section 38-55-120 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1212; 1964 (53) 2293] recodified as Section 38-57-120 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-810 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-191; 1962 Code Section 37-191] recodified as Section 38-55-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 707.
 It is unlawful for an insurer or for any person acting for or on its behalf knowingly to solicit, deliver any policy, or collect any premiums of insurance for the insurer from any person within this State when the insurer has surrendered its charter or when its charter has been revoked or canceled for any reason.  HISTORY: Former 1976 Code Section 38-55-130 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1213; 1964 (53) 2293] recodified as Section 38-57-130 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-280 [1947 (45) 322; 1952 Code Section 37-164; 1962 Code Section 37-164] recodified as Section 38-55-130 by 1987 Act No. 155, Section 1.
 When an insurer has surrendered its charter or when its charter has been revoked or canceled for any reason, it is still subject to suit under the laws of this State until all outstanding claims and demands against it have been settled. The director or his designee is designated the agent upon whom service of process may be had.  HISTORY: Former 1976 Code Section 38-55-140 [1947 (45) 322; 1952 Code Section 37-1203; 1962 Code Section 37-1214; 1964 (53) 2293] recodified as Section 38-57-140 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-290 [1947 (45) 322; 1952 Code Section 37-165; 1962 Code Section 37-165] recodified as Section 38-55-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 708.
 It is unlawful for a director or officer of an insurer to wilfully receive a premium or assessment on behalf of the insurer, knowing at the time of receipt of the premium or assessment that the insurer is insolvent according to the laws of its home state, and to fail to notify the person paying the premium or assessment of this fact.  A person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years.  HISTORY: Former 1976 Code Section 38-55-150 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1215; 1964 (53) 2293; 1968 (55) 2500] recodified as Section 38-57-150 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-270 [1947 (45) 322; 1952 Code Section 37-163; 1962 Code Section 37-163] recodified as Section 38-55-150 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 218.
 It is unlawful for an agent, physician, or any other person to insure or knowingly cause to be insured or reinstated in membership an infirm or unhealthy person, in an uninsurable condition, with intent to defraud.  A person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years.  HISTORY: Former 1976 Code Section 38-55-160 [1962 Code Section 37-1216; 1964 (53) 2293] recodified as Section 38-57-160 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-230 [1947 (45) 322; 1952 Code Section 37-159; 1962 Code Section 37-159] recodified as Section 38-55-160 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 219.
 A person who knowingly causes to be presented a false claim for payment to an insurer transacting business in this State, to a health maintenance organization transacting business in this State, or to any person, including the State of South Carolina, providing benefits for health care in this State, whether these benefits are administered directly or through a third person, or who knowingly assists, solicits, or conspires with another to present a false claim for payment as described above, is guilty of a:  (1) felony if the amount of the claim is ten thousand dollars or more. Upon conviction, the person must be imprisoned not more than ten years or fined not more than five thousand dollars, or both;  (2) felony if the amount of the claim is more than two thousand dollars but less than ten thousand dollars. Upon conviction, the person must be fined in the discretion of the court or imprisoned not more than five years, or both;  (3) misdemeanor triable in magistrates court or municipal court, notwithstanding the provisions of Sections 22-3-540, 22-3-545, 22-3-550, and 14-25-65, if the amount of the claim is two thousand dollars or less. Upon conviction, the person must be fined not more than one thousand dollars, or imprisoned not more than thirty days, or both.  HISTORY: Former 1976 Code Section 38-55-170 [1962 Code Section 37-1217; 1964 (53) 2293] recodified as Section 38-57-170 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-310 [1947 (45) 322; 1952 Code Section 37-167; 1962 Code Section 37-167; 1986 Act No. 410] recodified as Section 38-55-170 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 23; 1993 Act No. 73, Section 1; 1993 Act No. 184, Section 121; 2010 Act No. 273, Section 16.Z, eff June 2, 2010.
 (A) A person who is acting on behalf of or engaged in a vehicle glass repair business is guilty of a misdemeanor if the person offers or makes a payment or transfer of money or other consideration to:  (1) a third person for the third person's referral of an insurance claimant to the vehicle glass repair business for the repair or replacement of vehicle safety glass;  (2) an insurance claimant in connection with the repair or replacement of vehicle safety glass; or  (3) waive, rebate, give, or pay all or part of an insurance claimant's casualty or property insurance deductible as consideration for selecting the vehicle glass repair business.  (B) If the amount of the payment or transfer of subsection (A) has a value of:  (1) one thousand dollars or more, the person, upon conviction, must be fined in the discretion of the court or imprisoned for not more than three years, or both, per violation; or  (2) less than one thousand dollars, the person, upon conviction, must be fined not more than five hundred dollars or imprisoned for not more than thirty days, or both, per violation.  HISTORY: 2002 Act No. 215, Section 2, eff April 22, 2002.
 No agent, collector, solicitor, or other employee or representative of an insurer issuing contracts providing for sick, accident, or death benefits and operating on the weekly or monthly industrial plan is considered the owner of any part of the weekly or monthly debit collected by him or that may be under his charge, care, control, or supervision. The debit is considered wholly the property of the insurer in whose name the policies, contracts, or obligations were written or assumed. No former agent, collector, solicitor, superintendent, or other employee or representative of the insurer, within a period of ninety days after the termination of his employment with the insurer, may barter, sell, give, or in any manner transfer to any person or insurer any part of any debit of the insurer or any policies or contracts of the insurer, without the written consent of the insurer formerly employing him.  The director or his designee shall revoke the license of any person violating this section.  HISTORY: Former 1976 Code Section 38-55-180 [1962 Code Section 37-1218; 1964 (53) 2293] recodified as Section 38-57-180 by 1987 Act No. 155, Section 1; New Section 38-55-180 enacted by 1988 Act No. 394, Section 16; 1993 Act No. 181, Section 709.
 Every insurer shall conduct its business in the State in, and the policies and contracts of insurance issued by it must be headed or entitled by, its proper or corporate name; provided, however, notwithstanding any other provision of law, an insurer may elect to use a trade name in the conduct of its business if the insurer also clearly discloses its proper or corporate name on its policies, contracts of insurance, and other documents filed with the Department of Insurance. Two or more authorized insurers may, with the approval of the director or his designee, issue a combination policy which shall contain provisions substantially as follows:  (1) That the insurers executing the policy are severally liable for the full amount of any loss or damage, according to the terms of the policy, or for specified percentages or amounts thereof aggregating the full amount of insurance under the policy; and  (2) That service of process or of any notice or proof of loss required by the policy upon any of the insurers executing the policy constitutes service upon all the insurers.  HISTORY: Former 1976 Code Section 38-55-20 [1947 (45) 322; 1952 Code Section 37-1201; 1962 Code Section 37-1201; 1964 (53) 2293] recodified as Section 38-57-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-30 [1947 (45) 322; 1952 Code Section 37-143; 1962 Code Section 37-143] recodified as Section 38-55-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 703; 1995 Act No. 58, Section 5.
 Except as otherwise provided in this title, no insurer doing business in this State may expose itself to a loss on one risk in an amount exceeding ten percent of its surplus to policyholders. A risk or portion of it which has been reinsured must be deducted in determining the limitation of risk prescribed in this section. This section does not apply to captive insurers.  HISTORY: Former 1976 Code Section 38-55-30 [1947 (45) 322; 1952 Code Section 37-1204; 1962 Code Section 37-1203; 1964 (53) 2293] recodified as Section 38-57-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-180 [1947 (45) 322; 1952 Code Section 37-153; 1962 Code Section 37-153] recodified as Section 38-55-30 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 27; 2001 Act No. 82, Section 18, eff July 20, 2001.
 It is unlawful for a life insurer, except a fraternal benefit association licensed to do business in this State, to own, manage, supervise, operate, or maintain a mortuary or undertaking establishment or to permit its officers, agents, or employees to own, operate, or maintain a funeral or undertaking business, except as may be authorized under Section 38-55-330.  HISTORY: Former 1976 Code Section 38-55-310 [1962 Code Section 37-1231; 1964 (53) 2293] recodified as Section 38-57-230 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-510 [1948 (45)947; 1952 Code Section 37-176; 1962 Code Section 37-176] recodified as Section 38-55-310 by 1987 Act No. 155, Section 1; 1995 Act No. 67, Section 5.
 It is unlawful for a life insurer, a health insurer, or a funeral benefit company to contract or agree with a funeral director, undertaker, or mortuary that the funeral director, undertaker, or mortuary shall conduct the funeral of any person insured by it.  HISTORY: Former 1976 Code Section 38-55-320 [1947 (45) 322; 1952 Code Section 37-1221; 1962 Code Section 37-1232; 1964 (53) 2293] recodified as Section 38-57-230 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-520 [1948 (45) 1947; 1952 Code Section 37-177; 1962 Code Section 37-177] recodified as Section 38-55-320 by 1987 Act No. 155, Section 1.
 A licensed funeral director employed by a licensed funeral home in South Carolina may be licensed as an agent for a life insurer doing business in this State. However, a funeral director licensed under this section may act only as an agent for a life insurer in connection with the funding of a preneed funeral contract under Chapter 7, Title 32. The amount of an insurance policy sold by a licensed funeral director licensed under this section may not exceed the amount of the preneed funeral contract as defined in Section 32-7-10(3). In addition to the filing and approval requirements of Section 38-61-20, a life insurer must file a sample policy to fund a preneed funeral contract with the South Carolina Board of Funeral Service. The board also shall maintain a list of all funeral directors licensed as insurance agents, the insurer each director represents, and the type of policy each director is licensed to sell. Except for a funeral director licensed under this title, no insurance agent, as defined in Section 38-1-20, or person, as defined in Section 38-1-20, shall sell any policy, as defined in Section 38-1-20, which has for its purposes the funding of any funeral services, or the furnishing or delivery of personal property, merchandise, services of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of a person whose body is to be disposed of, but does not mean the furnishing of a cemetery lot, crypt, niche, mausoleum, grave marker, or monument.  HISTORY: Former 1976 Code Section 38-55-330 [1962 Code Section 37-1233; 1964 (53) 2293] recodified as Section 38-57-240 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-530 [1948 (45) 1947; 1952 Code Section 37-178; 1962 Code Section 37-178] recodified as Section 38-55-330 by 1987 Act No. 155, Section 1; 1995 Act No. 67, Section 6; 2002 Act No. 313, Section 1, eff upon approval (became law without the Governor's signature on June 6, 2002).
 Any person violating this article is guilty of a misdemeanor. Each violation of this article is a separate offense.  HISTORY: Former 1976 Code Section 38-55-340 [1962 Code Section 37-1234; 1964 (53) 2293] recodified as Section 38-57-250 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-540 [1948 (45) 1947; 1952 Code Section 37-179; 1962 Code Section 37-179] recodified as Section 38-55-340 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 28.
 No insurer may issue in this State, nor permit its agents, officers, and employees to issue in this State, agency company stock or other stock or securities or any special or advisory bond or other contract of any kind promising returns and profits, as an inducement to the taking of insurance. No insurer is authorized to do business in this State which issues or permits its agents, officers, or employees to issue in any state or territory agency company stock or securities or any special or advisory bond or other contract of any kind, promising returns and profits as an inducement to the taking of insurance. No corporation or stock company, acting as agent of an insurer, nor any of its agents, officers, and employees, is permitted to sell or give, agree to sell or give, or offer to sell or give, directly or indirectly, in any manner whatsoever, any share of stock, security, bond, or agreement of any form or nature promising returns and profits as an inducement to the taking of insurance or in connection therewith. The director or his designee, upon being satisfied that any insurer or its agent has violated this section, shall impose the penalties provided in Section 38-2-10. This section does not apply to marine insurers or their agents if the agents write only marine insurance.  HISTORY: Former 1976 Code Section 38-55-40 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1204; 1964 (53) 2293] recodified as Section 38-57-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-60 [1947 (45) 322; 1952 Code Section 37-145; 1962 Code Section 37-145] recodified as Section 38-55-40 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 25; 1993 Act No. 181, Section 704.
 An insurer, its agent, or an insurance broker doing business in this State may not make or permit any discrimination in favor of individuals between insureds of the same class and risk involving the same hazards in the amount of the payment of premiums or rates charged for policies of insurance except as provided in Sections 38-57-140, 38-65-310, and 38-71-1110, in the dividends or other benefits payable, or in any other of the terms and conditions of the contracts it makes. An insurer, its agent, or an insurance broker may not make a contract of insurance or agreement as to a contract other than as plainly expressed in the policy issued. An insurer or its officer, agent, solicitor, or representative or an insurance broker may not pay, allow, or give or offer to pay, allow, or give, directly or indirectly, as inducement to the taking of insurance any rebate of premium payable on the policy, any special favor or advantage in the dividends or other benefits to accrue from the policy, any paid employment or contract for services of any kind, or any valuable consideration or inducement not specified in the policy contract of insurance, or give, sell, or purchase or offer to give, sell, or purchase, as inducement to the taking of insurance or in connection therewith, any stocks, bonds, or other securities of an insurer or other corporation, association, or partnership, any dividends or profits to accrue from them, or anything of value not specified in the policy. This section does not prohibit a licensed agent or broker from charging administrative fees, as promulgated by the Department of Insurance by regulation, for incidental services associated with uninsured motorist related transactions and the electronic reporting of information to the Department of Motor Vehicles. However, fees for uninsured motorist related transactions may be charged only to consumers who have had a lapse in their automobile coverage. Notice of these fees must be posted prominently in the agent's or broker's office.  This section does not prohibit the payment of a fee to a trade or professional association exempt from income tax under Section 501(c) of the Internal Revenue Code.  Further, this section does not prohibit the rebating of any commission to the insured on an automobile insurance policy collected by, or on behalf of, a licensed insurance agent.  HISTORY: Former 1976 Code Section 38-55-50 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1205; 1964 (53) 2293] recodified as Section 38-57-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-80 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-147; 1962 Code Section 37-147] recodified as Section 38-55-50 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 14; 1990 Act No. 465, Section 2; 1997 Act No. 154, Section 26; 2004 Act No. 241, Section 7, eff January 1, 2005.
 This article is known and may be cited as the "Omnibus Insurance Fraud and Reporting Immunity Act".  HISTORY: 1994 Act No. 497, Part II, Section 31A.
 The purpose of this article is to confront aggressively the problem of insurance fraud in South Carolina by facilitating the detection of insurance fraud; to allow reporting of suspected insurance fraud; to grant immunity for reporting suspected insurance fraud; to prescribe penalties for insurance fraud; to require restitution for victims of insurance fraud; to establish a division within the Office of the Attorney General to prosecute insurance fraud; and to require the investigation of alleged insurance fraud by State Law Enforcement Division.  HISTORY: 1994 Act No. 497, Part II, Section 31A.
 As used in this article:  (A) "Authorized agency" means any duly constituted criminal investigative department or agency of the United States or of this State; the Department of Insurance; the Department of Revenue; the Department of Public Safety; the Department of Motor Vehicles; the Workers' Compensation Commission; the State Accident Fund; the Second Injury Fund; the Department of Employment and Workforce; the Department of Consumer Affairs; the Human Affairs Commission; the Department of Health and Environmental Control; the Department of Social Services; the Department of Health and Human Services; the Department of Labor, Licensing and Regulation; all other state boards, commissions, and agencies; the Office of the Attorney General of South Carolina; or the prosecuting attorney of any judicial circuit, county, municipality, or political subdivision of this State or of the United States, and their respective employees or personnel acting in their official capacity.  (B) "Insurer" shall have the meaning set forth in Section 38-1-20(25) and includes any authorized insurer, self-insurer, reinsurer, broker, producer, or any agent thereof.  (C) "Person" means any natural person, company, corporation, unincorporated association, partnership, professional corporation, or other legal entity and includes any applicant, policyholder, claimant, medical providers, vocational rehabilitation provider, attorney, agent, insurer, fund, or advisory organization.  (D) "False statement or misrepresentation" means a statement or representation made by a person that is false, material, made with the person's knowledge of the falsity of the statement and made with the intent of obtaining or causing another to obtain or attempting to obtain or causing another to obtain an undeserved economic advantage or benefit or made with the intent to deny or cause another to deny any benefit or payment in connection with an insurance transaction, and such shall constitute fraud. "False statement or misrepresentation" specifically includes, but is not limited to, an intentional:  (1) false report of business activities;  (2) miscount or misclassification by an employer of its employees;  (3) failure to timely reduce reserves;  (4) failure to account for Second Injury Fund reimbursements or subrogation reimbursements; or  (5) failure to provide verifiable information to public or private rating bureaus and the Department of Insurance.  An undeserved economic benefit or advantage includes, but is not limited to, a favorable insurance premium, payment schedule, insurance award, or insurance settlement.  (E) "Immune" means that neither a civil action nor a criminal prosecution may arise from any action taken pursuant to this article unless actual malice on the part of the reporting person or gross negligence or reckless disregard for the rights of the reported person is present.  HISTORY: 1994 Act No. 497, Part II, Section 31A; 1996 Act No. 278, Sections 1, 2; 1996 Act No. 459, Section 59; 2007 Act No. 111, Pt I, Section 3, eff July 1, 2007, applicable to injuries that occur on or after that date.
 (A) A person who knowingly makes a false statement or misrepresentation, and any other person knowingly, with an intent to injure, defraud, or deceive, or who assists, abets, solicits, or conspires with a person to make a false statement or misrepresentation, is guilty of a:  (1) misdemeanor, for a first offense violation, if the amount of the economic advantage or benefit received is less than one thousand dollars. Upon conviction, the person must be fined not less than one hundred nor more than five hundred dollars or imprisoned not more than thirty days;  (2) misdemeanor, for a first offense violation, if the amount of the economic advantage or benefit received is one thousand dollars or more but less than ten thousand dollars. Upon conviction, the person must be fined not less than two thousand nor more than ten thousand dollars or imprisoned not more than three years, or both;  (3) felony, for a first offense violation, if the amount of the economic advantage or benefit received is ten thousand dollars or more but less than fifty thousand dollars. Upon conviction, the person must be fined not less than ten thousand nor more than fifty thousand dollars or imprisoned not more than five years, or both;  (4) felony, for a first offense violation, if the amount of the economic advantage or benefit received is fifty thousand dollars or more. Upon conviction, the person must be fined not less than twenty thousand nor more than one hundred thousand dollars or imprisoned not more than ten years, or both;  (5) felony, for a second or subsequent violation, regardless of the amount of the economic advantage or benefit received. Upon conviction, the person must be fined not less than twenty thousand nor more than one hundred thousand dollars or imprisoned not more than ten years, or both.  (B) In addition to the criminal penalties set forth in subsection (A), a person convicted pursuant to the provisions of this section must be ordered by the court to make full restitution to a victim for any economic advantage or benefit which has been obtained by the person as a result of that violation, and to pay the difference between any taxes owed and any taxes the person paid, if applicable.  HISTORY: 1994 Act No. 497, Part II, Section 31A; 2007 Act No. 111, Pt I, Section 4, eff July 1, 2007, applicable to injuries that occur on or after that date.
 (A) In addition to any criminal liability, any person who is found by a court of competent jurisdiction to have violated any provision of this article, including Section 38-55-170, is subject to a civil penalty for each violation as follows:  (1) for a first offense, a fine not to exceed five thousand dollars;  (2) for a second offense, a fine of not less than five thousand dollars but not to exceed ten thousand dollars;  (3) for a third and subsequent offense, a fine of not less than ten thousand dollars but not to exceed fifteen thousand dollars.  (B) The civil penalty must be paid to the director of the Insurance Fraud Division to be used in accordance with subsection (D) of this section. The court may also award court costs and reasonable attorneys' fees to the director. When requested by the director, the Attorney General may assign one or more deputies attorneys general to assist the bureau in any civil court proceedings against the person.  (C) Nothing in subsections (A) and (B) shall be construed to prohibit the director of the Insurance Fraud Division and the person alleged to be guilty of a violation of this article from entering into a written agreement in which the person does not admit or deny the charges but consents to payment of the civil penalty. A consent agreement may not be used in a subsequent civil or criminal proceeding relating to any violation of this article.  (D) All revenues from the civil penalties imposed pursuant to this section must be used to provide funds for the costs of enforcing and administering the provisions of this article.  HISTORY: 1994 Act No. 497, Part II, Section 31A.
 (A) There is established in the Office of the Attorney General a division to be known as the Insurance Fraud Division, which must prosecute violations of Sections 38-55-170 and 38-55-540 and related criminal insurance activity. Upon receipt of any claims or allegations of violations of Section 38-55-170 and 38-55-540 and related criminal insurance activity, the Attorney General shall forward the information to the State Law Enforcement Division for investigation.  (B) The Attorney General, upon receipt of any claims or allegations of violations of Sections 38-55-170 and 38-55-540 and related criminal insurance activity, is empowered to:  (1) refer the matter for investigation to the State Law Enforcement Division;  (2) prosecute persons determined to be in violation of Sections 38-55-170 and 38-55-540 and related criminal insurance activity in a court of competent jurisdiction; and  (3) collect fines and restitution ordered by the court. Where considered appropriate, the Attorney General may use the Setoff Debt Collection Act to collect fines and restitution ordered as a result of actions brought pursuant to Sections 38-55-170 and 38-55-540.  (C) The State Law Enforcement Division shall investigate thoroughly all claims or allegations of violations of Sections 38-55-170 and 38-55-540 and related criminal insurance activity received from the Attorney General pursuant to this section.  (D) The Insurance Fraud Division of the Office of Attorney General and the investigative services of the State law Enforcement Division as provided by this section must be funded by an appropriation of not less than two hundred thousand dollars annually from the general revenues of the State derived from the insurance premium taxes collected by the Department of Insurance and/or from fines assessed under Sections 38-55-170 and 38-55-540 which must be deposited in the general revenue fund to the credit of the Office of the Attorney General and the State Law Enforcement Division to offset the costs of this program; provided, that the funds generated from these fines, to be utilized by either the Office of the Attorney General or the State Law Enforcement Division shall not total more than five hundred thousand dollars. These monies must be shared equally on a fifty-fifty basis by the Office of the Attorney General and the State Law Enforcement Division, and the balance must go to the general fund of the State.  (E) The Office of the Attorney General is authorized to hire, employ, and reasonably equip one forensic accountant, and this forensic accountant must be assigned to the Insurance Fraud Division of the Office of the Attorney General. A person is not qualified to be hired and the Insurance Fraud Division may not hire a forensic accountant unless he possesses and maintains a current license to engage in the practice of accounting pursuant to the provisions of Chapter 2, Title 40.  HISTORY: 1994 Act No. 497, Part II, Section 31A; 2007 Act No. 111, Pt I, Section 5, eff July 1, 2007, applicable to injuries that occur on or after that date.
 (A) Any person, insurer, or authorized agency having reason to believe that another has made a false statement or misrepresentation or has knowledge of a suspected false statement or misrepresentation shall, for purposes of reporting and investigation, notify the Insurance Fraud Division of the Office of the Attorney General of the knowledge or belief and provide any additional information within his possession relative thereto.  (B) Upon request by the Insurance Fraud Division, any person, insurer, or authorized agency shall release to the Insurance Fraud Division any or all information relating to any suspected false statement or misrepresentation including, but not limited to:  (1) insurance policy information relevant to the investigation, including any application for such a polity;  (2) policy premium payment records, audits, or other documents which are available;  (3) history of previous claims, payments, fees, commission, service bills, or other documents which are available; and  (4) other information relating to the investigation of the suspected false statement or misrepresentation.  (C) Any authorized agency provided with or obtaining information relating to a suspected false statement or misrepresentation as provided for above may release or provide the information to any other authorized agency. The Department of Insurance, the Department of Revenue, the Department of Public Safety, and the Department of Motor Vehicles shall report, but not adjudicate, all cases of suspected or reported false statement or misrepresentation to the Insurance Fraud Division of the Office of Attorney General of South Carolina for appropriate investigation or prosecution, or both. The Workers' Compensation Commission may refer such cases as provided in Section 42-9-440.  (D) Except as otherwise provided by law, any information furnished pursuant to this section is privileged and shall not be part of any public record. Any information or evidence furnished to an authorized agency pursuant to this section is not subject to subpoena or subpoena duces tecum in any civil or criminal proceeding unless, after reasonable notice to any person, insurer, or authorized agency which has an interest in the information and after a subsequent hearing, a court of competent jurisdiction determines that the public interest and any ongoing investigation will not be jeopardized by obedience of the subpoena or subpoena duces tecum. The Department of Insurance may receive and must maintain as confidential any documents or information furnished to it by the National Association of Insurance Commissioners or insurance departments of other states which is classified as confidential by that association or state. The Department of Insurance may share documents or information, including confidential documents or information, with the National Association of Insurance Commissioners or insurance departments of other states, if the association or other state agrees to maintain the same level of confidentiality as is provided under South Carolina law. If the documents or information received by the Department of Insurance from the National Association of Insurance Commissioners or the insurance departments of other states involve allegations of insurance fraud, the documents or information must be forwarded by the Department of Insurance to the Insurance Fraud Division of the Office of the Attorney General.  HISTORY: 1994 Act No. 497, Part II, Section 31A; 1995 Act No. 58, Section 6; 1996 Act No. 278, Section 3; 1996 Act No. 459, Section 60.
 (A) A person, insurer, or authorized agency, when acting without malice or in good faith, is immune from any liability arising out of filing reports, cooperating with investigations by any authorized agency, or furnishing other information, whether written or oral, and whether in response to a request by an authorized agency or upon their own initiative, concerning any suspected, anticipated, or completed false statement or misrepresentation when such reports or information are provided to or received by any authorized agency.  (B) Nothing herein abrogates or modifies in any way common law or statutory privilege or immunity heretofore enjoyed by any person, insurer, or authorized agency.  (C) Nothing herein limits the liability of any person or insurer who, with malice or in bad faith, makes a report of suspected fraud under the provisions of this article.  (D) In addition to the immunity granted in this section, persons identified as designated employees whose responsibilities include the investigation and disposition of claims relating to suspected fraudulent insurance acts may share information relating to persons suspected of committing fraudulent insurance acts with other designated employees employed by the same or other insurers whose responsibilities include the investigation and disposition of claims relating to fraudulent insurance acts, provided the department has been given written notice of the names and job titles of these designated employees prior to any designated employee sharing information. Unless the designated employees of the insurer act in bad faith or in reckless disregard for the rights of any insured, neither the insurer nor its designated employees are civilly liable for libel, slander, or any other relevant tort, and a civil action does not arise against the insurer or its designated employees:  (1) for any information related to suspected fraudulent insurance acts provided to an insurer; or  (2) for information related to suspected fraudulent insurance acts provided to the National Insurance Crime Bureau or the National Association of Insurance Commissioners.  Provided, however, that the qualified immunity against civil liability conferred on any insurer or its designated employees shall be forfeited with respect to the exchange or publication of any defamatory information with third persons not expressly authorized by subsection (D) to share in such information.  HISTORY: 1994 Act No. 497, Part II, Section 31A; 1996 Act No. 278, Section 4.
 The Director of the Insurance Fraud Division in the Office of the Attorney General shall annually report to the General Assembly regarding:  (A) the status of matters reported to the division, if not privileged information by law;  (B) the number of allegations or reports received;  (C) the number of matters referred to the State Law Enforcement Division for investigation;  (D) the outcome of all investigations and prosecutions under this article, if not privileged by law;  (E) the total amount of fines levied by the court and paid to or deposited by the division; and  (F) patterns and practices of fraudulent insurance transactions identified in the course of performing its duties. The director shall also periodically report this information to insurers transacting business in this State, health maintenance organizations transacting business in this State, and other persons, including the State of South Carolina, which provide benefits for health care in this State, whether these benefits are administered directly or through a third person.  HISTORY: 1994 Act No. 497, Part II, Section 31A.
 Every officer or agent of an insurer doing business in this State who violates Section 38-55-50 is guilty of a misdemeanor. The director or his designee, upon being satisfied that the insurer, its agent, or an insurance broker has violated Section 38-55-50, shall impose the penalties provided in Section 38-2-10.  HISTORY: Former 1976 Code Section 38-55-60 [1962 Code Section 37-1206; 1964 (53) 2293] recodified as Section 38-57-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-90 [1947 (45) 322; 1952 Code Section 37-148; 1962 Code Section 37-148] recodified as Section 38-55-60 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 26; 1993 Act No. 181, Section 705.
 It is not a violation of Section 38-55-50 or the criminal laws of this State to offer to make or to make loans to citizens of this State to be secured by mortgage of real estate or other collateral security.  HISTORY: Former 1976 Code Section 38-55-70 [1962 Code Section 37-1207; 1964 (53) 2293] recodified as Section 38-57-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-110 [1947 (45) 322; 1952 Code Section 37-149; 1962 Code Section 37-149] recodified as Section 38-55-70 by 1987 Act No. 155, Section 1.
 As used in this article:  (1) "Delivered by electronic means" includes:  (a) delivery to an electronic mail address at which a party has consented to receive notices or documents; or  (b) placement on an electronic network or site accessible by means of the Internet, mobile application, computer, mobile device, tablet, or another electronic device, together with separate written notice of the placement that must be provided by electronic mail to the address at which the party has consented to receive notice or by another delivery method that has been consented to by the party.  (2) "Party" means a recipient of a notice or document required as part of an insurance transaction, including, but not limited to, an applicant, an insured, a policyholder, or an annuity contract holder.  HISTORY: 2017 Act No. 70 (H.3488), Section 1, eff January 1, 2018.
 (A) Subject to the provisions of subsection (C), notice to a party of another document required under applicable law in an insurance transaction or that is to serve as evidence of insurance coverage may be delivered, stored, and presented by electronic means if it meets the requirements of Chapter 6, Title 26, the South Carolina Uniform Electronic Transactions Act.  (B) Delivery of a notice or document pursuant to this section must be considered equivalent to the following delivery methods:  (1) first-class mail; and  (2) first-class mail, postage prepaid.  (C)(1) A notice or document may be delivered by electronic means by an insurer to a party if:  (a) the party has affirmatively consented to the method of delivery and has not withdrawn consent;  (b) the party, before giving consent, is provided with a clear and conspicuous statement informing the party of:  (i) the right or option of the party to have the notice or document provided or made available in paper or another non-electronic form at no additional cost;  (ii) the right of the party at any time to withdraw his consent to have a notice or document delivered by electronic means;  (iii) the specific notice or document or categories of notices or documents that may be delivered by electronic means during the course of the relationship between the insurer and the party;  (iv) the means, after consent is given, by which a party may obtain a paper copy of a notice or document delivered by electronic means at no additional cost; and  (v) the procedure a party must follow to withdraw consent to have a notice or document delivered by electronic means and to update information needed to contact the party electronically;  (c) the transmission or delivery method used for the electronic notice includes conspicuous language concerning its subject or purpose;  (d) the party:  (i) before giving consent, is provided with a statement of the hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and  (ii) consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means for which the party has given consent; and  (e) after consent of the party is given, if a change occurs in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means that creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies, then the insurer shall:  (i) provide the party with a statement of the revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and  (ii) comply with the requirements of subsection (A).  (2) No insurer may cancel, refuse to issue, or refuse to renew a policy because the applicant or insured refuses to agree to receive mailings electronically pursuant to this subsection.  (D) A hardcopy of a notice of cancellation, notice of non-renewal, or notice of termination must be delivered by first-class mail, postage prepaid, to the last known mailing address of a party if the insurer knows that the notice of cancellation, notice of non-renewal, or notice of termination sent by electronic means was not received by the party. For the purposes of this subsection, the determination of whether an insurer sends, or a party receives, a notice of cancellation, notice of non-renewal, or notice of termination shall be governed by Section 26-6-150.  (E) This section does not affect requirements related to content or timing of any notice or document required under applicable law.  (F) If a provision of this title or other applicable law requiring a notice or document to be provided to a party expressly requires verification or acknowledgment of receipt of the notice or document, then the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt.  (G) The legal effectiveness, validity, or enforceability of the underlying contract or policy of insurance executed by a party may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party pursuant to subsection (C)(1)(d)(ii).  (H) A withdrawal of consent by a party:  (1) does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective; and  (2) is effective four business days after receipt of the withdrawal by the insurer.  (I) Failure by an insurer to comply with subsection (C)(1)(e) may be treated, at the election of the party, as a withdrawal of consent for purposes of this section.  (J) This section does not apply to a notice or document delivered by an insurer in an electronic form before the effective date of this section to a party who, before that date, had consented to receive notice or document in an electronic form otherwise allowed by law.  (K) If the consent of a party to receive certain notices or documents in an electronic form is on file with an insurer before the effective date of this section and if, pursuant to this section, an insurer intends to deliver additional notices or documents to the party in an electronic form, then, prior to delivering such additional notices or documents electronically, the insurer shall notify the party of:  (1) the notices or documents that may be delivered by electronic means under this section that were not previously delivered electronically; and  (2) the party's right to withdraw at any time consent to have notices or documents delivered by electronic means.  (L) If a provision of this title or applicable law requires a signature, notice, or document to be notarized, acknowledged, verified, or made under oath, then the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by the provision, is attached to or logically associated with the signature, notice, or document.  (M) This section may not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and National Commerce Act, Public Law 106-229, as amended. It is intended to provide an insurer additional options for the delivery of electronic notices and documents. An insurer choosing to use procedures outlined in ESIGN, UETA, or other applicable law or regulation governing such notice or documents must be considered to be in compliance with this section.  (N) An insurer delivering a notice or document by electronic means shall take appropriate and necessary measures reasonably calculated to ensure that the system for furnishing the notices of documents is secure and protects the confidentiality of information as defined by applicable law. An insurer who is in compliance with the Health Insurance Portability and Accountability Act, 45 C.F.R. 164.512(b), or the Gramm Leach Bliley Act, 16 C.F.R. 314.1, must be considered to be in compliance with this section.  (O) An insurer delivering a notice or other document pursuant to this article shall retain records in the manner provided in Sections 26-6-120, 38-13-120, 38-13-140, and 38-13-160.  (P) The director or his designee may promulgate, by bulletin, regulation, or order the requirements necessary to implement the provisions of this section.  HISTORY: 2017 Act No. 70 (H.3488), Section 1, eff January 1, 2018.
 The Department of Insurance may receive and shall maintain as confidential any documents or information furnished to the department by the National Association of Insurance Commissioners or regulatory officials of any state, federal agency, or foreign countries which are classified as confidential by that association or state. The Department of Insurance may share documents or information, including confidential documents or information, with the National Association of Insurance Commissioners or regulatory officials of any state, federal agency, or foreign countries if the association, state, federal agency, or foreign country agrees to maintain the same level of confidentiality as is provided under South Carolina law. Documents or information received or exchanged pursuant to this section are not subject to subpoena or subpoena duces tecum in any civil, criminal, or administrative proceeding.  HISTORY: 2001 Act No. 82, Section 19, eff July 20, 2001; 2006 Act No. 395, Section 2, eff June 14, 2006.
 (A) An insurer doing business in this State may not make a loan to any of its directors or officers, either directly or indirectly, except as provided in this section, and its director or officer may not accept any loan, directly or indirectly. The insurer may not make an advance to any of its directors or officers for future services to be performed beyond a period of one year from the date of making the advance. This section does not prohibit a life insurer from making a policy loan upon its policy or contract in an amount not exceeding the net reserve or cash value of the policy or contract.  (B) This section does not prohibit an insurer in connection with the relocation of the place of employment of an officer, including any relocation in connection with the initial employment of the officer, from making, or the officer from accepting, a mortgage loan to the officer on real property owned by the officer which is to serve as his residence or acquiring, or the officer from selling to it, at not more than the fair market value, the residence of the officer. Mortgage loans made or residences acquired under this section are subject to the limitations imposed on investments by Chapter 12 of this title. In addition, this section does not prohibit an insurer from making a loan to its directors or officers if the loan is first approved in writing by the director or his designee.  (C) An officer or director of an insurer who violates this section by participating in making the loan or accepting a loan except as authorized in this section, is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years, or both.  (D) A loan made by an insurer to its officers, directors, or employees bears the same rate of interest as is available to the public on loans from the insurer.  HISTORY: Former 1976 Code Section 38-55-80 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1208; 1964 (53) 2293] recodified as Section 38-57-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-140 [1956 (49) 2028; 1962 Code Section 37-149.3; 1980 Act No. 477] recodified as Section 38-55-80 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 27; 1993 Act No. 184, Section 217; 1993 Act No. 181, Section 706; 2012 Act No. 137, Section 7, eff April 2, 2012.
 No life insurer, mutual aid association, or fraternal benefit association operating in this State is permitted to issue policies, certificates, or contracts to policyholders or members providing for the establishment of its policyholders or members into divisions and classes for the purpose of providing for the payment of benefits from special funds created for that purpose to the oldest member of the division and class or to the members of the division and class whose policy has been in force the longest period of time upon the death of a member in the division and class.  HISTORY: Former 1976 Code Section 38-55-90 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1209; 1964 (53) 2293] recodified as Section 38-57-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-150 [1947 (45) 322; 1952 Code Section 37-150; 1962 Code Section 37-150] recodified as Section 38-55-90 by 1987 Act No. 155, Section 1.
 The purpose of this chapter is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the act of Congress of March 9, 1945, (Public Law 15, 79th Congress), by defining, or providing for the determination of, all the practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.  HISTORY: Former 1976 Code Section 38-57-10 [1947 (45) 322; 1952 Code Section 37-1151; 1962 Code Section 37-1151; 1978 Act No. 585 Section 3] recodified as Section 23-9-310 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-10 [1947 (45) 322; 1952 Code Section 37-1223; 1962 Code Section 37-1202; 1964 (53) 2293] recodified as Section 38-57-10 by 1987 Act No. 155, Section 1.
 No person may enter into an agreement to commit, or by any concerted action commit, any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.  HISTORY: Former 1976 Code Section 38-57-100 [1962 Code Section 37-1158.2; 1964 (53) 2057; 1978 Act No. 585 Section 9] recodified as Section 23-9-400 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-100 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1210; 1964 (53) 2293] recodified as Section 38-57-100 by 1987 Act No. 155, Section 1.
 (1) No lender, vendor, or person engaged in selling real or personal property or the financing thereof or the lending of money on the security thereof, and no trustee, agent, officer, or other employee of any such person, may require, as a condition precedent, concurrent, or subsequent to the sale or financing the purchase of such property or to lending money upon the security of a mortgage thereon or as a condition precedent, concurrent, or subsequent for the renewal or extension of the loan or mortgage, that the purchaser or borrower negotiate a policy of insurance or renewal thereof covering the property through a particular insurer or agent.  (2) This section does not prevent a mortgagee, real or chattel, of the right to designate reasonable financial requirements of the insurer and adequacy of the terms and provisions of the coverage with respect to the property pledged or mortgaged. A requirement that the insurer providing coverage be a particular type of insurer is not considered a reasonable financial requirement, if the insurer issues nonassessable policies and otherwise meets reasonable financial requirements.  HISTORY: Former 1976 Code Section 38-57-110 [1947 (45) 322; 1952 Code Section 37-1159; 1962 Code Section 37-1159; 1978 Act No. 585 Section 10] recodified as Section 38-7-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-110 [1962 Code Section 37-1211; 1964 (53) 2293; 1969 (56) 214, 760] recodified as Section 38-57-110 by 1987 Act No. 155, Section 1.
 (1) No person may make or permit any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon or in any other of the terms and conditions of the contract.  (2) No person may make or permit any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of disability insurance or in the benefits payable thereunder or in any of the terms or conditions of the contract or in any other manner.  HISTORY: Former 1976 Code Section 38-57-120 [1947 (45) 322; 1952 Code Section 37-1160; 1962 Code Section 37-1160; 1978 Act No. 585 Section 11] recodified as Section 38-7-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-120 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1212; 1964 (53) 2293] recodified as Section 38-57-120 by 1987 Act No. 155, Section 1.
 (1) No person may make, issue, circulate, or cause to be made, issued, or circulated any estimate, illustration, circular statement misrepresenting the terms of any policy issued or to be issued, the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon.  (2) No person may make any false or misleading statement as to the dividends or share of surplus previously paid on similar policies.  (3) No person may pay, allow, or give or offer to pay, allow, or give, directly or indirectly, as inducement to the purchase or the renewal of an insurance contract, any rebate of premiums payable on the contract, any special favor or advantage in any benefits payable thereon, or any valuable consideration or inducement that is not specified in the contract.  (4) Nothing in this section may be construed to:  (a) permit an unfair method of competition or an unfair or deceptive act or practice; or  (b) prohibit an insurer from offering or giving an insured, for free or at a discounted price, services or other offerings that directly and reasonably relate to the loss control of the risks covered under the policy.  HISTORY: Former 1976 Code Section 38-57-130 [1947 (45) 322; 1952 Code Section 37-1161; 1962 Code Section 37-1161; 1978 Act No. 585 Section 13] recodified as Section 38-7-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-130 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1213; 1964 (53) 2293] recodified as Section 38-57-130 by 1987 Act No. 155, Section 1; 2019 Act No. 6 (S.360), Section 8.A, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 8.A, added (4), clarifying that certain practices are prohibited.
 Nothing in Sections 38-57-120 and 38-57-130 may be construed as including within the definition of discrimination or rebates any of the following practices:  (1) In the case of any contract of life insurance, life annuity, or disability insurance, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance. However, these bonuses or abatement of premiums must be fair and equitable to policyholders and for the best interests of the insurer and its policyholders.  (2) In the case of life insurance and disability policies issued on the debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense.  (3) Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for the policy year.  (4) Issuing life or disability insurance policies on a salary savings, bank draft, preauthorized check, or payroll deduction plan or other similar plan at a reduced rate reasonably related to the savings made by the use of the plan.  (5) Nothing in this section may be construed to:  (a) permit an unfair method of competition or an unfair or deceptive act or practice; or  (b) prohibit an insurer from offering or giving an insured, for free or at a discounted price, services or other offerings that directly and reasonably relate to the loss control of the risks covered under the policy.  HISTORY: Former 1976 Code Section 38-57-140 [1947 (45) 322; 1952 Code Section 37-1162; 1962 Code Section 37-1162] recodified as Section 38-7-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-140 [1947 (45) 322; 1952 Code Section 37-1203; 1962 Code Section 37-1214; 1964 (53) 2293] recodified as Section 38-57-140 by 1987 Act No. 155, Section 1; 2019 Act No. 6 (S.360), Section 8.B, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 8.B, added (5), clarifying that certain practices are prohibited.
 (1) No policy or annuity contract may provide for, and no person may engage in any of the following, as an inducement to the purchaser or in connection with or as reference to the policy or annuity contract, directly or indirectly:  (a) Paying, allowing, giving, or offering any paid employment or contract for services of any kind.  (b) Giving, selling, or purchasing or offering or agreeing to give, sell, purchase, allow, or provide for any agreement promising returns and profits, or any stock, bonds, or other securities, including trading stamps or other properties or present or contingent interest therein of any insurer or other corporation, association, partnership, or person, or any dividends or profits accrued thereon.  (c) Giving, allowing, arranging for, or offering any advisory board contract, or similar contract, promising returns and profits.  (2) Subsection (1) does not prohibit a licensed agent who is registered under Chapter 1, Title 35 from offering to sell shares of or interests in mutual funds in connection with or as reference to a policy or annuity contract if the agent, at the time of the offer, gives the prospective buyer a written prospectus which has been filed with and approved by the director or his designee and the Securities Commissioner.  (3) Nothing in this section may be construed to:  (a) permit an unfair method of competition or an unfair or deceptive act or practice; or  (b) prohibit an insurer, by or through employees, affiliates, or third-party representatives, from offering or giving an insured, for free or at a discounted price, services or other offerings that directly and reasonably relate to the loss control of the risks covered under the policy.  HISTORY: Former 1976 Code Section 38-57-150 [1947 (45) 322; 1952 Code Section 37-1163; 1962 Code Section 37-1163; 1978 Act No. 585, Section 13] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-55-150 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1215; 1964 (53) 2293; 1968 (55) 2500] recodified as Section 38-57-150 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 710; 2019 Act No. 6 (S.360), Section 8.C, eff July 1, 2019; 2022 Act No. 195 (H.4832), Section 7, eff May 16, 2022.  Effect of Amendment  2019 Act No. 6, Section 8.C, added (3), clarifying that certain practices are prohibited.  2022 Act No. 195, Section 7, in (3)(b), inserted ", by or through employees, affiliates, or third-party representatives," following "prohibit an insurer".
 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, an article of merchandise having a value of not more than twenty-five dollars and having an advertisement for the insurer or agent printed on it. Nothing within this section precludes a licensed agent from providing refreshments during a sales presentation which do not exceed ten dollars a person in cost.  HISTORY: Former 1976 Code Section 38-57-160 [1947 (45) 322; 1952 Code Section 37-1164; 1962 Code Section 37-1164; 1978 Act No. 585 Section 14] recodified as Section 23-9-410 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-160 [1962 Code Section 37-1216; 1964 (53) 2293] recodified as Section 38-57-160 by 1987 Act No. 155, Section 1; 1997 Act No. 68, Section 11; 2007 Act No. 27, Section 1, eff upon approval (became law without the Governor's signature on May 16, 2007).
 (1) No person in this State may advertise, offer, or provide free insurance as an inducement to the purchase or sale of real or personal property or of services directly or indirectly connected with real or personal property.  (2) For the purposes of this section, "free" insurance is insurance for which no identifiable and additional charge is made to the purchaser of the real property or personal property or services or insurance for which an identifiable or additional charge is made in an amount less than the cost of the insurance as to the seller or other person, other than the insurer, providing the insurance.  (3) Subsections (1) and (2) do not apply to:  (a) insurance against loss of or damage to the real or personal property involved in any sale or services under a policy covering the interest of the seller or vendor;  (b) credit life or credit accident and health insurance;  (c) title insurance;  (d) obligations issued by insurers licensed in this State which shall indemnify against breaches of warranties made in connection with any sale or services.  (4) No person may use the word "free" to describe life or accident and health insurance in connection with the advertising or offering for sale of any kind of goods, merchandise, or services.  HISTORY: Former 1976 Code Section 38-57-170 [1947 (45) 322; 1951 (47) 433; 1952 Code Section 37-1165; 1962 Code Section 37-1165; 1978 Act No. 585, Section 15] recodified as Section 23-9-420 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-170 [1962 Code Section 37-1217; 1964 (53) 2293] recodified as Section 38-57-170 by 1987 Act No. 155, Section 1.
 Where the premium or charge for insurance is included in the overall purchase price or financing of the purchase of merchandise or property, the vendor or lender shall separately state and identify the amount charged and to be paid for the insurance and the classifications if any, upon which based. The inclusion or exclusion of the cost of insurance in the purchase price or financing may not increase, reduce, or otherwise affect any other factor involved in the cost of the merchandise or property or financing as to the purchaser or borrower.  HISTORY: Former 1976 Code Section 38-57-180 [1947 (45) 322; 1952 Code Section 37-1166; 1962 Code Section 37-1166; 1978 Act No. 585 Section 16] recodified as Section 23-9-430 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-180 [1962 Code Section 37-1218; 1964 (53) 2293] recodified as Section 38-57-180 by 1987 Act No. 155, Section 1.
 When used in this chapter "person" means any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers, and adjusters.  HISTORY: Former 1976 Code Section 38-57-20 [1947 (45) 322; 1952 Code Section 37-1152; 1962 Code Section 37-1152] recodified as Section 23-9-320 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-20 [1947 (45) 322; 1952 Code Section 37-1201; 1962 Code Section 37-1201; 1964 (53) 2293] recodified as Section 38-57-20 by 1987 Act No. 155, Section 1.
 If, after a hearing, the director or his designee determines that a method of competition or an act or practice is unfair or deceptive as defined in this title and that the person complained of has engaged in the method of competition, act, or practice in violation of this title, he shall reduce his finding to writing and shall issue and cause to be served upon the person charged with the violation:  (1) an order requiring the person to cease and desist from engaging in the method of competition, act, or practice; and  (2) an order imposing penalties provided in Section 38-2-10.  HISTORY: Former 1976 Code Section 38-57-200 [1947 (45) 322; 1952 Code Section 37-1167; 1962 Code Section 37-1167; 1978 Act No. 585, Section 17] recodified as Section 23-9-450 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-240 [1947 (45) 322; 1952 Code Section 37-1210; 1962 Code Section 37-1224; 1964 (53) 2293] recodified as Section 38-57-200 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 29; 1993 Act No. 181, Section 711.
 Upon good cause shown, the director or his designee shall permit any person to intervene, appear, and be heard at the hearing by counsel or in person. If the report of the director or his designee does not charge a violation of this chapter, then any intervenor in the proceedings may, within thirty days after the service of the report, cause a petition to be filed in the Circuit Court of Richland County for a review of the report. Upon review the court has authority to issue appropriate orders and decrees in connection therewith, including, if the court finds that it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act, or practice which it finds, notwithstanding the report of the director or his designee, constitutes a violation of this chapter.  HISTORY: Former 1976 Code Section 38-57-210 [1951 (47) 433; 1952 Code Section 37-1168; 1962 Code Section 37-1168; 1978 Act No. 585 Section 18] recodified as Section 23-9-460 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-290 [1947 (45) 322; 1952 Code Section 37-1220; 1962 Code Section 37-1229; 1964 (53) 2293] recodified as Section 38-57-210 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 712.
 If any person asks to be excused from attending and testifying or from producing any books, papers, records, correspondence, or other documents at any hearing on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to any penalty or forfeiture and is, notwithstanding, directed to give the testimony or produce the evidence, he shall comply with the direction, but he may not thereafter be prosecuted or subjected to a penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence pursuant thereto. No testimony so given or evidence produced may be received against him upon any criminal action, investigation, or proceeding. The individual so testifying is not exempt from prosecution or punishment for any perjury committed by him while so testifying, and the testimony or evidence so given or produced is admissible against him upon any criminal action, investigation, or proceeding concerning the perjury, nor is he exempt from the refusal, revocation, or suspension of any license, permission, or authority conferred or to be conferred pursuant to this title. The individual may execute, acknowledge, and file in the office of the department a statement expressly waiving his immunity or privilege in respect to any transaction, matter, or thing specified in the statement and thereupon the testimony of the person or the evidence in relation to the transaction, matter, or thing may be received or produced before any judge or justice, court, tribunal, grand jury, or otherwise, and, if so received or produced, the individual is not entitled to any immunity or privilege on account of any testimony he may so give or evidence so produced.  HISTORY: Former 1976 Code Section 38-57-220 [1979 Act No. 190 Section 9] recodified as Section 23-9-470 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-300 [1947 (45) 322; 1952 Code Section 37-1222; 1962 Code Section 37-1230; 1964 (53) 2293] recodified as Section 38-57-220 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 713.
 Any person who contemptuously violates a cease and desist order of any practice issued by the director or his designee shall, upon due notice, receive a hearing before the director or his designee. Upon the determination of the director or his designee that the contemptuous violation has been committed, the director or his designee shall issue his order to the effect that the person is in contempt of his order to cease and desist. Any person who contemptuously violates a cease and desist order of the director or his designee shall pay a fine set by the director or his designee but not to exceed fifty dollars for each day of violation. However, if the violation is wilful, the fine may be assessed in an amount not to exceed one hundred dollars per day of violation.  HISTORY: Former 1976 Code Sections 38-55-310 [1962 Code Section 37-1231; 1964 (53) 2293] and 38-55-320 [1947 (45) 322; 1952 Code Section 37-1221; 1962 Code Section 37-1232; 1964 (53) 2293] recodified as Section 38-57-230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 714.
 If upon completion of the hearing the director or his designee has elected to levy a fine on the person involved, that person must be so notified in writing by certified mail and of the amount of the fine. The notice shall state that, if the fine is not paid within thirty days from the date of receipt of the notice, further action to effect collection under this chapter will be initiated, together with revocation of the person's license or certificate of authority.  HISTORY: Former 1976 Code Section 38-55-330 [1962 Code Section 37-1233; 1964 (53) 2293] recodified as Section 38-57-240 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 715.
 When the time for appeal has expired and no appeal has been perfected by the person fined, the director or his designee shall file with the clerk of court of the county in which the person fined resides and for any other county in which he may own personal or real property, or an interest therein, a copy of the order. The clerk shall enter in the judgment roll, in the column for judgment debtors, the name of the person fined and in appropriate columns the amount of the fine and costs for which the order calls and the date when the copy was filed and shall index the order upon the judgment roll index. The order has the full effect of a civil judgment including rights of the judgment creditor to issue execution and accrue interest at the legal rate until the time as it is satisfied.  HISTORY: Former 1976 Code Section 38-55-340 [1962 Code Section 37-1234; 1964 (53) 2293] recodified as Section 38-57-250 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 716.
 If the fine remains unpaid after filing the order, the director or his designee shall levy on the real or personal property or any interest he may have therein, by issuing execution to the sheriff of the county of residence of the person fined. The sheriff shall proceed upon the execution with like effect and in the same manner prescribed by law with respect to executions issued against property upon judgments of a court of record. The sheriff is entitled to a fee equivalent to five percent of the total amount of the warrant for service in executing the order and the clerk of court is entitled to the same fees for recording the order as one prescribed by law in respect to executions issued against property upon judgments of a court of record. These fees are to be added to and collected with the total amount of the order.  HISTORY: Former 1976 Code Section 38-55-350 [1962 Code Section 37-1235; 1964 (53) 2293] recodified as Section 38-57-260 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 717.
 If an order is returned not satisfied in full, the director or his designee has the same remedies to enforce the claim for the fine and costs against the person fined as if the people of the state had recovered judgment against the person fined for the amount of the fine and costs.  HISTORY: Former 1976 Code Section 38-55-360 [1962 Code Section 37-1236; 1964 (53) 2293] recodified as Section 38-57-270 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 718.
 When the director or his designee levies a fine against a person and takes action to effect collection of the fine under this chapter, that person may pay the fine under written protest if he considers the fine to be unjust or illegal. Upon the protested payment being made, the director or his designee shall pay the fine into the state treasury, giving the State Treasurer notice at that time that the payment was made under protest.  HISTORY: Former 1976 Code Section 38-55-370 [1962 Code Section 37-1237; 1964 (53) 2293] recodified as Section 38-57-280 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 719.
 Any person paying a fine levied by the director or his designee, under protest, may at any time within thirty days after payment, but not afterwards, bring an action against the director or his designee for the recovery thereof in the court of common pleas of the county in which the fine was payable. If it is determined in that action that the fine was wrongfully or illegally levied and collected, for any reason going to the merits, the court before whom the case is tried shall certify of record that the fine was wrongfully collected and should be refunded and thereupon the Comptroller General shall issue his warrant for the refunding of the fine so paid.  HISTORY: Former 1976 Code Section 38-55-380 [1962 Code Section 37-1238; 1964 (53) 2293] recodified as Section 38-57-290 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 720.
 No person may engage, in this State, in any trade practice which is defined in this chapter as, or determined pursuant to this chapter to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.  HISTORY: Former 1976 Code Section 38-57-30 [1947 (45) 322; 1952 Code Section 37-1153; 1962 Code Section 37-1153] recodified as Section 23-9-330 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-30 [1947 (45) 322; 1952 Code Section 37-1204; 1962 Code Section 37-1203; 1964 (53) 2293] recodified as Section 38-57-30 by 1987 Act No. 155, Section 1.
 The Attorney General shall defend any suit or proceeding against the director or his designee for the recovery of fines allegedly illegally or unjustly paid under this title. Any judgment against the director or his designee must be paid in the manner prescribed in Section 38-57-290.  HISTORY: Former 1976 Code Section 38-55-390 [1962 Code Section 37-1239; 1964 (53) 2293] recodified as Section 38-57-300 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 721.
 In any action or proceeding against the director or his designee for the purpose of recovering a fine allegedly illegally or unjustly collected, the amount received in the suit may not exceed the amount of the fine paid under protest, together with costs arising from the service of process and procuring the attendance of witnesses.  HISTORY: Former 1976 Code Section 38-55-400 [1962 Code Section 37-1240; 1964 (53) 2293] recodified as Section 38-57-310 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 722.
 In all cases when it is necessary to file an order with a clerk of court to effect collection of a fine, the license or certificate of authority of the person fined may be summarily revoked or suspended.  HISTORY: Former 1976 Code Section 38-55-410 [1962 Code Section 37-1241; 1964 (53) 2293] recodified as Section 38-57-320 by 1987 Act No. 155, Section 1.  
 No person may make, issue, circulate, or cause to be made, issued, or circulated any estimate, proposal, circular, or statement misrepresenting the terms of a policy issued or to be issued or the benefits or advantages represented thereby or the dividends or share of the surplus to be received thereon, or make a false or misleading statement as to the dividend or share of surplus previously paid on similar policies or make a misrepresentation as to the financial condition of an insurer or as to the legal reserve system upon which an insurer operates or use any name or title of a policy or class of policies misrepresenting the true nature thereof.  HISTORY: Former 1976 Code Section 38-57-40 [1947 (45) 322; 1952 Code Section 37-1154; 1962 Code Section 37-1154; 1978 Act No. 585, Section 4] recodified as Section 23-9-340 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-40 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1204; 1964 (53) 2293] recodified as Section 38-57-40 by 1987 Act No. 155, Section 1.
 (A) No insurance agency, insurer, or health maintenance organization may make, publish, disseminate, circulate, or place before the public or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other solicitation material, an advertisement, representation, or statement with respect to the business of insurance which utilizes the Seal of South Carolina or any symbol which contains, includes, or is derivative of the Seal of South Carolina without the approval of the State Budget and Control Board.  (B) An insurance agency, an insurer, or a health maintenance organization must include in a prominent manner in solicitation material it utilizes specifically directed at and distributed to state employees a statement that the insurance program or health maintenance program is not officially endorsed by the State unless the program officially has been endorsed by the Budget and Control Board.  HISTORY: 1991 Act No. 131, Section 1.  Code Commissioner's Note  At the direction of the Code Commissioner, reference in this section to the former Budget and Control Board has not been changed pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1), until further action by the General Assembly.
 No person may make, publish, disseminate, circulate, or place before the public or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station, television, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business which is untrue, deceptive, or misleading.  HISTORY: Former 1976 Code Section 38-57-50 [1947 (45) 322; 1952 Code Section 37-1155; 1962 Code Section 37-1155; 1978 Act No. 585 Section 5] recodified as Section 23-9-350 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-50 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1205; 1964 (53) 2293] recodified as Section 38-57-50 by 1987 Act No. 155, Section 1.
 No person may make a false, misleading, fraudulent, or incomplete representation or comparison of insurance policies or insurers for the purpose of inducing or intending to induce any person to lapse, forfeit, surrender, terminate, retain, or convert an insurance policy or to take out a policy in another insurer.  HISTORY: Former 1976 Code Section 38-57-60 [1947 (45) 322; 1952 Code Section 37-1156; 1962 Code Section 37-1156; 1978 Act No. 585 Section 6] recodified as Section 23-9-360 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-60 [1962 Code Section 37-1206; 1964 (53) 2293] recodified as Section 38-57-60 by 1987 Act No. 155, Section 1.
 No person may, in connection with adjusting any claim, loss, or damage under a contract or policy of insurance, misrepresent to an insured, or any other person having an interest in the proceeds payable under the contract or policy the terms, coverage or effect of the contract or policy, for the purpose and with the intent of effecting settlement of the claim, loss, or damage under the contract or policy on less favorable terms than those provided in and contemplated by the contract or policy.  HISTORY: Former 1976 Code Section 38-57-70 [1947 (45) 322; 1952 Code Section 37-1157; 1962 Code Section 37-1157] recodified as Section 23-9-370 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-70 [1962 Code Section 37-1207; 1964 (53) 2293] recodified as Section 38-57-70 by 1987 Act No. 155, Section 1.
 (A) When an insured has suffered damage to the glass of a motor vehicle, "vehicle glass", both the insurer providing glass coverage and the third party administrator that administers glass coverage for that insurer must not require that repairs be made to the insured's vehicle by a particular provider of glass repair work.  (B) In processing a vehicle glass claim, a third party administrator must immediately disclose to the insured that the third party administrator is acting on behalf of the insurer.  (C) Immediately after verification of coverage and evaluation of the damage, an insurer or third party administrator must ascertain whether an insured has a provider of choice.  (D) When an insured requests to have covered glass repair work performed by a specific provider of choice, the insurer or third party administrator must determine whether the selected shop is a member of the insurer's or third party administrator's vehicle glass repair program or preferred provider list. If the provider of choice is a member of the insurer's vehicle repair program or preferred provider network, the insurer or its third party administrator must assign the claim and provide a claim or reference number at that time to the provider of choice.  (E) When an insured requests to have covered glass repair work performed by a provider who is not a member of the insurer's or third party administrator's vehicle repair program or preferred provider list, the insurer or third party administrator:  (1) must confirm that the provider agrees to perform the repair at the insurer's fair and reasonable rate of reimbursement. If the provider refuses to accept the rate, the insurer or third party administrator may inform the insured that he will be responsible for additional costs. If the provider agrees to accept the fair and reasonable rates, no further statements regarding costs shall occur and the provider must be paid the agreed fair and reasonable rate of reimbursement;  (2) must inform the insured that he or she may use the requested provider of choice; and  (3) must not make statements regarding the warranty offered by the provider of choice. If an insured asks the insurer or third party administrator questions regarding a provider's warranty, the insurer or third party administrator must refer the insured to the provider for clarification.  (F) When an insured does not request to have covered glass repair work performed by a specific provider of choice, the insurer or third party administrator may refer the repair to a vehicle glass repairer who is a member of the insurer's or third party administrator's preferred network of providers.  (G) A vehicle glass repair or replacement facility, including any agent, contractor, vendor, representative, or anyone acting on its behalf, must not:  (1) threaten, coerce, or intimidate an insured to file a claim for vehicle glass repair or replacement;  (2) engage in unfair or deceptive practices to induce an insured to file a vehicle glass repair claim;  (3) induce an insured to file a vehicle glass repair claim when the damage to the vehicle glass is insufficient to warrant vehicle glass repair or replacement;  (4) perform vehicle glass repair or replacement services under an insurance policy without first obtaining insurer approval;  (5) make any representations to an insured as to the vehicle glass coverage available under the insurance policy, including, but not limited to, representations that the insured is entitled to a free windshield; or  (6) represent verbally, electronically, or in any other way, including, but not limited to, advertisements, websites, or any marketing materials that a claim for a windshield replacement under an insurance policy is free.  (H) The owner, lessee, or insured driver of the vehicle, or the designee of the owner, lessee, or insured driver of the vehicle, if any, must be party to the filing of a vehicle glass repair claim, otherwise known as first notice of loss. A provider of vehicle glass repair services may not serve as the designee for the insured.  (I) When an insurer or third party administrator determines that an insured's requested glass repair must be physically inspected, and the inspection is carried out by a representative of a third party administrator, that representative must not make any offer to make repairs, engage in any discussion of other glass repair facilities, or recommend any glass repair facility during the course of the inspection.  (J) An insurer, agent, or third party administrator only may provide information about a claim to a vehicle glass repairer after the insured has selected that repairer to provide glass services.  (K) The provisions of this section do not apply to insurers or third party administrators who do not have a ten percent or greater ownership interest in a vehicle glass repair business.  (L) Violations of this section are subject to the provisions of the South Carolina Insurance Unfair Claim Practices Act.  (M) Notwithstanding the provisions of this chapter, the insurer has the right to inform the insured that the insurer will not guarantee the work performed by a provider that is not in the network of the insurer or third party administrator.  HISTORY: 2012 Act No. 236, Section 1, eff January 1, 2013.
 (1) No person may file with any supervisory or other public official, or make, publish, disseminate, circulate, or deliver to any person, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or delivered to any person or placed before the public, any false statement of financial condition of an insurer with intent to deceive.  (2) No person may make a false entry in a book, report, or statement of an insurer with intent to deceive an agent or examiner lawfully appointed to examine into its condition or into any of its affairs or any public official to whom the insurer is required by law to report or who has authority by law to examine into its condition or into any of its affairs or, with like intent, wilfully omit to make a true entry of any material fact pertaining to the business of the insurer in any book, report, or statement of the insurer.  HISTORY: Former 1976 Code Section 38-57-80 [1947 (45) 322; 1952 Code Section 37-1158; 1962 Code Section 37-1158; 1978 Act No. 585 Section 7] recodified as Section 23-9-380 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-80 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1208; 1964 (53) 2293] recodified as Section 38-57-80 by 1987 Act No. 155, Section 1.
 No person may make, publish, circulate, or disseminate, directly or indirectly, or aid, abet, or encourage the making, publishing, circulating, or disseminating of any oral or written statement or any pamphlet, circular, article, or literature which is false or maliciously critical of or derogatory to the financial condition of an insurer or of an organization proposing to become an insurer and which is calculated to injure any person engaged or proposing to engage in the business of insurance.  HISTORY: Former 1976 Code Section 38-57-90 [1962 Code Section 37-1158.1; 1964 (53) 2057; 1978 Act No. 585 Section 8] recodified as Section 23-9-390 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-55-90 [1947 (45) 322; 1952 Code Section 37-1202; 1962 Code Section 37-1209; 1964 (53) 2293] recodified as Section 38-57-90 by 1987 Act No. 155, Section 1.
 When an insurer under an insurance policy requires a written proof of loss after the notice of the loss has been given by the insured or beneficiary, the insurer or its representative shall furnish a blank to be used for that purpose. If the forms are not furnished within twenty days after the receipt of the notice, the claimant is considered to have complied with the requirements of the policy as to proof of loss upon submitting within the time fixed in the policy for filing proofs of loss written proof covering the occurrence, character, and extent of the loss for which claim is made. The twenty-day period after notice of loss to furnish forms applies to all types of insurance unless a lesser time period is specifically provided by law.  HISTORY: Former 1976 Code Section 38-59-10 [1976 Act No. 673; 1976 Act No. 745 Section 1] recodified as Section 38-79-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-300 [1947 (45) 322; 1952 Code Section 37-166; 1962 Code Section 37-166] recodified as Section 38-59-10 by 1987 Act No. 155, Section 1.
 Any of the following acts by an insurer doing accident and health insurance, property insurance, casualty insurance, surety insurance, marine insurance, or title insurance business, if committed without just cause and performed with such frequency as to indicate a general business practice, constitutes improper claim practices:  (1) Knowingly misrepresenting to insureds or third-party claimants pertinent facts or policy provisions relating to coverages at issue or providing deceptive or misleading information with respect to coverages.  (2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies, including third-party claims arising under liability insurance policies.  (3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims, including third-party liability claims, arising under its policies.  (4) Not attempting in good faith to effect prompt, fair, and equitable settlement of claims, including third-party liability claims, submitted to it in which liability has become reasonably clear.  (5) Compelling policyholders or claimants, including third-party claimants under liability policies, to institute suits to recover amounts reasonably due or payable with respect to claims arising under its policies by offering substantially less than the amounts ultimately recovered through suits brought by the claimants or through settlements with their attorneys employed as the result of the inability of the claimants to effect reasonable settlements with the insurers.  (6) Offering to settle claims, including third-party liability claims, for an amount less than the amount otherwise reasonably due or payable based upon the possibility or probability that the policyholder or claimant would be required to incur attorneys' fees to recover the amount reasonably due or payable.  (7) Invoking or threatening to invoke policy defenses or to rescind the policy as of its inception, not in good faith and with a reasonable expectation of prevailing with respect to the policy defense or attempted rescission, but for the primary purpose of discouraging or reducing a claim, including a third-party liability claim.  (8) Any other practice which constitutes an unreasonable delay in paying or an unreasonable failure to pay or settle in full claims, including third-party liability claims, arising under coverages provided by its policies.  HISTORY: Former 1976 Code Section 38-37-1110 [1962 Code Section 37-591.56; 1974 (58) 2718] recodified as Section 38-59-20 by 1987 Act No. 155, Section 1.
 This article may be cited as the "South Carolina Health Care Financial Recovery and Protection Act".  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 As used in this article:  (1) "Insurer" means an insurance company, a health maintenance organization, and any other entity providing health insurance coverage, as defined in Section 38-71-670(6), which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (2) "Health care services" means services included in furnishing an individual medical care or hospitalization, or services incident to the furnishing of medical care or hospitalization, and other services to prevent, alleviate, cure, or heal human illness, injury, or physical disability.  (3) "Health maintenance organization" means an organization as defined in Section 38-33-20(8).  (4) "Health insurance plan" means a health insurance policy or health benefit plan offered by a health insurer or a health maintenance organization that provides health insurance coverage, as defined in Section 38-71-670(6).  (5) "Physician" means a doctor of medicine or doctor of osteopathic medicine licensed by the South Carolina Board of Medical Examiners.  (6) "Provider" means a physician, hospital, or other person properly licensed, certified, or permitted, where required, to furnish health care services.  (7) "Participating provider" means a provider who provides covered health care services to an insured or a member pursuant to a contract with an insurer or health insurance plan.  (8) "Clean claim" means an eligible electronic or paper claim for reimbursement that:  (a) is received by the insurer within one hundred twenty business days of the date the health care services at issue were performed;  (b)(i) when submitted via paper has all the elements of the standardized CMS 1500 or UB 04 claim form, or the successor of each as either may be amended from time to time; or  (ii) when submitted via an electronic transaction, uses only permitted standard code sets and has all the elements of the standard electronic formats as required by the Health Insurance Portability and Accountability Act of 1996 and other federal and state regulatory authority;  (c) is for health care services covered by the health insurance plan and rendered to an insured person by a provider eligible for reimbursement under the health insurance plan;  (d) has any corresponding referral that may be required for the applicable claim;  (e) is a claim for which the insurer is the primary payor, or for which the insurer's responsibility as a secondary payor has been clearly established;  (f) has no material defect, error, or impropriety that would affect the adjudication of the claim;  (g) includes all required substantiating documentation or coding;  (h) is not subject to any particular circumstance that the insurer reasonably believes, subject to review by the Department of Insurance, would prevent accurate or timely payment from being made on the claim under the terms of the health insurance plan, the participating provider agreement, or the insurer's published filing requirements; and  (i) is under a health insurance plan for which the insurer has been timely paid all applicable premiums.  (9) "Force majeure" means any act of God, governmental act, act of terrorism, war, fire, flood, earthquake, hurricane, or other natural disaster, explosion or civil commotion.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 (A) Within six months of the effective date of this article, each insurer, upon written request from a physician who is also a participating provider will provide, by CD-ROM, or electronically at the insurer's option, the fee schedule that is contracted with that physician for up to 100 CPT(r) Codes customarily and routinely used by the specialty type of such physician. Each physician may request from an insurer an updated fee schedule no more than two times annually.  (B) A physician requesting a fee schedule pursuant to subsection (A) may elect to receive a hard copy of the fee schedule in lieu of the foregoing; however, the insurer may charge the physician a reasonable fee to cover the increased administrative costs of providing the hard copy.  (C) The physician shall keep all fee schedule information provided pursuant to this section confidential. The physician shall disclose fee schedule information only to those employees of the physician who have a reasonable need to access this information in order to perform their duties for the physician and who have been placed under an obligation to keep this information confidential. Any failure of a physician's office to abide by this subsection shall result in the physician's forfeiture of the right to receive fee schedules pursuant to this section and at the option of the insurer may constitute a breach of contract by the physician.  (D) Nothing in this section prohibits an insurer from basing actual compensation to the physician on the insurer's maximum allowable amount or other contract adjustments, including those stated in the patient's plan of benefits, or both.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 (A) An insurer shall direct the issuance of a check or an electronic funds transfer in payment for a clean claim that is submitted via paper within forty business days following the later of the insurer's receipt of the claim or the date on which the insurer is in receipt of all information needed and in a format required for the claim to constitute a clean claim and is in receipt of all documentation which may be requested by an insurer which is reasonably needed by the insurer:  (1) to determine that such claim does not contain any material defect, error, or impropriety; or  (2) to make a payment determination.  (B) An insurer shall direct the issuance of a check or an electronic funds transfer in payment for a clean claim that is submitted electronically within twenty business days following the later of the insurer's receipt of the claim or the date on which the insurer is in receipt of all information needed and in a format required for the claim to constitute a clean claim and is in receipt of all documentation which may be requested by an insurer which is reasonably needed by the insurer:  (1) to determine that such claim does not contain any material defect, error, or impropriety; or  (2) to make a payment determination.  (C) An insurer shall affix to or on paper claims, or otherwise maintain a system for determining, the date claims are received by the insurer. An insurer shall send an electronic acknowledgement of claims submitted electronically either to the provider or the provider's designated vendor for the exchange of electronic health care transactions. The acknowledgement must identify the date claims are received by the insurer. If an insurer determines that there is any defect, error, or impropriety in a claim that prevents the claim from entering the insurer's adjudication system, the insurer shall provide notice of the defect or error either to the provider or the provider's designated vendor for the exchange of electronic health care transactions within twenty business days of the submission of the claim if it was submitted electronically or within forty business days of the claim if it was submitted via paper. Nothing contained in this section is intended or may be construed to alter an insurer's ability to request clinical information reasonably necessary for the proper adjudication of the claim or for the purpose of investigating fraudulent or abusive billing practices.  (D) A clearinghouse, billing service, or any other vendor that contracts with a provider to deliver health care claims to an insurer on the provider's behalf is prohibited from converting electronic claims received from the provider into paper claims for submission to the insurer. A violation of this subsection constitutes an unfair trade practice under Chapter 5, Title 39, and individual providers and insurers injured by violations of this subsection have an action for damages as set forth in Section 39-5-140.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 (A) For each clean claim with respect to which an insurer has directed the issuance of a check or the electronic funds transfer later than the applicable period specified in Section 38-59-230, the insurer shall pay interest in the same manner and at the same rate set forth in Section 34-31-20(A) on the balance due on each claim computed from the twenty-first or the forty-first business day, as appropriate, based on the circumstances described in Section 38-59-230, up to the date on which the insurer directs the issuance of the check or the electronic funds transfer for payment of the clean claim. At the insurer's election, interest paid pursuant to this section must be included in the claim payment check or wire transfer or must be remitted periodically, but at least quarterly, in a separate check or wire transfer along with a report detailing the claims for which interest is being paid.  (B) No insurer has an obligation to make any interest payment pursuant to subsection (A):  (1) with respect to any clean claim if within twenty business days of the submission of an original claim submitted electronically or within forty business days of an original claim submitted via paper, a duplicate claim is submitted while the adjudication of the original claim is still in process;  (2) to any participating provider who balance bills a plan member in violation of the participating provider's agreement with the insurer;  (3) with respect to any time period during which a force majeure prevents the adjudication of claims; or  (4) when payment is made to a plan member.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 A determination of medical necessity of a decision affecting the diagnosis and/or treatment of a patient is not the practice of medicine, provided:  (A) it is a coverage decision denying health care services by an insurer that is based on a finding that the provision of a particular service is included or excluded as a covered benefit under the terms and conditions of the health care service plan contract; or  (B) it is a coverage decision approving a covered benefit for health care services that provides for the diagnosis, treatment, cure, or relief of a health condition, illness, injury, or disease; or  (C) it is a coverage decision denying coverage for a covered benefit for a health care service that provides diagnosis, treatment, cure, or relief of a health condition, illness, injury, or disease excluding, except where otherwise provided for by law, experimental, investigational, or cosmetic purposes, if the denial is issued by a licensed physician who has not wilfully and knowingly, or with reckless disregard or gross negligence, or with the intent solely to delay payment of the claim in bad faith, ignored nationally recognized protocols or standards of medical care in rendering such a decision. A good faith request for records or additional information is not a delay for purposes of this section. A person providing medical necessity review services for a health insurer or health maintenance organization who is subject to an inquiry regarding whether the person has been practicing medicine pursuant to this section has the right to remove the case to the Administrative Law Court upon petition of the person. If the Administrative Law Court determines that a complaint is filed, pursuant to this section, to harass or intimidate a person or is otherwise not based on a good faith belief that the provisions of this section are being violated, the defendant is entitled to an award of attorney's fees and the costs of defending the case.  HISTORY: 2008 Act No. 411, Section 7, eff June 25, 2008.
 (A)(1) An insurer shall initiate any overpayment recovery efforts by sending a written notice to the provider at least thirty business days prior to engaging in the overpayment recovery efforts, other than for recovery of duplicate payments or other similar adjustments relating to:  (a) claims where a provider has received payment for the same services from another payor whose obligation is primary; or  (b) timing or sequence of claims for the same insured that are received by the insurer out of chronological order in which the services were performed.  (2) The written notice required by this section shall include:  (a) the patient's name;  (b) the service date;  (c) the payment amount received by the provider;  (d) a reasonably specific explanation of the change in payment; and  (e) if the claim is submitted pursuant to a provider contract that includes an appeals process, the telephone number or a mailing address through which the provider may initiate an appeal, and the deadline by which an appeal must be received.  (B) An insurer may not initiate overpayment recovery efforts more than eighteen months after the initial payment was received by the provider; however, this time limit does not apply to the initiation of overpayment recovery efforts:  (1) based upon a reasonable belief of fraud or other intentional misconduct;  (2) required by a self-insured plan; or  (3) required by a state or federal government program.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008); 2012 Act No. 243, Section 1, eff September 16, 2012.
 The requirements of this article do not apply to claims that are processed under any national account delivery program in which an insurer participates but is not solely responsible for the processing and payment of the claims, or claims for services under a program offered or sponsored by any state or federal governmental entity other than in its capacity as an employer, or both.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 The Department of Insurance shall enforce the provisions of this article. If, after due notice and hearing, the Director of the Department of Insurance or his designee determines that an insurer has failed to meet the obligations imposed by this article, he shall order the insurer to cease and desist from the practice, to correct any errant business practices, and to make any payments due, including applicable interest. If an insurer does not comply with the order within thirty days, the director or his designee may then impose a penalty as provided in Section 38-2-10. Nothing in this article may be construed to create a private right of action to enforce the specific provisions of this article.  HISTORY: 2008 Act No. 356, Section 1, eff one year after approval by the Governor (approved June 11, 2008).
 If, after due notice and hearing, the director or his designee determines that the insurer has engaged in any of the improper claim practices defined in Section 38-59-20, he shall order the insurer to cease and desist from the practice and may impose a penalty as provided in Section 38-2-10. If the penalty is imposed, the penalty may not be considered a cost of the insurer for purposes of determining whether or not the rates of the insurer warrant adjustment.  HISTORY: Former 1976 Code Section 38-37-1120 [1962 Code Section 37-591.57; 1974 (58) 2718] recodified as Section 38-59-30 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 30; 1993 Act No. 181, Section 723.
 (1) In the event of a claim, loss, or damage which is covered by a policy of insurance or a contract of a nonprofit hospital service plan or a medical service corporation and the refusal of the insurer, plan, or corporation to pay the claim within ninety days after a demand has been made by the holder of the policy or contract and a finding on suit of the contract made by the trial judge that the refusal was without reasonable cause or in bad faith, the insurer, plan, or corporation is liable to pay the holder, in addition to any sum or any amount otherwise recoverable, all reasonable attorneys' fees for the prosecution of the case against the insurer, plan, or corporation. The amount of reasonable attorneys' fees must be determined by the trial judge and the amount added to the judgment. The amount of the attorneys' fees may not exceed one-third of the amount of the judgment.  (2) If attorneys' fees are allowed and, on appeal by the defendant, the judgment is affirmed, the Supreme Court or the court of appeals shall allow to the respondent an additional sum as the court adjudges reasonable as attorneys' fees of the respondent on the appeal.  (3) Nothing in this section may be construed to alter or affect the Tyger River Pine Co. v. Maryland Casualty Co., 161 SE 491, 163 SC 229, doctrine.  (4) This section applies to cases filed or removed to federal court and cases appealed in the federal court system.  HISTORY: Former 1976 Code Section 38-9-320 [1962 Code Section 37-167.1; 1972 (57) 2203] recodified as Section 38-59-40 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 50; 1999 Act No. 55, Section 38.
 It is unlawful for an insurer to make payment or settlement of benefits arising under life, endowment, accident, health, or hospitalization policies written by the insurer in merchandise, services rendered or agreed to be rendered, or to issue a policy which provides for settlement in merchandise or services rendered or to be rendered.  An insurer violating this section pays a penalty of ten times the amount of the policy, certificate, or other evidence of insurance to be collected in a suit by the policyholder or his legal representatives or beneficiary. An officer, agent, or servant of an insurer who violates this section is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years, or both.  HISTORY: Former 1976 Code Section 38-9-330 [1947 (45) 322; 1952 Code Section 37-168; 1958 (50) 1554; 1962 Code Section 37-168] recodified as Section 38-59-50 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 31; 1993 Act No. 184, Section 220.
 All contracts of insurance on property, lives, or interests in this State are considered to be made in the State and all contracts of insurance the applications for which are taken within the State are considered to have been made within this State and are subject to the laws of this State.  HISTORY: Former 1976 Code Section 38-61-10 [1977 Act No. 120 Section 1] recodified as Section 38-81-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-20 [1947 (45) 322; 1952 Code Section 37-141; 1962 Code Section 37-141] recodified as Section 38-61-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 724.
 (A) It is unlawful for an insurer doing business in this State to issue or sell in this State a policy, contract, or certificate until it has been filed with and approved by the director or his designee. The director or his designee may disapprove the form if it:  (1) does not meet the requirements of applicable state or federal law the Department of Insurance is authorized to enforce;  (2) contains provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or  (3) is solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.  However, this subsection does not apply to surety contracts or fidelity bonds, except as required in Section 38-15-10, or to insurance contracts, riders, or endorsements prepared to meet special, unusual, peculiar, or extraordinary conditions applying to an individual risk or exempt commercial policies.  (B) Within thirty days after the filing of a form requiring approval, the director or his designee shall notify the organization filing the form of the approval or disapproval of the form, and the reason if the form is disapproved. The director or his designee, in his discretion, may extend for up to an additional sixty days the period within which he shall approve or disapprove the form. A form received, but neither approved nor disapproved by the director or his designee, is deemed approved at the expiration of the thirty days if the period is not extended, or at the expiration of the extended period, if any. An organization may not use a form deemed approved pursuant to the default provision of this section until the organization has filed with the director or his designee a written notice of its intent to use the form. The notice must be filed in the office of the director at least ten days before the organization uses the form.  (C) At any time after having given written approval, and after an opportunity for a hearing for which at least thirty days' written notice has been given, the director or his designee may withdraw approval, impose the penalties pursuant to Section 38-2-10 if the insurer continues use of the form after it has been ordered withdrawn, or both, if he finds that the form:  (1) does not meet the requirements of applicable state or federal law the Department of Insurance is authorized to enforce;  (2) contains provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or  (3) is solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.  (D) The director or his designee may exempt from the requirements of subsection (A) as long as he considers proper any type of insurance policy, contract, or certificate to which in his opinion subsection (A) practically must not be applied, or the filing and approval of which, in his opinion, is not necessary for the protection of the public. However, each insurer at least annually shall list the types and form numbers of all policies it issues or sells in this State which the director or his designee has exempted from being filed and approved, and an officer of the insurer shall certify that all of these policies comply fully with the laws of this State. If a policy, contract, or certificate is certified to be in compliance with the laws of this State and the director or his designee finds it violates a law of this State, he may disqualify that insurer from certifying policies, contracts, or certificates allowed under this subsection.  (E) Nothing in this chapter precludes the issuance of a life insurance contract that includes an optional accident, health, or accident and health insurance rider. However, the optional accident, health, or accident and health insurance rider must be filed with and approved by the director or his designee pursuant to Section 38-71-310, 38-71-720, or 38-71-740, as appropriate, and comply with all applicable sections of Chapter 71 of this title and, in addition, in the case of long term care insurance, Chapter 72 of this title.  HISTORY: Former 1976 Code Section 38-61-20 [1977 Act No. 120 Section 2] recodified as Section 38-81-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-360 [1947 (45) 322; 1952 Code Section 37-170; 1962 Code Section 37-170; 1979 Act No. 64] recodified as Section 38-61-20 by 1987 Act No. 155, Section 1; 1988 Act No. 316, Section 1; 1992 Act No. 332, Section 2; 1993 Act No. 181, Section 724; 1998 Act No. 411, Section 5; 2000 Act No. 235, Section 3; 2000 Act No. 312, Section 12; 2001 Act No. 82, Section 20, eff July 20, 2001; 2018 Act No. 219 (H.4657), Section 5, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 5, in (A), in (1), substituted "applicable state or federal law the Department of Insurance is authorized to enforce" for "law"; and in (C), inserted ", impose the penalties pursuant to Section 38-2-10 if the insurer continues use of the form after it has been ordered withdrawn, or both," following "may withdraw approval", and in (1), substituted "applicable state or federal law the Department of Insurance is authorized to enforce" for "law".
 It is unlawful for an insurer doing business in this State to issue or sell in this State any exempt commercial policy, contract, or certificate until it has been filed with and approved by the director or his designee. A filing that is filed with the department is deemed to have met the requirements of this chapter unless it:  (1) does not meet the requirements of law;  (2) contains any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or  (3) is going to be solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.  If a filing is not in compliance with this chapter, the director or his designee shall issue an order specifying in detail the provisions with which the insurer has not complied and stating the time within which the insurer has to comply with the order before the filing is no longer valid. An order issued by the director pursuant to this section must be on a prospective basis only and may not affect a contract issued or made before the effective date of the order. However, this section does not apply to surety contracts or fidelity bonds, except as required in Section 38-15-10, or to insurance contracts, riders, or endorsements prepared to meet special, unusual, peculiar, or extraordinary conditions applying to an individual risk.  HISTORY: 2000 Act No. 235, Section 4.
 The department shall promulgate regulations which establish minimum standards for the readability of each homeowners, dwelling fire, automobile, accident and health, life, and all other forms of personal insurance, excluding commercial, fleet vehicle, and group insurance, which must be complied with by all insurers authorized to do business in this State. The standards shall include, but are not limited to, standards on an index of policy provisions, general organization of text, text readability, type size, type style, type spacing, and general appearance of the insurance contract.  HISTORY: Former 1976 Code Section 38-3-61 [1978 Act No. 550 Section 2] recodified as Section 38-61-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 724.
 All insurers licensed to transact insurance business in this State shall comply with the standards prescribed by regulation of the department. The director or his designee is empowered to withdraw approval or certification on all existing policies of commonly purchased insurance that do not comply with Section 38-61-30.  HISTORY: Former 1976 Code Section 38-3-62 [1978 Act No. 550 Section 3] recodified as Section 38-61-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 724; 2001 Act No. 82, Section 21, eff July 20, 2001.
 The director or his designee shall consult with and call upon the expertise of other state agencies, as may be necessary, to determine the standards to be promulgated and, after promulgation, the effectiveness of these standards. This consultation shall include, but is not limited to, the State Department of Education or its successor entity.  HISTORY: Former 1976 Code Section 38-3-63 [1978 Act No. 550 Section 4] recodified as Section 38-61-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 724.
 (A) If an insurer advertises an insurance policy, or the availability of a foreign language informational sheet, or the availability of a translation of an insurance policy in a language other than English, the insurer only needs to provide an English written insurance policy, so long as the advertisement clearly states that the insurance policy is only available in English. Notwithstanding the use of a language other than English in an advertisement, if there is a dispute, the insurance policy is controlling and an advertisement for an insurance policy, informational sheet, or translation may not be construed to modify or change the insurance policy.  (B) Nothing in this section may be construed to require insurers to provide insurance related services, such as claim services, in a language other than English.  HISTORY: 2006 Act No. 358, Section 1, eff June 9, 2006.
 (A) For purposes of this section:  (1) "Commercial general liability insurance policy" means a contract of insurance that covers occurrences of damages or injury during the policy period and insures a construction professional for liability arising from construction related work.  (2) "Construction professional" means a person, sole proprietorship, partnership, corporation, limited liability company, or other recognized legal entity that engages in the development, construction, installation, or repair of an improvement to real property.  (3) "Construction related work" means activities by a construction professional involving the development, construction, installation, or repair of an improvement to real property.  (B) Commercial general liability insurance policies shall contain or be deemed to contain a definition of "occurrence" that includes:  (1) an accident, including continuous or repeated exposure to substantially the same general harmful conditions; and  (2) property damage or bodily injury resulting from faulty workmanship, exclusive of the faulty workmanship itself.  (C) This section is not intended to restrict or limit the nature or types of exclusions from coverage that an insurer, including a surplus lines insurer, may include in a commercial general liability insurance policy.  (D) This section applies only to a commercial general liability insurance policy that insures a construction professional for liability arising from construction related work.  (E) This section applies to any pending or future dispute over coverage that would otherwise be affected by this section as to all commercial general liability insurance policies issued in the past, currently in existence, or issued in the future.  HISTORY: 2011 Act No. 26, Section 1, eff May 17, 2011.  Validity  For validity of this section, see Harleysville Mut. Ins. Co. v. State, 401 S.C. 15, 736 S.E.2d 651 (S.C. 2012).  Editor's Note  2011 Act No. 26, Section 3, provides as follows:  "This act takes effect upon approval by the Governor and applies to any pending or future dispute over coverage that would otherwise be affected by this section as to commercial general liability insurance policies issued in the past, currently in existence, or issued in the future."
 (A) An insurer must not cancel, nonrenew, or otherwise terminate all or substantially all of an entire line or class of business for the purpose of withdrawing from the market in this State unless:  (1) the insurer notified the director, in writing, of the action, including the reasons for such action, and plans for the orderly cessation of business at least one year before the completion of the withdrawal. This item must not be construed to prevent an insurer from canceling, nonrenewing, or terminating policies in the ordinary course of business that are not part of a plan to withdraw from an entire line or class of business or where the insurer, by contract, statute, or otherwise, has the right to take such action; or  (2) the insurer filed a plan of action for the orderly cessation of the insurer's business within a period of time shorter than one year and the plan of action is approved by the director or his designee.  (B) An insurer's rates, rules, and forms filed with the department are considered no longer on file for use with any new business in the market affected by the insurer's withdrawal plan on and after the date the withdrawal plan goes into effect.  (C) This section does not apply to health insurance issuers offering health insurance coverage as defined in Article 3 or Article 5, Chapter 71, Title 38. Health insurance issuers must comply with other applicable provisions of Chapter 71, Title 38 regarding the discontinuance of all or a significant block of business or withdrawal from the market in this State.  HISTORY: 2021 Act No. 13 (H.3585), Section 1, eff April 12, 2021.  
 No life insurer doing business in this State and no officer, director, or agent of it may issue or circulate or cause or permit to be issued or circulated any estimate, illustration, circular, or statement of any sort misrepresenting the terms of any policy issued by it, the benefits or advantages promised thereby, or the dividends or shares of surplus to be received thereon or may use any name or title of any policy or class of policies misrepresenting the true nature thereof. Violation of this section by an agent or officer of an insurer is a misdemeanor. If an insurer violates or participates in the violation of this section, the insurer is subject to the penalty provisions of Section 38-2-10.  HISTORY: Former 1976 Code Section 38-63-10 [1985 Act No. 189, Section 1] recodified as Section 38-53-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-40 [1947 (45) 322; 1952 Code Section 37-144; 1962 Code Section 37-144] recodified as Section 38-63-10 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 32.
 Notwithstanding any other provision of law, a bona fide charity or nonprofit corporation which is in compliance with the "Solicitation of Charitable Funds Act" (Chapter 55, Title 33) has an insurable interest in the life of an insured under a policy in which the charity or corporation is irrevocably named as a beneficiary provided that the application for insurance is signed by the insured.  The provisions of this section do not limit or abridge any insurable interest or right to insure now existing at common law or by statute, shall be construed liberally to sustain insurable interest, and shall stand as a declaration of existing law applicable to all life insurance policies in existence on or after the effective date of this section.  HISTORY: 1992 Act No. 352, Section 1.
 No insurer, or its employee or agent, may make any misleading representations or incomplete or fraudulent comparisons of any life insurance policies or insurers for the purpose of inducing, or which may tend to induce, any person to lapse, forfeit, surrender, terminate, return, or convert any life insurance policy.  HISTORY: Former 1976 Code Section 38-63-20 [1985 Act No. 189, Section 1] recodified as Section 38-53-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-50 [1956 (49) 1814; 1962 Code Section 37-144.1]; recodified as Section 38-63-20 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 33.
 Every insurer doing a life insurance business in the State shall deliver with each policy of insurance issued by it a copy of the application made by the insured so that the whole contract appears in the application and policy of insurance. If the insurer violates this requirement, no defense is allowed to the policy on account of anything contained in, or omitted from, the application. If the insurance policy is issued upon an oral application, no defense is allowed to the policy on account of anything contained in, or omitted from, the oral application.  HISTORY: Former 1976 Code Section 38-63-210 [1985 Act No. 189, Section 1] recodified as Section 38-53-200 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-70 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-146; 1962 Code Section 37-146; 1980 Act No. 305, Section 1] recodified as Section 38-63-210 by 1987 Act No. 155, Section 1.
 All individual life insurance policies must contain in substance the following:  (a) a brief and correct description of its benefits on the lower portion of its first page and an identifying form number on the lower left hand corner of its first page;  (b) a provision stating clearly, understandably, and conspicuously on the first page that the policyholder is permitted to return the policy within a period of not less than ten days of its delivery to the policyholder. If replacement of insurance is involved, the policyholder is permitted to return the policy within a period of not less than twenty days of its delivery to the policyholder. If the policy was solicited by a direct response insurer rather than through a licensed insurance agent, the provision must state that the policyholder is permitted to return the policy within a period of not less than thirty-one days. The entire premium paid by the policyholder must be returned immediately to the policyholder;  (c) a provision stating who is authorized by the insurer to waive, alter, or change any of the terms or conditions of the policy. It may also state that no agent has the power or authority to waive, change, or alter any of the terms or conditions of the policy;  (d) a provision that the policy and any rider or supplemental benefits attached to the policy are incontestable as to the truth of the application for insurance and to the representations of the insured individual after they have been in force during the lifetime of the insured for a period of two years from their date of issue. Any rider or supplemental benefits subsequently attached to the policy are incontestable as to the truth of the application for the rider or supplemental benefits and to the representations of the insured individual after they have been in force during the lifetime of the insured for a period of two years from their date of issue. If an insurer initiates a mutual rescission or institutes proceedings to vacate a policy on the ground of the falsity of the representations contained in the application for the policy, the proceedings or mutual rescission must commence within the time permitted in this subsection;  (e) a provision that if it is found that the age or sex of the insured, or of any individual considered in determining the premium, has been misstated, any amount payable or benefit accruing under the policy is that as the premium would have purchased according to the correct age or sex;  (f) a provision that when a policy becomes a claim by the death of the insured, settlement must be made upon receipt of proof of death. When a policy provides for payment of its proceeds in a lump sum upon the death of the insured and the insurer fails to pay the proceeds within thirty days of submission of proof of death and all necessary claim papers needed in order to pay the claim properly, the payment must include interest at the legal rate of interest from the date of death of the insured until the date the claim is paid;  (g) a provision stating how the beneficiary is designated and how the beneficiary may be changed;  (h) a provision stating the amount of premium and the time and manner payable. If the death of the insured occurs during a period for which the premium has been paid, the insurer shall add to the policy proceeds a refund of any premium paid for any period beyond the date of death of the insured, provided such premium was not waived under any policy provision for waiver of premium;  (i) a provision that the insured is entitled to a grace period of not less than thirty-one days within which the payment of any premium after the first may be made. During the grace period, the policy continues in full force. If a claim arises under the policy during the grace period, the amount of any premium due or overdue may be deducted from any amount payable under the policy in settlement;  (j) a provision that the policy may be reinstated at any time within three years after the date of default in the payment of any premium, unless the policy has been surrendered for its cash value or unless the extended term insurance, if any, has expired, upon evidence of insurability satisfactory to the insurer and the payment of all overdue premiums and payment (or within the limits permitted by the then cash value of the policy reinstatement) of any other indebtedness to the insurer upon the policy with interest as to both premiums and indebtedness at a rate not exceeding eight percent a year compounded annually. However, acceptance of all or any part of a premium more than thirty days in arrears by the agent or company without requiring reinstatement application continues the policy in force without any lapse of coverage;  (k) a provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy. Except as provided in this section, any dividend becoming payable is, at the option of the party entitled to elect the option, either payable in cash or applied to any one of the other dividend options as may be provided by the policy. If other dividend options are provided, the policy must further state which option is automatically effective if the party has not elected some other option. If a policy specifies a period within which the other option may be elected, this period must be not less than thirty days following the date on which the dividend is due and payable. If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus becoming payable or apportioned while the insurance is in force under the nonforfeiture provision will be applied in the manner set forth in the policy;  (l) a provision that after three full years' premiums have been paid, and after the policy has a cash surrender value, and while no premium is in default beyond the grace period for payment, the insurer will loan on the execution of a proper note or loan agreement by the owner of the policy, or on proper assignment of the policy and on the sole security of the policy, at the option of the owner of the policy, an amount not exceeding the cash value of the policy at the end of the current policy year including any dividend additions to the policy. The company may deduct from the loan value or from the proceeds of the loan any existing indebtedness on or secured by the policy not already deducted in determining the cash value, including interest due or accrued, and any unpaid balance of the premium for the current policy year, and may collect interest in advance of the loan through the end of the current policy year. The policy must reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for six months after application for the loan. The policy may also provide that if interest on any indebtedness is not paid when due, it must then be added to the existing indebtedness and bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy, then the policy terminates, but not until at least thirty days' notice has been mailed by the insurer to the last known address of the insured or policy owner and to that of any assignee of record on file with the insurer. The policy, at the insurer's option, may provide for an automatic premium loan, subject to an election of the party entitled to elect. No condition other than as provided in this subsection may be exacted as a prerequisite to any loan. This subsection does not apply to term insurance or to term insurance benefits provided by rider or supplemental policy provisions;  (m) a provision that is in accordance with Sections 38-63-240 to 38-63-280;  (n) a provision that is in accordance with Article 5, Chapter 63, Title 38, Standard Nonforfeiture Law for Life Insurance.  The director or his designee may approve policies with provisions which vary from the provisions required in this section if the provisions are more favorable to the insured or if the provisions are not applicable because of the nature of the product.  HISTORY: Former 1976 Code Section 38-63-220 [1985 Act No. 189, Section 1.] recodified as Section 38-53-210 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-250 [1947 (45) 322; 1950 (46) 2041; 1952 Code Section 37-161; 1962 Code Section 37-161] recodified as Section 38-53-210 by 1987 Act No. 155, Section 1; 1988 Act No. 482, Section 1; 1993 Act No. 181, Section 725; 2022 Act No. 191 (H.4220), Section 2, eff May 16, 2022.  Effect of Amendment  2022 Act No. 191, Section 2, in (d), in the third sentence, inserted "initiates a mutual rescission or" following "If an insurer" and "or mutual rescission" following "the proceedings".
 (A) If an individual life insurance policy contains a suicide provision, it may not limit payment of benefits for a period more than two years from the date of issue of the policy and it must provide for at least the return of premiums paid on the policy.  (B) An individual life insurance policy or rider to such a policy delivered or issued for delivery in this State may exclude or restrict liability in the event of death occurring while the insured is a resident in a specified foreign country or countries, but except as provided in subsection (A) may not contain any provision excluding or restricting liability in the event of death caused in a certain specified manner, except as a result of:  (1) death as a result of war, declared or undeclared, or any act or hazard of such a war;  (2) death as a result of operating, riding, or descending from an aircraft unless the insured is a passenger and the aircraft is operated commercially to transport passengers for hire or by a private business to transport personnel or guests;  (3) death as a result of hazardous occupations or hazardous sports specified in the policy or rider.  If death is caused in a manner excluded in the policy or rider, the policy must provide for at least the return of premiums paid on the policy less any indebtedness to the insurer on the policy.  (C) If an individual life insurance policy or rider contains any exclusions or restrictions of liability as allowed in subsection (B), the policy or rider must have a prominent stamp of notice of these exclusions or restrictions on the face of it and the insurer is required to have a separate form acknowledging the exclusions of liability signed by the owner of the policy.  HISTORY: 1988 Act No. 482, Section 3.
 (A) An insurer may rescind a life insurance policy within the two-year contestability period in Section 38-63-220(d) by:  (1) a mutual rescission agreement executed by all parties based on false statements included in the application; or  (2) proving a fraudulent or material misrepresentation by clear and convincing evidence in a court of competent jurisdiction.  (B) Mutual rescission of a policy may be accomplished by:  (1) if the owner is living, mailing a certified letter to the last known address on record of the insured or policy owner. If the owner is deceased, mailing a certified letter to the beneficiary and the deceased's estate, notifying the estate, insured, policy owner, or beneficiary, as appropriate, that the insurer is seeking a mutual rescission of the policy. The letter must state the policy is being rescinded for false statements included in the application and include the important notice language set forth in subsection (C). The letter must also specify which statements in the application were false along with a brief explanation of the facts supporting the determination that the statements were false;  (2) including a check reimbursing the insured, policy owner, or beneficiary the premium paid to the insurer with language stamped on the back of the check that reads: "I understand that cashing or depositing this check voids the policy and no benefits will be payable under the policy and am agreeing to the rescission of this policy"; and  (3) signing and cashing or depositing the premium reimbursement check by the insured, policyowner, or beneficiary, which will be deemed an acceptance of the proposed mutual rescission of the policy.  (C) Any certified letter proposing the rescission of a life insurance policy during the contestability period must include the following language in 12-point bold face type:  "IMPORTANT NOTICE:  You are the insured, owner, or beneficiary of an insurance policy the company proposes to rescind. This letter is notice the company seeks your consent to void and rescind the policy issued to you or that names you as a beneficiary based on false statements made in the application for insurance. If rescinded, the policy is void and no benefits will be payable under the policy. You do not have to agree to the rescission of this policy. If you do not agree, do not cash or deposit the enclosed check. Return it to the insurer or destroy it.  By cashing or depositing the enclosed premium reimbursement check, you are agreeing to rescind this policy. No benefits will be due or payable under the voided policy. If you do not agree to rescind this policy, the insurer has the right, in its sole discretion, to bring a court action to rescind the policy in accordance with South Carolina law.  You also have the right to bring an action in court if your policy is canceled or your claim for benefits is denied for material misrepresentation.  You may want to speak with an attorney about this notice. If you have any questions concerning this proposal, either you or your attorney may contact the insurer at the number listed in the letter.  Information regarding the specific misrepresentation that was made in your policy and a brief explanation of the insurer's determination that the representation is false is included with this letter."  (D) Insurance policies that are guaranteed issue or are not underwritten are not subject to mutual rescission.  HISTORY: 2022 Act No. 191 (H.4220), Section 1, eff May 16, 2022.
 Life insurance policies issued after May 1, 1985, may not provide for policy loan interest rates of more than eight percent per annum, except as provided in Section 38-63-250.  HISTORY: Former 1976 Code Section 38-63-240 [1985 Act No. 189, Section 1] recodified as Section 38-53-230 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-730 [1984 Act No. 432, Section 3] recodified as Section 38-53-230 by 1987 Act No. 155, Section 1.
 (a) In the alternative life insurers may issue policies that permit an adjustable maximum interest rate established from time to time by the life insurer as permitted by law. These adjustable maximum interest rates may not exceed the higher of the following:  (1) the Published Monthly Average for the calendar month ending two months before the date on which the rate is determined; or  (2) the rate used to compute the cash surrender values under the policy during the applicable period plus one percent per annum. "Published Monthly Average" means Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto or, if Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the department.  (b) If the maximum rate of interest is determined pursuant to this section, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for the policy.  (c) The maximum rate for each policy must be determined at regular intervals but only once each twelve months.  (d) At the intervals specified in the policy:  (1) the rate being charged may be increased whenever the increase as determined under subsection (a) would increase the rate by one-half percent or more per annum, but not more than twice in any calendar year;  (2) the rate being charged must be reduced whenever the reduction as determined under subsection (a) would decrease that rate by one-half percent or more per annum.  (e) The life insurer shall:  (1) notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;  (2) notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so, but in no event later than sixty days after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in item (3);  (3) send to policyholders with loans at least thirty days' advance notice of any increase in the rate and within due course notify the policyholder of any decrease in the interest rate;  (4) include in the notices required above the substance of the pertinent provisions of Section 38-63-240 or subsections (a) and (b).  (f) The loan value of the policy must be determined in accordance with the provisions of this article but no policy may terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.  (g) The substance of the pertinent provisions of Section 38-63-240 or subsections (a) and (b) must be set forth in the policies to which they apply.  (h) For the purposes of this section:  (1) the rate of interest on policy loans hereunder shall include the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy;  (2) policy loan includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due;  (3) policyholder includes the owner of the policy or the person designated to pay premiums, if different, as shown on the records of the life insurer;  (4) policy includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.  However, before May 1, 1986, no life insurer may issue policies that permit such rates unless at the same time it also makes available policies providing for a rate of interest under Section 38-63-240.  HISTORY: Former 1976 Code Section 38-63-250 [1985 Act No. 189, Section 1] recodified as Section 38-53-240 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-9-720 [1984 Act No. 43, Section 2] and 38-9-740 [1984 Act No. 432, Section 4] recodified as Section 38-63-250 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 726.
 Notwithstanding any other provision of this article, for life insurance policies having a face value of less than five thousand dollars, life insurers may issue policies with an adjustable maximum policy loan interest rate when the policy loan is three hundred dollars or more, but, if the policy loan is less than three hundred dollars, a fixed policy loan interest rate of not more than eight percent per annum must be charged.  HISTORY: Former 1976 Code Section 38-63-260 [1985 Act No. 189, Section 1] recodified as Section 38-53-250 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-760 [1984 Act No. 432, Section 6] recodified as Section 38-63-250 by 1987 Act No. 155, Section 1.
 The provisions of Sections 38-63-240 to 38-63-260 and of Section 38-63-280 do not apply to any insurance contract issued before May 1, 1985, unless the policyholder requests in writing the applicability of the provisions.  HISTORY: Former 1976 Code Section 38-63-270 [1985 Act No. 189, Section 1] recodified as Section 38-53-260 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-760 [1984 Act No. 432, Section 6] recodified as Section 38-63-260 by 1987 Act No. 155, Section 1.
 At the time an insurer makes a policy or premium loan that provides for periodic adjustment of policy or premium loan interest rates, the insurer shall provide a separate written disclosure form to the policyholder using plain understandable language that:  (a) Provides an explanation of the dollar impact on policy or premium loans when the adjustable interest rate moves up or down.  (b) Provides an explanation of the impact of a policy or premium loan on the benefits payable to the policyholder upon the death of the insured if a policy or premium loan remains unpaid at the time of death of the insured.  HISTORY: Former 1976 Code Section 38-63-280 [1985 Act No. 189, Section 1] recodified as Section 38-53-270 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-770 [1984 Act No. 432, Section 7] recodified as Section 38-63-270 by 1987 Act No. 155, Section 1.
 Life insurers may quote lower rates to female applicants because of their more favorable life expectancy.  HISTORY: Former 1976 Code Section 38-63-30 [1985 Act No. 189, Section 1] recodified as Section 38-53-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-100 [1960 (51) 1758; 1962 Code Section 37-148.1] recodified as Section 38-63-30 by 1987 Act No. 155, Section 1.
 (A) Proceeds and cash surrender values of life insurance payable to a beneficiary other than the insured's estate in which such proceeds and cash surrender values are expressed to be for the primary benefit of the insured's spouse, children, or dependents are exempt from creditors of the insured whether or not the right to change the beneficiary is reserved and whether or not the policy is payable to the insured if the beneficiary dies first except:  (1) if the insured has filed a petition in bankruptcy within two years of purchasing the insurance, such proceeds or cash surrender are only exempt as permitted by Section 15-41-30; or  (2) the amount of premiums paid and interest thereon with intent to defraud creditors;  (3) a creditor possessing a valid assignment from the policyowner may recover from either the cash surrender value or the proceeds of the life insurance policy the amount secured by the assignment with interest.  (B) Proceeds of life insurance or annuity contracts, by agreement, may be held by the insurer exempt from claims of the beneficiary's creditors.  (C) Proceeds of group life insurance contracts are exempt from claims of the creditors of the insured.  (D) Benefits of accident and disability contracts are exempt from claims of the creditors of the insured.  HISTORY: Former 1976 Code Section 38-63-40 [1985 Act No. 189, Section 1] recodified as Section 38-53-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-340 [1947 (45) 322; 1952 Code Section 37-169; 1962 Code Section 37-169] recodified as Section 38-63-40 by 1987 Act No. 155, Section 1; 1988 Act No. 305, Section 1; 1993 Act No. 89, Section 1.
 When the proceeds of a life insurance policy becoming a claim by death of the insured are left with an insurance company under a trust or other agreement, the benefits accruing thereunder after the death of the insured are not transferable nor subject to computation or encumbrance nor to legal process, except in an action to recover for necessaries if the parties to the trust or other agreement so agree.  HISTORY: Former 1976 Code Section 38-63-50 [1985 Act No. 189, Section 1] recodified as Section 38-53-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-350 [1953 (48) 493; 1962 Code Section 37-169.1] recodified as Section 38-63-50 by 1987 Act No. 155, Section 1.
 (1) This article is known and may be cited as the "Standard Nonforfeiture Law for Life Insurance".  (2) The term "operative date of the valuation manual" means January first of the first calendar year that the valuation manual, as defined in Section 38-9-180, is effective.  HISTORY: Former 1976 Code Section 38-7-10 [1960 (51) 1554; 1962 Code Section 37-171; 1982 Act No. 403, Section 1] recodified as Section 38-63-510 by 1987 Act No. 155, Section 1; 2016 Act No. 148 (S.850), Section 2, eff April 21, 2016.  Effect of Amendment  2016 Act No. 148, Section 2, inserted paragraph identifier (1) and added (2).
 No policy of life insurance, except as stated in Section 38-63-640, may be delivered or issued for delivery in this State unless it contains in substance the following provisions or corresponding provisions which, in the opinion of the director or his designee, are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified and are essentially in compliance with Section 38-63-630:  (1) In the event of default in any premium payment, the insurer shall grant, upon proper request not later than sixty days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as may be hereinafter specified. In lieu of the stipulated paid-up nonforfeiture benefit, the insurer may substitute, upon proper request not later than sixty days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits.  (2) Upon surrender of the policy within sixty days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the insurer shall pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be specified in this article.  (3) A specified paid-up nonforfeiture benefit becomes effective as specified in the policy unless the person entitled to make the election elects another available option not later than sixty days after the due date of the premium in default.  (4) If the policy has become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the insurer shall pay, upon surrender of the policy within thirty days after any policy anniversary, a cash surrender value of such amount as may be specified in this article.  (5) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary either during the first twenty policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy.  (6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that the method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered.  Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.  The insurer shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand therefor with surrender of the policy.  HISTORY: Former 1976 Code Section 38-7-20 [1960 (51) 1554; 1962 Code Section 37-172; 1964 (53) 2139; 1982 Act No. 403, Section 2] recodified as Section 38-63-520 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 727.
 (1) In event of default. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by Section 38-63-520, must be an amount not less than the excess, if any, of the present value on such anniversary of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of (a) the then present value of the adjusted premiums as defined in Sections 38-63-570 to 38-63-600, corresponding to premiums which would have fallen due on and after such anniversary, and (b) the amount of indebtedness to the insurer on the policy.  Any policy issued on or after the operative date of Section 38-63-600, as defined therein, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in the first paragraph of this section must be an amount not less than the sum of the cash surrender value as defined in that paragraph for an otherwise similar policy issued at the same age without the rider or supplemental policy provision and the cash surrender value as defined in that paragraph for a policy which provides only the benefits otherwise provided by the rider or supplemental policy provision.  Any family policy issued on or after the operative date of Section 38-63-600, as defined therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age of seventy-one, the cash surrender value referred to in the first paragraph of this section must be an amount not less than the sum of the cash surrender value as defined in that paragraph for an otherwise similar policy issued at the same age without the term insurance on the life of the spouse and the cash surrender value as defined in that paragraph for a policy which provides only the benefits otherwise provided by the term insurance on the life of the spouse.  (2) On paid-up policies. Any cash surrender value available within thirty days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by Section 38-63-620, must be an amount not less than the present value on such anniversary of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the policy.  HISTORY: Former 1976 Code Section 38-7-30 [1960 (51) 1554; 1962 Code Section 37-173; 1982 Act No. 403, Section 3] recodified as Section 38-63-530 by 1987 Act No. 155, Section 1.
 Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary must be such that its present value as of such anniversary is at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by this article in the absence of the condition that premiums must have been paid for at least a specified period.  HISTORY: Former 1976 Code Section 38-7-40 [1960 (51) 1554; 1962 Code Section 37-174] recodified as Section 38-63-540 by 1987 Act No. 155, Section 1.
 Any cash surrender value and any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary must be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary.  HISTORY: Former 1976 Code Section 38-7-50 [1960 (51) 1554; 1962 Code Section 37-175] recodified as Section 38-63-550 by 1987 Act No. 155, Section 1.
 Notwithstanding the provisions of Section 38-63-530, additional benefits payable: (a) in the event of death or dismemberment by accident or accidental means; (b) in the event of total and permanent disability; (c) as reversionary annuity or deferred reversionary annuity benefits; (d) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this article would not apply; (e) as term insurance on the life of a child or on the lives of children provided in a policy, on the life of a parent of the child, if the term insurance expires before the child's age is twenty-six, is uniform in amount after the child's age is one, and has not become paid up by reason of the death of a parent of the child; and (f) as other policy benefits additional to life insurance and endowment benefits, and premiums for all these additional benefits, must be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this article, and these additional benefits are not required to be included in any paid-up nonforfeiture benefits.  HISTORY: Former 1976 Code Section 38-7-60 [1960 (51) 1554; 1962 Code Section 37-175.1; 1964 (53) 2139] recodified as Section 38-63-560 by 1987 Act No. 155, Section 1.
 This section does not apply to policies issued on or after the operative date of Section 38-63-600 as defined therein. Except as provided in the third paragraph of this section the adjusted premiums for any policy must be calculated on an annual basis and must be the uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums must be equal to the sum of: (a) the then present value of the future guaranteed benefits provided for by the policy; (b) two percent of the amount of insurance, if the insurance is uniform in amount, or of the equivalent uniform amount as defined in this section if the amount of insurance varies with duration of the policy; (c) forty percent of the adjusted premium for the first policy year; and (d) twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. However, in applying the percentages specified in terms (c) and (d) above no adjusted premium may be considered to exceed four percent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this section is the date as of which the rated age of the insured is determined.  In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of this section is considered to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the inception of the insurance as the benefits under the policy. However, in the case of a policy providing a varying amount of insurance issued on the life of a child under the age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by the policy at age ten.  The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision is equal to (i) the adjusted premiums for an otherwise similar policy issued at the same age without the term insurance benefits, increased, during the period for which premiums for the term insurance benefits are payable, by (ii) the adjusted premiums for the term insurance, the foregoing items (i) and (ii) being calculated separately and as specified in the first two paragraphs of this section except that, for the purposes of (b), (c), and (d) of the first such paragraph, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (ii) must be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (i).  HISTORY: Former 1976 Code Section 38-7-70 [1960 (51) 1554; 1962 Code Section 37-175.2; 1964 (53) 2139; 1982 Act No. 403, Section 4] recodified as Section 38-63-570 by 1987 Act No. 155, Section 1.
 This section does not apply to industrial policies issued on or after the operative date of Section 38-63-600 as defined therein. All adjusted premiums and present values referred to in this article must, for policies of industrial insurance issued prior to January 1, 1968, be calculated on the basis of either the 1941 Standard Industrial Mortality Table or the Commissioners' 1961 Standard Industrial Mortality Table as may be elected by the insurer and approved by the Secretary of Commerce or his designee. However, adjusted premiums and present values for all policies of industrial insurance issued on or after January 1, 1968, must be calculated on the basis of the latter table. All calculations must be made on the basis of the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits so long as the rate of interest does not exceed three and one-half percent per annum, except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after January 3, 1976, and prior to January 1, 1979, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after January 1, 1979, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding six and one-half percent per annum may be used. However, in calculating the present value of any paid-up term insurance with the accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than one hundred thirty percent of the rates of mortality according to the 1941 Standard Industrial Mortality Table, if this table is used for calculating adjusted premiums and present values, or more than those shown in the Commissioners' 1961 Industrial Extended Term Insurance Table, if the Commissioners' 1961 Standard Industrial Mortality Table is used for calculating adjusted premiums and present values. For insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on any other table of mortality as may be specified by the insurer and approved by the Secretary of Commerce or his designee.  HISTORY: Former 1976 Code Section 38-7-80 [1960 (51) 1554; 1962 Code Section 37-175.3; 1964 (53) 2139; 1976 Act No. 452 Section 1; 1978 Act No. 577 Section 1; 1982 Act No. 403, Section 5] recodified as Section 38-63-580 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 728; 1994 Act No. 361, Section 9.
 This section does not apply to ordinary policies issued on or after the operative date of Section 38-63-600 as defined therein. In case of ordinary policies, all adjusted premiums and present values referred to in this article must be calculated on the basis of the Commissioners' 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits so long as the rate of interest does not exceed three and one-half percent per annum, except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after January 3, 1976, and prior to January 1, 1979, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after January 1, 1979, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding six and one-half percent per annum may be used, and, for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners' 1958 Extended Term Insurance Table, and, for insurance issued on a substandard basis, the calculation of the adjusted premiums and present values may be based on any other table of mortality as may be specified by the insurer and approved by the director or his designee.  HISTORY: Former 1976 Code Section 38-7-90 [1960 (51) 1554; 1962 Code Section 37-175.4; 1976 Act No. 452, Section 2; 1978 Act No. 577 Section 2; 1982 Act No. 403, Section 6] recodified as Section 38-63-590 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 729.
 Industrial life insurance is that form of life insurance provided by an individual contract under which premiums are payable weekly or monthly and having the words "INDUSTRIAL POLICY" printed in bold print upon the face of the policy as part of the title. No policy of life insurance delivered or issued for delivery in South Carolina may use industrial mortality tables unless the policy is an industrial life insurance policy.  HISTORY: Former 1976 Code Section 38-63-60 [1985 Act No. 189, Section 1] recodified as Section 38-53-60 by 1987 Act No. 155, Section 1; New Section 38-63-60 enacted by 1988 Act No. 482, Section 2.
 (1) This section applies to all policies issued on or after the operative date of this section as defined herein. Except as provided in subsection (7) of this section, the adjusted premiums for any policy must be calculated on an annual basis and must be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums must be equal to the sum of (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) one percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and (iii) one hundred twenty-five percent of the nonforfeiture net level premium as hereinafter defined. In applying the percentage specified in (iii) above, no nonforfeiture net level premium may be considered to exceed four percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years. The date of issue of a policy for the purpose of this section is the date as of which the rated age of the insured is determined.  (2) The nonforfeiture net level premium must be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of the policy on which a premium falls due.  (3) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values must initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums, and present values must be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.  (4) Except as otherwise provided in subsection (7) of this section, the recalculated future adjusted premiums for any such policy must be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards and also excluding any uniform annual contract charge or policy fee specified by the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums must be equal to the excess of (A) the sum of (i) the then present value of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.  (5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, must be the sum of (i) one percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten policy years subsequent to the time of the most recent previous change or, if there has been no previous change, the date of issue of the policy; and (ii) one hundred twenty-five percent of the increase, if positive, in the nonforfeiture net level premium.  (6) The recalculated nonforfeiture net level premium must be equal to the result obtained by dividing (A) by (B) where (A) equals the sum of (i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and (ii) the present value of the increase in future guaranteed benefits provided for by the policy, and (B) equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.  (7) Notwithstanding any other provisions of this section to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for the substandard policy may be calculated as if it were issued to provide the higher uniform amounts of insurance on the standard basis.  (8) All adjusted premiums and present values referred to in this article:  (A) must for all policies of ordinary insurance be calculated on the basis of (i) the Commissioners' 1980 Standard Ordinary Mortality Table or (ii) at the election of the insurer for any one or more specified plans of life insurance, the Commissioners' 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors;  (B) must for all policies of industrial insurance be calculated on the basis of the Commissioners' 1961 Standard Industrial Mortality Table; and  (C) must for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this section for policies issued in that calendar year. However:  (a) At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this section, for policies issued in the immediately preceding calendar year.  (b) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by Section 38-63-520, must be calculated on the basis of the mortality table and rate of interest used in determining the amount of the paid-up nonforfeiture benefit and paid-up dividend additions, if any.  (c) An insurer may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.  (d) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners' 1980 Extended Term Insurance Table for policies of ordinary insurance and not more than the Commissioners' 1961 Industrial Extended Term Insurance Table for policies of industrial insurance.  (e) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables.  (f) For policies issued prior to the operative date of the valuation manual, any Commissioners' Standard ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the department for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners' 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners' 1980 Extended Term Insurance Table.  For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners' Standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners' 1980 Standard Ordinary Mortality Table with or without the Ten-Year Select Mortality Factors or for the Commissioners' 1980 Extended Term Insurance Table. If the director approves, by regulation, any Commissioners' Standard ordinary mortality table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfetiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.  (g) For policies issued prior to the operative date of the valuation manual, any Commissioners' industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the department for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners' 1961 Standard Industrial Mortality Table or the Commissioners' 1961 Industrial Extended Term Insurance Table.  For policies issued on or after the operative date of the valuation manual, the valuation manual must provide the Commissioners' Standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners' 1961 Standard Industrial Mortality Table or the Commissioners' 1961 Industrial Extended Term Insurance Table. If the director approves, by regulation, any Commissioners' Standard industrial mortality table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.  (9) The nonforfeiture interest rate is:  (a) for policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate is per annum for any policy issued in a particular calendar year must be equal to one hundred twenty-five percent of the calendar year statutory valuation interest rate for the policy as defined in the Standard Valuation Law rounded to the nearest one-quarter of one percent, provided, however, that the nonforfeiture interest rate shall not be less than four percent; and  (b) for policies issued on and after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year must be provided by the valuation manual.  (10) Notwithstanding any other provision of law, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values does not require refiling of any other provisions of that policy form.  (11) After the effective date of this section, any insurer may file with the department a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1989, which shall be the operative date of this section for that insurer. If an insurer does not make that election, the operative date of this section for that insurer is January 1, 1989.  HISTORY: Former 1976 Code Section 38-7-91 [1982 Act No. 403, Section 7] recodified as Section 38-63-600 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Sections 730, 731; 2016 Act No. 148 (S.850), Section 3, eff April 21, 2016.  Effect of Amendment  2016 Act No. 148, Section 3, in (8)(f) and (8)(g), substituted "For policies issued prior to the operative date of the valuation manual, any Commissioners' Standard" for "Any", and added the undesignated paragraphs; and rewrote (9), adding references to the valuation manual, and in (a) added the text following "nearest one-quarter of one percent".
 In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience or, in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in Sections 38-63-520 to 38-63-600, then:  (a) The director or his designee must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by Sections 38-63-520 to 38-63-600.  (b) The director or his designee must be satisfied that the benefits and the pattern of premiums of that plan are not misleading to prospective policyholders or insureds.  (c) The cash surrender values and paid-up nonforfeiture benefits provided by the plan may not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this article, as determined by regulations promulgated by the department.  HISTORY: Former 1976 Code Section 38-7-92 [1982 Act No. 403, Section 7] recodified as Section 38-63-610 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 732.
 Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, must be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in Sections 38-63-530, 38-63-540, and 38-63-570 to 38-63-600 may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, may not be less than the amounts used to provide such additions.  HISTORY: Former 1976 Code Section 38-7-100 [1960 (51) 1554; 1962 Code Section 37-175.5; 1982 Act No. 403, Section 8] recodified as Section 38-63-620 by 1987 Act No. 155, Section 1.
 This section, in addition to all other applicable sections of this article, applies to all policies issued on or after January 1, 1986. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary must be in an amount which does not differ by more than two-tenths of one percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years, from the sum of (a) the greater of zero and the basic cash value hereinafter specified and (b) the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.  The basic cash value must be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after the anniversary. The effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in Section 38-63-530 or 38-63-570, whichever is applicable, must be the same as are the effects specified in Section 38-63-530 or 38-63-570, whichever is applicable, on the cash surrender values defined in that section.  The nonforfeiture factor for each policy year must be an amount equal to a percentage of the adjusted premium for the policy year, as defined in Section 38-63-570 or 38-63-600, whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, the percentage:  (a) Must be the same percentage for each policy year between the second policy anniversary and the later of (i) the fifth policy anniversary and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths of one percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years.  (b) Must be such that no percentage after the later of the two policy anniversaries specified in the preceding item (a) may apply to fewer than five consecutive policy years.  No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in Section 38-63-570 or 38-63-600, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.  All adjusted premiums and present values referred to in this section must for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other sections of this article. The cash surrender values referred to in this section include any endowment benefits provided for by the policy.  Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment must be determined in ways consistent with the ways specified for determining the analogous minimum amounts in Sections 38-63-520 to 38-63-540, 38-63-600, and 38-63-620. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as items (a) through (f) of subsection (8) of Section 38-63-600 shall conform with the principles of this section.  HISTORY: Former 1976 Code Section 38-7-101 [1982 Act No. 403, Section 9] recodified as Section 38-63-630 by 1987 Act No. 155, Section 1.
 This article does not apply to:  (a) any reinsurance;  (b) group insurance;  (c) pure endowment;  (d) annuity or reversionary annuity contract;  (e) any term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy;  (f) any term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in Sections 38-63-570 to 38-63-600, is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy;  (g) any policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in Sections 38-63-530 to 38-63-600, exceeds two and one-half percent of the amount of insurance at the beginning of the same policy year;  (h) any policy which is delivered outside this State through an agent or other representative of the company issuing the policy.  For purposes of determining the applicability of this article, the age at expiry for a joint term life insurance policy is the age of expiry of the oldest life.  HISTORY: Former 1976 Code Section 38-7-110 [1960 (51) 1554; 1962 Code Section 37-175.6; 1982 Act No. 403, Section 10] recodified as Section 38-63-640 by 1987 Act No. 155, Section 1.
 An insurer may file with the department a written notice of its election to comply with the provisions of this article after a specified date before January 1, 1966. After the filing of the notice, then upon the specified date, which shall be the operative date for that insurer, this article becomes operative with respect to the policies thereafter issued by the insurer. If an insurer makes no election, the operative date of this article for that insurer is January 1, 1966.  HISTORY: Former 1976 Code Section 38-7-120 [1960 (51) 1554; 1962 Code Section 37-175.7] recodified as Section 38-63-650 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 733.
 The Director of the Department of Insurance or his designee shall promulgate regulations to implement the provisions of this chapter.  HISTORY: 2000 Act No. 312, Section 13.
 When an individual life insurance policy provides for payment of its proceeds in a lump sum upon the death of the insured and the insurer fails to pay the proceeds within thirty days of submission of proof of death and all necessary claim papers needed in order to pay the claim properly, the payment must include interest at the legal rate from the date of death of the insured until the date the claim is paid.  HISTORY: Former 1976 Code Section 38-63-80 [1985 Act No. 189, Section 1] recodified as Section 38-53-80 by 1987 Act No. 155, Section 1; New Section 38-63-80 enacted by 1988 Act No. 416.
 When a life insurer refuses to pay a claim on a life insurance policy within thirty days after a demand has been made by the beneficiary of the policy or contract, and a finding on suit of the contract made by the trial judge that the refusal was without reasonable cause or in bad faith, the insurer is liable to pay the beneficiary, in addition to any sum or any amount otherwise recoverable, all reasonable attorneys' fees for the prosecution of the case. The amount of reasonable attorneys' fees must be determined by the trial judge and the amount added to the judgment. If attorneys' fees are allowed and, on appeal by the defendant, the judgment is affirmed, the Supreme Court or the court of appeals shall allow to the respondent an additional sum as the court adjudged reasonable as attorneys' fees of the respondent on the appeal.  HISTORY: Former 1976 Code Section 38-63-90 [1985 Act No. 189, Section 1] recodified as Section 38-53-140 by 1987 Act No. 155, Section 1; New Section 38-63-90 enacted by 1988 Act No. 482, Section 5; 1999 Act No. 55, Section 39.
 No life insurer doing business in this State and no officer, director, or agent of it may issue or circulate or cause or permit to be issued or circulated any estimate, illustration, circular, or statement of any sort misrepresenting the terms of any policy issued by it, the benefits or advantages promised thereby, or the dividends or shares of surplus to be received thereon or may use any name or title of any policy or class of policies misrepresenting the true nature thereof. Violation of this section by an agent or officer of an insurer is a misdemeanor. If an insurer violates or participates in the violation of this section, the insurer is subject to the penalty provisions of Section 38-2-10.  HISTORY: Former 1976 Code Section 38-65-10 [1985 Act No. 137, Section 1] recodified as Section 38-41-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-40 [1947 (45) 322; 1952 Code Section 37-144; 1962 Code Section 37-144] recodified as Section 38-65-10 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 34.
 When the proceeds of a life insurance policy becoming a claim by death of the insured are left with an insurance company under a trust or other agreement, the benefits accruing thereunder after the death of the insured are not transferable nor subject to computation or incumbrance nor to legal process, except in an action to recover for necessaries if the parties to the trust or other agreement so agree.  HISTORY: Former 1976 Code Section 38-9-350 [1953 (48) 493; 1962 Code Section 37-169.1] recodified as Section 38-65-100 by 1987 Act No. 155, Section 1.
 If an individual insured under a group life insurance policy delivered in this State becomes entitled under the terms of the policy to have an individual policy of life insurance issued without evidence of insurability, subject to making of application and payment of the first premium within the period specified in the policy, and if the individual is not given notice of the existence of this right at least fifteen days before the expiration date of the period, the individual has an additional period within which to exercise the right. Nothing contained in this section may be construed to continue any insurance beyond the period provided in the policy. This additional period expires fifteen days after the individual is given the notice but in no event may the additional period extend beyond sixty days after the expiration date of the period provided in the policy. Written notice presented to the individual or mailed by the policyholder to the last known address of the individual or mailed by the insurer to the last known address of the individual as furnished by the policyholder is notice for the purpose of this section.  HISTORY: 1988 Act No. 333, Section 3.
 When a group life insurance policy provides for payment of its proceeds in a lump sum upon the death of an insured and the insurer fails to pay the proceeds within thirty days of submission of proof of death, the payment must include interest at the legal rate of interest from the date of death of that insured until the date the claim is paid.  HISTORY: 1988 Act No. 482, Section 6.
 No insurer, or its employee or agent, may make any misleading representations or incomplete or fraudulent comparisons of any life insurance policies or insurers for the purpose of inducing, or which may tend to induce, any person to lapse, forfeit, surrender, terminate, or return any life insurance policy.  HISTORY: Former 1976 Code Section 38-65-20 [1985 Act No. 137, Section 2] recodified as Section 38-41-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-50 [1956 (49) 1814; 1962 Code Section 37-144.1] recodified as Section 38-65-20 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 35.
 No policy of group life insurance may be delivered in this State unless it contains in substance the following provisions or provisions which in the opinion of the director or his designee are more favorable to the persons insured or at least as favorable to the persons insured and more favorable to the policyholder. However, (a) items (6) to (11), inclusive, do not apply to policies issued to a creditor, (b) the standard provisions required for individual life insurance policies do not apply to group life insurance policies, and (c) if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision which in the opinion of the director or his designee is equitable to the insured persons and to the policyholder, but nothing may be construed in this section to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies:  (1) A provision that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the death benefit coverage continues in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder is liable to the insurer for the payment of a pro rata premium for the time the policy was in force during the grace period.  (2) A provision that the validity of the policy may not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue and that no statement made by any person insured under the policy relating to his insurability may be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force before the contest for a period of two years during the person's lifetime nor unless it is contained in a written instrument signed by him.  (3) A provision that a copy of the application, if any, of the policyholder must be attached to the policy when issued, that all statements made by the policyholder or by the persons insured are considered representations and not warranties and that no statement made by any person insured may be used in any contest unless a copy of the instrument containing the statement is or has been furnished to the person or his beneficiary.  (4) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.  (5) A provision specifying an equitable adjustment of premiums or of benefits, or of both, to be made in the event the age or sex of a person insured has been misstated. The provision shall contain a clear statement of the method of adjustment to be used.  (6) A provision that any sum becoming due by reason of the death of the person insured is payable to the beneficiary designated by the person insured, subject to the provisions of the policy in the event there is no designated beneficiary, as to all or any part of the sum, living at the death of the person insured and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of the sum not exceeding two thousand dollars to any person appearing to the insurer to be entitled equitably thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.  (7) A provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable and the rights and conditions set forth in items (8), (9), and (10) of this section.  (8) A provision that if the insurance or any portion of it on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy that person is entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits so long as application for the individual policy is made and the first premium paid to the insurer within thirty-one days after the termination and so long as the following conditions are met:  (a) The individual policy is, at the option of the individual, on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for.  (b) The individual policy is in an amount not in excess of the amount of life insurance which ceases because of the termination, less, in the case of a person whose membership in the class or classes eligible for coverage terminates but who continues in employment in another class, the amount of any life insurance for which the person is or becomes eligible under any other group policy within thirty-one days after the termination. Any amount of insurance which has matured on or before the date of the termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, is not, for the purposes of this provision, included in the amount which is considered to cease because of the termination.  (c) The premium on the individual policy is at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which the person then belongs, and to his age attained on the effective date of the individual policy.  (9) A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of the termination whose insurance terminates and who has been so insured for at least five years before the termination date is entitled to have issued to him by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by item (8) of this section, except that the group policy may provide that the amount of the individual policy may not exceed the smaller of:  (a) the amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which he is or becomes eligible under any group policy issued or reinstated by the same or another insurer within thirty-one days after the termination; and  (b) ten thousand dollars.  (10) A provision that if a person insured under the group policy dies during the period within which he would have been entitled to have an individual policy issued to him in accordance with item (8) or (9) and before the individual policy has become effective the amount of life insurance which he would have been entitled to have issued to him under the individual policy is payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made.  (11) Where active employment is a condition of insurance, a provision that an insured may continue coverage during the insured's total disability by timely payment to the policyholder of that portion, if any, of the premium that would have been required from the insured had total disability not occurred. Unless otherwise provided by law, the continuation must be on a premium-paying basis for a period of six months from the date on which the total disability started, but not beyond the earlier of:  (a) approval by the insurer of continuation of the coverage under any disability provision which the group insurance policy may contain; or  (b) the discontinuance of the group insurance policy.  (12) In the case of a policy issued to a creditor, a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the death benefit first must be applied to reduce or extinguish the indebtedness.  HISTORY: Former 1976 Code Section 38-31-10 [1953 (48) 493; 1956 (49) 2146; 1962 Code Section 37-307] recodified as Section 39-65-210 by 1987 Act No. 155, Section 1; 1988 Act No. 333, Section 4; 1993 Act No. 181, Section 735.
 (1) Notwithstanding any other provision of law, any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder, and the insurer, may assign his rights and benefits under the policy, including, but not limited to, the right to have issued to him an individual policy as set forth in items (8), (9), and (10) of Section 38-65-210 and the right to name a beneficiary. The assignment entitles the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.  (2) Subsection (1) of this section acknowledges, declares, and codifies the existing right of assignment of interest under group life insurance policies by persons insured under those policies.  HISTORY: Former 1976 Code Section 38-65-30 [1985 Act No. 137, Section 3] recodified as Sections 38-41-30, 38-41-40, and 38-41-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-31-20 [1962 Code Section 37-307.1; 1970 (56) 2505] recodified as Section 38-65-30 by 1987 Act No. 155, Section 1.
 Nothing contained in this chapter is considered to prohibit a life insurer from issuing life, term, and endowment insurance on the franchise plan, with or without annuities. The insurance under a franchise agreement or upon a wholesale basis may be written under rates less than the usual rates for the insurance. This insurance is subject to the following provisions:  (1) The term "franchise" or "wholesale" insurance means a life insurance plan under which a number of individual life insurance policies are issued at special rates to a selected group. A special rate is any rate lower than the rate shown in the issuing insurer's manual for individually issued policies of the same type and to insureds of the same class.  (2) No franchise or wholesale life insurance plan may be entered into in this State unless the individuals to whom the insurance is made available are members of a professional association, employees of a common employer or affiliated employers, or unless the insurance is made available in connection with an indebtedness or a contract of sale. The word "employees", as used herein, is considered to include the individual proprietors or partners who constitute the employer or affiliated employers and may include retired employees of any employer or affiliated employer.  (3) The association may not be formed, exist, or be continued for the sole or primary purpose of obtaining such insurance.  (4) For purposes of this section, a professional association means an association whose membership is restricted to one or more of the licensed professions such as medicine, dentistry, pharmacy, law, and accountancy.  (5) Each plan must have an eligibility period for the initial enrollment and for any new employees or members entering, and during this time insurance must be obtained without the requirement of statement of health.  HISTORY: Former 1976 Code Section 38-31-110 [1962 Code Section 37-312; 1969 (56) 699] recodified as Section 38-65-310 by 1987 Act No. 155, Section 1. 1988 Act No. 333, Section 5.
 The right of the insurer to terminate or refuse to renew a life, term, or endowment insurance policy issued on the franchise or wholesale plan is limited to:  (1) nonpayment of premium;  (2) the insured has attained the age limit prescribed in the policy;  (3) the employee's employment in the eligible classes or the member's membership in the eligible association terminates;  (4) the insurer terminates or refuses to renew the insurance on all employees of a common employer or affiliated employers after sixty days' written notice;  (5) participation in the plan falls below any percentage or minimum number specified by the policy.  HISTORY: Former 1976 Code Section 38-31-120 [1962 Code Section 37-312.1; 1969 (56) 699] recodified as Section 38-65-320 by 1987 Act No. 155, Section 1.
 A life, term, or endowment insurance policy on the franchise or wholesale plan which is subject to termination under the provisions of Section 38-65-320 shall contain a conversion privilege not less favorable to the insured than that provided under item (8) of Section 38-65-210.  HISTORY: Former 1976 Code Section 38-31-130 [1962 Code Section 37-312.2; 1969 (56) 699] recodified as Section 38-65-330 by 1987 Act No. 155, Section 1.
 No insurer nor its agent or representative may misrepresent or fail to disclose the conditional nature of the coverage with respect to any policy subject to termination under the provisions of Section 38-65-320. Every advertisement, announcement, or sales presentation with respect to any franchise or wholesale life insurance plan, some or all of the policies issued under which are subject to termination in accordance with Section 38-65-320 shall clearly and affirmatively disclose the conditional nature of the coverage.  Every policy which is subject to termination under the provisions of Section 38-65-320 shall contain a clear and conspicuous statement to that effect in bold face type upon the face and the filing back, if any, of the policy.  HISTORY: Former 1976 Code Section 38-31-130 [1962 Code Section 37-312.2; 1969 (56) 699] recodified as Section 38-65-340 by 1987 Act No. 155, Section 1.
 Franchise or wholesale life insurance policies may not be used to supplement group life insurance on the same lives.  HISTORY: Former 1976 Code Section 38-31-150 [1962 Code Section 37-312.4; 1969 (56) 699] recodified as Section 38-65-350 by 1987 Act No. 155, Section 1.
 The Director of the Department of Insurance or his designee shall promulgate regulations to implement the provisions of this chapter.  HISTORY: 2000 Act No. 312, Section 14.
 No policy of group life insurance may be delivered or issued for delivery in this State unless it conforms to the following description:  (1) A policy of group life insurance may be issued to a trust or to cover the lives of two or more persons who are associated in a common group formed for purposes other than the obtaining of insurance, except that group certificates of credit life insurance may be issued to persons other than those in a common group.  (2) The amounts of life insurance under the policy must be based on some plan or plans precluding individual selection, except that insurance supplemental to the basic coverage may be available to persons insured under the policy.  (3) For groups of twenty-five or more persons no evidence of individual insurability may be required at the time the person first becomes eligible for insurance or within thirty-one days thereafter except for any insurance supplemental to the basic coverage for which evidence of individual insurability may be required. With respect to trusteed groups the phrase "groups of twenty-five" must be applied on a participating unit basis for the purpose of requiring individual evidence of insurability.  (4) Premiums for basic and supplemental coverage must be paid by the policyholder from the policyholder's funds or from funds contributed by the insured persons or from both.  HISTORY: Former 1976 Code Section 38-65-40 [1985 Act No. 137, Section 1] recodified as Section 38-41-60 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 38-31-30 [1953 (48) 493; 1959 (51) 302; 1962 Code Section 37-301; 1976 Act No. 732, Section 1] and 38-31-40 [1953 (48) 493; 1956 (49) 2146; 1962 Code Section 37-302; 1976 Act No. 732 Section 2; 1981 Act No. 45] recodified as Section 38-65-40 by 1987 Act No. 155, Section 1; 1988 Act No. 339, Section 1.
 No mass-marketed life insurance may be effected on a person in this State if the charges to the individual insureds are unreasonable in relation to the benefits provided. "Mass-marketed life insurance" for purposes of this chapter means coverage under any group policy of life insurance which is offered by means of direct response solicitation whether through a sponsoring organization or the mails or other media, except that it does not include coverage offered to an employee or union member through his employer or union, to a member of a professional association, to a member of a national association of retired or aged persons through the association, or to a member of a national association of war veterans either chartered by Congress or composed of veterans of a particular ethnic, racial, or religious background through the association. This coverage offered through a trust formed by one or more employers, labor unions, or both, or by a professional association or association of retired or aged persons or war veterans to provide insurance coverage for employees, union members, and their dependents or for association members and their dependents is considered to be offered through the employer, union, or association, respectively. "Direct response solicitation" means any offer by an insurer to persons in this State to effect life insurance coverage which enables the individual to apply or enroll for the insurance on the basis of that offer.  HISTORY: Former 1976 Code Section 38-65-50 [1985 Act No. 137, Section 5] recodified as Section 38-41-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-31-50 [1953 (48) 493; 1962 Code Section 37-303; 1976 Act No. 732 Section 3] recodified as Section 38-65-50 by 1987 Act No. 155, Section 1.
 (1) No life insurance coverage may be extended to residents of this State under a policy of group insurance issued outside this State which does not provide in substance the provisions of Section 38-65-210 unless the director or his designee determines that certain provisions are not appropriate for the coverage provided.  (2) Any insurer extending life insurance under a group policy issued outside this State to residents of this State shall comply with the requirements of this State relating to advertising and to claims settlement practices with respect to the insurance.  (3) Upon request of the director or his designee, copies of policies and certificates under a policy of group life insurance issued outside this State and covering residents of this State must be made available on an informational basis only. However, mass-marketed life insurance policies and certificates must have approval of the director or his designee pursuant to Section 38-61-20 before they can be offered for sale to residents of this State.  HISTORY: Former 1976 Code Section 38-65-60 [1985 Act No. 137, Section 6] recodified as Section 38-41-30 by 1987 Act No. 155, Section 1; Former Section 38-31-60 [1953 (48) 493; 1962 Code Section 37-304; 1976 Act No. 732 Section 4] recodified as Section 38-65-60 by 1987 Act No. 155, Section 1; 1988 Act No. 333, Section 1; 1993 Act No. 181, Section 734; 2001 Act No. 82, Section 22, eff July 20, 2001.
 Any policy issued pursuant to Section 38-65-40 may be extended to insure the employees or members against loss due to the death of their spouses and any child under the age of nineteen or who is a dependent and a full-time student under twenty-five years of age and also may be extended to any child who is both (i) incapable of self-sustaining employment by reason of intellectual disability or physical handicap and (ii) chiefly dependent upon the employee for support and maintenance, subject to the following requirements:  (1) The premium for the insurance must be paid by the policyholder from the policyholder's funds or from funds contributed by the insured persons, or from both.  (2) Upon termination of the insurance with respect to the members of the family of any employee or member by reason of the employee's or member's termination of employment, termination of membership in the class or classes eligible for coverage under the policy, or death, the spouse or child is entitled to have issued by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits as long as application for the individual policy is made and the first premium paid to the insurer within thirty-one days after the termination, subject to the requirements of subitems (a), (b), and (c) of Section 38-65-210(8). If the group policy terminates or is amended so as to terminate the insurance of any class of employees or members and the employee or member is entitled to have issued an individual policy under Section 38-65-210(9), the spouse also is entitled to have issued by the insurer an individual policy, subject to the conditions and limitations provided above in this item (2). If the spouse dies within the period during which he would have been entitled to have an individual policy issued in accordance with this provision, the amount of life insurance which he would have been entitled to have issued under the individual policy is payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made. Notwithstanding Section 38-65-210(7), only one certificate need be issued for delivery to an insured person if a statement concerning a dependent's coverage is included in the certificate.  (3) The amounts of insurance must be based upon some plan precluding individual selection either by the employees or members or by the policyholder, employer, or union.  HISTORY: Former 1976 Code Section 38-65-70 [1985 Act No. Section 7] recodified as Section 38-41-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-31-180 [1962 Code Section 37-311.1; 1970 (56) 2325] recodified as Section 38-65-70 by 1987 Act No. 155, Section 1; 1988 Act No. 333, Section 2; 1994 Act No. 521, Section 1.
 The proceeds and cash surrender value of life insurance in the aggregate amount of not more than fifty thousand dollars upon the life of an individual, which has already been or may be taken out, in which it is expressed to be for the primary benefit of the insured's spouse, children, or dependents inure to the use and benefit of the individual or individuals for whose use and benefit it is expressed to be taken out, and the sum or net amount of the insurance becoming due and payable by the terms of the policy is payable to the individual or individuals as stated in this section, free and discharged from the claims of the representatives of the insured or of any of the insured's creditors or a person claiming by, through, or under him or them or any of them unless:  (1) the policy was obtained with the intent to defraud creditors; or  (2) the creditor or representative possesses a valid assignment of the cash surrender value of the policy from the policyholder on a separate form.  In these two instances, the creditor may recover from either the cash surrender value or the proceeds of the life insurance policy of the amount secured by the assignment.  HISTORY: Former 1976 Code Section 38-65-90 [1985 Act No. 137, Section 9] recodified as Section 38-41-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-340 [1947 (45) 322; 1952 Code Section 37-169; 1962 Code Section 37-169] recodified as Section 38-65-90 by 1987 Act No. 155, Section 1; 1988 Act No. 305, Section 2.
 A domestic life insurer may establish one or more separate accounts, and may allocate thereto amounts (including, without limitation, proceeds applied under optional modes of settlement or under dividend options) to provide for life insurance or annuities (and benefits incidental thereto), payable in fixed or variable amounts, or both, subject to the following:  (a) The income, gains, and losses, realized or unrealized, from assets allocated to a separate account must be credited to or charged against the account, without regard to other income, gains, or losses of the insurer.  (b) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in item (c) of this section, (i) amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this State governing the investments of life insurers and (ii) the investments in the separate account or accounts may not be taken into account in applying the investment limitations otherwise applicable to the investments of the insurer.  (c) Except with the approval of the director or his designee and under the conditions as to investments and other matters as he may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for (i) benefits guaranteed as to dollar amount and duration and (ii) funds guaranteed as to principal amount or stated rate of interest may not be maintained in a separate account.  (d) Unless otherwise approved by the director or his designee, assets allocated to a separate account must be valued at their market value on the date of valuation or, if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to the separate account. However, unless otherwise approved by the director or his designee, the portion of any of the assets of the separate account equal to the insurer's reserve liability with regard to the guaranteed benefits and funds referred to in item (c) of this section must be valued in accordance with the rules otherwise applicable to the insurer's assets.  (e) Amounts allocated to a separate account in the exercise of the power granted by this chapter must be owned by the insurer, and the insurer may not be, nor hold itself out to be, a trustee with respect to such amounts. If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account is not chargeable with liabilities arising out of any other business the insurer may conduct.  (f) No sale, exchange, or other transfer of assets may be made by an insurer between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made and unless the transfer, whether into or from a separate account, is made (i) by a transfer of cash, or (ii) by a transfer of securities having a readily determinable market value and the transfer of securities is approved by the director or his designee. The director or his designee may approve other transfers among such accounts if, in his opinion, the transfers would not be inequitable.  (g) To the extent the insurer considers it necessary to comply with any applicable federal or state laws, the insurer, with respect to any separate account, including, without limitation, any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of the account, including, without limitation, special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business of the account.  HISTORY: Former 1976 Code Section 38-67-10 [1985 Act No. 133, Section 1] recodified as Section 38-51-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-33-10 [1962 Code Section 37-331; 1968 (55) 2407; 1978 Act No. 441 Section 1] recodified as Section 38-67-10 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Sections 736-738.
 Any contract providing benefits payable in variable amounts delivered or issued for delivery in this State shall contain a statement of the essential features of the procedures to be followed by the insurer in determining the dollar amount of the variable benefits. Any contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder, shall state that the dollar amount will so vary and shall contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.  HISTORY: Former 1976 Code Section 38-67-20 [1985 Act No. 133, Section 2] recodified as Section 38-51-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-33-20 [1962 Code Section 37-332; 1968 (55) 2407; 1978 Act No. 441 Section 2] recodified as Section 38-67-20 by 1987 Act No. 155, Section 1.
 No company may deliver or issue for delivery within this State variable contracts unless it is licensed and organized to do a life insurance or annuity business in this State, and the director or his designee is satisfied that its condition or method of operation in connection with the issuance of variable contracts will not render its operation hazardous to the public or its policyholders in this State. In this connection, the director or his designee shall consider among other things:  (a) the history and financial condition of the insurer;  (b) the character, responsibility, and fitness of the officers and directors of the insurer; and  (c) the law and regulation under which the insurer is authorized in the state of domicile to issue variable contracts. The state of entry of an alien insurer is considered its place of domicile for this purpose.  If the insurer is a subsidiary of an admitted life insurer, or affiliated with an admitted life insurer through common management or ownership, it may be considered by the director or his designee to have met the provisions of this section if either it or the parent or the affiliated insurer meets the requirements hereof.  HISTORY: Former 1976 Code Section 38-67-30 [1985 Act No. 133, Section 3] recodified as Section 38-51-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-33-30 [1962 Code Section 37-333; 1968 (55) 2407; 1978 Act No. 441 Section 3] recodified as Section 38-67-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 739.
 Notwithstanding any other provision of law, the director or his designee has sole authority to regulate the issuance and sale of variable contracts, and the department has the sole authority to issue any regulations as may be appropriate to carry out the purposes and provisions of this chapter.  HISTORY: Former 1976 Code Section 38-67-40 [1985 Act No. 133, Section 4] recodified as Section 38-51-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-33-40 [1962 Code Section 37-334; 1968 (55) 2407; 1978 Act No. 441 Section 4] recodified as Section 38-67-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 740.
 Except as otherwise provided in this chapter, all pertinent provisions of the insurance laws of this State apply to separate accounts and contracts relating thereto. However, Article 5, Chapter 63 of this title does not apply to variable life insurance policies. Any individual variable life insurance contract, delivered or issued for delivery in this State, shall contain grace, reinstatement, and nonforfeiture provisions appropriate to such a contract. The reserve liability for variable contracts must be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.  HISTORY: Former 1976 Code Section 38-67-50 [1985 Act No. 133, Section 5] recodified as Section 38-51-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-33-50 [1962 Code Section 37-335; 1968 (55) 2407; 1978 Act No. 441 Section 5] recodified as Section 38-67-50 by 1987 Act No. 155, Section 1.  
 No insurer doing business in this State and no officer, director, or agent of it may issue or circulate or cause or permit to be issued or circulated any estimate, illustration, circular, or statement of any sort misrepresenting the terms of any annuity issued by it, the benefits or advantages promised thereby, or the dividends or shares of surplus to be received thereon or may use any name or title of any annuity or class of annuities misrepresenting the true nature thereof. Violation of this section by an agent or officer of an insurer is a misdemeanor. If an insurer violates or participates in the violation of this section, the insurer is subject to the penalty provisions of Section 38-2-10.  HISTORY: Former 1976 Code Section 38-9-40 [1947 (45) 322; 1952 Code Section 37-144; 1962 Code Section 37-144] recodified as Section 38-69-10 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 36.
 If the insurer does not deliver with an annuity contract issued by it a copy of the application made by the insured, no defense is allowed to that annuity on account of anything contained in or omitted from the application. If the annuity is issued upon an oral application, no defense is allowed to the contract on account of anything contained in, or omitted from, the oral application.  HISTORY: Former 1976 Code Section 38-9-70 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-146; 1962 Code Section 37-146; 1980 Act No. 305, Section 1] recodified as Section 38-69-110 by 1987 Act No. 155, Section 1.
 All fixed dollar annuities, variable annuities, pure endowment contracts, or reversionary annuities other than group annuities delivered or issued for delivery in this State must contain in substance the following:  (1) a brief and correct description of its benefits on the lower portion of its first page and an identifying form number on the lower left-hand corner of its face;  (2) a provision stating clearly, understandably, and conspicuously on the first page that the contract holder is permitted to return the contract within ten days of its delivery to the contract holder. If replacement of an annuity contract is involved, the contract holder is permitted to return the contract within twenty days of its delivery to the contract holder. If the contract was solicited by a direct response insurer rather than through a licensed insurance agent, the provision must state that the contract holder is permitted to return the contract within thirty-one days. The entire premium paid by the contract holder must be returned immediately to the contract holder;  (3) a provision stating who is authorized by the insurer to waive, alter, or change any of the terms or conditions of the contract. It may state also that no agent has the power or authority to waive, change, or alter any of the terms or conditions of the policy;  (4) a provision that the contract and any rider or supplemental benefits attached to the contract are incontestable as to the truth of the application for insurance and to the representations of the insured individual after they have been in force for two years from their date of issue. Any rider or supplemental benefits attached subsequently to the contract are incontestable as to the truth of the application for the rider or supplemental benefits and to the representations of the insured individual after they have been in force for two years from their date of issue. If an insurer institutes proceedings to vacate a contract on the ground of the falsity of the representations contained in the application for the contract, the proceedings must commence within the time permitted in this subsection;  (5) a provision that if it is found that the age or sex of the insured, or of any individual considered in determining the premium, has been misstated, any amount payable or benefit accruing under the contract is that as the premium would have purchased according to the correct age or sex;  (6) a provision stating how the beneficiary is designated and how the beneficiary may be changed;  (7) there must be a provision stating the amount of premium and the time and manner payable;  (8) a provision that the insured is entitled to a grace period of not less than thirty-one days within which the payment of any premium after the first may be made. During the grace period, the contract continues in full force. If a claim arises under the contract during the grace period, the amount of any premium due or overdue may be deducted from any amount payable under the contract in settlement;  (9) a provision that the contract may be reinstated upon written application at any time within three years from the date of default in making stipulated payments to the insurer, unless the cash surrender value has been paid. However, all overdue stipulated payments and indebtedness to the insurer on the contract must be paid or reinstated with interest thereon at a rate to be specified in the contract, but not exceeding eight percent a year compounded annually and, when applicable, the insurer may include also a requirement of evidence of insurability satisfactory to the insurer;  (10) a provision if the annuity contract is participating, that beginning not later than the end of the third contract year, the insurer shall ascertain annually and apportion any divisible surplus accruing on the contract;  (11) a provision that is in accordance with Article 5, Chapter 69, Title 38, Standard Nonforfeiture Law for Individual Deferred Annuities.  The director or his designee may approve contracts with provisions which vary from the provisions required in this section if the provisions are more favorable to the insured. Any of the provisions not applicable to single premium annuities, flexible premium annuities, or single premium pure endowment contracts need not be incorporated to that extent in the contract. This section does not apply to contracts for annuities included in or upon the lives of beneficiaries under life insurance contracts.  HISTORY: Former 1976 Code Section 38-9-250 [1947 (45) 322; 1950 (46) 2041; 1952 Code Section 37-161; 1962 Code Section 37-161] recodified as Section 38-69-120 by 1987 Act No. 155, Section 1; 1988 Act No. 341, Section 1; 1993 Act No. 181, Section 741.
 No insurer, or its employee or agent, may make any misleading representations or incomplete or fraudulent comparisons of any annuity contracts or insurers for the purpose of inducing, or which may tend to induce, any person to lapse, forfeit, surrender, terminate, return, or convert any annuity.  HISTORY: Former 1976 Code Section 38-9-50 [1956 (49) 1814; 1962 Code Section 37-144.1] recodified as Section 38-69-20 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 37.
 This article is known and may be cited as the "Standard Nonforfeiture Law for Individual Deferred Annuities".  HISTORY: Former 1976 Code Section 38-8-10 [1978 Act No. 517 Section 1] recodified as Section 38-69-210 by 1987 Act No. 155, Section 1.
 This article does not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer including a partnership or sole proprietorship or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, or to any contract which is delivered outside this State through an agent or other representative of the company issuing the contract.  HISTORY: Former 1976 Code Section 38-8-20 [1978 Act No. 517 Section 2] recodified as Section 38-69-220 by 1987 Act No. 155, Section 1.
 In the case of contracts issued on or after the operative date of this article as defined in Section 38-69-320, no contract of annuity, except as stated in Section 38-69-220, may be delivered or issued for delivery in this State unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the director or his designee are at least as favorable to the contractholder, upon cessation of payment of considerations under the contract:  (a) That upon cessation of payment of considerations under a contract, the insurer shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300.  (b) If a contract provides for a lump sum settlement at maturity, or at any other time, that, upon surrender of the contract at or prior to the commencement of any annuity payments, the insurer will pay in lieu of any paid-up annuity benefit a cash surrender benefit of the amount as is specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300. The insurer shall reserve the right to defer the payment of the cash surrender benefit for a period of six months after demand therefor with surrender of the contract.  (c) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender, or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of these benefits.  (d) A statement that any paid-up annuity, cash surrender, or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the insurer to the contract, any indebtedness to the insurer on the contract, or any prior withdrawals from or partial surrenders of the contract.  Notwithstanding the requirements of this section, any deferred annuity contract may provide that, if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to that period would be less than twenty dollars monthly, the insurer may at its option terminate the contract by payment in cash of the then present value of that portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit. This payment relieves the insurer of any further obligation under the contract.  HISTORY: Former 1976 Code Section 38-8-30 [1978 Act No. 517 Section 3] recodified as Section 38-69-230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 742.
 (A) This section applies to a contract issued before July 1, 2005, and may be applied by an insurer, on a contract-form-by-contract-form basis, to a contract issued after June 30, 2005, and before July 1, 2007. This section does not apply to a contract issued after June 30, 2007.  (B) The minimum values as specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract must be based upon minimum nonforfeiture amounts as defined in this section.  (C) With respect to a contract providing for flexible considerations, the minimum nonforfeiture amount at any time at or before the commencement of an annuity payment is equal to an accumulation up to that time at a rate of interest of three percent a year of percentages of the net considerations paid before that time, decreased by the sum of:  (1) any previous withdrawals from or partial surrenders of the contract accumulated at a rate of interest of three percent a year; and  (2) the amount of any indebtedness to the insurer on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the insurer to the contract.  (D) The net considerations for a given contract year used to define the minimum nonforfeiture amount must be an amount not less than zero and are equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars and less a collection charge of one dollar and twenty-five cents for each consideration credited to the contract during that contract year. The percentages of net considerations are sixty-five percent of the net consideration for the first contract year and eighty-seven and one-half percent of the net considerations for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage is sixty-five percent of the portion of the total net consideration for any renewal contract year which exceeds by not more than two times the sum of those portions of the net considerations in all previous contract years for which the percentage was sixty-five percent.  (E) With respect to a contract providing for fixed scheduled considerations, minimum nonforfeiture amounts are calculated on the assumption that considerations are paid annually in advance and are defined as for contracts with flexible considerations which are paid annually with two exceptions:  (1) the portion of the net consideration for the first contract year to be accumulated is the sum of sixty-five percent of the net consideration for the first contract year plus twenty-two and one-half percent of the excess of the net consideration for the first contract year over the lesser of the net considerations for the second and third contract years;  (2) the annual contract charge is the lesser of:  (a) thirty dollars; or  (b) ten percent of the gross annual considerations.  (F) With respect to a contract providing for a single consideration, minimum nonforfeiture amounts are defined as for contracts with flexible considerations except that the percentage of net consideration used to determine the minimum nonforfeiture amount is equal to ninety percent and the net consideration is the gross consideration less a contract charge of seventy-five dollars.  HISTORY: Former 1976 Code Section 38-8-40 [1978 Act No. 517 Section 4] recodified as Section 38-69-240 by 1987 Act No. 155, Section 1; 2005 Act No. 43, Section 2, eff May 3, 2005.  Editor's Note  2002 Act No. 313, Section 2, as amended by 2003 Act No. 73, Section 19 and 2005 Act No. 43, Section 3, provides as follows:  "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 June 30, 2007, the following may be applied, at the insurer's option, to a contract issued after the effective date of this act and before July 1, 2007, on a contract-form-by-contract-form basis:  "(1) The minimum values as specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300 of the 1976 Code of any paid-up annuity, cash surrender, or death benefits available under an annuity contract providing for flexible considerations, the minimum nonforfeiture amount at any time at or before the commencement of any annuity payments is equal to an accumulation up to that time at a rate of interest one and one-half percent a year of percentages of the net considerations paid before that time, decreased by the sum of:  "(a) any previous withdrawals from or partial surrenders of the contract accumulated at a rate of interest of one and one-half percent a year; and  "(b) the amount of any indebtedness to the insurer on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the insurer to the contract.  "(2) The net considerations for a given contract year used to define the minimum nonforfeiture amount must be an amount not less than zero and are equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars and less a collection charge of one dollar and twenty-five cents for each consideration credited to the contract during that contract year. The percentages of net considerations are sixty-five percent of the net consideration for the first contract year and eighty-seven and one-half percent of the net considerations for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage is sixty-five percent of the portion of the total net consideration for any renewal contract year which exceeds by not more than two times the sum of those portions of the net considerations in all previous contract years for which the percentage was sixty-five percent."
 (A) This section applies to contracts issued after June 30, 2007, and may be applied by an insurer, on a contract-form-by-contract-form basis, to a contract issued after June 30, 2005, and before July 1, 2007.  (B) The minimum values as specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract must be based upon minimum nonforfeiture amounts as defined in this section.  (C) The minimum nonforfeiture amount at any time at or before the commencement of an annuity payment is equal to an accumulation up to that time at a rate of interest as indicated in subsection (E) of the net considerations paid before that time, decreased by the sum of items of (1) through (4):  (1) any previous withdrawals from or partial surrenders of the contract accumulated at a rate of interest as indicated in subsection (E);  (2) an annual contract charge of fifty dollars, accumulated at a rate of interest as indicated in subsection (E);  (3) any premium tax paid by the company for the contract, accumulated at a rate of interest as indicated in subsection (E); and  (4) the amount of any indebtedness to the company on the contract, including interest due and accrued.  (D) The net considerations for a given contract year used to define the minimum nonforfeiture amount must be an amount equal to eighty-seven and one-half percent of the gross considerations credited to the contract during that contract year.  (E)(1) The interest rate used in determining minimum nonforfeiture amounts must be an annual rate of interest determined as the lesser of three percent a year and the following, which must be specified in the contract if the interest rate is reset:  (a) the five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20th of one percent, specified in the contract no longer than fifteen months before the contract issue date or redetermination date pursuant to subitem (d);  (b) reduced by one hundred twenty-five basis points;  (c) where the resulting interest rate is not less than one percent; and  (d) the interest rate shall apply for an initial period and may be redetermined for additional periods.  (2) The redetermination date, basis, and period, if any, must be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.  (F) During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection (E)(1)(b) by up to an additional one hundred basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date after that, of the additional reduction must not exceed the market value of the benefit. The director or his designee may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. If a demonstration is not acceptable to the director, or his designee, he may disallow or limit the additional reduction.  (G) The director, or his designee, may adopt rules to implement the provisions of subsection (F) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the director, or his designee, determines adjustments are justified.  HISTORY: 2005 Act No. 43, Section 1, eff May 3, 2005.
 (A) This section applies to contracts issued after June 30, 2022, and may be applied by an insurer, on a contract-form-by-contract-form basis, to a contract issued after June 30, 2022.  (B) The minimum values as specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract must be based upon minimum nonforfeiture amounts as defined in this section.  (C) The minimum nonforfeiture amount at any time at or before the commencement of an annuity payment is equal to an accumulation up to that time at a rate of interest as indicated in subsection (E) of the net considerations paid before that time, decreased by the sum of items of (1) through (4):  (1) any previous withdrawals from or partial surrenders of the contract accumulated at a rate of interest as indicated in subsection (E);  (2) an annual contract charge of fifty dollars, accumulated at a rate of interest as indicated in subsection (E);  (3) any premium tax paid by the company for the contract, accumulated at a rate of interest as indicated in subsection (E); and  (4) the amount of any indebtedness to the company on the contract, including interest due and accrued.  (D) The net considerations for a given contract year used to define the minimum nonforfeiture amount must be an amount equal to eighty-seven and one-half percent of the gross considerations credited to the contract during that contract year.  (E)(1) The interest rate used in determining minimum nonforfeiture amounts must be an annual rate of interest determined as the lesser of three percent a year and the following, which must be specified in the contract if the interest rate is reset:  (a) the five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20th of one percent, specified in the contract no longer than fifteen months before the contract issue date or redetermination date pursuant to subitem (d);  (b) reduced by one hundred twenty-five basis points;  (c) where the resulting interest rate is no less than 15 basis points (0.15%); and  (d) the interest rate must apply for an initial period and may be redetermined for additional periods.  (2) The redetermination date, basis, and period, if any, must be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.  (F) During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection (E)(1)(b) by up to an additional one hundred basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date after that, of the additional reduction must not exceed the market value of the benefit. The director, or his designee, may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. If a demonstration is not acceptable to the director, or his designee, he may disallow or limit the additional reduction.  (G) The director, or his designee, may adopt rules to implement the provisions of subsection (F) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the director, or his designee, determines adjustments are justified.  HISTORY: 2022 Act No. 195 (H.4832), Section 1, eff May 16, 2022.
 Any paid-up annuity benefit available under a contract must be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. The present value must be computed using the mortality table, if any, and the interest rate specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.  HISTORY: Former 1976 Code Section 38-8-50 [1978 Act No. 517 Section 5] recodified as Section 38-69-250 by 1987 Act No. 155, Section 1.
 For contracts which provide cash surrender benefits, the cash surrender benefits available prior to maturity may not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, the present value being calculated on the basis of an interest rate not more than one percent higher than the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, decreased by the amount of any indebtedness to the insurer on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the insurer to the contract. In no event may any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts must be at least equal to the cash surrender benefit.  HISTORY: Former 1976 Code Section 38-8-60 [1978 Act No. 517 Section 6] recodified as Section 38-69-260 by 1987 Act No. 155, Section 1.
 For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity may not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity. The present value is calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine such maturity value and increased by any existing additional amounts credited by the insurer to the contract. For contracts which do not provide any death benefits prior to the commencement of any annuity payments, the present values are calculated on the basis of the interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event may the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.  HISTORY: Former 1976 Code Section 38-8-70 [1978 Act No. 517 Section 7] recodified as Section 38-69-270 by 1987 Act No. 155, Section 1.
 For the purpose of determining the benefits calculated under Sections 38-69-260 and 38-69-270, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date is considered to be the latest date for which election is permitted by the contract but may not be considered to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.  HISTORY: Former 1976 Code Section 38-8-80 [1978 Act No. 517 Section 8] recodified as Section 38-69-280 by 1987 Act No. 155, Section 1.
 Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that those benefits are not provided.  HISTORY: Former 1976 Code Section 38-8-90 [1978 Act No. 517 Section 9] recodified as Section 38-69-290 by 1987 Act No. 155, Section 1.
 When the proceeds of an annuity becoming a claim by the death of the insured are left with an insurance company under a trust or other agreement, the benefits accruing under the agreement after the death of the insured are not transferable nor subject to computation or incumbrance nor to legal process, except in an action to recover for necessaries if the parties to the trust or other agreement so agree.  HISTORY: 1988 Act No. 342, Section 2.
 Any paid-up annuity, cash surrender, or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, must be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.  HISTORY: Former 1976 Code Section 38-8-100 [1978 Act No. 517 Section 10] recodified as Section 38-69-300 by 1987 Act No. 155, Section 1.
 For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits must be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300, additional benefits payable (a) in the event of total and permanent disability, (b) as reversionary annuity or deferred reversionary annuity benefits, or (c) as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, must be disregarded in ascertaining the minimum nonforfeiture amounts and paid-up annuity, cash surrender, and death benefits that may be required by this section. The inclusion of such additional benefits is not required in any paid-up benefits, unless such additional benefits separately would require minimum nonforfeiture amounts and paid-up annuity, cash surrender, and death benefits.  HISTORY: Former 1976 Code Section 38-8-110 [1978 Act No. 517 Section 11] recodified as Section 38-69-310 by 1987 Act No. 155, Section 1.
 After May 31, 1978, an insurer may file with the department a written notice of its election to comply with the provisions of this article after a specified date before May 31, 1980. After the filing of the notice, upon the specified date, which is the operative date of this article for the insurer, this article becomes operative with respect to annuity contracts thereafter issued by the insurer. If an insurer makes no election, the operative date of this article for the insurer is May 31, 1980.  HISTORY: Former 1976 Code Section 38-8-120 [1978 Act No. 517 Section 12] recodified as Section 38-69-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 743.
 The Director of the Department of Insurance or his designee shall promulgate regulations to implement the provisions of this chapter.  HISTORY: 2000 Act No. 312, Section 15.
 (A) Every insurer, except mutual benevolent aid associations and fraternal benefit associations, before transacting business in this State shall pay a license fee of eight hundred dollars to the department and after that initial payment pay to the department a biennial license fee of eight hundred dollars by March first every other year.  (B) In addition to the license fees required in subsection (A), the director or his designee shall collect from each insurer licensed by him to do business in this State a license fee of four hundred dollars for each kind of insurance for which the insurer is licensed as listed in Section 38-5-30(a) through (g). Each mutual insurer doing a property business only in no more than three counties shall pay a biennial fixed license fee of one hundred dollars and each mutual insurer doing a property business only in a single county shall pay a biennial fixed license fee of forty dollars. The license fees required in this subsection must be paid to the director or his designee before the insurer transacts business in this State and after that initial payment must be paid biennially to the director or his designee by March first every two years.  HISTORY: Former 1976 Code Section 38-7-10 [1960 (51) 1554; 1962 Code Section 37-171; 1982 Act No. 403, Section 1] recodified as Section 38-63-510 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-510 [1986 Act No. 540, Part II, Section 31A] recodified as Section 38-7-10 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11B; 1993 Act No. 181, Section 534.
 The State may bring suit in court for back fees, taxes, penalties, and interest imposed by this title at any time within ten years from the date on which they should have been paid. On collection of the fees and taxes, they must be distributed as provided by the statutes under which they were levied.  HISTORY: Former 1976 Code Section 38-7-110 [1960 (51) 1554; 1962 Code Section 37-175.6; 1982 Act No. 403, Section 10] recodified as Section 38-63-640 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-1-100 [1979 Act No. 63] recodified as Section 38-7-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534.
 (A) As soon as practicable after each tax return or other document is filed, the director or his designee, when fees and taxes are involved, shall examine the document and compute the fees and taxes due. If the fees and taxes found due are greater than the amount paid, the excess must be paid to the director or his designee within fifteen days after notice of the amount due is mailed by the director or his designee. If the amount due is not paid within the fifteen-day period, a penalty of five percent of the amount due may be assessed.  (B) If the additional fees and taxes found to be due upon the examination of the document are not paid within fifteen days of notice by the director or his designee, interest must be added to the amount of the deficiency at the rate of five percent for each month or fraction of a month from the date the fees or taxes originally were due until the date the deficiency is paid. The total maximum interest to be charged may not exceed twenty-five percent.  (C) Up to one year after the date upon which an original tax return or other document is required to be filed, an insurer or other person may file an amended return to correct errors of overpayment or other errors made by the insurer or person in the original return or document. No amended return or document may be filed by an insurer or a person or accepted by the director or his designee after one year. No tax adjustment, deduction, or credit may be made or taken by the insurer or person, or allowed by the director or his designee, on a return or document filed after one year for errors claimed to have been made by the insurer or other person in the original return or document.  (D) If, upon examination of an original or amended return or document, it appears to the director or his designee that the amount of fees or taxes due is less than the amount paid, the excess must be ordered refunded by the or his designee. No refunds may be made with respect to monies distributable to a governmental unit after the distribution has been made.  (E) This section does not apply to the continuation of biennial license fees for agencies, brokers, appraisers, or adjusters.  HISTORY: Former 1976 Code Section 38-7-120 [1960 (51) 1554; 1962 Code Section 37-175.7] recodified as Section 38-63-650 by 1987 Code No. 155, Section 1; Former 1976 Code Section 38-1-50 [1979 Act No. 63; 1982 Act No. 321, Section 1] recodified as Section 38-7-120 by 1987 Act No. 155, Section 1; 1992 Act No. 501, Part II Section 11D; 1993 Act No. 181, Section 534.
 (a) When the State charges or levies any fees, taxes, penalties, or interest against any insurer or other person, or any fees, taxes, penalties, or interest are assessed by the director or his designee and the State or director or his designee claims the payment of the fees, taxes, penalties, or interest so charged or assessed, or institutes a proceeding to collect them, the insurer or other person against whom the fees, taxes, penalties, or interest is charged or assessed or against whom the proceeding is instituted, if he conceives the fees or taxes to be unjust or illegal, may pay the fees or taxes and any penalties, or interest thereon, under protest in writing, with the type of funds the State Treasurer or director or his designee is authorized to receive. Upon this payment, the director or his designee shall pay the fees, taxes, penalties, or interest collected by him into the state treasury giving notice at the time to the State Treasurer that the payment was made under protest.  (b) Any insurer or other person paying any fees, taxes, penalties, or interest under protest must within thirty days after making the payment bring an action against the director for the recovery thereof, in the Court of Common Pleas for Richland County. If it is determined in that action that the fees, taxes, penalties, or interest was unjustly or illegally collected, the court must so certify of record, and the State Treasurer shall refund the fees, taxes, penalties, or interest to the payor.  HISTORY: Former 1976 Code Section 38-1-110 [1979 Act No. 63; 1982 Act No. 321, Section 2] recodified as Section 38-7-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534.
 (A) It is unlawful for a person, officer or employee of an insurer, or other person, with intent to evade a requirement of this title or a lawful requirement of the director or his designee, to:  (1) fail to pay any fees, taxes, penalties, or interest;  (2) fail to make, sign, or verify a return;  (3) fail to supply required information; or  (4) make, render, sign, or verify false or fraudulent information.  (B) A person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined not more than five thousand dollars or imprisoned not more than three years, or both.  HISTORY: Former 1976 Code Section 38-1-70 [1979 Act No. 63] recodified as Section 38-7-140 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 209; 1993 Act No. 181, Section 534.
 The director or his designee may, upon making a record of his reasons therefor, waive or reduce any of the penalties or interest imposed under the provisions of this title pertaining to fees and taxes.  HISTORY: Former 1976 Code Section 38-1-80 [1979 Act No. 63] recodified as Section 38-7-150 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534.
 This title may not be construed as preventing any municipality from levying and collecting license fees or taxes in accordance with its ordinances. However, for surplus lines insurance no municipality may charge an additional license fee or tax based upon a percentage of premiums. A municipality may not charge a license fee to fire insurers or their agents licensed by the director or his designee in any other manner than on a percentage of the premiums collected in the municipality or realized from risks located within the limits of the municipality, or both, the license fee not to exceed two percent of the premiums collected in the municipality and realized from risks located in the municipality, except in cities of fifty thousand inhabitants or more, where not exceeding five percent may be charged. Preference must be given hereunder to the municipality wherein the insured property is located, and, if a license is levied against the insuring company on such basis, that company may not be subject to a similar license from a municipality wherein it may collect the premium for such transaction.  HISTORY: Former 1976 Code Section 38-5-490 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-133; 1953 (48) 493; 1961 (52) 273; 1962 Code Section 37-133] recodified as Section 38-7-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534; 2012 Act No. 283, Section 2, eff January 1, 2012.
 All fees, taxes, penalties, and interest collected by the director or his designee under this title, unless specifically provided otherwise, must be deposited by the director or his designee in the general fund of the State.  HISTORY: Former 1976 Code Section 38-1-120 [1979 Act No. 63] recodified as Section 38-7-170 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534.
 An insurance company exempt from federal income tax pursuant to Section 501(c)(3) or (4) of the Internal Revenue Code of 1986, and which insures only churches and their property, is exempt from taxes levied on insurance companies in Sections 38-7-20, 38-7-30, 38-7-40, and 38-7-50. To provide proof of exemption from federal income tax under Section 501(c)(3) or (4) of the Internal Revenue Code of 1986, the company shall provide to the director or his designee a certificate issued by the Internal Revenue Service demonstrating the company's tax-exempt status. The company shall further provide evidence satisfactory to the director or his designee that it only insures churches and their property.  HISTORY: Former 1976 Code Section 38-43-800 [1986 Act No. 540, Part II, Section 31G] recodified as Section 38-7-180 by 1987 Act No. 155, Section 1; 1988 Act No. 399, Section 2; 1993 Act No. 181, Section 534; 1996 Act No. 328, Section 1.
 (A) Notwithstanding any other provision of law:  (1) Any credits under Chapter 6, Title 12 may be applied against any taxes, license fees, and other assessments imposed under this title.  (2) Any credits under this title which are earned by one member of a controlled group of corporations may be used and applied by that member and any other members of the controlled group of corporations.  (3) Any limitations upon the total amount of liability for taxes that can be reduced by the use of a credit must be computed before any credit is used to reduce any tax liability under this title. Subject to item (4), the taxpayer may apply any credits arising under this title in any order the taxpayer elects.  (4) No credit can be used more than once, and all credits must be used, to the extent possible in any given year, first by the company that earned them, and second against the tax which generated them.  (5) As used in this section:  (a) The term "controlled group of corporations" has the same meaning as provided under Section 1563 of the Internal Revenue Code without regard to Section 1563(a)(4), (b)(2)(A) only with respect to corporations which are in existence for less than one-half the number of days in the tax year referred to therein, and (b)(2)(C) and (D);  (b) The term "tax credit" or "credit" means a statutorily directed or authorized reduction in the tax liability made after any applicable tax rates are applied.  HISTORY: 1996 Act No. 231, Section 5A.
 (A)(1) 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, 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 written. For all other types of insurance, the insurance premium tax levied in this section is equal to one and one-fourth percent of the total premiums written.  (2) For purposes of this section, in computing total premiums, the following are excluded:  (a) return premiums on risks and dividends paid or credited to policyholders; and  (b) for premiums on bail bonds, any amounts retained by a licensed bail bondsman as defined in Chapter 53 for authorized commissions, fees, and expenses.  (B) Effective July 1, 2013, through June 30, 2030, of the revenue of the premium taxes collected pursuant to this section:  (1) one percent must be transferred to the South Carolina Forestry Commission and used by that agency for firefighting and firefighting equipment replacement;  (2) one percent must be transferred to the V-SAFE program pursuant to Section 23-9-25;  (3) one quarter of one percent must be transferred to the aid to emergency medical services regional councils within the Department of Health and Environmental Control and used for grants to fund emergency medical technician and paramedic training; and  (4) the remaining insurance premium taxes collected pursuant to this section must be deposited to the credit of the general fund of the State.  (C) The department or the director, as appropriate, may, upon notice and opportunity for all interested persons to be heard, promulgate regulations and orders necessary to carry out the provisions of this section.  HISTORY: Former 1976 Code Section 38-7-20 [1960 (51) 1554; 1962 Code Section 37-172; 1964 (53) 2139; 1982 Act No. 403, Section 2] recodified as Section 38-63-520 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-520 [1986 Act No. 540, Part II, Section 31 B] recodified as Section 38-7-20 by 1987 Act No. 155, Section 1; 1987 Act No. 170, Part II, Section 40 B (amendment to former 1976 Code Section 38-5-520 transferred to Section 38-7-20 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 534; 2003 Act No. 73, Section 2, eff June 25, 2003; 2012 Act No. 271, Section 1, eff July 1, 2013; 2016 Act No. 273 (S.973), Section 1, eff July 1, 2017; 2019 Act No. 6 (S.360), Section 4.A, eff July 1, 2019; 2020 Act No. 149 (S.753), Section 1, eff September 28, 2020.  Editor's Note  2016 Act No. 273, Section 2, provides as follows:  "SECTION 2. This act takes effect on July 1, 2017, and first applies to Fiscal Year 2017-2018."  2020 Act No. 149, Section 2, provides as follows:  "SECTION 2. Upon the effective date of this act, the State Treasurer shall transfer to the V-SAFE Program any funds in the aid to fire districts account that are attributable to insurance premium taxes credited to the account pursuant to Section 38-7-20."  Effect of Amendment  2016 Act No. 273, Section 1, rewrote (B), adding (1) through (4).  2019 Act No. 6, Section 4.A, in (A), inserted the (1) identifier, deleted the fourth sentence, which related to computing total premiums, and inserted (2), relating to the exclusion of certain factors from the computation of total premiums; and added (C), relating to the promulgation of regulations.  2020 Act No. 149, Section 1, in (B), rewrote (2).
 (A) A licensed insurer providing full property and casualty coverage, to specifically include wind and hail coverage, to property owners within the area defined in Section 38-75-310(5), including any portion of the area as it may be expanded from time to time pursuant to Section 38-75-460, may claim as a nonrefundable credit against the premium tax imposed by Sections 38-7-20 and 38-7-40 in an amount equal to twenty-five percent of the tax that otherwise is due on the premium written for the property owners for the taxable year.  (B) The credit allowed by this section is available only to an insurer licensed or authorized to do business in this State with respect to a property and casualty insurance policy providing full coverage as defined in subsection (A).  (C) A licensed insurer who claims the credit allowed by this section shall provide information required by the Department of Insurance to demonstrate that the taxpayer is eligible for the credit and that the amount paid for premiums for which the credit is claimed was not excluded from the licensed insurer's gross income for the taxable year.  (D) The tax credit allowed under this section for a taxable year may be claimed only once for any one structure, regardless of the number of policies written on the structure.  (E) The department shall take the action necessary to monitor and examine the use of the credits claims under this section.  HISTORY: 2007 Act No. 78, Section 5, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2014 Act No. 191 (S.569), Section 2, eff June 2, 2014.  Effect of Amendment  2014 Act No. 191, Section 2, deleted former subsection (F), relating to the application of the section.  
 Any expenses, including expenses of counsel, detectives, and officers, incurred by the discrimination in rates, must be defrayed by the fire insurance companies doing business in this State, and a tax of one percent on the gross premium receipts less premiums returned on canceled policy contracts and less dividends and returns of unabsorbed premium deposits of all fire insurance companies is levied for this purpose, to be collected by the director or his designee as other taxes on fire insurance companies are collected. The director or his designee shall keep a separate account of all monies received and disbursed under the provisions of this section and shall include the account in his annual report. Fifty percent of the one percent tax levied in this section must be directed to the Division of Fire and Life Safety of the Department of Labor, Licensing and Regulation to be used only for expenses of this division. For fiscal year 1997-98 only, the fifty percent of the tax levied by this section that is directed to the Department of Labor, Licensing and Regulation is capped at $2,567,325. The department shall report annually to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee where any growth above the base authorization for the preceding is expended and for what purposes within the Division of Fire and Life Safety.  HISTORY: Former 1976 Code Section 38-7-30 [1960 (51) 1554; 1962 Code Section 37-173; 1982 Act No. 403, Section 3] recodified as Section 38-63-530 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-1250 [1947 (45) 322; 1952 Code Section 37-288; 1960 (51) 1562, 1646; 1962 Code Section 37-288] recodified as Section 38-7-30 by 1987 Act No. 155, Section 1; 1987 Act No. 170, Part II, Section 17 (amendment to former 1976 Code Section 38-5-1250 transferred to Section 38-7-30 by 1987 Act No. 155, Section 24]; 1993 Act No. 181, Section 534, Part II; 1997 Act No. 155, Part II, Section 3A.
 (A) One hundred seventy-five thousand dollars of the revenue collected annually pursuant to Section 38-7-30 must be transferred to the Department of Labor, Licensing and Regulation for the purpose of implementing the training, certification, and continuing education program for building codes enforcement officers as provided by law.  (B) The Department of Labor, Licensing and Regulation shall report annually to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee detailing actual program expenditures including, but not limited to, the number of instructors employed, the number of training sessions conducted, and the number of certifications issued. This report must be submitted to the respective chairmen no later than July fifteenth of each year.  (C) One hundred thousand dollars of the revenue collected annually pursuant to Section 38-7-30 must be transferred to the Department of Insurance for the purpose of implementing the program as provided in Section 38-75-480.  (D) Subsection (C) of this section ceases to be of any force or effect after June 30, 2002.  HISTORY: 1997 Act No. 123, Section 4; 1997 Act No. 155, Part II, Section 29; 2000 Act No. 312, Section 3.
 Each fire insurer shall pay to the director or his designee an amount equal to one percent of all premiums written on fire insurance required to be reported under Section 38-7-70 during the preceding year ending December thirty-first or for such portion of that period as the insurer has done business in this State.  HISTORY: Former 1976 Code Section 38-7-40 [1960 (51) 1554; 1962 Code Section 37-174] recodified as Section 38-63-540 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-57-120 [1947 (45) 322; 1952 Code Section 37-1160; 1962 Code Section 37-1160; 1978 Act No. 585, Section 11] recodified as Section 38-7-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534.
 Every insurer insuring employers in this State against liability for personal injuries to their employees or death caused by the injuries, under the provisions of Title 42, shall pay a tax upon the premiums received whether in cash or notes in this State, or on account of business done in this State, for such insurance in this State at the rate of four and one-half percent of the amount of the premiums. For fiscal year 1990-91, the tax is at the rate of three and one-half percent of the amount of the premiums. For fiscal year 1991-92 and thereafter, the tax is at the rate of two and one-half percent of the amount of the premiums. This tax is in lieu of all other taxes on these premiums and must be assessed and collected as provided in this chapter. However, the insurers must be credited with all canceled or returned premiums actually refunded during the year on workers' compensation insurance including any unused premiums refunded or credited to policyholders as dividends.  If an insurer fails or refuses to make the return required by Section 38-7-60, the director or his designee shall assess the tax against the insurer at the rate provided for in this chapter on the amount of premiums he considers just and the proceedings thereon must be the same as if the return had been made.  HISTORY: Former 1976 Code Section 38-7-50 [1960 (51) 1554; 1962 Code Section 37-175] recodified as Section 38-63-550 by 1987 Act No. 155, Section 1; Former 1976 Code Sections 42-5-140 [1936 (39) 1231; 1937 (4) 613; 1942 Code Section 7035-76; 1952 Code Section 72-414; 1962 Code Section 72-414] and Section 42-5-160 [1936 (39) 1231; 1937 (40) 613; 1942 Code Section 7035-76; 1952 Code Section 72-416; 1960 (51) 1946; 1962 Code Section 72-416] recodified as Section 38-7-50 by 1987 Act No. 155, Section 1; 1989 Act No. 100, Section 1; 1993 Act No. 181, Section 534.
 (1) Not later than March first of each year, every insurer licensed by the director or his designee shall file with him a return of premiums written by the insurer in the State during the immediately preceding calendar year ending on December thirty-first. The return must be made on forms prescribed by the director or his designee and must be made under oath by the insurer's employee or representative responsible for the preparation of fee and tax returns, as well as an officer of the insurer.  (2) The license fees imposed in Section 38-7-20 must be fully reported on the return filed in accordance with subsection (1).  (3) The premium and other taxes imposed on insurers pursuant to Sections 38-7-20, 38-7-30, 38-7-40, 38-7-50, and 38-7-90 must be paid to the director or his designee in quarterly installments on or before March first, June first, September first, and December first of each calendar year. The quarterly payments must be calculated and paid as follows:  (a) The quarterly installments paid on or before June first, September first, and December first must each be computed based upon one-fourth of the total premiums written by the insurer during the immediately preceding calendar year ending on December thirty-first. The quarterly installments for June first, September first, and December first must be reported on forms prescribed by the director or his designee.  (b) The quarterly installment paid on or before March first must equal the difference between the total tax liability of the insurer for the immediately preceding calendar year ending on December thirty-first and the sum of the quarterly installments paid by the insurer on June first, September first, and December first of that immediately preceding calendar year. The quarterly installment for March first must be reported on the returns filed in accordance with item (1) of this section. An insurer whose quarterly tax installments are less than one thousand dollars per payment may elect not to pay its tax liability on a quarterly basis and, instead, may elect to report and pay its entire tax liability on the return filed in accordance with item (1).  (4) The director or his designee may suspend or revoke the license of any insurer which fails to make returns and pay fees and taxes as required in this section. The Attorney General shall bring suit in the name of the State to collect any unpaid portion of the fees or taxes required by law.  HISTORY: Former 1976 Code Section 38-7-60 [1960 (51) 1554; 1962 Code Section 37-175.1; 1964 (53) 2139] recodified as Section 38-63-560 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-530 [1986 Act No. 540, Part II, Section 31C] recodified as Section 38-7-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 53. 312, Section 4; 2019 Act No. 6 (S.360), Section 4.B, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 4.B, in (1), in the first sentence, substituted "return of premiums written by the insurer" for "return of premiums collected by the insurer"; and in (3), in (a), in the first sentence, substituted "total premiums written by the insurer" for "total premiums collected by the insurer", and in (b), in the second and third sentences, substituted "item (1)" for "subsection (1)".
 Each fire insurer carrying on business in this State shall annually return to the director or his designee by March first a just and true account, verified by oath, of all premiums received during the preceding year ending December thirty-first from all fire insurance on all property located or that may be located in this State and from all fire insurance business done in this State. In the report the insurer shall allocate the premiums on this business to the county in which the property is located, regardless of where the insurance is written or premiums collected.  HISTORY: Former 1976 Code Section 38-7-70 [1960 (51) 1554; 1962 Code Section 37-175.2; 1964 (53) 2139; 1982 Act No. 403, Section 4] recodified as Section 38-63-570 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-57-110 [1947 (45) 322; 1952 Code Section 37-1159; 1962 Code Section 37-1159; 1978 Act No. 585 Section 10; 1986 Act No. 540, Part II, Section 31F] recodified as Section 38-7-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 534.
 Every fire insurer shall keep accurate books of account of all business done by it on fire insurance required to be reported under the provisions of Section 38-7-70. If it is apparent the return is fraudulent or dishonest, the director or his designee shall investigate the return and collect the amount he finds due.  Every fire insurer which neglects to keep books of account as required by this section, neglects or fails to report or pay any of the money due on premiums as required by Section 38-7-40 or 38-7-70, or is found upon examination to have made a false return of business done by it shall for each offense be subject to the penalty provisions of Section 38-2-10, to be applied to the purposes prescribed in Section 23-9-410.  HISTORY: Former 1976 Code Section 38-7-80 [1960 (51) 1554; 1962 Code Section 37-175.3; 1964 (53) 2139; 1976 Act No. 452 Section 1; 1978 Act No. 577 Section 1; 1982 Act No. 403, Section 5] recodified as Section 38-63-580 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-57-130 [1947 (45) 322; 1952 Code Section 37-1161; 1962 Code Section 37-1161; 1978 Act No. 585 Section 13] and Section 38-57-140 [1947 (45) 322; 1952 Code Section 37-1162; 1962 Code Section 37-1162] recodified as Section 38-7-80 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 5; 1993 Act No. 181, Section 534.
 (A) When the laws of any other state or the regulations or actions of any public official of another state subject, or would subject, insurance companies chartered by this State, or their agents or representatives, to fees, taxes, obligations, conditions, restrictions, or penalties for the privilege of doing business in that state which are greater than those required by this State of similar insurers organized or domiciled in the other state by or in this State for the privilege of doing business herein, then all similar insurers organized or domiciled in that state are subjected to the greater requirements which are or would be imposed by or in that state upon similar insurers of this State.  (B) This section must be applied, regardless of whether an insurer chartered by this State is doing business in the other state. The application of this section is based upon a comparison of the aggregate requirements imposed by this State with the aggregate requirements imposed by the other state. Taxes, fees, or other obligations imposed by municipalities are considered in the application of this section.  (C) This section is effective for all insurance premiums collected after December 31, 1989, and to all insurance premium tax returns filed beginning with the quarterly return due September 1, 1990, and all quarterly and annual returns filed after that time.  (D) Title insurers only may include the title insurers' portion of the premium in the retaliatory tax computation for this State. Since the title insurer collects the agent's portion of the premium tax, the title insurer is prohibited from including these amounts in the South Carolina column of retaliatory tax worksheets. This subsection is effective for all premiums collected after the effective date of this act.  HISTORY: Former 1976 Code Section 38-7-90 [1960 (51) 1554; 1962 Code Section 37-175.4; 1976 Act No. 452 Section 2; 1978 Act No. 577 Section 2; 1982 Act No. 403, Section 6] recodified as Section 38-63-590 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-550 [1986 Act No. 540, Part II, Section 31E] recodified as Section 38-7-90 by 1987 Act No. 155, Section 1; 1990 Act No. 347, Section 1; 1993 Act No. 181, Section 534; 2018 Act No. 229 (H.4962), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 229, Section 1, added (D), providing that title insurers only may include their portion of the premium in the retaliatory tax computations.
 As used in this chapter:  (1) "Utilization review" means a system for reviewing the necessary, appropriate, and efficient allocation of health care resources and services given or proposed to be given to a patient or group of patients.  (2) "Private review agent" means a person performing utilization reviews who is either under contract with or acting on behalf of, but not employed by:  (a) a South Carolina business entity;  (b) the State of South Carolina; or  (c) a hospital.  (3) "Utilization review program" means an overview of the activities performed by the private review agent.  (4) "Director or his designee" means the director or his designee of the South Carolina Department of Insurance. The director may appoint a designee or deputy director to assist in the management and operation of the department. If the director does not appoint a designee or deputy director, the term "director or his designee" shall be construed to refer to the director of the department.  (5) "Certificate" means a renewable certificate of registration granted by the director or his designee to a private review agent, authorizing the agent to perform utilization review activities in this State for two years. This certificate is not transferable.  HISTORY: 1990 Act No. 311, Section 2; 1993 Act No. 181, Sections 744, 745; 1994 Act No. 339, Section 18.
 This chapter applies to insurance companies, administrators of insurance benefit plans, and health maintenance organizations licensed and regulated by the South Carolina Department of Insurance. Insurance companies, administrators of insurance benefit plans, and health maintenance organizations so regulated are exempt from the provisions of Sections 38-70-20(A) and (B), 38-70-30, and 38-70-50.  HISTORY: 1990 Act No. 311, Section 2; 1994 Act No. 339, Section 19.
 (A) No private review agent may conduct utilization reviews in this State unless the director or his designee has granted the private review agent a certificate to perform these activities. The director or his designee, in his discretion, may approve or deny certificate applications.  (B) An applicant for a certificate shall pay the director or his designee the application fee as provided in Section 38-70-50 and shall submit an application to the director or his designee on forms and with any supporting documentation that the director or his designee requires. The application must contain information regarding the utilization review programs to be conducted by the applicant which must meet the requirements contained in subsection (C).  (C) A utilization review program of the applicant must meet the following minimum standards:  (1) notification of an adverse decision by the utilization review agent must be provided to the insured or other party designated by the insured within five business days;  (2) all utilization review agents shall maintain a procedure by which insured or providers may seek reconsideration of appeal of determinations of the utilization review agent;  (3) a representative of the utilization review agent must be accessible by telephone to insureds or providers in South Carolina, at least forty hours each week during normal business hours;  (4) the type and qualification of the personnel either employed or under contract to perform the utilization reviews must be included in the utilization review program information submitted to the director or his designee;  (5) a copy of the materials designed to inform applicable patients of the requirements of the utilization plan and the responsibilities and rights of patients under the plan must be provided interested parties upon request; and  (6) an acknowledgment that all applicable state and federal laws to protect the confidentiality of individual medical records are followed.  HISTORY: 1990 Act No. 311, Section 2; 1993 Act No. 181, Section 746.
 A certificate must be renewed on the second anniversary of its effective date and is considered to be approved upon payment of the fee unless the director or his designee takes action to withdraw or cancel the certificate.  HISTORY: 1990 Act No. 311, Section 2; 1993 Act No. 181, Section 747.
 (A) The director or his designee may conduct periodic reviews of the operations of private review agents in this State to ensure that they continue to meet the specifications outlined in this chapter and any applicable regulations which may be promulgated by the department. The director or his designee may perform periodic telephone audits of private review agents authorized to conduct business in this State, to determine if the agents are reasonably accessible.  (B) Within ninety days upon receipt of a complaint from a licensed health care provider, the director or his designee may investigate the complaint, including holding hearings and taking testimony or other appropriate actions, and shall present a written response to the complainant and the private review agent named. This response must include the following:  (1) a statement of the original complaint;  (2) a determination of findings of the director or his designee;  (3) corrective actions, if any, on the part of the private review agent which the director or his designee finds appropriate; and  (4) a time frame in which any corrective actions are to be completed.  (C) The director or his designee is authorized to take appropriate action against a private review agent who fails to meet the standards of this chapter or of any applicable regulations promulgated by the department, or who fails to respond in a timely fashion to corrective actions ordered by the director or his designee. The director or his designee may impose an administrative fine not to exceed one thousand dollars for each violation or may deny, suspend, or revoke the certificate of the private review agent.  (D) The director or his designee may also deny, suspend, or revoke a certificate if, upon review, the director or his designee finds that the private review agent does not:  (1) have a utilization review program that meets the requirements of subsection (C) of Section 38-70-20;  (2) have available the services of sufficient numbers of registered nurses, medical records technicians, or similarly qualified persons supported and supervised by appropriate physicians to carry out its utilization review activities;  (3) meet any applicable regulations the department promulgates under this chapter relating to the qualifications of private review agents or the performance of utilization review;  (4) remain accessible to patients and providers.  (E) Before taking the actions authorized by this section to deny, suspend, or revoke the certificate of a private review agent, the director or his designee shall provide the private review agent with reasonable time to supply additional information demonstrating compliance with the requirements of this chapter and the opportunity to request a hearing. If a private review agent requests a hearing, the director or his designee shall send a hearing notice to the involved parties by certified mail, return receipt requested, at least thirty days before the hearing. The director or his designee shall hold the hearing in accordance with the provisions of Chapter 3 of this title, and the State Administrative Procedures Act. Any action or decision of the director or his designee pursuant to the administrative hearing may be appealed to the Administrative Law Court as provided by law by the private review agent.  HISTORY: 1990 Act No. 311, Section 2; 1993 Act No. 181, Section 748.
 (A) Every private review agent, before transacting business in this State, shall pay an application fee of not more than four hundred dollars and a registration fee of not more than eight hundred dollars to the department by July first each even-numbered year. The certificate year runs July first to the following June thirtieth.  (B) The department shall promulgate regulations necessary to establish these registration and application fees.  HISTORY: 1990 Act No. 311, Section 2; 1992 Act No. 501, Part II Section 11Q; 1993 Act No. 181, Section 749.
 The department, after consultation with payers, providers, utilization review agents, the Department of Health and Environmental Control and other interested parties, shall promulgate regulations to implement and enforce the requirements of this chapter in accordance with the State Administrative Procedures Act.  HISTORY: 1990 Act No. 311, Section 2; 1993 Act No. 181, Section 750.  
 All licensed accident and health insurers are entitled to:  (a) issue and deliver service benefit contracts to provide for prepayment of any health care service and to make payment directly to the provider of the services, in whole or in part, including, but not limited to, professional services, any institutional care, personal services, and supplies;  (b) issue and deliver contracts of indemnity or contracts providing for payment of money directly to the insureds or for them for health care services.  HISTORY: Former 1976 Code Section 38-35-20 [1962 Code Section 37-442; 1968 (55) 2584] recodified as Section 38-71-10 by 1987 Act No. 155, Section 1.
 Nothing in this chapter applies to or affects:  (1) any policy of workers' compensation insurance or any policy of liability insurance with or without supplementary coverage therein;  (2) any policy or contract of reinsurance;  (3) any blanket or group policy of insurance, except as specifically required in this chapter; or  (4) life insurance, endowment, or annuity contracts or contracts supplemental thereto which contain only such provisions relating to accident and health insurance as (a) provide additional benefits in case of death or dismemberment or loss of sight by accident or (b) operate to safeguard the contracts against lapse or to give a special surrender value or special benefit or an annuity in the event that the insured or annuitant becomes totally and permanently disabled, as defined by the contract or supplemental contract.  HISTORY: Former 1976 Code Section 38-35-230 [1947 (45) 322; 1952 Code Sections 37-460 and 37-461; 1956 (49) 2029; 1962 Code Section 37-460] recodified as Section 38-71-100 by 1987 Act No. 155, Section 1.
 "Blanket accident and health insurance" is defined to be that form of accident and health insurance covering special groups of individuals as enumerated in one of the following items:  (1) under a policy or contract issued to any common carrier, which must be considered the policyholder, covering a group defined as all individuals who may become passengers on the common carrier;  (2) under a policy or contract issued to an employer, who must be considered the policyholder, covering any group of employees defined by reference to exceptional hazards incident to the employment;  (3) under a policy or contract issued to an employer, who is considered the policyholder, covering employees or independent contractors, or both, under contract to the employer while traveling to and from and while attending meetings at a common location as a group or in groups incident to their employment or contractual arrangement;  (4) under a policy or contract issued to a college, school, or other institution of learning or to the head or principal thereof, which or who must be considered the policyholder, covering students or teachers;  (5) under a policy or contract issued in the name of any volunteer fire department, first aid, or other such volunteer group, which must be considered the policyholder, covering all of the members of the department or group;  (6) under a policy or contract issued to any other similar group which, in the discretion of the director or his designee, may be eligible for issuance of a blanket accident and health policy or contract either under special circumstances, exceptional hazards, or for short periods of duration.  HISTORY: Former 1976 Code Section 38-35-710 [1947 (45) 322; 1952 Code Section 37-521; 1962 Code Section 37-521; 1970 (56) 2319; 1979 Act No. 26] recodified as Section 38-71-1010 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 12; 1993 Act No. 181, Section 776.
 All blanket accident and health insurance policies are subject to the provisions of Articles 1 and 3 of this chapter. However, no policy is required to contain any of the required policy provisions set forth in Section 38-71-340. However, no policy may contain any provision relative to notice of claim, proofs of loss or time of payment of claims, or the time within which suit may be brought upon the policy which, in the opinion of the director or his designee, is less favorable to the insured than would be permitted by the required policy provisions.  HISTORY: Former 1976 Code Section 38-35-720 [1947 (45) 322; 1952 Code Section 37-522; 1956 (49) 2029; 1962 Code Section 37-522] recodified as Section 38-71-1020 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 777.
 An individual application is not required from an individual covered under a blanket accident and health policy or contract, nor is it necessary for the insurer to furnish each individual a certificate.  HISTORY: Former 1976 Code Section 38-35-730 [1947 (45) 322; 1952 Code Section 37-523; 1962 Code Section 37-523] recodified as Section 38-71-1030 by 1987 Act No. 155, Section 1.
 All benefits under any blanket accident and health policy are payable to the individual insured, to his designated beneficiary or beneficiaries, or to his estate, except that if the individual insured is a minor, the benefits may be made payable to his parent, guardian, or other person actually supporting him.  HISTORY: Former 1976 Code Section 38-35-740 [1947 (45) 322; 1952 Code Section 37-524; 1962 Code Section 37-524] recodified as Section 38-71-1040 by 1987 Act No. 155, Section 1.
 Nothing contained in this article affects the legal liability of policyholders for the death of, or injury to, any member of the group.  HISTORY: Former 1976 Code Section 38-35-750 [1947 (45) 322; 1952 Code Section 37-525; 1962 Code Section 37-525] recodified as Section 38-71-1050 by 1987 Act No. 155, Section 1.
 No insurer doing business in this State and issuing health or accident insurance policies, other than contracts of group insurance of disability, accidental death, or disability and accidental death benefits in connection with policies of life insurance, the premium for which is to be collected in weekly, monthly, or other periodic installments by authority of a payroll deduction order executed by the insured and delivered to the insurer or the insured's employer authorizing the deduction of premium installments from the insured's salary or wages, may, during the period for which the policy is issued and while the insured remains employed by the authorized employer, declare forfeited or lapsed the policy until and unless a written or printed notice of the failure of the employer to remit the premium or installment thereof, stating the amount or portion thereof due on the policy and to whom it must be paid, has been duly addressed and mailed to the person who is insured under the policy at least fifteen days before the policy is terminated or lapsed.  HISTORY: Former 1976 Code Section 38-35-170 [1947 (45) 322; 1952 Code Section 37-457; 1962 Code Section 37-457] recodified as Section 38-71-110 by 1987 Act No. 155, Section 1.
 "Accident and health insurance on a franchise plan" is that form of accident and health insurance issued to: (1) three or more employees of any corporation, copartnership, or individual employer or any governmental corporation, agency, or department; or (2) ten or more members of any trade or professional association, labor union, or any other association having had an active existence for at least two years when the association or union has a constitution or bylaws and is formed in good faith for purposes other than that of obtaining insurance, when: (a) the insureds, with or without their dependents, are issued the same form of an individual policy varying only as to amounts and kinds of coverage applied for by the insureds; and (b) the employer, union, or association has approved and endorsed the policy being sold to its employees or members. Accident and health insurance on a franchise plan may be written under rates less than the usual rates for the insurance, but all premium rates and discounts the insurer proposes to use must be filed with the department and approved by the director or his designee as required by Section 38-71-310.  HISTORY: Former 1976 Code Section 38-35-1110 [1947 (45) 322; 1952 Code Section 37-551; 1962 Code Section 37-551] recodified as Section 38-71-1110 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 13; 1993 Act No. 181, Section 778.
 All individual and group health insurance policies and health maintenance organizations providing coverage for the hospitalization for mastectomies must provide benefits for hospitalization for at least forty-eight hours following a mastectomy. Nothing in this section shall be construed to prohibit an attending physician from releasing the patient prior to the expiration of the time provided herein. In the case of an early release, coverage shall include at least one home care visit if ordered by the attending physician.  HISTORY: 1998 Act No. 329, Section 3.
 All individual and group health insurance policies and health maintenance organizations providing coverage for mastectomy surgery must provide coverage for prosthetic devices and reconstruction of the breast on which surgery for breast cancer has been performed and surgery and reconstruction of the non-diseased breast, if determined medically necessary by the patient's attending physician with the approval of the insurer or HMO. The provisions of this section shall not require supplemental health insurance policies to provide coverage for reconstruction of the nondiseased breast.  HISTORY: 1998 Act No. 329, Section 4.
 This article shall be known and may be cited as the "Small Employer Health Insurance Availability Act".  HISTORY: 1994 Act No. 339, Section 1.
 The purpose and intent of this article is to promote the availability of health insurance coverage to small employers, excluding individual health insurance plans, regardless of their health status or claims experience, to provide for development of "basic" and "standard" health insurance plans to be offered to all small employers, to provide for establishment of a reinsurance program, to improve the overall fairness and efficiency of the small group health insurance market, and to allow small employers to form cooperatives for the purpose of providing health insurance to their employees.  HISTORY: 1994 Act No. 339, Section 2; 2008 Act No. 180, Section 2, eff February 19, 2008.
 As used in this article:  (1) "Basic health insurance plan" means a lower cost health insurance plan developed pursuant to Section 38-71-1420.  (2) "Board" means the board of directors of the program established pursuant to Section 38-71-1410.  (3) "Director" means the Director of the Department of Insurance of this State.  (4) "Committee" means the advisory committee to the commissioner referred to in Section 38-71-1420.  (5) "Dependent" means a spouse, an unmarried child under the age of nineteen years, an unmarried child who is a full-time student between the ages of nineteen and twenty-two and who is financially dependent upon the parent, and an unmarried child of any age who is medically certified as disabled and dependent upon the parent.  (6) "Eligible employee" means an employee:  (a) as defined in Section 38-71-710(1) or Section 38-71-840(7) who works on a full-time basis and has a normal workweek of thirty or more hours; or  (b) who is a licensed real estate person engaged in the sale, leasing, or rental of real estate for a licensed real estate broker on a straight commission basis, who has signed a valid independent contractor agreement with the broker who works on a full-time basis and has a normal workweek of thirty or more hours.  (7) "Employer contribution rule" means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of participants and beneficiaries.  (8) "Group participation rule" means a requirement relating to the minimum number of participants or beneficiaries that must be enrolled in relation to a specified percentage or number of eligible individuals or employees of an employer.  (9) "Health group cooperative" or "cooperative" means a private purchasing cooperative composed of small employers formed under this article.  (10)(a) "Health insurance plan" or "plan" means any hospital or medical policy or certificate, major medical expense insurance, hospital or medical service plan contract, or health maintenance organization subscriber contract that provides benefits consisting of medical care provided directly through insurance or reimbursement, or otherwise and including items and services paid for medical care. It includes the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application, if attached.  (b) "Health insurance plan" does not include: accident only; blanket accident and sickness; specified disease or hospital indemnity or other fixed indemnity insurance if offered as independent noncoordinated benefits; credit; limited scope dental or vision if offered separately; Medicare supplement if offered as a separate policy; long-term care if offered separately; disability income insurance; coverage issued as a supplement to liability or other liability insurance, including general liability insurance and automobile liability insurance; coverage designed only to provide payments on a per diem, fixed indemnity, or nonexpense incurred basis; coverage for Medicare or Medicaid services pursuant to a contract with state or federal government; workers' compensation or similar insurance; automobile medical payment insurance; coverage for on-site medical clinics; or other similar coverage specified in regulations under which benefits for medical care are secondary or incidental to other insurance benefits.  (11) "Insurer" means an entity that provides health insurance in this State. For the purposes of this article, insurer includes an insurance company, a health maintenance organization, and any other entity providing a plan of health insurance or health benefits subject to state insurance regulation, including multiple employer self-insured health plans licensed pursuant to the provisions of Chapter 41, Title 38.  (12) "Medical care" means amounts paid for:  (a) the diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of affecting a structure or function of the body;  (b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and  (c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).  (13) "Network plan" means a health insurance plan issued by an insurer under which the financing and delivery of medical care, including items and services paid for as medical care, are provided, in whole or in part, through a defined set of providers under contract with the insurer.  (14) "Plan of operation" means the plan of operation of the program established pursuant to Section 38-71-1410.  (15) "Program" means the South Carolina Small Employer Insurer Reinsurance Program pursuant to Section 38-71-1410.  (16) "Reinsuring insurer" means a small employer insurer participating in the reinsurance program pursuant to Section 38-71-1410.  (17) "Risk-assuming insurer" means a small employer insurer whose application is approved by the commissioner pursuant to Section 38-71-1390.  (18) "Small employer" means, in connection with a health insurance plan with respect to a calendar year and a plan year, any person, firm, corporation, partnership, association, or employer, as defined in Section 3(5) of the Employee Retirement Income Security Act of 1974, that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar year, employed no more than fifty eligible employees or employed an average of not more than fifty employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.  (a) in determining the number of eligible employees, companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation or that are treated as a single employer under subsections (b), (c), (m), or (o) of Section 414 of the Internal Revenue Code of 1986 are considered one employer; and  (b) in the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether that employer is a small or large employer must be based on the average number of employees that it reasonably is expected to employ on business days in the current calendar year; and  (c) any reference in this article to an employer includes a reference to any predecessor of the employer.  (19) "Small employer insurer" means an insurer that offers health insurance plans covering eligible employees of one or more small employers in this State.  (20) "Standard health insurance plan" means a health insurance plan developed pursuant to Section 38-71-1420.  HISTORY: 1994 Act No. 339, Section 3; 1997 Act No. 5, Section 12; 2008 Act No. 180, Section 2, eff February 19, 2008; 2013 Act No. 48, Section 1, eff June 7, 2013.  Editor's Note  2005 Act No. 76, Section 4, provides as follows:  "This act does not apply to a health insurance plan that is individually underwritten and does not apply to a health insurance plan provided to a small employer, as defined by Section 38-71-1330(17) of the 1976 Code."
 (A) Except as provided in subsection (B), the provisions of this article apply to any health insurance plan that provides group coverage to groups of two to fifty.  (B) The provisions of this article do not apply to individual health insurance policies that are subject to policy form and premium rate approval as may be provided in this title.  (C) For health group cooperatives, the applicable group size is two to fifty. Health group cooperatives are permitted to attempt to obtain coverage for small employer groups that contain fewer than two eligible employees; however, such attempt to obtain coverage is subject to the medical underwriting requirements and policies of the small employer insurer.  HISTORY: 1994 Act No. 339, Section 4; 2008 Act No. 180, Section 2, eff February 19, 2008.
 (A) A health group cooperative of small employers may be formed only for the purpose of obtaining insurance. A health group cooperative:  (1) shall contain at least one thousand eligible employees or must have at least ten participating employers;  (2) shall establish requirements for membership. A small employer's participation in a cooperative is voluntary, but an employer electing to participate in a cooperative shall commit to purchasing coverage through the cooperative for five years, unless allowed to terminate because of a financial hardship affecting the employer as determined by rules governing termination adopted by the director. The health group cooperative may not exclude a small employer, which otherwise meets the requirements for membership, on the basis of claim experience or a health status-related factor, as defined in Section 38-71-840, in relation to the employee or a dependent of the employee;  (3) shall hold an open enrollment period at least once a year during which new members may join the health group cooperative;  (4) shall allow eligible employees and their dependents, upon initial enrollment and during subsequent open enrollment periods, to choose among health insurance plans offered through the cooperative. A person covered by a health insurance plan offered through the cooperative, which requires an enrollment period in excess of one year, is eligible to choose among available plans upon the completion of the enrollment period;  (5) shall offer coverage under all plans offered through the cooperative to all eligible employees of member small employers and their dependents. Coverage must be offered to all employees of member small employers and their dependents except as provided in Section 38-71-1370(B);  (6) does not assume any risk or form self-insurance plans among its members unless it complies with the provisions of Chapter 41 of this title;  (7) has the option of using any type of rating arrangement with the health insurance plans and, at its discretion, premiums may be paid to the health insurance plans by the cooperative, by member small employers, or by eligible employees and their dependents. A health insurance plan offered through the health group cooperative that rates:  (a) each member small employer separately is subject to the laws governing small employer health insurance; and  (b) the entire group as a whole shall charge each insured person based on a community rate within the health group cooperative, adjusted for case characteristics as permitted by Section 38-71-940 and plan selection, and is subject to the laws governing group accident and health insurance.  (B)(1) The health group cooperative, before offering any health insurance plan through the cooperative, and annually after that time, shall register with the department and demonstrate continued compliance with the provisions of item (2).  (2) The health group cooperative:  (a) must be organized as a nonprofit corporation and have the rights and duties pursuant to the provisions of Chapter 31, Title 33 (South Carolina Nonprofit Corporations Act). On receipt of a certificate of incorporation from the South Carolina Secretary of State, the cooperative shall file written notification of the receipt of the certificate and a copy of the cooperative's organizational documents with the director. The board of directors shall file annually with the director a statement of all amounts collected and expenses incurred for the preceding year;  (b) or a member of the board of directors, the executive director, an employee, or an agent of a cooperative, is not liable for:  (i) an act performed in good faith in the execution of duties in connection with the cooperative; or  (ii) an independent action of a small employer insurer or a person who provides health care services under a health insurance plan; and  (c) or a member of the board of directors, the executive director, an employee, or an agent is not liable for failure to arrange for coverage of a particular illness, disease, or health condition.  (C) A small employer insurer may not form, or be a member of, a health group cooperative. An insurer may associate with a sponsoring entity, such as a business association, chamber of commerce, or other organization representing employers or serving an analogous function, to assist the sponsoring entity in forming a health group cooperative.  HISTORY: 2008 Act No. 180, Section 1, eff February 19, 2008.
 All individual and group health insurance and health maintenance organization policies providing coverage for the hospitalization and attendant professional services of a mother and her newborn child or children must provide for the mother and her newborn child or children to remain in the hospital for at least forty-eight hours after a vaginal delivery, not including the day of delivery, and at least ninety-six hours following a Cesarean Section, not including the day of surgery. Nothing in this section shall be construed to prohibit the attending physician, in consultation with the mother, from requesting additional time for hospitalization or from releasing the mother or her newborn child or children prior to the expiration of time provided herein.  HISTORY: 1996 Act No. 335, Section 1; 1997 Act No. 5, Section 4.
 (A) Except as provided in Section 38-71-1345(A)(7)(b), premium rates for health insurance plans subject to this article are governed by the rating restrictions provided for in this chapter.  (B) Premium rates for health insurance plans must comply with the requirements of this section notwithstanding any reinsurance premiums or assessments paid or payable by small employer insurers pursuant to Section 38-71-1410.  HISTORY: 1994 Act No. 339, Section 5; 2008 Act No. 180, Section 2, eff February 19, 2008.
 (1) shall arrange for group health insurance plan coverage for small employers who are members of the cooperative by contracting with small employer insurers who meet the criteria established by this chapter for coverage under group health insurance plans;  (2) shall collect premiums to cover the cost of:  (a) group health insurance plan coverage purchased through the cooperative; and  (b) the cooperative's administrative expenses;  (3) may contract with agents to market coverage issued through the cooperative;  (4) shall establish administrative and accounting procedures for the operation of the cooperative;  (5) shall establish procedures under which an applicant for or participant in coverage issued through the cooperative may have a grievance reviewed by an impartial person;  (6) may contract with a small employer insurer or third-party administrator to provide administrative services to the cooperative;  (7) shall contract with small employer insurers for the provision of services to small employers covered through the cooperative;  (8) shall develop and implement a plan to maintain public awareness of the cooperative and publicize the eligibility requirements and the procedures for enrollment in coverage through the cooperative;  (9) may negotiate the premiums paid by its members; and  (10) may offer other ancillary products and services to its members as are customarily offered in conjunction with group health insurance plans.  HISTORY: 2008 Act No. 180, Section 1, eff February 19, 2008.
 (A)(1) Every small employer insurer shall, as a condition of transacting business in this State with small employers, actively offer to small employers all health insurance plans actively marketed to small employers in this State, including at least two health insurance plans. One health insurance plan offered by each small employer insurer must be a basic health insurance plan and one plan must be a standard health insurance plan.  (2) Coverage under such health insurance plan must be offered to every eligible employee of a small employer and his or her dependents who apply for enrollment during the period in which the employee first becomes eligible to enroll under the terms of the health insurance plan and may not place any restriction which is inconsistent with Section 38-71-860 on an eligible employee being a participant or beneficiary. A small employer insurer may not offer coverage only to certain individuals in a small employer group, or to only part of the group, except as provided in Section 38-71-850 for late enrollees.  (3) Except with respect to applicable preexisting condition limitation periods or late enrollees as provided in Section 38-71-850, a small employer insurer shall not modify a health insurance plan with respect to a small employer or any eligible employee or dependent through rider, endorsement, or otherwise, to restrict or exclude coverage or benefits for specific diseases, medical conditions or services otherwise covered under the plan.  (4)(a) Except as provided in subsections (C) and (D), a small employer insurer shall issue these health insurance plans to any eligible small employer that applies for any such plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health insurance plan relating to employer contribution rules and group participation rules and not inconsistent with this article.  (b) In the case of a small employer insurer that establishes more than one class of business pursuant to Section 38-71-920, the small employer insurer shall maintain and issue to eligible small employers these health insurance plans in addition to at least one basic health insurance plan and at least one standard health insurance plan in each class of business so established. A small employer insurer may apply reasonable criteria in determining whether to accept a small employer into a class of business, provided that:  (i) the criteria are not intended to discourage or prevent acceptance of small employers applying for a basic or standard health insurance plan;  (ii) the criteria are not related to the health status or claim experience of the small employer;  (iii) the criteria are applied consistently to all small employers applying for coverage in the class of business; and  (iv) the small employer insurer provides for the acceptance of all eligible small employers into one or more classes of business.  The requirement to offer these health insurance plans to small employers shall not apply to a class of business into which the small employer insurer is no longer enrolling new small businesses.  (5) The provisions of this subsection (A) of this section shall be effective one hundred eighty days after the director's approval of the basic health insurance plan and the standard health insurance plan developed pursuant to Section 38-71-1420; provided that if the Small Employer Insurer Reinsurance Program created pursuant to Section 38-71-1410 is not yet operative on that date, the provisions of this paragraph shall be effective on the date that the program begins operation.  (B)(1) After the director's approval of the basic health insurance plan and the standard health insurance plan developed pursuant to Section 38-71-1420, a small employer insurer shall file with the director, in the form and manner prescribed by the director, the basic and standard health insurance plans to be used by the insurer. The insurer shall certify to the director that the plans as filed are in substantial compliance with the provisions as approved by the director. Upon the director's receipt of the certification, the insurer may use the certified plans unless their use is disapproved by the director.  (2) The director may, at any time, after providing notice and an opportunity for hearing, disapprove the continued use by a small employer insurer of a basic or standard health insurance plan on the grounds that the plan does not meet the requirements of this article.  (C)(1) In the case of a small employer insurer that offers health insurance coverage through a network plan, the small employer insurer may:  (a) limit the employers that may apply for such coverage to those with eligible employees who live, work, or reside in the service area for such network plan; and  (b) within the service area of any such plan, deny such coverage to such employers if such insurer has demonstrated to the satisfaction of the director that:  (i) it will not have the capacity to deliver services adequately to members of any additional groups because of its obligations to existing group contract holders and enrollees; and  (ii) it is applying this item uniformly to all employers without regard to claims experience of those employers and their employees and their dependents or any health status-related factors relating to such employees and dependents.  (2) A small employer insurer that offers health insurance coverage through a network plan that cannot offer coverage pursuant to item (1)(b) may not offer coverage in the applicable area to new cases of employer groups with more than fifty eligible employees or to any small employer groups until the later of one hundred eighty days following each such refusal or the date on which the insurer notifies the director that it has regained capacity to deliver services to small employer groups.  (D)(1) A small employer insurer may deny health insurance coverage to small employers for any period of time for which the director determines that requiring the acceptance of small employers in accordance with the provisions of subsection (A) would place the small employer insurer in a financially impaired condition or if the small employer insurer has demonstrated to the director that it:  (a) does not have the financial reserves necessary to underwrite additional coverage; and  (b) is applying this item uniformly to all small employers in the State without regard to claims experience of those employers and their employees and their dependents or any health status-related factor relating to such employees and dependents.  (2) A small employer insurer that denies coverage to a small employer pursuant to item (1) may not offer coverage in the State to new cases of employer groups with more than fifty eligible employees or to any small employer groups until the later of one hundred eighty days following each such refusal or the date on which the small employer insurer demonstrates to the director that it has sufficient financial reserves to underwrite additional coverage. The director may provide for the application of this subsection on a service-area-specific basis.  HISTORY: 1994 Act No. 339, Section 6; 1997 Act No. 5, Section 13.
 (A) A health group cooperative shall contract only with a small employer insurer that demonstrates:  (1) that the insurer or health maintenance organization is licensed and in good standing with the Department of Insurance;  (2) the capacity to administer the group health insurance plans;  (3) the ability to monitor and evaluate the quality and cost effectiveness of care and applicable procedures;  (4) the ability to conduct utilization management and applicable procedures and policies;  (5) the ability to assure enrollees a sufficient number of health care providers, including specialty providers; and  (6) a satisfactory grievance procedure and the ability to respond to enrollees' calls, questions, and complaints.  (B) A health group cooperative shall comply with federal laws applicable to cooperatives and group health insurance plans issued through cooperatives, to the extent required by this title or regulations adopted under them.  HISTORY: 2008 Act No. 180, Section 1, eff February 19, 2008.
 (A) Except to the extent inconsistent with specific provisions of this article, all provisions of Article 5, are applicable to any insurance plans required to be offered by small employer insurers.  (B) Late enrollees may be excluded from coverage for the greater of eighteen months or an eighteen month preexisting condition exclusion; however, if both a period of exclusion from coverage and a preexisting condition exclusion are applicable to a late enrollee, the combined period may not exceed eighteen months.  HISTORY: 1994 Act No. 339, Section 7; 1997 Act No. 5, Section 14; 2001 Act No. 82, Section 26, eff July 20, 2001.
 (A)(1) Within sixty days after the plan of operation is approved by the director under Section 38-71-1410, each small employer insurer shall notify the director of the insurer's intention to operate as a risk-assuming insurer or a reinsuring insurer. A small employer insurer seeking to operate as a risk-assuming insurer shall make an application pursuant to Section 38-71-1390.  (2) The decision shall be binding for a five-year period except that the initial decision shall be binding for two years. The director may permit an insurer to modify its decision at any time for good cause shown.  (3) The director shall establish an application process for small employer insurers seeking to change their status under this subsection. In the case of a small employer insurer that has been acquired by another such insurer, the director may waive or modify the time periods established in item (2).  (B) A reinsuring insurer that applies and is approved to operate as a risk-assuming insurer shall not be permitted to continue to reinsure any health insurance plan with the program. Such an insurer shall pay a prorated assessment based upon business issued as a reinsuring insurer for any portion of the year that the business was reinsured.  HISTORY: 1994 Act No. 339, Section 8.
 (A) Any small employer insurer may elect to become a risk-assuming insurer upon application to and approval by the director. A small employer insurer shall not be approved as a risk-assuming insurer if the director finds that the insurer is not capable of assuming that status pursuant to the criteria set forth in subsection (B) of this section. The insurer shall provide public notice of its application to become a risk-assuming insurer. A small employer insurer's application to be a risk-assuming insurer shall be approved unless disapproved by the director within sixty days after the insurer's application. A small employer insurer that has had its application to be a risk-assuming insurer disapproved may request and shall be granted a public hearing within sixty days after the disapproval.  (B) In determining whether or not to approve an application by a small employer insurer to become a risk-assuming insurer, the director shall consider the insurer's financial condition and the financial condition of its parent or guaranteeing corporation, if any; its history of assuming and managing risk; its ability to assume and manage the risk of enrolling small employers without the protection of the reinsurance provided in Section 38-71-1410; and its commitment to fairly market to all small employers.  HISTORY: 1994 Act No. 339, Section 9.
 (A) All individual and group health insurance policies providing coverage on an expense-incurred basis and individual and group service or indemnity-type contracts issued by a nonprofit corporation which provide coverage for a family member of the insured or subscriber, as to the family member's coverage, also must provide that the health insurance benefits applicable for children are payable with respect to a newly born child of the insured or subscriber from the moment of birth.  (B) The coverage for a newly born child consists of coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities.  (C) If payment of a specific premium or subscription fee is required to provide coverage for a child, the policy or contract may require that notification of birth of a newly born child and payment of the required premium or fees must be furnished to the insurer or nonprofit service or indemnity corporation within thirty-one days after the date of birth in order to have the coverage continue beyond the thirty-one-day period.  (D)(1) The provisions of this section apply to a child with respect to whom a decree of adoption by the insured or subscriber has been entered within thirty-one days after the date of his birth and to a child with respect to whom:  (a) adoption proceedings have been instituted by the insured or subscriber within thirty-one days after the date of his birth and the insured or subscriber has temporary custody pursuant to Section 63-9-510;  (b) the adoption proceedings have been completed and a decree of adoption entered within one year from the institution of proceedings, unless extended by order of the court by reason of the special needs of the child pursuant to Section 63-9-750.  (2) Coverage must be provided as long as the insured or subscriber has custody of the child pursuant to decree of the court and the required premiums or fees are furnished to the insurer or nonprofit service or indemnity corporation.  HISTORY: Former 1976 Code Section 38-35-70 [1962 Code Section 37-446; 1974 (58) 2247] recodified as Section 38-71-140 by 1987 Act No. 155, Section 1; 1990 Act No. 417, Section 1.
 (A) A small employer insurer may elect to become a reinsuring insurer and operate under the provisions of this section and Section 38-71-1410.  (B) Each reinsuring insurer shall conduct business with its members and subscribers, and administer claims for coverage reinsured by the program, in the same manner as it would administer health claims that it writes without reinsurance.  HISTORY: 1994 Act No. 339, Section 10, eff July 1, 1995.
 (A) There is hereby created a nonprofit entity to be known as the South Carolina Small Employer Insurer Reinsurance Program, which shall become operational on July 1, 1995.  (B)(1) The program shall operate subject to the supervision and control of the board. Subject to the provisions of item (2), the board shall consist of eight members appointed by the director plus the director or his designated representative, who shall serve as an ex officio member of the board.  (2) In selecting the members of the board, the director shall include representatives of small employers and small employer insurers and such other individuals determined to be qualified by the director. At least five members of the board shall be representatives of insurers, one of whom shall be a licensed independent insurance agent who represents multiple health and accident insurance carriers, and shall be selected from individuals nominated in this State pursuant to procedures and guidelines developed by the director.  (3) The initial board members shall be appointed as follows: two of the members to serve a term of two years; three of the members to serve a term of four years; and three of the members to serve a term of six years. Subsequent board members shall serve for a term of three years. A board member's term shall continue until his successor is appointed.  (4) A vacancy in the board shall be filled by the director. A board member may be removed by the director for cause.  (C) Not later than September 1, 1994, each small employer insurer shall make a filing with the director containing the insurer's net health insurance premium derived from health insurance plans delivered or issued for delivery to small employers in this State in the previous calendar year.  (D) Within one hundred eighty days after the appointment of the initial board, the board shall submit to the director a plan of operation and thereafter any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the program. The director may, after notice and hearing, approve the plan of operation if the director determines it to be suitable to assure the fair, reasonable, and equitable administration of the program, and to provide for the sharing of program gains or losses on an equitable and proportionate basis in accordance with the provisions of this section. The plan of operation shall become effective upon written approval by the director.  (E) If the board fails to submit a suitable plan of operation within one hundred eighty days after its appointment, the director shall, after notice and hearing, adopt and promulgate a temporary plan of operation. The director shall amend or rescind any plan adopted under this subsection at the time a plan of operation is submitted by the board and approved by the director.  (F) The plan of operation shall:  (1) establish procedures for handling and accounting of program assets and monies and for an annual fiscal reporting to the director;  (2) establish procedures for selecting a licensed administrator, as provided in Sections 38-51-10 through 38-51-60, and setting forth the powers and duties of the licensed administrator;  (3) establish procedures for reinsuring risks in accordance with the provisions of this section;  (4) establish procedures for collecting assessments from reinsuring insurers to fund claims and administrative expenses incurred or estimated to be incurred by the program;  (5) establish a methodology for applying the dollar thresholds contained in this section in the case of insurers that pay or reimburse health care providers though capitation or salary; and  (6) provide for any additional matters necessary for the implementation and administration of the program.  (G) The program shall have the general powers and authority granted under the laws of this State to insurance companies and health maintenance organizations licensed to transact business, except the power to issue health insurance plans directly to either groups or individuals. In addition, the program shall have the specific authority to:  (1) enter into contracts as are necessary or proper to carry out the provisions and purposes of this article, including the authority, with the approval of the director, to enter into contracts with similar programs of other states for the joint performance of common functions or with persons or other organizations for the performance of administrative functions;  (2) sue or be sued, including taking any legal actions necessary or proper to recover any assessments and penalties for, on behalf of, or against the program or any reinsuring insurers;  (3) take any legal action necessary to avoid the payment of improper claims against the program;  (4) define the health insurance plans for which reinsurance will be provided, and to issue reinsurance policies, in accordance with the requirements of this article;  (5) establish rules, conditions, and procedures for reinsuring risks under the program;  (6) establish actuarial functions as appropriate for the operation of the program;  (7) assess reinsuring insurers in accordance with the provisions of subsection (K), and make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses. Any interim assessments shall be credited as offsets against any regular assessments due following the close of the fiscal year;  (8) appoint appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the program, policy and other contract design, and any other function within the authority of the program;  (9) borrow money to effect the purposes of the program. Any notes or other evidence of indebtedness of the program not in default shall be legal investments for insurers and may be carried as admitted assets;  (H) A reinsuring insurer may reinsure with the program as provided for in this subsection:  (1) with respect to any health insurance plan offered by the small employer insurer to small employers, the program shall reinsure the level of coverage as defined in the plan of operation;  (2) a small employer insurer may reinsure an entire employer group within sixty days of the commencement of the group's coverage under a health insurance plan;  (3) a reinsuring insurer may reinsure an eligible employee or dependent within a period of sixty days following the commencement of the coverage with the small employer. A newly-eligible employee or dependent of the reinsured small employer may be reinsured within sixty days of the commencement of his coverage;  (4)(a) the program shall not reimburse a reinsuring insurer with respect to the claims of a reinsured employee or dependent until the insurer has incurred an initial level of claims for such employee or dependent of five thousand dollars in a calendar year for benefits covered by the program. In addition, the reinsuring insurer shall be responsible for ten percent of the next fifty thousand dollars of benefit payments during a calendar year and the program shall reinsure the remainder. A reinsuring insurers' liability under this subparagraph shall not exceed a maximum limit of ten thousand dollars in any one calendar year with respect to any reinsured individual;  (b) the board annually may adjust the initial level of claims, the coinsurance percentage, and the maximum limit to be retained by the insurer with the approval of the director.  (5) a small employer insurer may terminate reinsurance with the program for one or more of the reinsured employees or dependents of a small employer on any anniversary of the health insurance plan;  (6) a reinsuring insurer shall apply all managed care and claims handling techniques, including utilization review, individual case management, preferred provider provisions, and other managed care provisions or methods of operation consistently with respect to reinsured and nonreinsured business.  (I)(1) The board, as part of the plan of operation, shall establish a methodology for determining premium rates to be charged by the program for reinsuring small employers and individuals pursuant to this section. The methodology must contain a provision surcharging the reinsurance premium rate of a small employer insurer which does not employ effective cost containment and managed care arrangements including, but not limited to:  (a) preferred provider organizations;  (b) utilization review;  (c) case management;  (d) other.  The methodology shall include a system for classification of small employers that reflects the types of case characteristics commonly used by small employer insurers in the State. The methodology shall provide for the development of base reinsurance premium rates which shall be multiplied by the factors set forth in item (2) to determine the premium rates for the program. The base reinsurance premium rates shall be established by the board, subject to the approval of the director, and shall be set at levels which reasonably approximate gross premiums charged to small employers by small employer insurers for health insurance plans with benefits similar to the standard health insurance plan.  (2) Premiums for the program shall be as follows:  (a) An entire small employer group may be reinsured for a rate that is one and one-half times the base reinsurance premium rate for the group established pursuant to this paragraph.  (b) An eligible employee or dependent may be reinsured for a rate that is five times the base reinsurance premium rate for the individual established pursuant to this paragraph.  (3) The board periodically shall review the methodology established under item (1), including the system of classification and any rating factors, to assure that it reasonably reflects the claims experience of the program. The board may propose changes to the methodology which shall be subject to the approval of the director.  (J) If a health insurance plan for a small employer is entirely or partially reinsured with the program, the premium charged to the small employer for any rating period for the coverage issued shall meet the requirements relating to premium rates set forth in Section 38-71-910, et seq.  (K)(1) Before March first of each year, the board shall determine and report to the director the program net loss for the previous calendar year, including administrative expenses and incurred losses for the year, taking into account investment income and other appropriate gains and losses.  (2) Any net loss for the year shall be recouped by assessments of reinsuring insurers.  (a) The board shall establish, as part of the plan of operation, a formula by which to make assessments against reinsuring insurers. The assessment formula shall be based on:  (i) each reinsuring insurer's share of the total premiums earned in the preceding calendar year from health insurance plans delivered or issued for delivery to small employers in this State by reinsuring insurers; and  (ii) each reinsuring insurer's share of the premiums earned in the preceding calendar year from newly-issued health insurance plans delivered or issued for delivery during the calendar year to small employers in this State by reinsuring insurers.  (b) The formula established pursuant to subitem (a) shall not result in any reinsuring insurer having an assessment share that is less than fifty percent nor more than one hundred fifty percent of an amount which is based on the proportion of the reinsuring insurer's total premiums earned in the preceding calendar year from health insurance plans delivered or issued for delivery to small employers in this State by reinsuring insurers to the total premiums earned in the preceding calendar year from health insurance plans delivered or issued for delivery to small employers in this State by all reinsuring insurers.  (c) The board may, with approval of the director, change the assessment formula established pursuant to subitem (a) from time to time as appropriate. The board may provide for the shares of the assessment base attributable to total premium and to the previous year's premium to vary during a transition period.  (d) Subject to the approval of the director, the board shall make an adjustment to the assessment formula for reinsuring insurers that are approved health maintenance organizations which are federally qualified under 42 U.S.C. Sec. 300, et seq., to the extent, if any, that restrictions are placed on them that are not imposed on other small employer insurers.  (3)(a) Before March first of each year, the board shall determine and file with the director an estimate of the assessments needed to fund the losses incurred by the program in the previous calendar year.  (b) If the board determines that the assessments needed to fund the losses incurred by the program in the previous calendar year will exceed the amount specified in subitem (c), the board shall evaluate the operation of the program and report its findings, including any recommendations for changes to the plan of operation, to the director within ninety days following the end of the calendar year in which the losses were incurred. The evaluation shall include an estimate of future assessments and consideration of the administrative costs of the program, the appropriateness of the premiums charged, the level of insurer retention under the program, and the costs of coverage for small employers. If the board fails to file a report with the director within ninety days following the end of the applicable calendar year, the director may evaluate the operations of the program and implement such amendments to the plan of operation the director considers necessary to reduce future losses and assessments.  (c) For any calendar year, the amount specified in this subparagraph is five percent of total premiums earned in the previous calendar year from health insurance plans delivered or issued for delivery to small employers in this State by reinsuring insurers.  (4) If assessments exceed net losses of the program, the excess shall be held at interest and used by the board to offset future losses or to reduce program premiums. As used in this item, "future losses" includes reserves for incurred but not reported claims.  (5) Each reinsuring insurer's proportion of the assessment shall be determined annually by the board based on annual statements and other reports considered necessary by the board and filed by the reinsuring insurers with the board.  (6) The plan of operation shall provide for the imposition of an interest penalty for late payment of assessments.  (7) A reinsuring insurer may seek from the director a deferment from all or part of an assessment imposed by the board. The director may defer all or part of the assessment of a reinsuring insurer if the director determines that the payment of the assessment would place the reinsuring insurer in a financially impaired condition. If all or part of an assessment against a reinsuring insurer is deferred, the amount deferred shall be assessed against the other participating insurers in a manner consistent with the basis for assessment set forth in this subsection. The reinsuring insurer receiving the deferment shall remain liable to the program for the amount deferred and shall be prohibited from reinsuring any individuals or groups with the program until such time as it pays the assessments.  (L) Neither the participation in the program as reinsuring insurers, the establishment of rates, forms, or procedures, nor any other joint or collective action required by this article shall be the basis of any legal action, criminal or civil liability, or penalty against the program or any of its reinsuring insurers either jointly or separately.  (M) The board, as part of the plan of operation, shall develop standards setting forth the manner and levels of compensation, if any, to be paid to agents for the sale of basic and standard health insurance plans. In establishing such standards, the board shall take into consideration the need to assure the broad availability of coverages, the objectives of the program, the time and effort expended in placing the coverage, the need to provide on-going service to the small employer, the levels of compensation currently used in the industry, and the overall costs of coverage to small employers selecting these plans.  (N) The program shall be exempt from any and all taxes.  HISTORY: 1994 Act No. 339, Section 11; 1997 Act No. 5, Section 15; 2006 Act No. 332, Section 7, eff June 1, 2006.
 (A) The Governor shall appoint an advisory committee to the director which shall recommend the form and level of coverages to be made available by small employer insurers pursuant to Section 38-71-1360. At least one member of the committee shall be a licensed independent insurance agent who represents multiple health and accident insurance carriers. In preparing its initial recommendations, the advisory committee shall build on the work of the Governor's Committee on Basic Health Services.  (B) The committee shall recommend benefit levels, cost-sharing levels, exclusions and limitations for the basic health insurance plan and the standard health insurance plan. The committee shall specifically recommend which, if any, mandated coverages of health care services or health care providers should be included in the basic and standard health insurance plans and shall recommend as well whether the plans should be exempt from any other statutory provisions otherwise applicable to group health insurance policies. Section 38-71-200 is applicable to the basic and standard health insurance plans and is not subject to exemption. The committee also shall design a basic health insurance plan and a standard health insurance plan which contain benefit and cost-sharing levels that are consistent with the basic method of operation and the benefit plans of health maintenance organizations, including any restrictions imposed by federal law.  (1) The plans recommended by the committee may include cost containment features such as:  (a) utilization review of health care services, including review of medical necessity of hospital and physician services;  (b) case management;  (c) selective contracting with hospitals, physicians, and other health care providers;  (d) reasonable benefit differentials applicable to providers that participate or do not participate in arrangements using restricted network provisions; and  (e) other managed care provisions.  (2) The committee shall submit the health insurance plans described in paragraphs (A) and (B) to the director for approval by January 1, 1995. If, for any reason, the committee does not provide the director with a recommendation as to the form and level of coverages to be made available pursuant to this article, the board shall make such recommendation to the director. If, subsequent to the approval of the benefit levels of the basic and standard health insurance plans, amendments to the plans become necessary, the board shall make such recommendations to the director for his approval.  HISTORY: 1994 Act No. 339, Section 12.
 (A) If an individual or group health plan provides coverage for dependent children of participants or beneficiaries, the plan shall provide benefits to dependent children placed with participants or beneficiaries for adoption under the same terms and conditions as apply to the natural, dependent children of the participants and beneficiaries, irrespective of whether the adoption has become final.  (B) A group health plan may not restrict coverage under the plan of a dependent child adopted by a participant or beneficiary or placed with a participant or beneficiary for adoption solely on the basis of a preexisting condition of the child at the time that the child would otherwise become eligible for coverage under the plan, if the adoption or placement for adoption occurs while the participant or beneficiary is eligible for coverage under the plan.  (C) For the purposes of this section:  (1) "child" means, in connection with an adoption or placement for adoption of the child, an individual who has not attained age eighteen as of the date of the adoption or placement for adoption;  (2) "placement for adoption" means the assumption and retention by a person of a legal obligation for total or partial support of a child in anticipation of the adoption of the child. The child's placement with a person terminates upon the termination of the legal obligations.  HISTORY: 1994 Act No. 481, Section 2, eff July 14, 1994.
 The board, in consultation with members of the committee, shall study and make a public report each year to the director on the effectiveness of this article. The report shall analyze the effectiveness of the act in promoting rate stability, product availability, and coverage affordability. The report shall include the total number of basic and standard policies sold in the State noting whether these insureds have ever been denied coverage before July 1, 1995. The report shall contain a detailed analysis of the financial condition of the reinsurance pool including losses and assessments by year. The report may contain recommendations for actions to improve the overall effectiveness, efficiency, and fairness of the small group health insurance marketplace. The report shall address whether insurers and agents are fairly marketing or issuing health insurance plans to small employers in fulfillment of the purposes of this article. The report may contain recommendations for market conduct or other regulatory standards or action.  HISTORY: 1994 Act No. 339, Section 13.
 (A) For purposes of this section:  (1) "Health benefit plan" means all individual and group health insurance policies and health maintenance organizations issued, delivered or renewed in this State, to include the State Health Plan, but otherwise not to include the administrative services performed on behalf of a self-funded plan subject to the Employee Retirement Income Security Act (ERISA) of 1974 or other plans exempted by Section 38-71-1920(9).  (2) "Stage four advanced, metastatic cancer" means cancer that has spread from the primary or original site of the cancer to nearby tissues, lymph nodes, or other areas or parts of the body.  (3) "Recognized diagnostic imaging service" means a diagnostic imaging service for the diagnosis and treatment of stage four advanced, metastatic cancer for which the National Comprehensive Cancer Network Clinical Practice Guidelines in Oncology provide a uniform consensus that the proposed use of the diagnostic imaging service is appropriate and is supported by peer-reviewed literature.  (B) If a health benefit plan that covers the treatment of stage four advanced, metastatic cancer denies a prior authorization request or a claim for a recognized diagnostic imaging service for a covered person's stage four advanced metastatic cancer based upon an adverse medical necessity determination, then the covered person shall have a right to an expedited external review in accordance with Section 38-71-1980.  HISTORY: 2022 Act No. 187 (H.3775), Section 1, eff May 16, 2022.  Editor's Note  2022 Act No. 187, Section 2, provides as follows:  "SECTION 2. This act takes effect upon approval by the Governor, and applies to health benefit plans issued, renewed, delivered, or entered into on or after the effective date of this act."
 (A) Each small employer insurer shall fairly market health insurance plan coverage, including the basic and standard health insurance plans, to eligible small employers in the State. A small employer insurer shall not deny coverage to a small employer based solely on the employer's occupation.  (B)(1) Except as provided in item (2), no small employer insurer or its agent shall, directly or indirectly, engage in the following activities:  (a) encouraging or directing small employers to refrain from filing an application for coverage with the small employer insurer because of the health status, claims experience, industry, occupation, or geographic location of the small employer;  (b) encouraging or directing small employers to seek coverage from another insurer because of the health status, claims experience, industry, occupation, or geographic location of the small employer.  (2) The provisions of item (1) shall not apply with respect to information provided by a small employer insurer or agent to a small employer regarding the established geographic service area or a restricted network provision of a small employer insurer or health maintenance organization.  (C)(1) Except as provided in item (2), no small employer insurer shall, directly or indirectly, enter into any contract, agreement, or arrangement with an agent that provides for or results in the compensation paid to an agent for the sale of a health insurance plan to be varied because of the health status, claims experience, industry, occupation, or geographic location of the small employer.  (2) Item (1) shall not apply with respect to a compensation arrangement that provides compensation to an agent on the basis of percentage of premium, provided that the percentage shall not vary because of the health status, claims experience, industry, occupation, or geographic area of the small employer.  (D) A small employer insurer shall provide reasonable compensation, if provided under the plan of operation of the program, to an agent, if any, for the sale of a basic or standard health insurance plan.  (E) No small employer insurer may terminate, fail to renew, or limit its contract or agreement of representation with an agent for any reason related to the health status, claims experience, occupation, or geographic location of the small employers placed by the agent with the small employer insurer.  (F) No small employer insurer or agent may induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment.  (G) Denial by a small employer insurer of an application for coverage from a small employer shall be in writing and shall state the reason or reasons for the denial.  (H) If a small employer insurer enters into a contract, agreement, or other arrangement with a third-party administrator to provide administrative, marketing, or other services related to the offering of health insurance plans to small employers in this State, the third-party administrator shall be subject to this article as if it were a small employer insurer.  HISTORY: 1994 Act No. 339, Section 14; 1997 Act No. 5, Section 16.
 The South Carolina Department of Insurance and Revenue and Fiscal Affairs Office shall submit to the Office of the Governor and the General Assembly by January 1, 2010, a report on the effectiveness of the health group cooperative in expanding the availability of health insurance coverage for small employers.  HISTORY: 2008 Act No. 180, Section 1, eff February 19, 2008.  Code Commissioner's Note  At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1).
 (A) All individual and group health insurance and health maintenance organization policies in this State shall include coverage in the policy for:  (1) mammograms;  (2) annual pap smears;  (3) prostate cancer examinations, screenings, and laboratory work for diagnostic purposes in accordance with the most recent published guidelines of the American Cancer Society.  (B) The coverage required to be offered under subsection (A) may not contain any exclusions, reductions, or other limitations as to coverages, deductibles, or coinsurance provisions which apply to that coverage unless these provisions apply generally to other similar benefits provided and paid for under the health insurance policy.  (C) Nothing in this section prohibits a health insurance policy from providing benefits greater than those required to be offered by subsections (A) and (B) or more favorable to the enrollee than those required to be offered by subsections (A) and (B).  (D) This section applies to individual and group health insurance policies issued by a fraternal benefit society, an insurer, a health maintenance organization, or any similar entity, except as exempted by ERISA.  (E) For purposes of this section:  (1) "Mammogram" means a radiological examination of the breast for purposes of detecting breast cancer when performed as a result of a physician referral or by a health testing service which utilizes radiological equipment approved by the Department of Health and Environmental Control, which examination may be made with the following minimum frequency:  (a) once as a base-line mammogram for a female who is at least thirty-five years of age but less than forty years of age;  (b) once every two years for a female who is at least forty years of age but less than fifty years of age;  (c) once a year for a female who is at least fifty years of age; or  (d) in accordance with the most recent published guidelines of the American Cancer Society.  (2) "Pap smear" means an examination of the tissues of the cervix of the uterus for the purpose of detecting cancer when performed upon the recommendation of a medical doctor, which examination may be made once a year or more often if recommended by a medical doctor.  (3) "Health insurance policy" means a health benefit plan, contract, or evidence of coverage providing health insurance coverage as defined in Section 38-71-670(6) and Section 38-71-840(14).  HISTORY: 1998 Act No. 329, Section 5.
 The Director of Insurance may promulgate regulations as may be necessary or appropriate to carry out the provisions of this article.  HISTORY: 1997 Act No. 5, Section 18.
 An individual or group accident and health or health insurance policy or a health maintenance organization plan may not:  (1) prohibit or limit a person who is a participant or beneficiary of the policy or plan from selecting a pharmacy or pharmacist of the person's choice who has agreed to participate in the plan according to the terms offered by the insurer; or  (2) deny a pharmacy or pharmacist the right to participate as a contract provider under the policy or plan if the pharmacy or pharmacist agrees to provide pharmacy services including, but not limited to, prescription drugs that meet the terms and requirements set forth by the insurer under the policy or plan and agrees to the terms of reimbursement set forth by the insurer.  HISTORY: 1994 Act No. 394, Section 1; 1994 Act No. 394, Section 2; 1997 Act No. 67, Section 1.
 Every individual or family accident and health or hospitalization policy, certificate, contract, or plan, except trip or travel ticket policies, issued for delivery in this State shall have printed thereon or attached thereto a notice to the insured that ten days are allowed, from the date of the receipt of the policy to examine its provisions and that the insured may for any reason surrender the policy to the insurer. In addition, if the policy was solicited by a direct response insurer, rather than through a licensed insurance agent, the policy, certificate, contract, or plan shall have printed thereon or attached thereto a notice to the insured that thirty days are allowed from the date of the receipt of the policy to examine its provisions and that the insured may for any reason surrender the policy to the insurer. Any premium advanced by the insured, upon appropriate surrender as provided herein, must be immediately returned in full by the insurer to the insured.  HISTORY: Former 1976 Code Section 38-35-140 [1956 (49) 1840; 1962 Code Section 37-456.4; 1982 Act No. 284, Section 1] recodified as Section 38-71-150 by 1987 Act No. 155, Section 1.
 This article may be cited as the "Access to Emergency Medical Care Act".  HISTORY: 1998 Act No. 326, Section 1.
 As used in this article:  (1) "Emergency medical care" means those health care services provided in a hospital emergency facility to evaluate and treat an emergency medical condition.  (2) "Emergency medical condition" means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson who possesses an average knowledge of health and medicine could reasonably expect the absence of immediate medical attention to result in:  (a) placing the health of the individual, or with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy;  (b) serious impairment to bodily functions; or  (c) serious dysfunction of any bodily organ or part.  (3) "Emergency medical provider" means hospitals licensed by the South Carolina Department of Health and Environmental Control, hospital-based services, physicians licensed by the State Board of Medical Examiners, and oral surgeons and dentists licensed by the State Board of Dentistry who provide emergency medical care.  (4) "Managed care organization" means a licensed insurance company, a hospital or medical services plan contract, a health maintenance organization, or any other entity which is subject to regulation by the department and which operates a managed care plan.  (5) "Managed care plan" means a plan operated by a managed care organization which provides for the financing and delivery of health care and treatment services to individuals enrolled in the plan through its own employed health care providers or contracting with selected specific providers that conform to explicit selection standards, or both. A managed care plan also customarily has a formal organizational structure for continual quality assurance, a certified utilization review program, dispute resolution, and financial incentives for individual enrollees to use the plan's participating providers and procedures.  HISTORY: 1998 Act No. 326, Section 1; 2016 Act No. 172 (H.5100), Section 1, eff May 12, 2016.  Effect of Amendment  2016 Act No. 172, Section 1, in (3), inserted reference to oral surgeons and dentists.
 (A) A patient who presents to an emergency department, by the Federal Social Security Act, must be screened to determine whether an emergency medical condition exists. This evaluation may include, but is not limited to, diagnostic testing to assess the extent of the condition, sickness, or injury and radiographic procedures and interpretation.  (B) Appropriate intervention must be initiated by medical personnel to stabilize any emergency medical condition before requesting authorization for the treatment by a managed care organization.  (C) A managed care organization shall inform its insureds, enrollees, patients, and affiliated providers about all policies related to emergency medical care access, coverage, payment, and grievance procedures. It is the ultimate responsibility of the managed care organization to inform any contracted third party administrator, independent contractor, or primary care provider about the emergency medical care provisions contained in this subsection.  (D) A managed care organization which includes emergency medical care services as part of its policy or contract shall provide coverage and shall subsequently pay providers for emergency medical care services provided to an insured, enrollee, or patient who presents an emergency medical condition. This subsection must not be construed to require coverage for illnesses, diseases, equipment, supplies, or procedures or treatments which are not otherwise covered under the terms of the insured's policy or contract.  (E) A managed care organization may not retrospectively deny or reduce payments to providers for emergency medical care of an insured, enrollee, or patient even if it is determined that the emergency medical condition initially presented is later identified through screening not to be an actual emergency, except in these cases:  (1) material misrepresentation, fraud, omission, or clerical error;  (2) a payment reduction due to applicable co-payments, coinsurance, or deductibles which may be the responsibility of the insured;  (3) cases in which the insured does not meet the emergency medical condition definition, unless the insured has been referred to the emergency department by the insured's primary care physician or other agent acting on behalf of the insurer.  HISTORY: 1998 Act No. 326, Section 1.
 No managed care organization may engage in any practice to prohibit or discourage the appropriate use of the 911 emergency telephone system which may adversely impact the health of its enrollees.  HISTORY: 1998 Act No. 326, Section 1.
 The provisions of this article do not apply to a policy which provides disability or income protection coverage, hospital confinement indemnity coverage, accident-only coverage, specified disease or specified accident coverage, long-term care coverage, vision-only coverage, or coverage issued as a supplement to Medicare.  HISTORY: 2016 Act No. 172 (H.5100), Section 2, eff May 12, 2016.
 If any provision of this article or the application of any provision to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the article which can be given effect without the invalid provision or application, and to this end the provisions of this article are severable.  HISTORY: 1998 Act No. 326, Section 1.
 For purposes of Section 38-71-150, the insured is considered to have returned a policy sold on a direct response basis as of the date shown on the postmark or the date the insured notifies the insurer or an agent of the insurer, in writing or in person, that the insured does not want the policy, whichever is the earlier.  HISTORY: Former 1976 Code Section 38-35-141 [1982 Act No. 284, Section 2] recodified as Section 38-71-160 by 1987 Act No. 155, Section 1.
 No policy or certificate of accident, health, or accident and health insurance issued or delivered in this State which in addition to covering the insured also provides coverage to the spouse of the insured may contain a provision for termination of coverage for a spouse covered under the policy solely as a result of a break in the marital relationship except by reason of an entry of a valid decree of divorce between the parties.  Every policy which contains a provision for termination of coverage of the spouse upon divorce shall contain a provision to the effect that upon the entry of a valid decree of divorce between the insured parties the divorced spouse is entitled to have issued to him or her, without evidence of insurability, upon application made to the insurer within sixty days following the entry of the decree, and upon payment of the appropriate premium, an individual policy of accident and health insurance. The policy shall provide the coverage then being issued by the insurer which is most nearly similar to, but not greater than, the terminated coverages. Any probationary or waiting periods set forth in the policy are considered as being met to the extent coverage was in force under the prior policy.  HISTORY: Former 1976 Code Section 38-35-145 [1978 Act No. 434] recodified as Section 38-71-170 by 1987 Act No. 155, Section 1.
 This article may be cited as the "South Carolina Patients' Insurance and Benefits Protection Act".  HISTORY: 1998 Act No. 441, Section 1.
 As used in this article:  (1) "Closed panel health plan" means a network plan that requires an insured or a member to seek covered health care services or supplies, except in the case of emergency, exclusively from network providers.  (2) "Eligibility" means the time at which an insured or a member is entitled to enroll under the terms of the coverage offered by the network plan by virtue of:  (a) terms of employment;  (b) an annual open enrollment period; or  (c) at any other time during which the network plan's procedures or South Carolina law allows enrollment in the plan or allows renewal in the plan.  (3) "Health insurance coverage" means coverage as defined in Section 38-71-840(14).  (4) "Network plan" means a plan as defined in Section 38-71-840(24).  (5) "Network providers" means those entities and individuals who provide covered health care services or supplies to an insured or a member pursuant to a contract with a network plan to act as a participating provider.  (6) "Open panel health plan" means a plan which permits an insured or a member to seek covered health care services or supplies exclusively from an out-of-network provider.  (7) "Out-of-network providers" means those entities and individuals who provide covered health care services or supplies who are not network providers.  (8) "Point-of-service option" means a network plan that provides benefits for services or supplies provided by network providers and provides benefits for services or supplies provided by nonparticipating network providers.  (a) In-network covered health care services provided through a licensed health maintenance organization are governed by and subject to the provisions of Chapter 33 of this title.  (b) Out-of-network coverage may be underwritten by and provided through the health maintenance organization or through a licensed insurance company. The Director of Insurance may promulgate regulations as necessary or appropriate to implement the provisions of this subsection.  (c) Any benefit limitation for out-of-network covered health care services applied to an annual or lifetime benefit limitation may be offset against the benefit limitation applicable to in-network covered health care services or supplies, regardless of whether out-of-network coverage is provided through a health maintenance organization or an insurance company.  (d) The rating methods used to establish premiums for the point-of-service option must be based on actuarially sound principles.  HISTORY: 1998 Act No. 441, Section 1.
 (A) For purposes of health plans offered pursuant to this section:  (1) An employer may require an employee who chooses a point-of-service option to be responsible for payment of premiums, deductibles, copayments, or other payments in excess of the benefits provided by the closed panel health plan.  (2) Differences between coinsurance percentages for in-network and out-of-network covered health care services or supplies in a point-of-service option may not exceed a maximum differential of thirty percent. The coinsurance percentage for in-network and out-of-network covered health care services or supplies provided by dentists may not exceed a maximum difference of five percent.  (3) An employee, a spouse, or a dependent receiving treatment for an illness covered under a closed panel health plan may continue to receive services from a provider who elects to discontinue participation as a closed panel plan provider, subject to the terms of the contract between the provider and the health plan. This right of continuation is limited to a period of ninety days or the anniversary date of the plan, whichever occurs first.  (4) A point-of-service option or closed panel health plan may not discriminate against a physician, a podiatrist, an optometrist, an oral surgeon, or a chiropractor by excluding the provider from participating in the plan on the basis of the profession. A health care plan may not exclude these providers from providing health care services which they are licensed to provide and which are covered by the plan and as determined by medical necessity under utilization review guidelines. Nothing in this section interferes in any way with the medical decision of the primary health care provider to use or not use any health care professional on a case-by-case basis.  (5) A pharmacist may provide professional services under the pharmacist's scope of practice so long as the services are provided pursuant to a prescription written by a medical doctor or dentist with whom the patient has an established physician-patient relationship. Nothing in this subsection requires a managed care plan to provide reimbursement to a pharmacist. An advanced practice nurse functioning as authorized by the State Board of Nursing Regulation 91-6 may provide professional services under the advanced practice nurse's scope of practice so long as the services provided are pursuant to protocols by a medical doctor with whom the patient has an established physician-patient relationship. A point-of-service option offered pursuant to this section may not discriminate against an advanced practice nurse. Nothing in this subsection requires a managed care plan to provide reimbursement to an advanced practice nurse.  (6) Nothing contained in this article affects in any way a plan exempted by the federal Employee Retirement Income Security Act of 1974 or any South Carolina law in existence before January 1, 1999, and state employee health insurance programs or any political subdivision self-funded health insurance program; and this article does not affect the right of an employer to specify plan design or affect the right of a plan to credential or re-credential a provider. Nothing contained in this article affects accident-only, blanket accident and sickness, specified disease, credit, Medicare supplement, long-term care, or disability income insurance, coverage issued as a supplement to liability or other insurance coverage designed solely to provide payments on a per diem, fixed-indemnity, or nonexpense incurred basis, coverage for Medicare or Medicaid services pursuant to a contract with state or federal government, worker's compensation or similar insurance, or automobile medical payment insurance.  (B) This section applies only to employers who employ more than fifty eligible employees and who offer as major medical, hospitalization, and surgical health insurance coverage, only a closed panel health plan.  HISTORY: 1998 Act No. 441, Section 1; 2013 Act No. 49, Section 1, eff July 22, 2013.
 (A) For purposes of any health insurance plan, health maintenance organization, or any other health benefits plan offered in this State under the jurisdiction of South Carolina law:  (1) Each party to a managed care participating provider agreement is responsible for the legal consequences and costs of his own acts or omissions, or both, and is not responsible for the acts or omissions, or both, of the other party. A clause in a participating provider agreement to the contrary is unlawful in this State, as a matter of public policy, whether entered into before or after January 1, 1999.  (2) To the extent that a network plan requires an insured or a member to receive health benefits through a network of providers, the provisions of participating provider agreements may not limit the network provider's:  (a) ability to discuss with an insured or a member, the treatment options available to the insured or member, risks associated with treatments, utilization management decisions, and recommended course of treatment;  (b) legal obligations to an insured or a member as specified under the provider's professional license.  (B) Nothing in this section:  (1) prevents a network plan from prohibiting disclosure by network providers of trade secrets;  (2) subjects a network plan to liability for clinical decisions made solely by the network provider; and  (3) limits the ability of the network plan otherwise prudently to administer its provider contracts.  HISTORY: 1998 Act No. 441, Section 1.
 A network plan must disclose in writing, using the plain and ordinary meaning of words so as reasonably to ensure comprehension by the insured or member, and make available to an insured or a member at the time of enrollment:  (1) services or benefits under the plan, including limitations on services;  (2) rules regarding copayments, prior authorization, and review requirements that apply to the benefits plan of the insured or member;  (3) potential financial liability for the insured or member to pay for a portion of services received from an out-of-network provider;  (4) financial obligations of the insured or member for items and services both in and out of the network;  (5) the number, mix, and distribution of network providers and a current list of network providers upon request from an insured or a member;  (6) the rights and responsibilities of an insured or a member, including an explanation of any appeals process for the denial of care or services under the plan;  (7) the existence of any limitations on the choice of providers by an insured or a member.  HISTORY: 1998 Act No. 441, Section 1.
 The Director of the Department of Insurance or his designee shall promulgate regulations to implement the provisions of this chapter.  HISTORY: 2000 Act No. 312, Section 16.
 (A) For the purposes of this article:  (1) "Insurer" means an entity that provides health insurance coverage in this State as defined in Section 38-71-670(7) and Section 38-71-840(16).  (2) "Responsible party" means the entity responsible for payment of claims for health care services other than:  (a) the individual to whom the health care services were rendered; or  (b) that individual's guardian or legal representative.  (3) "Audit" means an evaluation, investigation, or review of claims paid to a pharmacy that takes place at the pharmacy location and does not include review of claims or claims payments that an insurer conducts as a normal course of business.  (4) "Abuse" means any practice that:  (a)(i) is inconsistent with sound fiscal or business practices; or  (ii) fails to meet professionally recognized standards for pharmacy services; and  (b) directly or indirectly causes financial loss to a responsible party.  (B) If a managed care organization, insurer, third-party payor, or any entity that represents a responsible party conducts an audit of the records of a pharmacy, then, with respect to this audit, the pharmacy has a right to:  (1) have at least fourteen days' advance notice of the initial audit for each audit cycle with no audit to be initiated or scheduled during the first five days of any month without the express consent of the pharmacy, which shall cooperate with the auditor to establish an alternate date if the audit would fall within the excluded days;  (2) have an audit that involves clinical judgment be conducted with a pharmacist who is licensed and employed by or working under contract with the auditing entity;  (3) not have clerical or record-keeping errors, including typographical errors, scrivener's errors, and computer errors, on a required document or record considered fraudulent in the absence of any other evidence or serve as the sole basis of rejection of a claim; however, the provisions of this item do not prohibit recoupment of fraudulent payments;  (4) have the auditing entity to provide the pharmacy, upon request, all records related to the audit in an electronic format or contained in digital media;  (5) submit records related to the audit in electronic format or by certified mail;  (6) have the properly documented records of a hospital or of a person authorized to prescribe controlled substances for the purpose of providing medical or pharmaceutical care for their patients transmitted by any means of communication approved by the auditing entity in order to validate a pharmacy record with respect to a prescription or refill for a controlled substance or narcotic drug pursuant to federal and state regulations;  (7) have a projection of an overpayment or underpayment based on either the number of patients served with a similar diagnosis or the number of similar prescription orders or refills for similar drugs; however, the provisions of this item do not prohibit recoupments of actual overpayments unless the projection for overpayment or underpayment is part of a settlement by the pharmacy;  (8) be free of recoupments based on either of the following subitems unless defined within the billing, submission, or audit requirements set forth in the pharmacy provider manual not inconsistent with current State Board of Pharmacy Regulations, except for cases of Food and Drug Administration regulation or drug manufacturer safety programs in accordance with federal or state regulations:  (a) documentation requirements in addition to, or exceeding requirements for, creating or maintaining documentation prescribed by the State Board of Pharmacy;  (b) a requirement that a pharmacy or pharmacist perform a professional duty in addition to, or exceeding, professional duties prescribed by the State Board of Pharmacy unless otherwise agreed to by contract with the auditing entity;  (9) be subject, so long as a claim is made within the contractual claim submission time period, to recoupment only following the correction of a claim and to have recoupment limited to amounts paid in excess of amounts payable under the corrected claim unless a prescription error occurs. For purposes of this subsection, a prescription error includes, but is not limited to, wrong drug, wrong strength, wrong dose, or wrong patient;  (10) be subject to reversals of approval, except for Medicare claims, for drug, prescriber, or patient eligibility upon adjudication of a claim only in cases in which the pharmacy obtained the adjudication by fraud or misrepresentation of claim elements;  (11) be audited under the same standards and parameters as other similarly situated pharmacies audited by the same entity;  (12) have at least thirty days following receipt of the preliminary audit report to produce documentation to address any discrepancy found during an audit;  (13) have the option of providing documentation in electronic format or by certified mail;  (14) have the period covered by an audit limited to twenty-four months from the date a claim was submitted to, or adjudicated by, a managed care organization, an insurer, a third-party payor, or an entity that represents responsible parties, unless a longer period is permitted by or under federal law;  (15) have the preliminary audit report delivered to the pharmacy within one hundred twenty days after conclusion of the audit;  (16) have a final audit report delivered to the pharmacy within ninety days after the end of the appeals period; and  (17) not have the accounting practice of extrapolation used in calculating recoupments or penalties for audits, unless otherwise required by federal requirements or federal plans.  (C) Notwithstanding Section 38-71-1840, the auditing entity shall provide the pharmacy, if requested, a masked list that provides a prescription number range the auditing entity is seeking to audit.  HISTORY: 2012 Act No. 250, Section 1, eff January 1, 2013; 2019 Act No. 48 (S.359), Section 3.A, eff May 16, 2019.  Editor's Note  2019 Act No. 48, Section 3.B, provides as follows:  "B. The provisions of this section are effective upon approval by the Governor [May 16, 2019]."  Effect of Amendment  2019 Act No. 48, Section 3.A, in (B), in (3), inserted "or serve as the sole basis of rejection of a claim" and made a nonsubstantive changed, in (4), deleted ", if required under the terms of the contract with the auditing entity," following "have", inserted (5) and redesignated (5) to (11) as (6) to (12), and inserted (13) and redesignated (12) to (15) as (14) to (17).
 (A) Each entity that conducts an audit of a pharmacy shall establish an appeals process under which a pharmacy may appeal an unfavorable preliminary audit report to the entity.  (B) If, following the appeal, the entity finds that an unfavorable audit report or any portion of the unfavorable audit report is unsubstantiated, the entity shall dismiss the unsubstantiated portion of the audit report without any further proceedings.  (C) Each entity conducting an audit shall provide a copy, if required under the terms of the contract with the responsible party, of the audit findings to the plan sponsor after completion of any appeals process.  HISTORY: 2012 Act No. 250, Section 1, eff January 1, 2013.
 (A) Recoupments of any funds disputed on the basis of an audit must occur only after final internal disposition of the audit, including the appeals process as provided for in Section 38-71-1820, unless fraud or misrepresentation is reasonably suspected.  (B) Recoupment on an audit must be refunded to the responsible party as contractually agreed upon by the parties involved in the audit.  (C) The entity conducting the audit may charge or assess the responsible party, directly or indirectly, based on amounts recouped if both of the following conditions are met:  (1) the responsible party or payor and the entity conducting the audit have entered into a contract that explicitly states the percentage charge or assessment to the responsible party; and  (2) a commission or other payment to an agent or employee of the entity conducting the audit is not based, directly or indirectly, on amounts recouped.  HISTORY: 2012 Act No. 250, Section 1, eff January 1, 2013.
 The provisions of this article do not apply to an audit, review, or investigation:  (1) that involves alleged insurance fraud or abuse, Medicare fraud or abuse, or other fraud or misrepresentation; or  (2) conducted by or on the behalf of the Department of Health and Human Services in the performance of its duties in administering Medicaid under Titles XIX and XXI of the Social Security Act.  HISTORY: 2012 Act No. 250, Section 1, eff January 1, 2013.
 Any policy or contract of accident and health insurance issued in this State may include provision for subrogation by the insurer to the insured's right of recovery against a liable third party for not more than the amount of insurance benefits that the insurer has paid previously in relation to the insured's injury by the liable third party. If the director or his designee, upon being petitioned by the insured, determines that the exercise of subrogation by an insurer is inequitable and commits an injustice to the insured, subrogation is not allowed. Attorneys' fees and costs must be paid by the insurer from the amounts recovered. This determination by the director or his designee may be appealed to the Administrative Law Court as provided by law in accordance with Section 38-3-210.  HISTORY: Former 1976 Code Section 38-35-100 [1962 Code Section 37-447; 1974 (58) 2608] recodified as Section 38-71-190 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 1; 1993 Act No. 181, Section 752.
 This article may be cited as the "Health Carrier External Review Act".  HISTORY: 2000 Act No. 380, Section 3A.
 For purposes of this article:  (1) "Adverse determination" means a determination by a health carrier or its designee that an admission, availability of care, continued stay or other health care service that is a covered benefit has been reviewed and, based upon the information provided:  (a) does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness; or  (b) is experimental or investigational and involves a condition that is life-threatening or seriously disabling, and the requested service or payment for the service is, therefore, denied, reduced, or terminated.  (2) "Authorized representative" means:  (a) a person to whom a covered person has given express written consent to represent the covered person in an external review;  (b) a person authorized by law to provide substituted consent for a covered person; or  (c) a family member of the covered person or the covered person's treating health care professional when the covered person is unable to provide consent.  (3) "Clinical review criteria" means the written screening procedures, decision abstracts, clinical protocols, and practice guidelines used by a health carrier to determine the necessity and appropriateness of health care services.  (4) "Covered benefits" means those health care services to which a covered person is entitled under the terms of a health benefit plan.  (5) "Covered person" means an insured, subscriber, enrollee, or other individual entitled to covered benefits under a health benefit plan.  (6) "Director or his designee" means the Director of the South Carolina Department of Insurance or a person designated by the director.  (7) "Facility" means an institution providing health care services or a health care setting including, but not limited to, hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory, and imaging centers, and rehabilitation and other therapeutic health settings.  (8) "Final adverse determination" means an adverse determination involving a covered benefit that has been upheld by a health carrier, or its designee, at the completion of the health carrier's internal appeal process.  (9) "Health benefit plan" means a policy, contract, or certificate issued by a health carrier that provides benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise, and including items and services paid for as medical care under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer, except:  (a) coverage only for accident or disability income insurance or any combination of accident and disability income insurance;  (b) coverage issued as a supplement to liability insurance;  (c) liability insurance, including general liability insurance and automobile liability insurance;  (d) workers' compensation or similar insurance;  (e) automobile medical payment insurance;  (f) credit-only insurance;  (g) coverage for on-site medical clinics;  (h) other similar insurance coverage specified in regulations under which benefits for medical care are secondary or incidental to other insurance benefits;  (i) if offered separately:  (i) limited scope dental or vision benefits;  (ii) benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these;  (iii) other similar, limited benefits, as are specified in regulations;  (j) if offered as independent, noncoordinated benefits:  (i) coverage only for a specified disease or illness;  (ii) hospital indemnity or other fixed indemnity insurance;  (k) if offered as a separate insurance policy:  (i) Medicare supplemental health insurance, as defined under Section 1882( g)(1) of the Social Security Act;  (ii) coverage supplemental to the coverage provided under Chapter 55, Title 10 of the United States Code; and  (iii) similar supplemental coverage under a group health plan;  (l) any health benefit plan offered or administered by the Public Employee Benefit Authority.  (10) "Health care professional" means a physician, dentist, or other person properly licensed, where required, to furnish health care services.  (11) "Health care provider" or "provider" means a health care professional or a facility.  (12) "Health care services" means services for the diagnosis, prevention, treatment, cure, or relief of a health condition, illness, injury, or disease.  (13) "Health carrier" means an entity that provides health insurance coverage in this State and an insurance company, a health maintenance organization, and any other entity providing health insurance coverage which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (14) "Independent review organization" means an entity that conducts independent external reviews of adverse determinations and final adverse determinations.  (15) "Life-threatening condition or disease" means a condition or disease which, according to the current diagnosis by the covered person's treating physician, has a high probability of causing the covered person's death within three years.  (16) "Medical and scientific evidence" means:  (a) peer-reviewed scientific studies published in, or accepted for publication by, medical journals that meet nationally recognized requirements for scientific manuscripts and that submit most of their published articles for review by experts who are not part of the editorial staff;  (b) peer-reviewed medical literature, including literature relating to therapies reviewed and approved by a qualified institutional review board, biomedical compendia, and other medical literature that meets the criteria of the National Institute of Health's National Library of Medicine for indexing in Index Medicus, Excerpta Medicus, Medline and Medlars database Health Services Technology Assessment Research;  (c) medical journals recognized by the Secretary of Health and Human Services, under Section 1861 (t)(2) of the federal Social Security Act;  (d) these standard reference compendia: the American Hospital Formulary Service-Drug Information; the American Medical Association Drug Evaluation; the American Dental Association Accepted Dental Therapeutics; and the United States Pharmacopoeia-Drug Information;  (e) findings, studies, or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes, including the federal Agency for Health Care Policy and Research, National Institutes of Health, National Cancer Institute, National Academy of Sciences, Health Care Financing Administration, Congressional Office of Technology Assessment, and any national board recognized by the National Institutes of Health for the purpose of evaluating the medical value of health services.  (17) "Person" means a corporation, partnership, association, voluntary organization, individual, or any other entity, organization, or aggregation of individuals.  (18) "Retrospective review" means a review of medical necessity conducted after services have been provided to a patient; this term does not include the review of a claim that is limited to an evaluation of reimbursement levels, veracity of documentation, accuracy of coding, or adjudication for payment.  (19) "Serious medical condition" means a health condition or illness that requires immediate medical attention, where failure to provide immediate medical attention would result in a serious impairment to bodily functions, serious dysfunction of a bodily organ or part, or would place the person's health in serious jeopardy.  (20) "Seriously disabling" means a health condition or illness that involves a serious impairment to bodily functions or serious dysfunction of a bodily organ or part.  (21) "Utilization review" means a system for reviewing the necessary, appropriate, and efficient allocation of health care resources and services given or proposed to be given to a patient or a group of patients.  HISTORY: 2000 Act No. 380.  Code Commissioner's Note  At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1).
 (A) Except as provided in subsection (B), this article applies to all health carriers that provide or perform utilization review, including those plans subject to regulation under Chapter 33.  (B) This article does not apply to the administrative services performed on behalf of a self-funded plan subject to the Employee Retirement Income Security Act (ERISA) of 1974.  (C) For purposes of this article, notice to the subscriber or insured entitled to covered benefits under a health benefit plan shall constitute notice to the covered person. This subsection does not affect the health plan's obligations under a court order requiring a parent to provide health coverage pursuant to Section 63-17-2100, et seq.  HISTORY: 2000 Act No. 380, Section 3A.
 (A) A health carrier shall notify the covered person in writing of the right to request an external review and include the appropriate statements and information set forth in subsection (B) at the time the health carrier sends written notice of either an adverse determination or a final adverse determination.  (B)(1) The health carrier shall include in the notice required under subsection (A) a clear and concise description of the right of the covered person to request a standard external review pursuant to Section 38-71-1970 or an expedited external review pursuant to Section 38-71-1980 upon receipt of an adverse determination or a final adverse determination and the circumstances under which the covered person is not required to exhaust the health carrier's internal appeal process or is considered to have exhausted the health carrier's internal appeal process pursuant to Section 38-71-1960.  (2) In addition to the information to be provided pursuant to item (1), the health carrier shall include a brief description of both the standard and expedited external review procedures.  (3) As part of any forms provided under item (2), the health carrier shall include an authorization form, or other document promulgated or approved by the director or his designee, by which the covered person, for purposes of conducting an external review under this article, authorizes the health carrier to disclose protected health information, including medical records, concerning the covered person that are pertinent to the external review.  (C) A notice, statement, or form required by this section must achieve a score of no lower than 70 on the Flesch Reading East Test and must be printed in no smaller than 12 point type. No part of the notice, statement, or form may be printed in all capitals. A notice, statement, or form required by this section must include a statement of the right of the covered person to contact the director or his designee for assistance. The statement must include the telephone number and address of the director or his designee.  (D) A notice, statement, or form required by this section must be approved by the Department of Insurance. The director or his designee shall promulgate standard language, in a specified font size and type for any notice, statement, or form required by this section. Use of the standard language in the specified font size and type promulgated by the department pursuant to this section shall constitute compliance with the notice requirements of this section.  HISTORY: 2000 Act No. 380, Section 3A.
 (A) All requests for external review must be made in writing to the health carrier.  (B) A covered person or his authorized representative may make a request for an external review of an adverse determination or final adverse determination only when the amount payable for covered benefits is at least five hundred dollars.  (C) A covered person is not entitled to an external review of a retrospective review determination unless the covered person has exhausted the health carrier's internal appeal process and may be held financially responsible for the covered benefits.  HISTORY: 2000 Act No. 380, Section 3A.
 (A)(1) Except in cases where the covered person's treating physician has certified in writing that the covered person has a serious medical condition, or where the denial of coverage is based on a determination that the health care service or treatment recommended or requested is experimental or investigational and the covered person's treating physician has provided the certifications required pursuant to Section 38-71-1980, a request for a standard or expedited external review may not be made until the covered person has exhausted the health carrier's internal appeal process.  (2) A covered person is considered to have exhausted the health carrier's internal appeal process for purposes of this section, if the covered person or his authorized representative:  (a) has filed an appeal involving an adverse determination pursuant to the health carrier's internal appeal process; and  (b) the health carrier has not issued a written decision within the time frames set forth in the health carrier's internal appeals process after receipt of all information necessary to complete the appeal and the covered person or his authorized representative has not agreed to a delay.  (B) A request for an external review of an adverse determination may be made before the covered person has exhausted the health carrier's internal appeal process whenever the health carrier agrees to waive the exhaustion requirement.  (C) If the requirement to exhaust the health carrier's internal appeal process is waived under subsection (B), the covered person or his authorized representative may file a request in writing for an external review.  HISTORY: 2000 Act No. 380, Section 3A.
 (A)(1) Within sixty days after the date of receipt of a notice of an adverse determination or final adverse determination pursuant to Section 38-71-1940, a covered person or his authorized representative may file a request for an external review with the health carrier.  (2) If the denial of coverage is based on a determination that the health care service or treatment recommended or requested is experimental or investigational, the request for review must include a certification from the covered person's treating physician who must be a licensed physician qualified to practice in the area of medicine appropriate to treat the covered person's condition that:  (a) the covered person has a life-threatening disease or seriously disabling condition; and  (b) at least one of the following situations is applicable:  (i) standard health care services or treatments have not been effective in improving the condition of the covered person;  (ii) standard health care services or treatments are not medically appropriate for the covered person; or  (iii) the recommended or requested service or treatment is more beneficial than the standard health care service or treatment covered by the health carrier; and  (c) medical and scientific evidence using accepted protocols demonstrate that the health care service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is more beneficial to the covered person than available standard health care services or treatments and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of the standard services or treatments.  (B)(1) Within five business days from the date the health carrier receives a request for an external review, the health carrier or its designee shall:  (a) assign an independent review organization from the list of approved independent review organizations compiled and maintained pursuant to Section 38-71-2000 to conduct an external review; and  (b) send the documents and any information considered in making the adverse determination or final adverse determination to the independent review organization; or  (c) inform the covered person or his authorized representative in writing that the request does not meet the criteria for external review pursuant to this article and include a statement explaining the reason for nonacceptance and the right of the covered person to contact the director or his designee for assistance. The statement shall include the telephone number and address of the director or his designee;  (2) Except as provided in item (3), failure by the health carrier or its designee to send the documents and information within the time specified in item (1) may not delay the conduct of the external review.  (3)(a) If the health carrier or its designee fails to send the documents and information within the time specified in item (1), the independent review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination.  (b) Immediately upon making the decision under item (3)(a), the independent review organization shall notify the covered person or his authorized representative and the health carrier.  (C)(1) Within five business days after receipt of the request for external review from the health carrier, the independent review organization shall determine whether all the information, certifications, and forms required to process an external review, including the release form provided under Section 38-71-1940(B)(3) have been provided. The independent review organization shall immediately notify the covered person or his authorized representative in writing if additional information is required.  (2) The independent review organization shall include in the notice provided pursuant to item (1) a clear statement that the covered person or his authorized representative may submit in writing to the independent review organization within seven business days following the date of receipt of the notice additional information and supporting documentation that the independent review organization shall consider when conducting the external review.  (3) If the request is not:  (a) complete, the independent review organization shall inform the covered person or his authorized representative what information or materials are needed to make the request complete; or  (b) accepted for external review, the independent review organization shall inform the covered person or his authorized representative and the health carrier in writing of the reasons for its nonacceptance.  (D)(1) If a request for external review is accepted for external review, the independent review organization shall notify the health carrier and the covered person or his authorized representative.  (2) In reaching a decision, the independent review organization is not bound by any decisions or conclusions reached during the health carrier's utilization review process, as set forth in Chapter 70, or the health carrier's internal appeal process.  (3) If the denial of coverage is based on a determination that the health care service or treatment recommended or requested is experimental or investigational, at the time a request is accepted for external review pursuant to subsection (C)(3),  (a) the independent review organization shall:  (i) immediately select a clinical peer review panel pursuant to subitem (b) to conduct the external review; and  (ii) based on the opinions of the clinical peer reviewers on the panel, make a decision to uphold or reverse the adverse determination or final adverse determination.  (b)(i) Notwithstanding the provisions of subsubitem (ii), the panel shall consist of the number of physicians or other health care professionals considered appropriate by the independent review organization who meet the minimum qualifications described in Section 38-71-2010 and, through clinical experience in the past three years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested health care service or treatment.  (ii) The health carrier may require that the panel consist of at least three physicians or other health care professionals who meet the minimum qualifications described in Section 38-71-2010 and, through clinical experience in the past three years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested health care service or treatment.  (iii) Neither the covered person nor his authorized representative, if applicable, nor the health carrier shall choose or control the choice of the physicians or other health care professionals to be selected for the clinical peer review panel.  (c) Each member of the clinical peer review panel shall provide a written opinion to the independent review organization on whether to uphold or reverse the adverse determination or the final adverse determination. Each clinical peer reviewer's opinion shall include a description:  (i) of the covered person's medical condition, which is the subject of the adverse determination or final adverse determination;  (ii) of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested health care service or treatment is more beneficial to the covered person than standard services or treatments and that the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of the standard services or treatment; and  (iii) analysis of the medical and scientific evidence used in making the determination.  (E)(1) The independent review organization shall review all of the information and documents received from the health carrier and any other information submitted in writing to the independent review organization by the covered person or his authorized representative.  (2) Upon receipt of any information submitted by the covered person or his authorized representative pursuant to subsection (C)(2), the independent review organization immediately shall forward the information to the health carrier.  (F)(1) The health carrier may reconsider its adverse determination or final adverse determination at any time.  (2) Reconsideration by the health carrier may not delay or terminate the external review.  (3) The health carrier may terminate the external review only if the health carrier reverses its adverse determination or final adverse determination.  (4)(a) within five business days of making the decision to reverse its adverse determination or final adverse determination, as provided in item (3), the health carrier shall send written notice to the covered person or his authorized representative and the independent review organization.  (b) the independent review organization shall terminate the external review upon receipt of the notice from the health carrier sent pursuant to subitem (a).  (G) In addition to the documents and information provided or transmitted pursuant to this section, the independent review organization, to the extent the information or documents are available and the independent review organization considers them appropriate, shall consider the following in reaching a decision:  (1) the covered person's relevant medical records;  (2) the treating health care provider's recommendation;  (3) consulting reports from appropriate health care professionals and other documents submitted by the health carrier, covered person, his authorized representative, or the covered person's treating provider;  (4) the most appropriate practice guidelines, which may include generally accepted practice guidelines, evidence-based practice guidelines, or any other practice guidelines developed by the federal government or national or professional medical societies, boards, and associations;  (5) any applicable clinical review criteria developed and used by the health carrier or its designee; and  (6) If adverse determination or final adverse determination involves a denial of coverage based on a determination that the health care service or treatment recommended or requested is experimental or investigational, whether:  (a) the recommended or requested health care service or treatment has been approved by the Federal Food and Drug Administration; or  (b) medical and scientific evidence demonstrates that the expected benefits of the recommended or requested health care service or treatment would be greater than the benefits of any available standard service or treatment and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of standard services or treatments.  (H)(1) Within forty-five days after the date of receipt of the request for an external review by the health carrier, the independent review organization shall provide written notice of its decision to uphold or reverse the adverse determination or the final adverse determination to the covered person or his authorized representative and the health carrier.  (2) If adverse determination or final adverse determination involves a denial of coverage based on a determination that the health care service or treatment recommended or requested is experimental or investigational, the independent review organization shall make a decision to uphold or reverse the health carrier's adverse determination or final adverse determination based upon the recommendation of a majority of the clinical peer review panel, if more than one physician or other health care professional serves on the panel.  (3) The independent review organization shall include in the notice sent pursuant to item (1):  (a) a general description of the reason for the request for external review;  (b) the date the independent review organization received the assignment from the health carrier;  (c) the date the external review was conducted, if appropriate;  (d) the date of its decision;  (e) the principal reason or reasons for its decision;  (f) the rationale for its decision;  (g) references to the evidence or documentation, including the practice guidelines, considered in reaching its decision; and  (h) the written opinions of the clinical peer review panel, if any.  (4) Within five business days of receipt of a notice of a decision pursuant to item (1) reversing the adverse determination or final adverse determination, the health carrier shall approve the covered benefit that was the subject of the adverse determination or final adverse determination, subject to applicable contract exclusions, limitations, or other provisions.  (I) The assignment by a health carrier of an approved independent review organization to conduct an external review in accordance with this section must be fair and impartial. The health carrier and the independent review organization shall comply with standards promulgated by the director or his designee by regulation or bulletin to ensure fairness and impartiality in the assignment by health carriers of approved independent review organizations to conduct external reviews, including its term, its termination, and payment arrangement.  HISTORY: 2000 Act No. 380, Section 3A.
 (A)(1) Within fifteen days after the date of receipt of a notice of an adverse determination or final adverse determination pursuant to Section 38-71-1940, a covered person or his authorized representative may file a request for an expedited external review with the health carrier at the time the covered person receives:  (a) an adverse determination if the covered person's treating physician has certified that the covered person has a serious medical condition;  (b) a final adverse determination if:  (i) the covered person's treating physician has certified that the covered person has a serious medical condition; or  (ii) the final adverse determination concerns an admission, availability of care, continued stay, or health care service for which the covered person received emergency medical care, as defined in Section 38-71-1520(2), but has not been discharged from a facility, if the covered person may be held financially responsible for the emergency medical care.  (2) If the denial of coverage is based on a determination that the health care service or treatment recommended or requested is experimental or investigational, the request for review must include a certification from the covered person's treating physician who must be a licensed physician qualified to practice in the area of medicine appropriate to treat the covered person's condition that:  (a) the covered person has a life-threatening disease or seriously disabling condition; and  (b) at least one of the following situations is applicable:  (i) standard health care services or treatments have not been effective in improving the condition of the covered person;  (ii) standard health care services or treatments are not medically appropriate for the covered person; or  (iii) the recommended or requested service or treatment is more beneficial than the standard health care service or treatment covered by the health carrier; and  (c) medical and scientific evidence using accepted protocols demonstrate that the health care service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is more beneficial to the covered person than available standard health care services or treatments and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of the standard services or treatments.  (B)(1) At the time the health carrier receives a request for an expedited external review, the health carrier or its designee as expeditiously as reasonably possible shall:  (a) assign an independent review organization from the list of approved independent review organizations compiled and maintained pursuant to Section 38-71-2000 to conduct the expedited external review; and  (b) send all the documents and any information considered in making the adverse determination or final adverse determination to the independent review organization by overnight delivery service or any other reasonably available expeditious method; or  (c) inform the covered person or his authorized representative that the request does not meet the criteria for external review pursuant to this article and include a statement of the right of the covered person to contact the director or his designee for assistance. The statement shall include the telephone number and address of the director or his designee.  (2) Except as provided in item (3), failure by the health carrier or its designee to send the documents and information within the time specified in item (1) may not delay the conduct of the external review.  (3)(a) If the health carrier or its designee fails to send the documents and information within the time specified in item (1), the independent review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination.  (b) Immediately upon making the decision under subitem (a), the independent review organization shall notify the covered person or his authorized representative and the health carrier.  (C)(1) In reaching a decision, the independent review organization is not bound by any decisions or conclusions reached during the health carrier's utilization review process, as set forth in Chapter 70, or the health carrier's internal appeal process.  (2) If the denial of coverage is based on a determination that the health care service or treatment recommended or requested is experimental or investigational:  (a) the independent review organization shall:  (i) immediately select a clinical peer review panel pursuant to subsection (C)(2)(b) to conduct the external review; and  (ii) based on the opinions of the clinical peer reviewers on the panel, make a decision to uphold or reverse the adverse determination or final adverse determination.  (b)(i) notwithstanding the provisions of subsubitem (ii), the panel shall consist of the number of physicians or other health care professionals, considered appropriate by the independent review organization, who meet the minimum qualifications described in Section 38-71-2010 and, through clinical experience in the past three years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested health care service or treatment;  (ii) the health carrier may require that the panel consist of at least three physicians or other health care professionals who meet the minimum qualifications described in Section 38-71-2010 and, through clinical experience in the past three years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested health care service or treatment;  (iii) neither the covered person nor his authorized representative, if applicable, nor the health carrier shall choose or control the choice of the physicians or other health care professionals to be selected for the clinical peer review panel;  (c) each member of the clinical peer review panel shall provide an opinion to the independent review organization on whether to uphold or reverse the adverse determination or the final adverse determination. Each clinical peer reviewer's opinion shall include a description:  (i) of the covered person's medical condition, which is the subject of the adverse determination or final adverse determination;  (ii) of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested health care service or treatment is more beneficial to the covered person than standard services or treatments and that the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of the standard services or treatment; and  (iii) analysis of the medical and scientific evidence used in making the determination.  (D) In addition to the documents and information provided or transmitted pursuant to this section, the independent review organization, to the extent the information or documents are available and the independent review organization considers them appropriate, shall consider the following in reaching a decision:  (1) the covered person's relevant medical records;  (2) the treating health care provider's recommendation;  (3) consulting reports from appropriate health care professionals and other documents submitted by the health carrier, covered person, his authorized representative, or the covered person's treating provider;  (4) the most appropriate practice guidelines, which may include generally accepted practice guidelines, evidence-based practice guidelines, or any other practice guidelines developed by the federal government or national or professional medical societies, boards, and associations;  (5) any applicable clinical review criteria developed and used by the health carrier or its designee; and  (6) if adverse determination or final adverse determination involves a denial of coverage based on a determination that the health care service or treatment recommended or requested is experimental or investigational, whether:  (a) the recommended or requested health care service or treatment has been approved by the federal Food and Drug Administration; or  (b) medical and scientific evidence demonstrates that the expected benefits of the recommended or requested health care service or treatment would be greater than the benefits of any available standard service or treatment and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of standard services or treatments.  (E)(1) The health carrier may reconsider its adverse determination or final adverse determination at any time.  (2) Reconsideration by the health carrier may not delay or terminate the external review.  (3) The health carrier may terminate the external review only if the health carrier reverses its adverse determination or final adverse determination.  (4)(a) As expeditiously as reasonably possible upon making the decision to reverse its adverse determination or final adverse determination, as provided in item (3), the health carrier shall send notice to the covered person or his authorized representative and the independent review organization.  (b) The independent review organization shall terminate the external review upon receipt of the notice from the health carrier sent pursuant to subsubitem (a).  (F)(1) As expeditiously as reasonably possible, but in no event more than three business days after the date of receipt of the request for an expedited external review by the health carrier, the independent review organization shall provide notice of its decision to uphold or reverse the adverse determination or the final adverse determination to the:  (a) covered person or his authorized representative; and  (b) health carrier.  (2) If adverse determination or final adverse determination involves a denial of coverage based on a determination that the health care service or treatment recommended or requested is experimental or investigational, the independent review organization shall make a decision to uphold or reverse the health carrier's adverse determination or final adverse determination based upon the recommendation of a majority of the clinical peer review panel, if more than one physician or other health care professional serves on the panel.  (3) If the notice provided pursuant to item (1) was not in writing, within two days after the date of providing that notice, the independent review organization shall:  (a) provide written confirmation of the decision to the covered person or his authorized representative and the health carrier; and  (b) include the information set forth in Section 38-71-1970(H)(3).  (4) As expeditiously as reasonably possible after receipt of the notice of a decision pursuant to item (1) reversing the adverse determination or final adverse determination, the health carrier shall approve the covered benefit that was the subject of the adverse determination or final adverse determination, subject to applicable contract exclusions, limitations, or other provisions.  (G) The assignment by a health carrier of an approved independent review organization to conduct an external review in accordance with this section must be fair and impartial. The health carrier and the independent review organization shall comply with standards promulgated by the director or his designee by regulation or bulletin to ensure fairness and impartiality in the assignment by health carriers of approved independent review organizations to conduct external reviews, including its term, its termination, and payment arrangement.  HISTORY: 2000 Act No. 380, Section 3A; 2001 Act No. 82, Section 27, eff July 20, 2001.
 (A) An external review decision is binding on the health carrier.  (B) An external review decision is binding on the covered person except to the extent the covered person has other remedies available under applicable federal or state law. If such other remedies are available, the covered person or his authorized representative may not, in these proceedings, utilize, disclose, or introduce in evidence information generated during or findings reached by the independent review organization.  (C) A covered person or his authorized representative may not file a subsequent request for external review involving the same adverse determination or final adverse determination.  HISTORY: 2000 Act No. 380, Section 3A.
 Insurers licensed to do business in this State have the corporate power to contract to act as agent in the administration of programs of health, hospital, and medical insurance sponsored or financed by an agency of the United States Government or any political subdivision.  HISTORY: Former 1976 Code Section 38-35-50 [1962 Code Section 37-444; 1968 (55) 2569] recodified as Section 38-71-20 by 1987 Act No. 155, Section 1.
 Discrimination between individuals of the same class in the amount of premiums or rates charged for a policy of insurance covered by this chapter, in the benefits payable on the policy, in terms or conditions of the policy, or in another manner is prohibited except as provided in Sections 38-57-140 and 38-71-1110. If a policy of insurance governed by this chapter provides for payment or reimbursement for a service which is within the scope of practice of a licensed podiatrist, licensed oral surgeon, licensed optometrist, or licensed doctoral psychologist, the insured or other person entitled to benefits under the policy is entitled to payment or reimbursement in accordance with the usual and customary fee for the services whether the services are performed by a licensed physician or a licensed podiatrist, a licensed oral surgeon, a licensed optometrist, or a licensed doctoral psychologist, notwithstanding a provision in the policy, and the policyholder, insured, or beneficiary may choose the provider of the services.  HISTORY: Former 1976 Code Section 38-35-90 [1947 (45) 322; 1952 Code Section 37-455; 1962 Code Section 37-455; 1972 (57) 2454; 1980 Act No. 339; 1985 Act No. 66] recodified as Section 38-71-200 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 15; 1994 Act No. 396, Section 1.
 (A) The director or his designee shall approve independent review organizations eligible to be assigned to conduct external reviews to ensure that an independent review organization satisfies the minimum qualifications established under Section 38-71-2010.  (B) The director or his designee shall develop an application form for initially approving and for reapproving independent review organizations to conduct external reviews and may establish an advisory committee with appropriate representation to review the applications. No member of the advisory committee may be liable to any person for any acts or omissions arising out of or related to the approval or reapproval of independent review organizations pursuant to this act.  (C)(1) An independent review organization wishing to be approved to conduct external reviews under this article shall submit the application form and include with the form all documentation and information necessary for the director or his designee to determine if the independent review organization satisfies the minimum qualifications established under Section 38-71-2010.  (2) The director or his designee may charge an application fee that independent review organizations shall submit to the director or his designee with an application for approval and reapproval.  (D)(1) Except as provided in item (2), an approval is effective for two years.  (2) The independent review organization must notify the director or his designee of any material changes in qualifications, including removal or loss of accreditation by a nationally recognized private accrediting entity, approved by the director or his designee pursuant to subsection (E). Whenever the director or his designee determines that an independent review organization no longer satisfies the minimum requirements established under Section 38-71-2010 or has violated a provision of this article, the director or his designee shall terminate the approval of the independent review organization and remove the independent review organization from the list of independent review organizations approved to conduct external reviews under this article that is maintained by the director or his designee pursuant to subsection (F).  (E) An independent review organization accredited by a nationally recognized private accrediting entity with established and maintained standards for independent review organizations that meet the minimum qualifications established pursuant to Section 38-71-2010, which accrediting entity has been approved by the director or his designee, may be deemed to meet the minimum qualification requirements set forth in Section 38-71-2010.  (F) The director or his designee shall maintain and periodically update a list of approved independent review organizations and approved nationally recognized private accrediting entities.  (G) The director or his designee may promulgate regulations or bulletins to carry out the provisions of this section.  HISTORY: 2000 Act No. 380, Section 3A.
 (A) To be approved under Section 38-71-2000 to conduct external reviews, an independent review organization shall have and maintain written policies and procedures that govern all aspects of both the standard external review process and the expedited external review process set forth in Sections 38-71-1970 and 38-71-1980 that include, at a minimum:  (1) a quality assurance mechanism in place that ensures:  (a) that external reviews are conducted within the specified time frames and required notices are provided in a timely manner;  (b) the selection of qualified and impartial clinical peer reviewers to conduct external reviews on behalf of the independent review organization and suitable matching of reviewers to specific cases;  (c) the confidentiality of medical and treatment records and clinical review criteria; and  (d) that any person employed by or under contract with the independent review organization adheres to the requirements of this article;  (2) a toll-free telephone service to receive information on a 24-hour-day, 7-day-a-week basis related to external reviews that is capable of accepting, recording, or providing appropriate instruction to incoming telephone callers during other than normal business hours; and  (3) agree to maintain and provide to the director or his designee the information set out in Section 38-71-2030.  (B) All clinical peer reviewers assigned by an independent review organization to conduct external reviews must be physicians or other appropriate health care providers who:  (1) are knowledgeable about the recommended health care service or treatment through recent or current actual clinical experience treating patients with the same or similar medical condition of the covered person; and  (2) hold a nonrestricted license in a state of the United States and, for physicians, a current certification by a recognized American medical specialty board in the area or areas appropriate to the subject of the external review.  (C) In addition to the requirements set forth in subsection (A), an independent review organization may not own or control, be a subsidiary of or in any way be owned or controlled by, or exercise control with a health benefit plan, a national, state, or local trade association of health benefit plans, or a national, state, or local trade association of health care providers.  (D)(1) In addition to the requirements set forth in subsections (A), (B), and (C), to be approved pursuant to Section 38-71-2000 to conduct an external review of a specified case, neither the independent review organization selected to conduct the external review nor any clinical peer reviewer assigned by the independent review organization to conduct the external review may have a material professional, familial, or financial conflict of interest with:  (a) the health carrier that is the subject of the external review;  (b) the covered person whose treatment is the subject of the external review or his authorized representative;  (c) any officer, director, or management employee of the health carrier that is the subject of the external review;  (d) the health care provider or the health care provider's medical group or independent practice association recommending the health care service or treatment that is the subject of the external review;  (e) the facility at which the recommended health care service or treatment would be provided; or  (f) the developer or manufacturer of the principal drug, device, procedure, or other therapy being recommended for the covered person whose treatment is the subject of the external review.  HISTORY: 2000 Act No. 380, Section 3A.
 No independent review organization, or employee, officer, or director of an independent review organization or health care professional who furnishes services to an independent review organization is liable to any person for any acts or omissions arising out of or related to an external review conducted pursuant to this article, except for cases of wilful and intentional misconduct.  HISTORY: 2000 Act No. 380, Section 3A.
 (A)(1) An independent review organization assigned pursuant to Section 38-71-1970 or Section 38-71-1980 to conduct an external review shall maintain written records in the aggregate and by health carrier on all requests for external review for which it conducted an external review during a calendar year and submit a report to the director or his designee, as required under item (2).  (2) Each independent review organization required to maintain written records on all requests for external review pursuant to item (1) for which it was assigned to conduct an external review shall submit to the director or his designee, no later than March first of each year and upon request by the director or his designee, a report in the format specified by the director or his designee.  (3) The report shall include in the aggregate and for each health carrier:  (a) the total number of requests for external review and the manner in which they were resolved;  (b) the average length of time for resolution;  (c) a summary of the types of coverages or cases for which an external review was sought, as provided in the format required by the director or his designee; and  (d) any other information the director or his designee may request or require.  (4) The independent review organization shall retain the written records required pursuant to this subsection for at least three years.  (B)(1) Each health carrier shall maintain written records in the aggregate and for each general type of health benefit plan offered by the health carrier on all requests for external review that are filed with the health carrier during a calendar year.  (2) Each health carrier required to maintain written records on all requests for external review pursuant to item (1) shall submit to the director or his designee, no later than March first of each year and upon request by the director or his designee, a report in the format specified by the director or his designee.  (3) The report shall include in the aggregate and by type of health benefit plan:  (a) the total number of requests for external review and the manner in which they were resolved;  (b) the average length of time for resolution;  (c) a summary of the types of coverages or cases for which an external review was sought, as provided in the format required by the director or his designee; and  (d) any other information the director or his designee may request or require.  (4) The health carrier shall retain the written records required pursuant to this subsection for at least three years.  (C) The director or his designee shall make the reports required in this section available to any person for inspection and copying upon request.  HISTORY: 2000 Act No. 380, Section 3A.
 The health carrier shall pay for the external review.  HISTORY: 2000 Act No. 380, Section 3A.
 (A) Each health carrier shall include a description of the external review procedures in either the policy, certificate, membership booklet, outline of coverage, or other evidence of coverage it provides to covered persons.  (B) The description required under subsection (A) shall include a statement of the right of the covered person to contact the director or his designee for assistance. The statement shall include the telephone number and address of the director or his designee.  (C) In addition to subsection (B), the statement shall inform the covered person that, when filing a request for an external review, the covered person will be required to authorize the release of any medical records of the covered person that may be required to be reviewed for the purpose of reaching a decision on the external review.  HISTORY: 2000 Act No. 380, Section 3A.
 The director or his designee may, after notice, promulgate reasonable regulations or bulletins to carry out the provisions of this article.  HISTORY: 2000 Act No. 380, Section 3A.
 If an insurer offers a policy containing a provision for medical expense benefits that does not provide payment for chiropractic services, it shall offer as a part thereof an optional rider or endorsement, if specifically requested by the insured or subscriber under an individual policy or a certificate holder or subscriber under a master policy, which defines such benefits as including payment to a chiropractor for procedures specified in the policy which are within the scope of the practice of chiropractic. Any additional cost to the insured or certificate holder must be reasonably related to benefits provided.  HISTORY: Former 1976 Code Section 38-35-445 [1980 Act No. 307, Section 10] recodified as Section 38-71-210 by 1987 Act No. 155, Section 1.
 HISTORY: Former Section 38-71-2110, titled Definitions; application of article, had the following history: 2016 Act No. 163 (S.849), Section 1, eff January 1, 2016. Repealed by 2019 Act No. 48, Section 4, eff January 1, 2021.  HISTORY: Former Section 38-71-2120, titled Placement of drug on maximum allowable cost list, had the following history: 2016 Act No. 163 (S.849), Section 1, eff January 1, 2016. Repealed by 2019 Act No. 48, Section 4, eff January 1, 2021.  HISTORY: Former Section 38-71-2130, titled Duties of pharmacy benefit manager, had the following history: 2016 Act No. 163 (S.849), Section 1, eff January 1, 2016. Repealed by 2019 Act No. 48, Section 4, eff January 1, 2021.  HISTORY: Former Section 38-71-2140, titled Process for appeals, had the following history: 2016 Act No. 163 (S.849), Section 1, eff January 1, 2016. Repealed by 2019 Act No. 48, Section 4, eff January 1, 2021.  HISTORY: Former Section 38-71-2150, titled Prohibited acts, had the following history: 2018 Act No. 177 (H.5038), Section 1, eff May 3, 2018. Repealed by 2019 Act No. 48, Section 4, eff January 1, 2021.
 (A) If a primary care physician makes a referral to a dermatologist, the enrollee in a managed care plan may see the in-network dermatologist to whom the enrollee is referred, without further referral, for a minimum of six months or four visits, whichever first occurs, for diagnosis, medical treatment, or surgical procedures for the referral problem or related complications.  (B) Written communication from the dermatologist should be sent to the primary care physician after each visit.  (C) An enrollee with a documented past history of malignant melanoma may be referred by his or her primary care physician to an in-network dermatologist for an annual evaluation and, as necessary, biopsy or surgery, or both.  (D) All services provided pursuant to this section are subject to contractual provisions regarding medical necessity and benefit coverage.  (E) Nothing in this section may be construed to extend benefits to an enrollee past the contract period.  HISTORY: 1998 Act No. 353, Section 1.
 No insurer, or its employee or agent, may make any misleading representations or incomplete or fraudulent comparisons of any disability insurance policies or insurers for the purpose of inducing, or which may tend to induce, any person to lapse, forfeit, surrender, terminate, return, or convert any disability insurance policy.  HISTORY: Former 1976 Code Section 38-9-50 [1956 (49) 1814; 1962 Code Section 37-144.1] recodified as Section 38-71-220 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 39.
 As used in this article:  (1) "Claim" means a request from a pharmacy or pharmacist to be reimbursed for the cost of administering, filling, or refilling a prescription for a drug or for providing a medical supply or device.  (2) "Claims processing services" means the administrative services performed in connection with the processing and adjudicating of claims relating to pharmacist services that include:  (a) receiving payments for pharmacist services;  (b) making payments to pharmacists or pharmacies for pharmacist services; or  (c) both receiving and making payments.  (3) "Health benefit plan" means any individual, blanket, or group plan, policy, or contract for health care services issued or delivered by a health care insurer in this State as defined in Section 38-71-670(6) and 38-71-840(14), including the state health plan as defined in Section 1-11-710. Notwithstanding this section, the state health plan is not subject to the provisions of this title unless specifically referenced.  (4) "Health care insurer" means an entity that provides health insurance coverage in this State as defined in Section 38-71-670(7) and Section 38-71-840(16).  (5) "Maximum Allowable Cost List" means a listing of generic drugs used by a pharmacy benefits manager to set the maximum allowable cost at which reimbursement to a pharmacy or pharmacist may be made.  (6) "Other prescription drug or device services" means services other than claims processing services, provided directly or indirectly by a pharmacy benefits manager, whether in connection with or separate from claims processing services, including without limitation:  (a) negotiating rebates, discounts, or other financial incentives and arrangements with drug companies;  (b) disbursing or distributing rebates;  (c) managing or participating in incentive programs or arrangements for pharmacist services;  (d) negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both;  (e) developing formularies;  (f) designing prescription benefit programs; or  (g) advertising or promoting services.  (7) "Pharmacist" has the same meaning as provided in Section 40-43-30(65).  (8) "Pharmacist services" means products, goods, and services, or any combination of products, goods, and services, provided as a part of the practice of pharmacy.  (9) "Pharmacy" has the same meaning as provided in Section 40-43-30(67).  (10) "Pharmacy benefits manager" means an entity that contracts with pharmacists or pharmacies on behalf of an insurer, third party administrator, or the South Carolina Public Employee Benefit Authority to:  (a) process claims for prescription drugs or medical supplies or provide retail network management for pharmacies or pharmacists;  (b) pay pharmacies or pharmacists for prescription drugs or medical supplies; or  (c) negotiate rebates with manufacturers for drugs paid for or procured as described in this article.  (11) "Pharmacy benefits manager affiliate" means a pharmacy or pharmacist that directly or indirectly, through one or more intermediaries, owns or controls, is owned or controlled by, or is under common ownership or control with a pharmacy benefits manager.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff May 16, 2019.  Editor's Note  2019 Act No. 48, Section 6, provides as follows:  "SECTION 6. Except for Section 38-71-2220 in SECTION 1 and SECTION 3, this act takes effect on January 1, 2021. The provisions of Section 38-71-2220 in SECTION 1 and SECTION 3 take effect upon approval by the Governor."
 (A)(1) A person or organization may not establish or operate as a pharmacy benefits manager in this State for health benefit plans without obtaining a license from the Director of the Department of Insurance.  (2) The director shall prescribe the application for a license to operate in this State as a pharmacy benefits manager and may charge an initial application fee of one thousand dollars and an annual renewal fee of five hundred dollars, provided the pharmacy benefits manager application form must collect the following information:  (a) the name, address, and telephone contact number of the pharmacy benefits manager;  (b) the name and address of the pharmacy benefits manager's agent for service of process in the State;  (c) the name and address of each person with management or control over the pharmacy benefits manager;  (d) the name and address of each person with a beneficial ownership interest in the pharmacy benefits manager;  (e) a signed statement indicating that, to the best of their knowledge, no officer with management or control of the pharmacy benefit manager has been convicted of a felony or has violated any of the requirements of state law applicable to pharmacy benefits managers, or, if the applicant cannot provide such a statement, a signed statement describing the relevant conviction or violation; and  (f) in the case of a pharmacy benefits manager applicant that is a partnership or other unincorporated association, limited liability company, or corporation, and has five or more partners, members, or stockholders:  (i) the applicant shall specify its legal structure and the total number of its partners, members, or stockholders who, directly or indirectly, own, control, hold with the power to vote, or hold proxies representing ten percent or more of the voting securities of any other person; and  (ii) the applicant shall agree that, upon request by the department, it shall furnish the department with information regarding the name, address, usual occupation, and professional qualifications of any other partners, members, or stockholders who, directly or indirectly, own, control, hold with the power to vote, or hold proxies representing ten percent or more of the voting securities of any other person.  (3) An applicant or a pharmacy benefits manager that is licensed to conduct business in the State shall, unless otherwise provided for in this chapter, file a notice describing any material modification of this information.  (B) The director may promulgate regulations establishing the licensing and reporting requirements of pharmacy benefits managers consistent with the provisions of this article.  (C) The fees and penalties assessed pursuant to this article must be retained by the department for the administration of this chapter.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021.
 (A) In any participation contracts between pharmacy benefits managers and pharmacists or pharmacies providing prescription drug coverage for health benefit plans, no pharmacy or pharmacist may be prohibited, restricted, or penalized in any way from disclosing to any covered person any health care information that the pharmacy or pharmacist deems appropriate within their scope of practice.  (B) A pharmacy or pharmacist must not be proscribed by a pharmacy benefits manager from discussing information regarding the total cost for pharmacist services for a prescription drug or from selling a more affordable alternative to the insured if a more affordable alternative is available, but a pharmacy benefits manager may proscribe a pharmacy or pharmacist from sharing proprietary or confidential information.  (C) A pharmacy benefits manager contract with a participating pharmacist or pharmacy may not prohibit, restrict, or limit disclosure of information to the director investigating or examining a complaint or conducting a review of a pharmacy benefits manager's compliance with the requirements pursuant to this act. The information or data acquired during an examination or review pursuant to this section is considered proprietary and confidential and is not subject to the South Carolina Freedom of Information Act.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021.
 (A) A pharmacy benefits manager or representative of a pharmacy benefits manager shall not:  (1) cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading;  (2) charge a pharmacist or pharmacy a fee related to the adjudication of a claim other than a reasonable fee for the receipt and processing of a pharmacy claim;  (3) engage, with the express intent or purpose of driving out competition or financially injuring competitors, in a pattern or practice of reimbursing independent pharmacies or pharmacists in this State consistently less than the amount that the pharmacy benefits manager reimburses a pharmacy benefits manager affiliate for providing the same pharmacist services;  (4) collect or require a pharmacy or pharmacist to collect from an insured a copayment for a prescription drug at the point of sale in an amount that exceeds the lesser of:  (a) the contracted copayment amount;  (b) the amount an individual would pay for a prescription drug if that individual was paying cash; or  (c) the contracted amount for the drug.  (5) require the use of mail order for filling prescriptions unless required to do so by the health benefit plan or the health benefit plan design;  (6) charge a fee related to the adjudication of a claim without providing the cause for each adjustment or fee;  (7) penalize or retaliate against a pharmacist or pharmacy for exercising rights provided pursuant to the provisions of this chapter;  (8) prohibit a pharmacist or pharmacy from offering and providing direct and limited delivery services including incidental mailing services, to an insured as an ancillary service of the pharmacy; or  (9) any combination thereof.  (B) A claim for pharmacist services may not be retroactively denied or reduced after adjudication of the claim unless the:  (1) original claim was submitted fraudulently;  (2) original claim payment was incorrect because the pharmacy or pharmacist had already been paid for the pharmacist services;  (3) pharmacist services were not properly rendered by the pharmacy or pharmacist; or  (4) adjustment was agreed upon by the pharmacy prior to the denial or reduction.  (C) This subsection may not be construed to limit overpayment recovery efforts as set forth in Section 38-59-250.  A pharmacy may not be subject to a charge-back or recoupment for a clerical or recordkeeping error in a required document or record, including a typographical or computer error, unless the error resulted in overpayment to the pharmacy.  (D) Termination of a pharmacy or pharmacist from a pharmacy benefits manager network does not release the pharmacy benefits manager from the obligation to make any payment due to the pharmacy or pharmacist for pharmacist services properly rendered according to the contract.  (E) A pharmacy benefits manager may maintain more than one network for different pharmacy services. Each individual network may require different pharmacy accreditation standards or certification requirements for participating in the network provided that the pharmacy accreditation standards or certification requirements are applied without regard to a pharmacy's or pharmacist's status as an independent pharmacy or pharmacy benefits manager affiliate. Each individual pharmacy location as identified by its National Council for Prescription Drug Program identification number may have access to more than one network so long as the pharmacy location meets the pharmacy accreditation standards or certification requirements of each network.  (F) Nothing in this article abridges the right of a pharmacist to refuse to fill or refill a prescription as referenced in Section 40-43-86(E)(6) of the South Carolina Pharmacy Practice Act.  (G) Nothing in this article may be construed to require a pharmacy benefits manager to allow participation in a network that would not be required by Section 38-71-147.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021.
 (A) Before a pharmacy benefits manager places or continues to place a particular drug on a Maximum Allowable Cost List, the drug must:  (1) be listed as "A" or "B" rated in the most recent version of the Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book, or has an "NR" or "NA" rating, or a similar rating, by a nationally recognized reference;  (2) be available for purchase in the State from national or regional wholesalers operating in this State; and  (3) not be obsolete.  (B) A pharmacy benefits manager shall:  (1) provide a process for network pharmacy providers to readily access the maximum allowable cost specific to that provider;  (2) update its Maximum Allowable Cost List at least once every seven calendar days;  (3) provide a process for each pharmacy subject to the Maximum Allowable Cost List to access any updates to the Maximum Allowable Cost List;  (4) ensure that dispensing fees are not included in the calculation of maximum allowable cost; and  (5) establish a reasonable administrative appeal procedure by which a contracted pharmacy can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing if the reimbursement for the drug is less than the net amount that the network provider paid to the suppliers of the drug. The reasonable administrative appeal procedure must include:  (a) a dedicated telephone number and email address or website for the purpose of submitting administrative appeals; and  (b) the ability to submit an administrative appeal directly to the pharmacy benefits manager regarding the pharmacy benefits plan or program or through a pharmacy service administrative organization if the pharmacy service administrative organization has a contract with the pharmacy benefits manager that allows for the submission of such appeals.  (C) A pharmacy must be allowed no less than ten calendar days after the applicable fill date to file an administrative appeal.  (D) If an appeal is initiated, the pharmacy benefits manager shall within ten calendar days after receipt of notice of the appeal either:  (1) if the appeal is upheld:  (a) notify the pharmacy or pharmacist or his designee of the decision;  (b) make the change in the maximum allowable cost effective as of the date the appeal is resolved;  (c) permit the appealing pharmacy or pharmacist to reverse and rebill the claim in question; and  (d) make the change effective for each similarly situated pharmacy as defined by the payor subject to the Maximum Allowable Cost List effective as of the date the appeal is resolved; or  (2) if the appeal is denied, provide the appealing pharmacy or pharmacist the reason for the denial, the National Drug Code number, and the name of the national or regional pharmaceutical wholesalers operating in this State.  (E) The provisions of this section:  (1) do not apply to the Maximum Allowable Cost List maintained by the State Medicaid Program, the Medicaid managed care organizations under contract with the South Carolina Department of Health and Human Services or the South Carolina Public Employee Benefit Authority; and  (2) apply to the pharmacy benefits manager employed by the South Carolina Public Employee Benefit Authority if, at any time, the South Carolina Public Employee Benefit Authority engages the services of a pharmacy benefits manager to maintain the Maximum Allowable Cost List.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021.
 (A) The director shall enforce this article.  (B)(1) The director may examine or audit the books and records of a pharmacy benefits manager providing claims processing services or other prescription drug or device services for a health benefit plan that are relevant to determining if the pharmacy benefits manager is in compliance with this act. The pharmacy benefits manager shall pay the charges incurred in the examination, including the expenses of the director or his designee and the expenses and compensation of his examiners and assistants. The director or his designee promptly shall institute a civil action to recover the expenses of examination against a pharmacy benefits manager which refuses or fails to pay.  (2) The information or data acquired during an examination pursuant to this section is considered proprietary and confidential and is not subject to the South Carolina Freedom of Information Act.  (C) Violations of this article are subject to the penalties provided in Sections 38-2-10 through 38-2-30.  (D) The director may promulgate regulations regarding pharmacy benefits managers that are not inconsistent with this article.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021.
 (A) Nothing in this act is intended or may be construed to be in conflict with existing relevant federal law.  (B) This article does not apply to the South Carolina Department of Health and Human Services in the performance of its duties in administering Medicaid under Titles XIX and XXI of the Social Security Act or to the Medicaid managed care organizations under contract with the South Carolina Department of Health and Human Services.  HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021.
 (A) All licensed health care providers are required to provide written notice of the policies and procedures with regard to health insurance claims. The notice may take the form of a patient information card or notice clearly posted in all patient waiting areas of the providers' place of business.  (B) An organization providing payment or reimbursement for diagnosis and treatment of a condition or a complaint by a licensed physician in South Carolina must accept the standardized CMS 1500 claim form, or its successor as it may be amended from time to time. An organization providing payment or reimbursement for diagnosis and treatment of a condition or a complaint by a hospital licensed in South Carolina shall accept the standardized UB 04 claim form, or its successor as it may be amended from time to time.  (C) The CMS 1500 or the UB 04 claim form or the successor of each or as either may be amended from time to time may be altered only with a customized logo which must appear in the top portion of the claim form one inch vertical from the top.  HISTORY: 1992 Act No. 295, Section 1; 2008 Act No. 356, Section 2, eff one year after approval by the Governor (approved June 11, 2008).
 (A) Abortion coverage may not be provided by a qualified health plan offered by a health insurer, including a group health plan as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, through a health insurance exchange created pursuant to the federal "Patient Protection and Affordable Care Act".  (B) This limitation shall not apply to an abortion performed when the life of the mother is endangered by a physical disorder, physical illness, or physical injury, including a life-endangering physical condition caused or arising from the pregnancy, or when the pregnancy is the result of rape or incest.  HISTORY: 2012 Act No. 202, Section 1, eff June 7, 2012.
 (A) As used in this section:  (1) "Cleft lip and palate" means a congenital cleft in the lip or palate, or both.  (2) "Medically necessary care and treatment" shall include, but not be limited to:  (a) oral and facial surgery, surgical management, and follow-up care made necessary because of a cleft lip and palate;  (b) prosthetic treatment such as obdurators, speech appliances, and feeding appliances;  (c) medically necessary orthodontic treatment and management;  (d) medically necessary prosthodontic treatment and management;  (e) otolaryngology treatment and management;  (f) audiological assessment, treatment, and management performed by or under the supervision of a licensed doctor of medicine, including surgically implanted amplification devices; and  (g) medically necessary physical therapy assessment and treatment.  (B)(1) Any individual or group accident and health policy which provides dependent coverage shall provide coverage for the medically necessary care and treatment of cleft lip and palate and any condition or illness which is related to or developed as a result of a cleft lip and palate. Such a policy may contain the same copayment provisions for the coverage of cleft lip and palate as apply to other conditions or procedures covered by the policy.  (2) Any individual or group dental policy which provides dependent coverage shall provide coverage for teeth capping, prosthodontics, and orthodontics necessary for the care and treatment of cleft lip and palate. Such a policy may contain the same copayment provisions for the coverage of cleft lip and palate as apply to other conditions or procedures covered by the policy.  (C) If a person with a cleft lip and palate is covered by an accident and health policy described in subsection (B)(1) and is also covered by a dental policy described in subsection (B)(2), teeth capping, prosthodontics, and orthodontics shall be covered by the dental policy to the limit of coverage provided and any excess thereafter shall be provided by the individual or group accident and health policy.  (D) The provisions of this section do not apply to a policy which provides disability or income protection coverage, hospital confinement indemnity coverage, accident only coverage, specified disease or specified accident coverage, long-term care coverage, vision only coverage, or coverage issued as a supplement to Medicare.  HISTORY: 1993 Act No. 129, Section 1.
 An insurer that negotiates rates with providers for covered health care services under an individual or group accident and health insurance policy must provide that percentage copayments and deductibles paid by the insured are applied to the negotiated rates or lesser charge of that provider. Nothing in this section precludes an insurer from issuing a policy which contains fixed dollar copayments and deductibles.  HISTORY: 1995 Act No. 58, Section 3.
 (A)(1) When used in any individual or group specified disease insurance policy in connection with the benefits payable for goods or services provided by any health care provider or other designated person or entity, the terms "actual charge", "actual charges", "actual fee", or "actual fees" shall mean the amount that the health care provider or other designated person or entity:  (a) agreed to accept, pursuant to a network or other agreement with a health insurer, third-party administrator, or other third-party payor, as payment in full for the goods or services provided to the insured;  (b) agreed or is obligated by operation of law to accept as payment in full for the goods or services provided to the insured pursuant to a provider, participation agreement, or supplier agreement under Medicare, Medicaid, or any other government administered health care program, where the insured is covered or reimbursed by such program; or  (c) if both subitems (a) and (b) of this subsection apply, the lowest amount determined under these two subitems; and  (2) must include any applicable deductibles, coinsurance requirements, or co-pay requirements applicable to the insured under any government administered health care program or any private primary health insurance coverage for the health care provider's goods or services provided to the insured.  (B) This section applies to any individual or group specified disease insurance policy issued to any resident of this State that contains the terms "actual charge", "actual charges", "actual fee", or "actual fees" and does not contain an express definition for the terms "actual charge", "actual charges", "actual fee", or "actual fees".  (C) Notwithstanding any other provision of law, after the effective date of this section, an insurer or issuer of any individual or group specified disease insurance policy shall not pay any claim or benefits based upon an actual charge, actual charges, actual fee, or actual fees under the applicable policy in an amount in excess of the "actual charge", "actual charges", "actual fee", or "actual fees" as defined in this section.  HISTORY: 2008 Act No. 265, Section 1, eff June 4, 2008.
 (A) As used in this section:  (1) "Continuation of care" means the provision of in-network level benefits for services rendered by certain out-of-network providers for a definite period of time in order to ensure continuity of care for covered persons for a serious medical condition. Continuation of care must be provided for ninety days or until the termination of the benefit period, whichever is greater.  (2) "Health insurance coverage" means as defined in Sections 38-71-670(6) and 38-71-840(14).  (3) "Health insurance issuer" or "issuer" means an entity that provides health insurance coverage in this State as defined in Sections 38-71-670(7) and 38-71-840(16).  (4) "State health plan" means the employee and retiree insurance program provided for in Article 5, Chapter 11, Title 1.  (5) "Serious medical condition" means a health condition or illness, that requires medical attention, and where failure to provide the current course of treatment through the current provider would place the person's health in serious jeopardy, and includes cancer, acute myocardial infarction, and pregnancy. Such attestation by the treating physician must be made upon the request of the patient and in a written form approved by the Department of Insurance or prescribed through regulation, order, or bulletin.  (B) This section applies to an individual health plan, a group health plan, or a health benefit plan, including the state health plan, that is delivered, issued for delivery, or renewed in this State and which provides health insurance coverage. Continuation of care must not be provided if suspension or revocation of the provider's license occurs.  (C) If a provider contract is terminated or nonrenewed, the issuer and the provider shall comply with the following requirements:  (1) The issuer is liable for covered benefits rendered in the continuation of care by a provider to a covered person for a serious medical condition. Except as required by this section, the benefits payable for services rendered during the continuation of care are subject to the policy's or contract's regular benefit limits.  (2) The issuer shall not require a covered person to pay a deductible or copayment which is greater than the in-network rate for services rendered during the continuation of care.  (3) An issuer offering health insurance coverage shall not require a covered person, as a condition of continued coverage under the plan, to pay a premium or contribution which is greater than the premium or contribution for a similarly situated individual enrolled in the plan on the basis of covered benefits rendered as provided for in this section to the covered person or the dependent of a covered person.  (4) The provider shall accept as payment in full for services rendered within in the continuation of care the negotiated rate under the provider contract.  (5) Except for an applicable deductible or a copayment, a provider shall not bill or otherwise hold a covered person financially responsible for services rendered in the continuation of care and furnished by the provider, unless the provider has not received payment in accordance with item (4) of this subsection and in accordance with Article 2, Chapter 59 of this title.  (6) Upon receipt of the patient's request accompanied by the physician's attestation on the prescribed form, the issuer shall notify the provider and the covered person of the provider's date of termination from the network and of the continuation of care provisions as provided for in this section.  (7) The issuer is responsible for determining if a covered person qualifies for continuation of care and may request additional information in reaching such determination.  HISTORY: 2010 Act No. 143, Section 1, eff March 31, 2010.  Editor's Note  2010 Act No. 143, Sections 2 and 4, provide:  "SECTION 2. The Department of Insurance may promulgate regulations necessary for implementation of this act."  "SECTION 4. This act takes effect upon approval by the Governor and applies to an individual health plan, a group health plan, or a health benefit plan, including the state health plan, issued, renewed, delivered, or entered into after December 31, 2010."
 No health insurer, including a group health plan, as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, may deny enrollment of a child under the health plan of the child's parent on the grounds that the child:  (1) was born out of wedlock;  (2) is not claimed as a dependent on the parent's federal tax return; or  (3) does not reside with the parent or in the insurer's service area.  HISTORY: 1994 Act No. 481, Section 3.
 (A) Each provider contract must contain a continuation of care provision consistent with the language of Section 38-71-243.  (B) Nothing in this section prohibits a provider contract from providing continuation of care services greater than those required to be offered pursuant to subsection (A) or more favorable to the covered person than those required to be offered pursuant to subsection (A).  HISTORY: 2010 Act No. 143, Section 1, eff March 31, 2010.  Editor's Note  2010 Act No. 143, Sections 2 and 4, provide:  "SECTION 2. The Department of Insurance may promulgate regulations necessary for implementation of this act."  "SECTION 4. This act takes effect upon approval by the Governor and applies to an individual health plan, a group health plan, or a health benefit plan, including the state health plan, issued, renewed, delivered, or entered into after December 31, 2010."
 Each health insurance issuer shall include a plain language description of the continuation of care provisions set forth in Section 38-71-243 in the policy, certificate, membership booklet, outline of coverage, or other evidence of coverage it provides to covered persons.  HISTORY: 2010 Act No. 143, Section 1, eff March 31, 2010.  Editor's Note  2010 Act No. 143, Sections 2 and 4, provide:  "SECTION 2. The Department of Insurance may promulgate regulations necessary for implementation of this act."  "SECTION 4. This act takes effect upon approval by the Governor and applies to an individual health plan, a group health plan, or a health benefit plan, including the state health plan, issued, renewed, delivered, or entered into after December 31, 2010."
 If, pursuant to a court order which meets the specifications of Section 63-17-2110, a parent is required to provide health coverage for a child and the parent is eligible for family health coverage through a health insurer, including a group health plan as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, the insurer shall:  (1) permit the parent to enroll, under the family coverage, a child who is otherwise eligible for the coverage without regard to any enrollment season restrictions;  (2) if the parent is enrolled but fails to make application to obtain coverage for the child, enroll the child under family coverage upon application of:  (a) the child's other parent;  (b) the state agency administering the Medicaid program; or  (c) the state agency administering 42 U.S.C. Sections 651 to 669, the child support enforcement program; and  (3) continue coverage of the child unless the insurer is provided satisfactory written evidence that the:  (a) court order is no longer in effect;  (b) child is or will be enrolled in comparable health coverage through another insurer which will take effect not later than the effective date of disenrollment; or  (c) employer has eliminated family health coverage for all of its employees.  HISTORY: 1994 Act No. 481, Section 3.
 A health insurer, including a group health plan as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, may not impose requirements on a state agency, which has been assigned the rights of an individual eligible for medical assistance under Medicaid who is also covered under a plan issued by the health insurer, that are different from requirements applicable to an agent or assignee of any other individual so covered.  HISTORY: 1994 Act No. 481, Section 3.
 If a child has health coverage through the health insurer including a group health plan, as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, of a noncustodial parent, the insurer shall:  (1) provide information to the custodial parent as may be necessary for the child to obtain benefits through that coverage;  (2) permit the custodial parent or the health care provider, with the custodial parent's approval, to submit claims for covered services without the approval of the noncustodial parent; and  (3) make payments on claims submitted in accordance with item (2) directly to the custodial parent, the provider, or the state Medicaid agency.  HISTORY: 1994 Act No. 481, Section 3.
 (A) In enrolling a person or in making any payments for benefits to a person or on behalf of a person, no health insurer, including a group health plan as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, may take into account that the person is eligible for or is provided medical assistance under a State Plan for Medical Assistance pursuant to Title XIX of the Social Security Act.  (B) In a case where a health insurer, including a group health plan as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 or health maintenance organization as defined in Section 38-33-20, has a legal liability to make payments for medical assistance to or on behalf of a person, to the extent that payment has been made under a State Plan for Medical Assistance pursuant to Title XIX of the Social Security Act for health care items or services furnished to the person, the State is considered to have acquired the rights of the person to the payment for the health care items or services.  HISTORY: 1994 Act No. 481, Section 3.
 (A) No insurance policy which provides coverage for drugs shall exclude coverage of any such drug used for the treatment of cancer on the grounds that the drug has not been approved by the Federal Food and Drug Administration for the treatment of the specific type of cancer for which the drug has been prescribed; provided, that such drug is recognized for treatment of that specific type of cancer in one of the standard reference compendia or in the medical literature.  (B) This section shall not be construed to:  (1) alter existing law with regard to provisions limiting the coverage of drugs that have not been approved by the Federal Food and Drug Administration;  (2) require coverage for any drug when the Federal Food and Drug Administration has determined its use to be contraindicated;  (3) require coverage for experimental drugs not otherwise approved for any indication by the Federal Food and Drug Administration;  (4) create, impair, alter, limit, modify, enlarge, abrogate, or prohibit reimbursement for drugs used in the treatment of any other disease or condition.  (C) For purposes of this section:  (1) "Insurance policy" means an individual, group, or blanket policy written by a medical expense indemnity corporation, a hospital service corporation, a health care service plan contract, or a private insurance plan issued, amended, delivered, or renewed in this State or which provides insurance for residents of this State.  (2) "Standard reference compendia" means:  (a) the United States Pharmacopoeia Drug Information;  (b) the American Medical Association Drug Evaluations; or  (c) the American Hospital Formulary Service Drug Information.  (3) "Medical literature" means two articles from major peer-reviewed professional medical journals that have recognized, based on scientific or medical criteria, the drug's safety and effectiveness for treatment of the indication for which it has been prescribed unless one article from major peer-reviewed professional medical journals has concluded, based on scientific or medical criteria, that the drug is unsafe or ineffective or that the drug's safety and effectiveness cannot be determined for the treatment of the indication for which it has been prescribed.  HISTORY: 1996 Act No. 351, Section 1.
 (A) As used in this section:  (1) "Autism spectrum disorder" means one of the three following disorders as defined in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders of the American Psychiatric Association:  (a) Autistic Disorder;  (b) Asperger's Syndrome;  (c) Pervasive Developmental Disorder-Not Otherwise Specified.  (2) "Insurer" means an insurance company, a health maintenance organization, and any other entity providing health insurance coverage, as defined in Section 38-71-670(6), which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (3) "Health maintenance organization" means an organization as defined in Section 38-33-20(8).  (4) "Health insurance plan" means a group health insurance policy or group health benefit plan offered by an insurer. It includes the State Health Plan, but does not otherwise include any health insurance plan offered in the individual market as defined in Section 38-71-670(11), any health insurance plan that is individually underwritten, or any health insurance plan provided to a small employer, as defined by Section 38-71-1330(17).  (5) "State Health Plan" means the employee and retiree insurance program provided for in Article 5, Chapter 11, Title 1.  (B) A health insurance plan as defined in this section must provide coverage for the treatment of autism spectrum disorder. Coverage provided under this section is limited to treatment that is prescribed by the insured's treating medical doctor in accordance with a treatment plan. With regards to a health insurance plan as defined in this section an insurer may not deny or refuse to issue coverage on, refuse to contract with, or refuse to renew or refuse to reissue or otherwise terminate or restrict coverage on an individual solely because the individual is diagnosed with autism spectrum disorder.  (C) The coverage required pursuant to subsection (B) must not be subject to dollar limits, deductibles, or coinsurance provisions that are less favorable to an insured than the dollar limits, deductibles, or coinsurance provisions that apply to physical illness generally under the health insurance plan, except as otherwise provided for in subsection (E). However, the coverage required pursuant to subsection (B) may be subject to other general exclusions and limitations of the health insurance plan, including, but not limited to, coordination of benefits, participating provider requirements, restrictions on services provided by family or household members, utilization review of health care services including review of medical necessity, case management, and other managed care provisions.  (D) The treatment plan required pursuant to subsection (B) must include all elements necessary for the health insurance plan to appropriately pay claims. These elements include, but are not limited to, a diagnosis, proposed treatment by type, frequency, and duration of treatment, the anticipated outcomes stated as goals, the frequency by which the treatment plan will be updated, and the treating medical doctor's signature. The health insurance plan may only request an updated treatment plan once every six months from the treating medical doctor to review medical necessity, unless the health insurance plan and the treating medical doctor agree that a more frequent review is necessary due to emerging clinical circumstances.  (E) To be eligible for benefits and coverage under this section, an individual must be diagnosed with autistic spectrum disorder at age eight or younger. The benefits and coverage provided pursuant to this section must be provided to any eligible person under sixteen years of age. Coverage for behavioral therapy is subject to a fifty thousand dollar maximum benefit per year. Beginning one year after the effective date of this act, this maximum benefit shall be adjusted annually on January first of each calendar year to reflect any change from the previous year in the current Consumer Price Index, All Urban Consumers, as published by the United States Department of Labor's Bureau of Labor Statistics.  HISTORY: 2007 Act No. 65, Section 1, eff July 1, 2008, applicable to health insurance plans issued, renewed, delivered, or entered into on or after that date.
 (A) As used in this section:  (1) "Health insurance plan" means a health insurance policy or health benefit plan offered by an insurance issuer, including a qualified health benefit plan offered or administered by the State, or a subdivision or instrumentality of the State, that provides group health insurance coverage as defined by Section 38-71-840(12).  (2) "Mental health condition" means the following psychiatric illnesses as defined by the "Diagnostic and Statistical Manual of Mental Disorders-Fourth Edition (DSM-IV)", and subsequent editions published by the American Psychiatric Association:  (a) Bipolar Disorder;  (b) Major Depressive Disorder;  (c) Obsessive Compulsive Disorder;  (d) Paranoid and Other Psychotic Disorder;  (e) Schizoaffective Disorder;  (f) Schizophrenia;  (g) Anxiety Disorder;  (h) Post-traumatic Stress Disorder; and  (i) Depression in childhood and adolescence.  (3) "Rate, term, or condition" means lifetime or annual payment limits, deductibles, copayments, coinsurance and other cost-sharing requirements, out-of-pocket limits, visit limits, and any other financial component of health insurance coverage that affects the insured.  (4) "Settings" means either emergency, outpatient, or inpatient care.  (5) "Modalities" means therapeutic methods or agents including, without limitation, surgery or pharmaceuticals.  (B) A health insurance plan must provide coverage for treatment of a mental health condition and may not establish a rate, term, or condition that places a greater financial burden on an insured for access to treatment for a mental health condition than for access to treatment for a physical health condition in similar settings and treatment modalities. Any deductible or out-of-pocket limits required under a health insurance plan must be comprehensive for coverage of both mental health and physical health conditions.  (C) A health insurance plan that does not otherwise provide for management of care under the plan, or that does not provide for the same degree of management of care for all health conditions, may provide coverage for treatment of mental health conditions through a managed care organization if the managed care organization is in compliance with regulations promulgated by the director. The regulations promulgated by the director must ensure that timely and appropriate access to care is available, that the quantity, location, and specialty distribution of health care providers is adequate, and that administrative or clinical protocols do not prevent access to medically necessary treatment for the insured.  (D) A health insurance plan complies with this section if at least one choice for treatment of mental health conditions provided to the insured within the plan has rates, terms, and conditions that place no greater financial burden on the insured than for access to treatment of physical conditions in similar settings and treatment modalities. The director may disapprove a plan that the director determines to be inconsistent with the purposes of this section.  (E) To be eligible for coverage under this section for the treatment of mental illness, the treatment must be rendered by a licensed physician, licensed mental health professional, or certified mental health professional in a mental health facility that provides a program for the treatment of a mental health condition pursuant to a written treatment plan. A health insurance plan may require a mental health facility, licensed physician, or licensed or certified mental health professional to enter into a contract as a condition of providing benefits.  (F) The provisions of this section do not:  (1) limit the provision of specialized medical services for individuals with mental health disorders;  (2) supersede the provisions of federal law, federal or state Medicaid policy, or the terms and conditions imposed on a Medicaid waiver granted to the State for the provision of services to individuals with mental health disorders;  (3) require a health insurance plan to provide rates, terms, or conditions for access to treatment for mental illness that are identical to rates, terms, or conditions for access to treatment for a physical condition;  (4) apply to a health insurance plan that is individually underwritten; or  (5) apply to a health insurance plan provided to a small employer, as defined in Section 38-71-1330(18).  (G) The provisions of this section apply where required regardless of the applicability of Section 38-71-880 regarding parity in the application of certain limits to mental health and substance use disorder benefits.  HISTORY: 2005 Act No. 76, Section 1, eff June 30, 2006, applicable to health insurance plans issued or renewed on or before eff date of Act; 2009 Act No. 50, Section 3, eff upon approval (became law without the Governor's signature on June 3, 2009); 2009 Act No. 50, Section 4, eff upon approval (became law without the Governor's signature on June 3, 2009); 2009 Act No. 50, Section 5, eff upon approval (became law without the Governor's signature on June 3, 2009).  Editor's Note  2005 Act No. 76, Section 4, provides as follows:  "This act does not apply to a health insurance plan that is individually underwritten and does not apply to a health insurance plan provided to a small employer, as defined by Section 38-71-1330(17) of the 1976 Code."  2009 Act No. 50 Section 6 provides as follows:  "This act takes effect upon approval by the Governor and applies to group health plans for plan years beginning after October 2, 2009."
 Every insurer doing accident or health insurance business in the State shall deliver with each policy of insurance issued by it a copy of the application made by the insured so that the whole contract appears in the application and policy of insurance. If the insurer violates this requirement, no defense is allowed to the policy on account of anything contained in or omitted from the application. If the insurance policy is issued upon an oral application, no defense is allowed to the policy on account of anything contained in or omitted from the oral application.  HISTORY: Former 1976 Code Section 38-9-70 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-146; 1962 Code Section 37-146; 1980 Act No. 305, Section 1] recodified as Section 38-71-30 by 1987 Act No. 155, Section 1.
 (A) A policy or certificate of accident, health, or accident and health insurance may not be issued or delivered in this State, nor may any application, endorsement, or rider which becomes a part of the policy be used, until a copy of its form has been filed with and approved by the director or his designee, except as exempted by the director or his designee as permitted by Section 38-61-20. The director or his designee may disapprove the form if the form:  (1) does not meet the requirements of law;  (2) contains provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or  (3) is solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.  The director or his designee shall notify in writing, as soon as is practicable, the insurer that has filed the form of his approval or disapproval. If the form is disapproved, the notice must contain the reasons for disapproval, and the insurer is entitled to a public hearing on that decision. If action is not taken to approve or disapprove a policy or certificate, application, endorsement, or rider after the document has been filed for thirty days, it is deemed to be approved.  The director or his designee, in his discretion, may extend for up to an additional sixty days the period for approval or disapproval of the form. An organization may not use a form deemed approved pursuant to the default provision of this section until the organization has filed with the director or his designee a written notice of its intent to use the form. The notice must be filed in the office of the director at least ten days before the organization uses the form.  (B) No premium rates applicable to accident policies, health policies, or combined accident and health policies or certificates for individual or family protection may be used unless they have been filed with the department and approved by the director or his designee. The director or his designee may disapprove premium rates if he determines that the benefits provided in the policies or certificates are unreasonable in relation to the premiums charged. The director or his designee shall notify in writing the insurer, as soon as is practicable, which has filed the premium rates of his approval or disapproval with the department. In the event of disapproval, the notice must contain the reasons for disapproval, and the insurer is entitled to appeal the decision or determination of disapproval before the Administrative Law Court as provided by law. If no action has been taken to approve or disapprove the premium rates after they have been filed for ninety days, they are deemed to be approved.  (C) At any time the director or his designee, after a public hearing of which at least thirty days' written notice has been given, may withdraw approval of forms or rates previously approved under subsections (A) and (B) if he determines that the forms or rates no longer meet the standards for approval specified in subsections (A) and (B).  (D) The provisions of this section do not apply to policies issued in connection with loans made under the Small Loan Act of 1966.  (E) For major medical expense coverage individual accident and health insurance policies, as defined by regulation of the department, the benefits are deemed reasonable in relation to the premium charged if the insurer has filed a loss ratio guarantee with the department. This guaranteed loss ratio must be equivalent to, or greater than, the most recent loss ratios detailed within the National Association of Insurance Commissioners' "Guidelines for Filing of Rates for Individual Health Insurance Forms". This loss ratio guarantee must be in writing and must contain at least the following:  (1) A recitation of the anticipated (target) loss ratio standards contained in the original actuarial memorandum filed with the policy form when it was originally approved.  (2) A guarantee that the actual South Carolina loss ratios for the calendar year in which the new rates take effect, and for each year thereafter until new rates are filed will meet or exceed the loss ratio standards referred to in item (1).  (3) A guarantee that the actual South Carolina loss ratio results for the year at issue will be independently audited at the insurer's expense. This audit must be done in the second quarter of the next year and the audited results must be reported to the department not later than the date for filing the applicable Accident and Health Policy Experience Exhibit.  (4) A guarantee that affected South Carolina policyholders will be issued a proportional refund (based on premium paid) of the amount necessary to bring the actual aggregate loss ratio up to the anticipated loss ratio standards referred to in item (1). The refund must be made to all South Carolina policyholders insured under the applicable policy form as of the last day of the year at issue if the refund would equal five dollars or more. The refund must include statutory interest from the end of the year at issue until the date of payment. Payments must be made during the third quarter of the next year.  (5) As used herein, the term "loss ratio" means the ratio of incurred losses to earned premium by number of years of policy duration, for all combined durations.  (6) The reference in item (1) of this subsection to the "anticipated (target) loss ratio standards contained in the original actuarial memorandum filed with the policy form when it was originally approved" may not be considered or construed as evidence of legislative intent that the use of, or adherence to, such "anticipated (target) loss ratio standards" is approved or disapproved in any application for a rate increase for any policy form approved prior to the effective date of these amendments to Section 38-71-310.  (F) Nothing in this chapter precludes the issuance of an individual accident, health, or accident and health insurance policy that includes an optional life insurance rider. However, the optional life insurance rider must be filed with and approved by the director or his designee pursuant to Section 38-61-20 and comply with all applicable sections of Chapter 63 and, in addition, in the case of a life insurance rider with accelerated long term care benefits, Chapter 72 of this title.  HISTORY: Former 1976 Code Section 38-35-410 [1947 (45) 322; 1952 Code Section 37-471; 1962 Code Section 37-471; 1972 (57) 2593; 1976 Act No. 630; 1980 Act No. 337, Section 2] recodified as Section 38-71-310 by 1987 Act No. 155, Section 1; 1988 Act No. 316, Section 2; 1989 Act No. 24, Section 1; 1989 Act No. 90, Section 1; 1993 Act No. 181, Section 753; 1998 Act No. 411, Section 6; 2001 Act No. 82, Section 23, eff July 20, 2001.
 Any insurer of individual accident and health insurance may at any time, except when required by law or order of the director or his designee, voluntarily decrease its premium charge for any approved policy form without the prior approval of the director or his designee. However, the insurer must notify the director or his designee and the consumer advocate for information thirty days prior to the use of the revised premium charge. Notwithstanding any other provision of law, any time within one year after using such revised premium charge, the insurer may return its premium charge back to the previously approved level by informing the director or his designee and the consumer advocate of the revision thirty days prior to the effective date. The director or his designee may not disapprove such revision.  HISTORY: 1989 Act No. 90, Section 2; 1993 Act No. 181, Section 754.
 If a policy is issued by an insurer domiciled in this State for delivery to a person residing in another state and if the official having responsibility for the administration of the insurance laws of the other state has advised the director or his designee that the policy is not subject to approval or disapproval by the official, the director or his designee may by ruling require that the policy meet the standards set forth in Sections 38-71-330, 38-71-340, and 38-71-370.  HISTORY: Former 1976 Code Section 38-35-430 [1956 (49) 2029; 1962 Code Section 37-473] recodified as Section 38-71-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 755.
 On January 1, 1992, in addition to any other requirements of law, no new individual major medical expense coverage policy, as defined in regulations promulgated by the department, may be approved unless:  (1) Premium rates, after appropriate allowance for the actuarial value of the difference in benefits, for any such policy form first approved for use by the insurer in South Carolina within the two-year period immediately prior to the effective date of this section and any such policy form first approved for use after the effective date of this section do not exceed the premium rates for any other such policy form first approved for use during this period by more than thirty percent.  (2) The actuarial value of the difference in benefits set out in such policy forms of the insurer, as specified in an opinion by a qualified actuary or other qualified person acceptable to the director or his designee,is reported not less often than once a year to the director or his designee and used in demonstrating compliance with item (1).  (3) The anticipated (target) loss ratio for the combined experience for all the policy forms specified in item (1) must be equivalent to or greater than the most recent loss ratios detailed within the National Association of Insurance Commissioner's 'Guidelines for Filing of Rates for Individual Health Insurance Forms' or successor publications. The anticipated (target) loss ratio for the combined experience is defined as the average anticipated (target) loss ratio for all these policy forms included in the combined experience weighted by premium volume. With respect to the policy form, the insurer shall have the right to file a loss ratio guarantee in accordance with the procedures specified in Section 38-71-310(E) or to request approval of any rate change before the use thereof, but the anticipated loss ratios of each policy form whether or not a loss ratio guarantee has been filed must be combined as provided in the preceding item (3).  The initial policy form proposed to be used by a domestic insurer after its organization under the laws of this State and the initial policy form proposed to be used by a foreign insurer after authorization by the director or his designee to do business in this State may be disapproved by the director or his designee if he determines that the rates proposed to be used with the policy form are set at a level substantially less than rates charged by other insurers in this State offering comparable coverage.  Nothing contained in this section may be construed to prevent the use of age, sex, area, industry, occupational, and avocational factors or to prevent the use of different rates for smokers and nonsmokers or for any other habit or habits of an insured person which have a statistically proven effect on the health of the person and are approved by the director or his designee. Also, nothing contained in this section shall preclude the establishment of a substandard classification based upon the health condition of the insured, but the initial classification may not be changed adversely to the applicant after initial issue.  The director or his designee has the right, upon application by any insurer, to grant relief, for good cause shown, from any requirement of this section.  HISTORY: 1991 Act No. 131, Section 2; 1993 Act No. 181, Section 756.
 No policy of accident and health insurance may be delivered or issued for delivery to any person in this State unless:  (1) The entire money and other considerations therefor are expressed therein.  (2) The time at which the insurance takes effect and terminates is expressed therein.  (3) It purports to insure only one individual, except that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family who is considered the policyholder, any two or more eligible members of that family, including husband, wife, dependent children, or any children under a specified age which may not exceed nineteen years, and any other individual dependent upon the policyholder.  (4) The style, arrangement, and overall appearance of the policy give no undue prominence to any portion of the text and every printed portion of the text of the policy and of any endorsements or attached papers is plainly printed in light-faced type of a style in general use, the size of which must be uniform and not less than ten-point with a lower-case unspaced alphabet length not less than one-hundred-and-twenty-point (the "text" includes all printed matter except the name and address of the insurer, name or title of the policy, the brief description, if any, and captions and subcaptions).  (5) The exceptions and reductions of indemnity are set forth in the policy and, except those which are set forth in Sections 38-71-340 and 38-71-370, are printed, at the insurer's option, either included with the benefit provision to which they apply or under an appropriate caption such as "EXCEPTIONS" or "EXCEPTIONS AND REDUCTIONS". However, if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of the exception or reduction must be included with the benefit provision to which it applies.  (6) Each form, including riders and endorsements, is identified by a form number in the lower left-hand corner of the first page thereof.  (7) It contains no provision purporting to make any portion of the charter, rules, constitution, or bylaws of the insurer a part of the policy unless that portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates or classification of risks or short-rate table filed with the department.  HISTORY: Former 1976 Code Section 38-35-420 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-472, 37-500; 1956 (49) 2029; 1962 Code Section 37-472] recodified as Section 38-71-330 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 757.
 (A) No individual or family accident, health, or accident and health insurance policy may contain a provision which gives the insurer the right to cancel the policy. "To cancel" means to terminate a policy at a date other than the policy anniversary date or the premium due date.  (B) For individual or family accident, health, or accident and health insurance policies, excluding individual health insurance coverage as defined in Section 38-71-670, individual or family accident, health, or accident and health insurance policies may not be written on an optionally renewable basis. "Optionally renewable" means a contract of insurance in which the insurer reserves the right to terminate the coverage at the policy anniversary date. Optionally renewable does not include the following categories of policies as defined by the department by regulation: (1) "nonrenewable for stated reasons only"; and (2) "conditionally renewable". Term insurance is not considered insurance written on an optionally renewable basis. For individual health insurance coverage as defined in Section 38-71-670, Section 38-71-675 relating to guaranteed renewability of individual health insurance coverage shall apply.  (C) An individual or family accident, health, or accident and health insurance policy which may be nonrenewed, may be nonrenewed at the policy anniversary date or premium due date. The insurer shall give the insured at least thirty-one days' written notice of nonrenewal. Nonrenewal by the insurer is without prejudice to any claims originating before the effective date of nonrenewal. No written notice shall be required for failure to pay premiums except as provided in Section 38-71-110. For individual health insurance coverage as defined in Section 38-71-670, the notification requirements of Section 38-71-675(C) shall apply.  HISTORY: 1988 Act No. 394, Section 2; 1993 Act No. 181, Section 758; 1997 Act No. 5, Section 5.
 Except as provided in Section 38-71-410, each accident, health, or accident and health policy delivered or issued for delivery to an individual in this State must contain the provisions specified in this section, in the words in which they appear in this section. The insurer, at its option, may substitute for one or more of these provisions corresponding provisions of different wording approved by the director or his designee which are in each instance not less favorable in any respect to the insured or the beneficiary. These provisions must be preceded individually by the caption appearing in this section or, at the option of the insurer, by appropriate individual or group caption or subcaptions approved by the director or his designee.  (1) A provision as follows:  ENTIRE CONTRACT; CHANGES:  This policy, with the application and attached papers, if any, is the entire contract between the insured and the company.  No change in this policy is effective until approved by a company officer. This approval must be noted on or attached to this policy. No agent may change this policy or waive any of its provisions.  (2) A provision as follows:  TIME LIMIT ON CERTAIN DEFENSES:  After two years from the issue date only fraudulent misstatements in the application may be used to void the policy or deny any claim for loss incurred or disability that starts after the two-year period.  A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium (a) until at least age fifty or (b) in the case of a policy issued after age forty-four, for at least five years from its date of issue, may contain in lieu of the foregoing the following provision (from which the clause in parenthesis may be omitted at the insurer's option) "INCONTESTABLE":  (a) Misstatements in the application:  After this policy has been in force for two years during the insured's lifetime (excluding any period during which the insured is disabled), the company cannot contest the statements contained in the application.  (b) Preexisting conditions:  No claim for loss incurred or disability that starts after two years from the issue date will be reduced or denied because a sickness or physical condition not excluded by name or specific description before the date of loss had existed before the effective date of coverage.  (3) A provision as follows:  GRACE PERIOD:  This policy has a _ day grace period. This means that if a renewal premium is not paid on or before the date it is due, it may be paid during the following __ days. During the grace period the policy will stay in force. [Note: Insert a number not less than "seven" for weekly premium policies, "ten" for monthly premium policies, and "thirty-one" for all other policies.]  (4) A provision as follows:  REINSTATEMENT:  If the renewal premium is not paid before the grace period ends the policy will lapse. Later acceptance of the premium by the company or by an agent authorized to accept payment without requiring an application for reinstatement will reinstate the policy. If the company or its agent requires an application, the insured will be given a conditional receipt for the premium. If the application is approved, the policy will be reinstated as of the approval date. Lacking such approval, the policy will be reinstated on the forty-fifth day after the date of the conditional receipt unless the company has previously written the insured of its disapproval. The reinstated policy will cover only loss that results from an injury sustained after the date of reinstatement or sickness that starts more than ten days after such date.  In all other respects the rights of the insured and the company will remain the same, subject to any provisions noted on or attached to the reinstated policy. Any premiums the company accepts for reinstatement will be applied to a period for which premiums have not been paid. No premiums will be applied to any period more than sixty days before the reinstatement date.  [The last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums (a) until at least age fifty or (b) in the case of a policy issued after age forty-four, for at least five years from its date of issue.]  (5) A provision as follows:  NOTICE OF CLAIM:  Written notice of claim must be given within twenty days after a covered loss starts or as soon as reasonably possible. The notice may be given to the company at its home office or to the company's agent. Notice should include the name of the insured and the policy number.  Optional paragraph: If the insured has a disability for which benefits may be payable for at least two years, at least once every six months after the insured has given notice of claim, the insured shall give the company notice that the disability has continued. The insured need not do this if legally incapacitated. The first six months after any filing of proof by the insured or any payment or denial of a claim by the company will not be counted in applying this provision.  If the insured delays in giving this notice, the insured's right to any benefits for the six months before the date when the insured gives notice will not be impaired.  (6) A provision as follows:  CLAIM FORMS:  When the company receives notice of claim, it will send the claimant forms for filing proof of loss. If these forms are not given to the claimant within fifteen days the claimant will meet the proof of loss requirements by giving the company a written statement of the nature and extent of the loss within the time limits stated in the Proofs of Loss section.  (7) A provision as follows:  PROOFS OF LOSS:  If the policy provides for periodic payment for a continuing loss, written proof of loss must be given the company within ninety days after the end of each period for which the company is liable. For any other loss, written proof must be given within ninety days after such loss. If it was not reasonably possible to give written proof in the time required, the company may not reduce or deny the claim for this reason if the proof is filed as soon as reasonably possible. The proof required must be given no later than one year from the time specified unless the claimant was legally incapacitated.  (8) A provision as follows:  TIME OF PAYMENT OF CLAIMS:  After receiving written proof of loss, the Company will pay _ [insert period for payment which may not be less frequently than monthly] all benefits then due for _ [insert applicable term for type of benefits].  Notwithstanding the above, the time of payment of claims provision in health insurance coverage as defined in Section 38-71-670(6) must read as follows:  TIME OF PAYMENT OF CLAIMS:  After receiving written proof of loss, the Company will pay _ [insert period for payment which may not be less prompt than those set forth in Section 38-59-230] all benefits then due for _ [insert applicable term for type of benefits].  (9) A provision as follows:  PAYMENT OF CLAIMS:  Benefits will be paid to the insured. Loss of life benefits are payable in accordance with the beneficiary designation in effect at the time of payment. If none is then in effect, the benefits will be paid to the insured's estate. Any other benefits unpaid at death may be paid, at the company's option, either to the insured's beneficiary or estate.  Optional paragraph: If benefits are payable to the insured's estate or a beneficiary who cannot execute a valid release, the company can pay benefits up to one thousand dollars to someone related to the insured or beneficiary by blood or marriage whom the company considers to be entitled to the benefits. The company will be discharged to the extent of any such payment made in good faith.  Optional paragraph: The company may pay all or a portion of any indemnities provided for health care services to the provider, unless the insured directs otherwise in writing by the time proofs of loss are filed. The company cannot require that the services be rendered by a particular provider.  (10) A provision as follows:  PHYSICAL EXAMINATIONS AND AUTOPSY:  The company at its own expense may have the insured examined as often as reasonably necessary while a claim is pending and in cases of death of the insured the insurer at its own expense also may have an autopsy performed during the period of contestability unless prohibited by law. The autopsy must be performed in South Carolina.  (11) A provision as follows:  LEGAL ACTIONS:  No legal action may be brought to recover on this policy within sixty days after written proof of loss has been given as required by this policy. No such action may be brought after six years from the time written proof of loss is required to be given.  (12) A provision as follows:  CHANGE OF BENEFICIARY:  The insured can change the beneficiary at any time by giving the company written notice. The beneficiary's consent is not required for this or any other change in the policy, unless the designation of the beneficiary is irrevocable.  (13) A provision as follows:  CONFORMITY WITH STATE STATUTES:  Any provision of this policy which, on its effective date, is in conflict with the laws of the state in which the insured resides on that date is amended to conform to the minimum requirements of such laws.  HISTORY: Former 1976 Code Section 38-35-440 [1947 (45) 322; 1952 Code Sections 37-473 to 37-484, 37-486, 37-487; 1956 (49) 2029; 1962 Code Section 37-474; 1980 Act No. 354, Section 2] recodified as Section 38-71-340 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 3; 1993 Act No. 181, Section 759; 2021 Act No. 13 (H.3585), Section 5, eff April 12, 2021.  Effect of Amendment  2021 Act No. 13, Section 5, rewrote (8), adding a time of payment of claims requirement for health insurance coverage.
 An individual hospital or medical expense insurance policy, hospital service plan contract, or medical service plan contract delivered or issued for delivery in this State which provides that coverage of a dependent child terminates upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of the limiting age does not operate to terminate the coverage of the child while the child is and continues to be both (a) incapable of self-sustaining employment by reason of intellectual disability or physical handicap and (b) chiefly dependent upon the policyholder or subscriber for support and maintenance, so long as proof of the incapacity and dependency is furnished to the insurer by the policyholder or subscriber within thirty-one days of the child's attainment of the limiting age and subsequently as may be required by the insurer but not more frequently than annually after the two-year period following the child's attainment of the limiting age.  HISTORY: Former 1976 Code Section 38-35-450 [1962 Code Section 37-474.1; 1970 (56) 2464] recodified as Section 38-71-350 by 1987 Act No. 155, Section 1.
 (A) As used in this section:  (1) "Dependent child" means a covered person under a policy who:  (a) is a dependent child, under the terms of the coverage, of an individual under the coverage; and  (b) was enrolled in the coverage, on the basis of being a student at a postsecondary educational institution immediately before the first date of the medically necessary leave of absence involved.  (2) "Health insurance coverage" means as defined in Section 38-71-670(6).  (3) "Health insurance issuer" or "issuer" means an entity that provides health insurance coverage in this State as defined in Section 38-71-670(7).  (4) "Medically necessary leave of absence" means a leave of absence of a dependent child from a postsecondary educational institution, including an institution of higher education as defined in Section 102 of the Higher Education Act of 1965, or any other change in enrollment of the child at such an institution, that:  (a) commences while the child is suffering from a serious illness or injury;  (b) is medically necessary; and  (c) causes the child to lose student status for purposes of coverage under the terms of the policy.  (B) This section applies to health insurance coverage offered by a health insurance issuer, that is delivered, issued for delivery, or renewed in this State and which provides health insurance coverage in the individual market.  (C)(1) In the case of a dependent child, a health insurance issuer may not terminate health insurance coverage of the child due to a medically necessary leave of absence before the date that is the earlier of:  (a) one year after the first day of the medically necessary leave of absence; or  (b) the date on which the coverage would otherwise terminate under the terms of the policy.  (2) The provisions of this subsection apply to health insurance coverage offered by a health insurance issuer only if the issuer has received written certification by a treating physician of the dependent child that states the child is suffering from a serious illness or injury and that the leave of absence or other change of enrollment is medically necessary.  (D) Each health insurance issuer shall include with a notice regarding a requirement for certification of student status for coverage under the policy or coverage in a plain-language description of the terms of this section for continued coverage during medically necessary leaves of absence.  (E) A dependent child whose benefits are continued under this section is entitled to the same benefits during the medically necessary leave of absence as if the child continued to be a covered student at the institution of higher education and was not on a medically necessary leave of absence.  (F) Coverage of the dependent child shall continue for the remainder of the period of the medically necessary leave of absence under the changed coverage in the same manner as it would have under the previous coverage in the case where:  (1) a dependent child is in a period of health insurance coverage pursuant to a medically necessary leave of absence;  (2) the manner in which the insured or dependent child is covered under the policy changes, whether through a change in health insurance coverage or health insurance issuer, or otherwise; and  (3) the coverage as changed continues to provide coverage of dependent children.  HISTORY: 2010 Act No. 217, Section 2, eff June 7, 2010.
 An individual hospital, medical, or surgical expense incurred insurance policy, hospital service plan contract, or medical service plan contract, other than a limited classification policy, delivered or issued for delivery in this State which provides that coverage of a nonhandicapped dependent child terminates upon attainment of the limiting age for the child as specified in the policy or contract shall also contain a provision to the effect that upon the attainment of the limiting age the child is entitled to have issued to him, without evidence of insurability, upon application made to the insurer within thirty days following the attainment of the age, and upon payment of the appropriate premium, an individual policy of accident and health insurance. The policy shall provide the coverage then being issued by the insurer which is closest to, but not greater than, the terminated coverage. Any probationary or waiting period set forth in the policy must be considered as met to the extent coverage was in force under the prior policy. For purposes of this section, "limited classification policy" means an accident-only policy, a limited accident policy, a travel accident policy, or a specified disease policy.  HISTORY: Former 1976 Code Section 38-35-455 [1983 Act No. 59] recodified as Section 38-71-360 by 1987 Act No. 155, Section 1.
 Except as provided in Section 38-71-410, no individual accident, health, or accident and health policy delivered or issued for delivery to any person in this State may contain provisions respecting the matters set forth below unless the provisions are in the words in which they appear in this section. However, the insurer may, at its option, use in lieu of these provisions a corresponding provision of different wording approved by the director or his designee which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption appearing in this section, or, at the option of the insurer, by appropriate individual or group captions or subcaptions approved by the director or his designee.  (1) A provision as follows:  CHANGE OF OCCUPATION:  If the insured be injured or contract sickness after having changed his occupation to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes his occupation to one classified by the insurer as less hazardous than that stated in this policy, the insurer, upon receipt of proof of such change of occupation, will reduce the premium rate accordingly and will return the excess pro rata unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such proof, whichever is the more recent.  In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the classification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change in occupation.  (2) A provision as follows:  MISSTATEMENT OF AGE:  If the insured's age has been misstated, the benefits will be those the premium paid would have purchased at the correct age.  (3) A provision as follows:  OTHER INSURANCE IN THIS INSURER:  If the insured has more than one policy __________ [insert designation for limitation such as policy form-type-form], only one policy chosen by the insured will be effective. The company shall refund all premiums paid for all the other policies.  Optional paragraph: If the insured has more than one policy with this company providing a total indemnity for __________ [insert type of coverage or coverages] of more than __________ [insert maximum limit of indemnity or indemnities] the excess insurance is void. The premiums paid for the excess must be returned to the insured.  Or, in lieu thereof:  Insurance effective at one time on the insured under a like policy or policies in this insurer is limited to the one such policy elected by the insured, his beneficiary, or his estate, as the case may be, and the insurer will return all premiums paid for all other such policies.  On every application for insurance the insurer shall ask for the amount of insurance which the applicant currently has in force with such insurer. If the insurer fails to ascertain the amount of insurance which an applicant has in force, all policies issued by the insurer to the applicant remain in force and the insurer is liable for all benefits payable thereunder, unless the applicant has misrepresented the amount of existing coverage on the application.  In all cases where the applicant indicates that other life, accident, and health insurance is in force with the insurer or the insurer's company, the insurer shall provide the applicant with the total amount of existing coverage with the insurer or insurer's company within sixty days.  (4) A provision as follows:  INSURANCE WITH OTHER INSURERS:  If there be other valid coverage, not with this insurer, providing benefits for the same loss on a provision-of-service basis or on an expense-incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense-incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus the total of the like amounts under all such other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for such loss and for the return of such portion of the premiums paid as shall exceed the pro rata portion for the amount so determined. For the purpose of applying this provision when other coverage is on a provision-of-service basis, the "like amount" of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage.  [If the foregoing policy provision is included in a policy which also contains the policy provision set out in item (5) of this section, there shall be added to the caption of the foregoing provision the phrase "EXPENSE-INCURRED BENEFITS". The insurer may, at its option, include in this provision a definition of "other valid coverage", approved as to form by the director or his designee, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada and by hospital or medical service organizations and to any other coverage the inclusion of which may be approved by the director or his designee. In the absence of such definition such term shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations.  For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute, including any workers' compensation or employer's liability statute, whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third-party liability coverage shall be included as "other valid coverage".]  (5) A provision as follows:  INSURANCE WITH OTHER INSURERS:  If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense-incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss and for the return of such portion of the premium paid as shall exceed the pro ratio portion for the indemnities thus determined.  [If the foregoing policy provision is included in a policy which also contains the policy provision set out in item (4) of this section, there shall be added to the caption of the foregoing provision the phrase "OTHER BENEFITS". The insurer may, at its option, include in this provision a definition of "other valid coverage" approved as to form by the director or his designee, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the director or his designee. In the absence of such definition such term shall not include group insurance or benefits provided by union welfare plans or by employer or employee benefit organizations.  For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute, including any workers' compensation or employer's liability statute, whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third-party liability coverage shall be included as "other valid coverage".]  (6) A provision as follows:  RELATION OF EARNINGS TO INSURANCE:  If the total monthly amount of loss-of-time benefits promised for the same loss under all valid loss-of-time coverage upon the insured, whether payable on a weekly or monthly basis, shall exceed the monthly earnings of the insured at the time disability commenced or his average monthly earnings for the period of two years immediately preceding a disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such benefits under this policy as the amount of such monthly earnings or such average monthly earnings of the insured bears to the total amount of monthly benefits for the same loss under all such coverage upon the insured at the time such disability commences and for the return of such part of the premiums paid during such two years as shall exceed the pro ratio amount of the premiums for the benefits actually paid hereunder; but this shall not operate to reduce the total monthly amount of benefits payable under all such coverage upon the insured below the sum of two hundred dollars or the sum of the monthly benefits specified in such coverages, whichever is the lesser, nor shall it operate to reduce benefits other than those payable for loss of time. [The foregoing policy provision may be inserted only in a policy which the insured has the right to continue in force subject to its terms by the timely payment of the premiums (a) until at least age fifty or (b) in the case of a policy issued after age forty-four, for at least five years from its date of issue. The insurer may, at its option, include in this provision a definition of "valid loss-of-time coverage", approved as to form by the director or his designee, which definition shall be limited in subject matter to coverage provided by governmental agencies or by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada or to any other coverage the inclusion of which may be approved by the director or his designee or any combination of such coverages. In the absence of such definition such term shall not include any coverage provided for such insured pursuant to any compulsory benefit statute, including any workers' compensation or employer's liability statute, or benefits provided by union welfare plans or by employer or employee benefit organization.]  (7) A provision as follows:  UNPAID PREMIUM:  When a claim is paid, any premium due and unpaid may be deducted from the claim payment.  (8) A provision as follows:  ILLEGAL OCCUPATION:  The company is not liable for any loss which results from the insured committing or attempting to commit a felony or from the insured engaging in an illegal occupation.  (9) A provision as follows:  INTOXICANTS AND NARCOTICS:  The company is not liable for any loss resulting from the insured being drunk or under the influence of any narcotic unless taken on the advice of a physician.  HISTORY: Former 1976 Code Section 38-35-460 [1947 (45) 322; 1952 Code Sections 37-485, 37-488, 37-489, 37-491 to 37-493, 37-495 to 37-497; 1956 (49) 2029; 1962 Code Section 37-475; 1980 Act No. 354, Section 1; 1981 Act No. 35, Sections 1, 2] recodified as Section 38-71-370 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Sections 4-8; 1993 Act No. 181, Section 760.
 (A) For purposes of this section, "medical expense policy" means an accident and sickness insurance policy that provides hospital, medical, and surgical expense coverage.  (B) The provisions of Section 38-71-370(9) may not be used with respect to a medical expense policy.  (C) This section applies to policies issued or renewed after December 31, 2017.  HISTORY: 2017 Act No. 42 (S.9), Section 1, eff May 19, 2017.
 The falsity of any statement in the application for any policy covered by this chapter does not bar the right to recovery thereunder unless the false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.  HISTORY: Former 1976 Code Section 38-35-180 [1947 (45) 322; 1952 Code Section 37-451; 1962 Code Section 37-451] recodified as Section 38-71-40 by 1987 Act No. 155, Section 1.
 If any provision of Sections 38-71-340 and 38-71-370 is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the director or his designee, shall omit from the policy any inapplicable provision or part of a provision and shall modify any inconsistent provision or part of the provision in a manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.  HISTORY: Former 1976 Code Section 38-35-470 [1947 (45) 322; 1952 Code Section 37-499; 1956 (49) 2029; 1962 Code Section 37-476] recodified as Section 38-71-410 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 761.
 The provisions which are the subject of Sections 38-71-340 and 38-71-370, or any corresponding provisions which are used in lieu thereof in accordance with those sections, must be printed in the consecutive order of the provisions in those sections, or, at the option of the insurer, any such provision may appear as a unit in any part of the policy with other provisions to which it may be logically related, as long as the resulting policy is not in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered, or issued.  HISTORY: Former 1976 Code Section 38-35-480 [1956 (49) 2029; 1962 Code Section 37-477] recodified as Section 38-71-420 by 1987 Act No. 155, Section 1.
 A policy provision which is not subject to Sections 38-71-340 and 38-71-370 may not make a policy, or any portion thereof, less favorable in any respect to the insured or the beneficiary than the provisions which are subject to either of these sections.  HISTORY: Former Section 38-35-500 [1947 (45) 322; 1952 Code Section 37-499; 1956 (49) 2029; 1962 Code Section 37-479] recodified as Section 38-71-430 by 1987 Act No. 155, Section 1.
 (A) As used in this section:  (1) "Health benefit plan" means any public or private health plan implemented in this State that provides medical eye care or vision care benefits, or both, to covered persons including payments and reimbursements.  (2) "Ophthalmologist" means a physician licensed pursuant to Title 40, Chapter 47 who practices in South Carolina and who specializes in the medical and surgical care of the eye and visual system and routine vision care.  (3) "Optometrist" means a doctor of optometry licensed pursuant to Title 40, Chapter 37 who is engaged in the practice of optometry in South Carolina.  (B) No health maintenance organization or health benefit plan which maintains or contracts with a network of ophthalmologists or optometrists, or both, to provide medical eye care or vision care benefits, or both, shall prohibit a participating optometrist from performing medical services within that optometrist's scope of practice set forth in Title 40, Chapter 37, in accordance with the terms of the health maintenance organization or health benefit plan and in accordance with subsections (C) and (I).  (C) No health maintenance organization or health benefit plan which maintains or contracts with a network of ophthalmologists or optometrists, or both, to provide medical eye care or vision care benefits, or both, excepting all self-funded health benefit plans as defined under the Federal Employee Retirement Income Security Act (ERISA) of 1974, shall discriminate against optometry, as a class, or ophthalmology, as a class, with respect to the terms, conditions, privileges, and opportunity of participation or compensation for the same eye care services provided in this section.  (D) No health benefit plan or health maintenance organization shall impose on optometry, as a class, any condition or restriction which is not necessary for the delivery of services or materials, or both, in accordance with and subject to Chapter 37, Title 40.  (E) Any health maintenance organization or health benefit plan may contract for vision care benefits or medical eye care benefits, or both. A health maintenance organization or health benefit plan may contract for surgery only services with ophthalmologists. A health maintenance organization or health benefit plan must be authorized to contract with optometrists and ophthalmologists as either individual panelists or network panelists.  (F) Nothing in this section may be construed to limit, expand, or otherwise affect the scope of practice of optometrists and therapeutically certified optometrists as provided for in Chapter 37, Title 40.  (G) Nothing in this section may be construed to preclude a covered person from receiving emergency medical eye care or to preclude a primary care physician from providing treatment for covered services in accordance with the terms of a health maintenance organization or health benefit plan.  (H) Nothing in this section may be construed to mandate coverage of any service.  (I) Nothing in this plan may be construed to prohibit a health maintenance organization or health benefit plan from professionally credentialing and evaluating all individual optometrists or ophthalmologists within a network or plan in a nondiscriminatory manner. Nothing in this section may be construed to prohibit any health maintenance organization or health benefit plan from limiting the number of optometrists or ophthalmologists in a nondiscriminatory manner or to prohibit a health maintenance organization or health benefit plan from negotiating individually with optometrists or ophthalmologists for individual rates and eye care services in a nondiscriminatory manner.  (J) Any person aggrieved by a violation of this section may file a complaint with the Department of Insurance. After notice to the health maintenance organization or health benefit plan and an opportunity for it to submit a written response to the complaint, the director of the department may make a written determination regarding the complaint. Any party aggrieved by the director's determination is entitled to administrative and judicial review pursuant to Article 3, Chapter 23, Title 1. The director or the administrative law judge, if a hearing before the Administrative Law Court is requested, may impose sanctions that are authorized under current insurance laws if a violation of this section is found to have occurred.  HISTORY: 1997 Act No. 121, Section 2.  Subarticle 3  Standardization and Simplification of Terms and Coverages
 (A) On or after January 1, 2000, every health maintenance organization, individual and group health insurance policy, or contract issued or renewed in this State must provide coverage for the equipment, supplies, Food and Drug Administration-approved medication indicated for the treatment of diabetes, and outpatient self-management training and education for the treatment of people with diabetes mellitus, if medically necessary, and prescribed by a health care professional who is legally authorized to prescribe such items and who demonstrates adherence to minimum standards of care for diabetes mellitus as adopted and published by the Diabetes Initiative of South Carolina. This subsection does not prohibit a health maintenance organization or an individual or a group health insurance policy from providing coverage for medication according to formulary or using network providers. Coverage must not be denied unless the health care professional demonstrates a persistent pattern of failure to adhere to the minimal standards of care and unless the health maintenance organization or insurer has first provided written notice to the health care professional that coverage will be denied if the health care professional fails to adhere to the minimal standards of care.  (B) Services and payment for diabetes education programs shall conform to regulations of the Health Care Financing Administration, US Department of Health and Human Services, pursuant to Section 4105 of the Balanced Budget Act of 1997. Diabetes outpatient self-management training and education shall be provided by a registered or licensed health care professional with certification in diabetes by the National Certification Board of Diabetes Educators, or other accredited program approved by the Diabetes Initiative of South Carolina, or by the Diabetes Control Program of the SC Department of Health and Environmental Control in order to meet the needs of rural communities wherein certified health care professionals providing this service are not available.  (C) Nothing contained in this section may be construed to affect in any way the ability of a managed care plan to credential or recredential a provider.  (D) For purposes of this section: "health insurance policy" means a health benefit plan, contract, or evidence of coverage providing health insurance coverage as defined in Section 38-71-670(6) and Section 38-71-840(14).  HISTORY: 1999 Act No. 98, Section 5; 2000 Act No. 348, Section 1.
 No alteration of any written application for insurance by erasure, insertion, or otherwise may be made by any person other than the applicant without his written consent, and the making of any such alteration without the consent of the applicant is a misdemeanor. However, insertions may be made by the insurer, for administrative purposes only, in a manner that clearly indicates that the insertions are not to be ascribed to the applicant.  HISTORY: Former 1976 Code Section 38-35-190 [1947 (45) 322; 1952 Code Section 37-452; 1962 Code Section 37-452] recodified as Section 38-71-50 by 1987 Act No. 155, Section 1.
 The purpose of this subarticle is to provide reasonable standardization and simplification of terms and coverages of individual accident and health insurance policies or subscriber contracts of nonprofit hospital, medical, and dental service associations in order to facilitate public understanding and comparison, to eliminate provisions contained in individual accident and health insurance policies or subscriber contracts of nonprofit hospital, medical, and dental service associations which may be misleading or unreasonably confusing in connection with the purchase of the coverage or with the settlement of claims, to provide for full disclosure in the sale of accident and health coverages, and to provide for the termination of approval, after due notice and hearing before the director or his designee, of policy forms which do not comply with the minimum standards. Any decision or determination by the director or his designee to terminate approval pursuant to the administrative hearing may be appealed to the Administrative Law Court as provided in accordance with Section 38-3-210.  HISTORY: Former 1976 Code Section 38-35-1210 [1975 (59) 588] recodified as Section 38-71-510 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 762.
 As used in this subarticle, unless the context clearly indicates otherwise, the following words or phrases have the following meaning:  (1) "Form" means policies, contracts, riders, endorsements, and applications as provided in Section 38-71-310.  (2) "Accident and health insurance" means insurance written under this article, other than credit accident and health insurance.  (3) "Policy" means the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application, if attached, and also includes subscriber contracts issued by nonprofit hospital, medical, and dental service associations.  HISTORY: Former 1976 Code Section 38-35-1220 [1975 (59) 588] recodified as Section 38-71-520 by 1987 Act No. 155, Section 1.
 (a) The department shall promulgate regulations to establish specific standards, including standards of full and fair disclosure, that set forth the manner, content, and required disclosure for the sale of individual policies of accident and health insurance or subscriber contracts of nonprofit hospital, medical, and dental service associations which must be in addition to and in accordance with applicable laws of this State and which may cover, but are not limited to, the following:  (1) terms of renewability;  (2) initial and subsequent conditions of eligibility;  (3) nonduplication of coverage provisions;  (4) coverage of dependents;  (5) preexisting conditions;  (6) termination of insurance;  (7) probationary periods;  (8) limitations;  (9) exceptions;  (10) reductions;  (11) elimination periods;  (12) requirements for replacement;  (13) recurrent conditions.  (14) The definition of terms including, but not limited to, the following:  (i) hospital;  (ii) accident;  (iii) sickness;  (iv) injury;  (v) physician;  (vi) accidental means;  (vii) total disability;  (viii) partial disability;  (ix) nervous disorder;  (x) guaranteed renewable;  (xi) noncancelable.  (b) The department may promulgate regulations that specify prohibited policy provisions not otherwise specifically authorized by law which in the opinion of the director or his designee are unjust, unfair, or unfairly discriminatory to the policyholder, any person insured under the policy, or beneficiary.  HISTORY: Former 1976 Code Section 38-35-1230 [1975 (58) 588] recodified, 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 763.
 (a) The department shall promulgate regulations to establish minimum standards for benefits under each of the following categories of coverage in individual policies of accident and health insurance or subscriber contracts of nonprofit hospital, medical, and dental service associations, other than conversion policies issued pursuant to a contractual conversion privilege under a group policy:  (1) basic hospital expense coverage;  (2) basic medical-surgical expense coverage;  (3) hospital confinement indemnity coverage;  (4) major medical expense coverage;  (5) disability income protection coverage;  (6) accident-only coverage; and  (7) specified disease or specified accident coverage.  (b) This section does not preclude the issuance of any policy or contract which combines two or more of the categories of coverage enumerated in items (1) through (6) of subsection (a).  (c) No policy or contract may be delivered or issued for delivery in this State which does not meet the prescribed minimum standards for the categories of coverage listed in items (1) through (7) of subsection (a) which are contained within the policy or contract unless the director or his designee finds the policy or contract will be in the public interest and the policy or contract meets the requirements set forth in Section 38-71-310.  (d) The department shall by regulation prescribe the method of identification of policies and contracts based upon overages provided.  HISTORY: Former 1976 Code Section 38-35-1240 [1975 (59) 588] recodified as Section 38-71-540 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 764.
 (a) In order to provide for full and fair disclosure in the sale of individual accident and health insurance policies or subscriber contracts of a nonprofit hospital, medical, or dental service association, no such policy or contract may be delivered or issued for delivery in this State unless, in the case of a direct response insurance product, the outline of coverage described in subsection (b) accompanies the policy and, in all other cases, the outline of coverage described in subsection (b) is delivered to the applicant at the time application is made and an acknowledgment of receipt or certificate of delivery of the outline is provided the insured with the application. In the event the policy is issued on a basis other than that applied for, the outline of coverage properly describing the policy or contract shall accompany the policy or contract when it is delivered and clearly state that it is not the policy or contract for which application was made.  (b) The department shall by regulation prescribe the format and content of the outline of coverage required by subsection (a). For purposes of this subsection (b), 'format' means style, arrangement, and overall appearance, including such items as the size, color, and prominence of type and the arrangement of text and captions. The outline of coverage shall include:  (1) A statement identifying the applicable category or categories of coverage provided by the policy or contract as prescribed in Section 38-71-540.  (2) A description of the principal benefits and coverage provided in the policy or contract.  (3) A statement of the exceptions, reductions, and limitations contained in the policy or contract.  (4) A statement of the renewal provisions, including any reservation by the insurer of a right to change premiums.  (5) A statement that the outline is a summary of the policy or contract issued or applied for and that the policy or contract should be consulted to determine governing contractual provisions.  HISTORY: Former 1976 Code Section 38-35-1250 [1975 (59) 588] recodified as Section 38-71-550 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 765.
 Notwithstanding the provisions of item (2) of Section 38-71-340 or any other provision of law, if an insurer elects to use a simplified application form, with or without a question as to the applicant's health at the time of application, but without any questions concerning the insured's health history or medical treatment history, the policy shall cover any loss occurring after twelve months from any preexisting condition not specifically excluded from coverage by terms of the policy, and, except as so provided, the policy or contract may not include wording that would permit a defense based upon preexisting conditions.  HISTORY: Former 1976 Code Section 38-35-1260 [1975 (59) 588] recodified as Section 38-71-560 by 1987 Act No. 155, Section 1.  Subarticle 5  General Provisions
 The acknowledgment of any insurer of the receipt of notice given under any policy covered by this chapter, the furnishing of forms for filing proofs of loss, the acceptance of proofs of loss, or the investigation of any claim thereunder does not operate as a waiver of any of the rights of the insurer in defense of any claim arising under the policy.  HISTORY: Former 1976 Code Section 38-35-200 [1947 (45) 322; 1952 Code Section 37-458; 1962 Code Section 37-458] recodified as Section 38-71-60 by 1987 Act No. 155, Section 1.
 (1) All insurers issuing accident or health policies, or combinations thereof, in this State, where the premiums on the policies are collected directly by mail on a quarterly, semiannual, or annual basis, shall give a written notice to the policyholders of any premium due on the policies at least ten days prior to the due date. No premium is considered past due on the policies unless the policyholder has been given this notice and the policy remains in full force and effect until the expiration of the ten-day period after notice has been given. In the event the premium is not paid upon first notice at least ten days prior to lapsing of the policy a second notice must be forwarded to the insured. Nothing contained in this section applies to the following kinds of health and accident policies: debit accident insurance, debit health insurance, debit accident and health insurance, group accident and health insurance, franchise accident and health insurance, salaries savings accident and health insurance, credit accident and health insurance, accident and health insurance where premiums are paid by bank draft or preauthorized check service, and blanket insurance.  (2) This section may not be construed to relieve any policyholder from paying any premium or portion thereof, nor may it be construed so as to prevent termination for any other valid reason.  HISTORY: Former 1976 Code Section 38-35-160 [1962 Code Section 37-457.1; 1973 (58) 766; 1974 (58) 2863] recodified as Section 38-71-610 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 9.
 If an accident and health insurance policy contains provisions which reserve the right to the insurer to increase the premium, the policy shall also provide that at least thirty-one days' prior written notice of a rate increase must be given to the insured before the rate increase becomes effective.  HISTORY: Former 1976 Code Section 38-35-425 [1979 Act No. 17] recodified as Section 38-71-620 by 1987 Act No. 155, Section 1.
 If any accident, health, or accident and health policy contains a provision establishing, as an age limit or otherwise, a date after which the coverage provided by the policy will not be effective and if the date falls within a period for which premium is accepted by the insurer or if the insurer accepts a premium after the date, the coverage provided by the policy must continue in force until the end of the period for which premium has been accepted. In the event the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the policy would not have become effective or would have ceased prior to the acceptance of the premium or premiums, then the liability of the insurer is limited to the refund, upon request, of all premiums paid for the period not covered by the policy.  HISTORY: Former 1976 Code Section 38-35-510 [1947 (45) 322; 1952 Code Section 37-494; 1956 (49) 2029; 1962 Code Section 37-480] recodified as Section 38-71-630 by 1987 Act No. 155, Section 1.
 The term "insured" as used in this article may not be construed as preventing a person other than the insured, with a proper insurable interest, from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits, and rights provided therein.  HISTORY: Former Code Section 38-35-490 [1956 (49) 2029; 1962 Code Section 37-478] recodified as Section 38-71-640 by 1987 Act No. 155, Section 1.
 Any person purchasing an individual accident, health, or accident and health insurance policy after July 1, 1991, shall have the right to transfer to any individual policy of equal or lesser benefits offered for sale by the insurer at the time the transfer is sought. Any special provision excluding coverage for a specified condition may remain after transfer, and any waiting period or preexisting condition period specified in the policy to which the transfer is made may be required to be served after the transfer.  HISTORY: 1991 Act No. 131, Section 3.  Subarticle 7  Requirements for Issuers and Individual Health Insurance Coverage under the Health Insurance Portability and Accountability Act of 1996
 As used in this subarticle:  (1) "Bona fide association" means, with respect to health insurance coverage offered in the State, an association which:  (a) has been actively in existence for at least 5 years;  (b) has been formed and maintained in good faith for purposes other than obtaining insurance;  (c) does not condition membership in the association on any health status-related factor relating to an individual, including an employee of an employer or a dependent of an employee;  (d) makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to the members, or individuals eligible for coverage through a member;  (e) does not make health insurance coverage offered through the association available other than in connection with a member of the association; and  (f) meets such additional requirements as may be imposed under state law.  (2) "Director of Insurance" or "director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. "Director" also includes a designee or deputy director upon whom the director has bestowed any duty or function required of the director by the director in managing or supervising the Department of Insurance.  (3) "Employee" has the meaning given the term under Section 3(6) of the Employee Retirement Income Security Act of 1974.  (4) "Employer" has the meaning given the term under Section 3(5) of the Employee Retirement Income Security Act of 1974, except that the term shall include only employers of two or more employees.  (5) "Group health plan" means an employee welfare benefit plan, as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, to the extent that the plan provides medical care, including items and services paid for as medical care, to employees or their dependents, as defined under the terms of the plan, directly or through insurance, reimbursement, or otherwise.  (6) "Health insurance coverage" means benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer, except:  (a) coverage only for accident or disability income insurance or any combination of these;  (b) coverage issued as a supplement to liability insurance;  (c) liability insurance, including general liability insurance and automobile liability insurance;  (d) workers' compensation or similar insurance;  (e) automobile medical payment insurance;  (f) credit-only insurance;  (g) coverage for on-site medical clinics;  (h) other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits;  (i) if offered separately:  (i) limited scope dental or vision benefits;  (ii) benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these;  (iii) other similar, limited benefits as are specified in regulations;  (j) if offered as independent, noncoordinated benefits:  (i) coverage only for a specified disease or illness;  (ii) hospital indemnity or other fixed indemnity insurance;  (k) if offered as a separate insurance policy:  (i) Medicare supplemental health insurance, as defined under Section 1882(g)(1) of the Social Security Act;  (ii) coverage supplemental to the coverage provided under Chapter 55 of Title 10 of the United States Code; and  (iii) similar supplemental coverage under a group health plan.  (7) "Health insurance issuer" or "issuer" means any entity that provides health insurance coverage in this State. For purposes of this subarticle, "issuer" includes an insurance company, a health maintenance organization, and any other entity providing health insurance coverage which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (8) "Health maintenance organization" means an organization as defined in Section 38-33-20(7).  (9) "Health status-related factor" means any of the following factors in relation to the individual or a dependent of the individual: health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; or disability.  (10) "Individual health insurance coverage" means health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance.  (11) "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan. The term includes coverage offered in connection with a group health plan that has fewer than two participants as current employees on the first day of the plan year unless the State elects to regulate the coverage as coverage issued to small employers, as defined in Section 38-71-1330.  (12) "Large group market" means the health insurance market under which individuals obtain health insurance coverage, directly or through any arrangement, on behalf of themselves and their dependents through a group health plan maintained by an employer that is not a small employer, as defined in Section 38-71-1330.  (13) "Medical care" means amounts paid for:  (a) the diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of affecting any structure or function of the body;  (b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and  (c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).  (14) "Network plan" means health insurance coverage of a health insurance issuer under which the financing and delivery of medical care, including items and services paid for as medical care, are provided, in whole or in part, through a defined set of providers under contract with the issuer.  (15) "Participant" has the meaning given the term under Section 3(7) of the Employee Retirement Income Security Act of 1974.  (16) "Small group market" means the health insurance market under which individuals obtain health insurance coverage, directly or through any arrangement, on behalf of themselves and their dependents through a group health plan maintained by a small employer, as defined in Section 38-71-1330.  HISTORY: 1997 Act No. 5, Section 2.
 (A) Except as provided in this section, a health insurance issuer that provides individual health insurance coverage to an individual shall renew or continue in force such coverage at the option of the individual.  (B) A health insurance issuer may nonrenew or discontinue health insurance coverage of an individual in the individual market based only on one or more of the following:  (1) the individual has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the issuer has not received timely premium payments;  (2) the individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;  (3) the issuer is ceasing to offer coverage in the individual market in accordance with subsection (C) and applicable state law;  (4) with the approval of the director or his designee, in the case of a health insurance issuer that offers health insurance coverage in the market through a network plan, the individual no longer resides, lives, or works in the service area or in an area for which the issuer is authorized to do business but only if the coverage is terminated under this item uniformly without regard to any health status-related factor of covered individuals;  (5) with the approval of the director or his designee, in the case of health insurance coverage that is made available in the individual market only through one or more bona fide associations, the membership of the individual in the association, on the basis of which the coverage is provided, ceases but only if the coverage is terminated under this item uniformly without regard to any health status-related factor of covered individuals.  (C)(1) In any case in which an issuer decides to discontinue offering a particular type of health insurance coverage offered in the individual market, coverage of such type may be discontinued by the issuer only if the issuer:  (a) provides notice to each covered individual provided coverage of this type in the market of the discontinuation at least ninety days before the date of the discontinuation of the coverage;  (b) offers to each individual in the individual market provided coverage of this type, the option to purchase any other individual health insurance coverage currently being offered by the issuer for individuals in such market; and  (c) in exercising the option to discontinue coverage of this type and in offering the option of coverage under subitem (b), the issuer acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for the coverage.  (2)(a) Subject to subitem (c), in any case in which a health insurance issuer elects to discontinue offering all health insurance coverage in the individual market in this State, health insurance coverage may be discontinued by the issuer only if:  (i) the issuer provides notice to the director and to each individual of the discontinuation at least one hundred eighty days before the date of the expiration of the coverage; and  (ii) all health insurance issued or delivered for issuance in the State in the market is discontinued and coverage under the health insurance coverage in the market is not renewed.  (b) In the case of a discontinuation under subitem (a) in the individual market, the issuer may not provide for the issuance of any health insurance coverage in the market and this State during the five-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed.  (D) At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a policy form offered to individuals in the individual market so long as the modification is consistent with state law and effective on a uniform basis among all individuals with that policy form.  (E) In applying this section in the case of health insurance coverage that is made available by a health insurance issuer in the individual market to individuals only through one or more associations, a reference to an "individual" is deemed to include a reference to such an association of which the individual is a member.  HISTORY: 1997 Act No. 5, Section 2.
 Section 38-71-850(D) applies to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as it applies to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market.  HISTORY: 1997 Act No. 5, Section 2.
 Any foreign insurer authorized to do business in this State may, with the approval of the director or his designee, insert in any policy covered by this chapter so issued or delivered any provision required by the laws of any state or country in which the insurer is licensed, if the provision is not substantially in conflict with any law of this State. A domestic insurer may insert in any policy covered by this chapter issued for delivery in another state or foreign country and governed by the laws thereof any provision required by the laws of the other state or country applicable to the policy.  HISTORY: Former 1976 Code Section 38-35-40 [1947 (45) 322; 1952 Code Section 37-453; 1962 Code Section 37-453] recodified as Section 38-71-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 751.
 (1) "Employees" as used in this article includes, for the purposes of insurance hereunder, as employees of a single employer, the officers, managers, and employees of the employer and of subsidiary or affiliated corporations of a corporate employer and the individual proprietors, partners, and employees of individuals and firms the business of which is controlled by the insured employer through stock ownership, contract, or otherwise. The policy or contract may provide that the term "employees" includes retired employees.  (2) "Employer" as used in this article may include any municipal corporation or the proper officers, as such, of any unincorporated municipality or any department of the municipal corporation or unincorporated municipality determined by conditions pertaining to the employment.  (3) A "group accident insurance policy" is a policy or contract of insurance against death or injury resulting from accident or from accidental means which covers more than one person, except blanket accident policies, family accident policies, and accident and health policies.  (4) A "group accident and health policy" is a policy or contract which combines the coverage of group accident insurance and of group health insurance.  (5) A "group health insurance policy" is a policy or contract which insures against disablement, disease, or sickness of the insured, excluding disablement which results from accident or from accidental means, which covers more than one person, except blanket health policies, family health policies, franchise health policies, and accident and health policies.  HISTORY: Former 1976 Code Sections 38-35-910 [1947 (45) 322; 1952 Code Section 37-531; 1962 Code Section 37-531] and 38-35-920 [1947 (45) 322; 1952 Code Section 37-633; 1962 Code Section 37-533; 1968 (55) 2302] recodified as Section 38-71-710 by 1987 Act No. 155, Section 1.
 (A) A policy or contract of group accident, group health, or group accident and health insurance may not be issued or delivered in this State, nor may any application, endorsement, or rider which becomes a part of the policy be used, until a copy of the form has been filed with and approved by the director or his designee except as exempted by the director or his designee as permitted by Section 38-61-20. The director or his designee may disapprove the form if the form:  (1) does not meet the requirements of law;  (2) contains provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or  (3) is solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.  If action is not taken to approve or disapprove a policy, contract, certificate, application, endorsement, or rider after the document has been filed for thirty days, it is deemed to be approved. The director or his designee, in his discretion, may extend for up to an additional sixty days the time period for approval or disapproval of the form. An organization may not use a form deemed approved pursuant to the default provision of this section until the organization has filed with the director or his designee a written notice of its intent to use the form. The notice must be filed in the office of the director at least ten days before the organization uses the form. The director or his designee, as soon as is practicable, shall notify in writing the insurer which has filed the form of his approval or disapproval. If the form is disapproved, the notice must contain the reasons for disapproval and the insurer is entitled to a public hearing on that decision. At any time after having given written approval, the director or his designee, after a public hearing of which at least thirty days' written notice has been given, may withdraw approval if he finds that the form:  (1) does not meet the requirements of law;  (2) contains provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or  (3) is solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.  The withdrawal of approval must be effected by written notice to the insurer and the insurer is entitled to a public hearing on that decision. Any action or decision of the director or his designee to withdraw approval may be appealed to the Administrative Law Court in accordance with Section 38-3-210.  (B) Nothing in this chapter precludes the issuance of a policy or contract of group accident, group health, or group accident and health insurance that includes an optional life insurance rider. However, the optional life insurance rider must be filed with and approved by the director or his designee pursuant to Section 38-61-20 and comply with all applicable sections of Chapter 65 and, in addition, in the case of a life insurance rider with accelerated long term care benefits, Chapter 72 of this title.  HISTORY: Former 1976 Code Section 38-35-930 [1956 (49) 2029; 1962 Code Section 37-532.1] recodified as Section 38-71-720 by 1987 Act No. 155, Section 1; 1988 Act No. 316, Section 3; 1993 Act No. 181, Section 766; 1998 Act No. 411, Section 7; 2001 Act No. 82, Section 24, eff July 20, 2001.
 No policy of group health, group accident, or group accident and health insurance may be delivered or issued for delivery in this State unless it conforms to the following description:  (1) Except as provided in this item, the policy is issued to a trust or to insure two or more persons who are associated in a common group for purposes other than the obtaining of insurance.  (a) Group policies of credit accident and health insurance may be issued to persons other than those in a common group.  (b) A common group of small employers may be formed solely for the purpose of obtaining insurance. Such a group must comply with the following provisions:  (i) It contains at least one thousand eligible employees.  (ii) It establishes requirements for membership. However, the common group cannot exclude any small employer, which otherwise meets the requirements for membership, on the basis of claim experience or any health status-related factors, as defined in Section 38-71-840, in relation to the employee or a dependent of the employee.  (iii) It holds an open enrollment period at least once a year during which new members can join the common group.  (iv) It allows eligible employees and their dependents, upon initial enrollment and during subsequent open enrollment periods, to choose among health insurance plans offered through the group. Persons covered by a health insurance plan offered through the group which requires an enrollment period in excess of one year are eligible to choose among available plans upon the completion of the enrollment period.  (v) It offers coverage under all plans offered through the group to all eligible employees of member small employers and their dependents. Coverage may not be offered only to certain employees of member small employers and their dependents except as provided in Section 38-71-1370(B) of this chapter.  (vi) It does not assume any risk or form self-insurance plans among its members unless it complies with the provisions of Chapter 41 of this title.  (vii) It has the option of using any type of rating arrangement with the health insurance plans and, at its discretion, premiums may be paid to the health insurance plans by the common group, by member small employers, or by eligible employees and their dependents.  (A) Health insurance plans offered through the common group which rate each member small employer separately are subject to the laws governing small employer health insurance; and  (B) Health insurance plans offered through the common group which rate the entire group as a whole must charge each insured person based on a community rate within the common group, adjusted for case characteristics as permitted by Section 38-71-940 and plan selection, and are subject to the laws governing group accident and health insurance.  (viii) It may not act as an agent or engage in any activities for which an insurance agent's license is required.  (ix) Before offering any health insurance plans through the common group, and annually thereafter, it registers with the department and demonstrates continued compliance with the subitems (b)(i) through (viii).  (2) The benefits provided by the policy are based on some plan or plans precluding individual selection, except that insurance supplemental to the basic coverage may be available to persons insured under the policy.  (3) For all groups, no evidence of individual insurability may be required at the time the person first becomes eligible for insurance or within thirty-one days thereafter. Nothing in this section precludes the obtaining of medical information with respect to the members of the group for use in determining the insurability of the group, but the information may not be used to exclude an individual from coverage. In addition, group health insurance coverage, as defined in Section 38-71-840 must adhere to the requirements of Section 38-71-860 prohibiting discrimination against individual participants and beneficiaries based on health status-related factors.  (4) Except for group health insurance coverage as defined in Section 38-71-840, the policies may contain a provision limiting coverage for preexisting conditions. The preexisting conditions must be covered no later than twelve months without medical care, treatment, or supplies ending after the effective date of the coverage or twelve months after the effective date of the coverage, whichever occurs first. Policies of disability income insurance may exclude coverage for disabilities beginning during the first twelve months after the effective date of coverage which result from a preexisting condition. Preexisting conditions are defined as those conditions for which medical advice or treatment was received or recommended no more than twelve months before the effective date of a person's coverage. However, whenever a covered person moves from one insured group to another, the insurer of the group to which the covered person moves shall give credit for the satisfaction of the preexisting condition period or portion thereof already served under the prior plan if the coverage is selected when the person first becomes eligible and the coverage is continuous to a date not more than thirty days prior to the effective date of the new coverage. Service under a probationary waiting period required by the employer is not considered to interrupt continuous service. The requirements with respect to limitations on preexisting condition exclusions for group health insurance coverage are described in Section 38-71-850.  (5) Except as provided in item (1)(b)(vii) of this section, the premium for the policy must be paid by the policyholder from the policyholder's funds or from funds contributed by the insured persons, or from both.  (6) A group policy or subscriber contract of accident and health insurance which is advertised, marketed, or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare must equal, and may exceed, the minimum standards for Medicare supplement policies as contained in regulations promulgated by the department.  HISTORY: Former 1976 Code Section 38-35-940 [1947 (45) 322; 1952 Code Section 37-532; 1957 (50) 165; 1962 Code Section 37-532; 1971 (57) 518; 1976 Act No. 732 Section 6; 1982 Act No. 318] recodified as Section 38-71-730 by 1987 Act No. 155, Section 1; 1988 Act No. 339, Section 2; 1990 Act No. 362, Section 1; 1991 Act No. 131, Sections 6, 7; 1992 Act No. 283, Section 1; 1992 Act No. 286, Section 1; 1993 Act No. 181, Section 767; 1994 Act No. 339, Section 17; 1996 Act No. 435, Section 1; 1997 Act No. 5, Sections 6 to 8.
 No policy of group accident, group health, or group accident and health insurance may be delivered in this State unless it contains in substance the following provisions, or provisions which in the opinion of the director or his designee are more favorable to the persons insured, or at least as favorable to the persons insured, and more favorable to the policyholder. However, (1) items (f) and (k) do not apply to policies issued to a creditor; (2) the standard provisions required for individual policies do not apply to group policies; and (3) if any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the director or his designee, shall omit from the policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in a manner as to make the provision contained in the policy consistent with the coverage provided by the policy:  (a) A provision that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the policy continues in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder is liable to the insurer for the payment of a pro ratio premium for the time the policy was in force during the grace period.  (b) A provision that the validity of the policy may not be contested after it has been in force for two years from its date of issue and that no statement, except fraudulent misstatements, made by any person covered under the policy relating to insurability may be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force prior to the contest for a period of two years during the person's lifetime nor unless it is contained in a written instrument signed by the person making the statement. The provision does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the policy or upon other provisions in the policy.  (c) A provision that a copy of the application, if any, of the policyholder must be attached to the policy when issued, that all statements made by the policyholder or by the persons insured are considered representations and not warranties, and that no statement made by any person insured may be used in any contest unless a copy of the instrument containing the statement is or has been furnished to the person or, in the event of the death or incapacity of the insured person, to the individual's beneficiary or personal representative.  (d) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of the individual's coverage.  (e) If the premiums or benefits vary by age, there must be a provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event the age of a covered person has been misstated. The provision must contain a clear statement of the method of adjustment to be used.  (f) A provision that the insurer will issue to the policyholder for delivery to each person insured a certificate setting forth a statement as to the insurance protection to which that person is entitled, to whom the insurance benefits are payable, and a statement as to any family member's or dependent's coverage.  (g) A provision that written notice of claim must be given to the insurer within twenty days after the occurrence or commencement of any loss covered by the policy. Failure to give notice within the time does not invalidate nor reduce any claim if it can be shown not to have been reasonably possible to give the notice and that notice was given as soon as was reasonably possible.  (h) A provision that the insurer will furnish to the person making claim, or to the policyholder for delivery to such person, such forms as are usually furnished by it for filing proof of loss. If the forms are not furnished before the expiration of fifteen days after the insurer received notice of any claim under the policy, the person making the claim is considered to have complied with the requirements of the policy as to proof of loss upon submitting within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, character, and extent of the loss for which claim is made.  (i) A provision that in the case of claim for loss of time for disability, written proof of the loss must be furnished to the insurer within ninety days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of the disability must be furnished to the insurer at intervals the insurer may reasonably require, and that in the case of claim for any other loss, written proof of the loss must be furnished to the insurer within ninety days after the date of the loss. Failure to furnish proof within the time does not invalidate nor reduce any claim if it was not reasonably possible to furnish the proof within that time so long as the proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity of the claimant, later than one year from the time proof is otherwise required.  (j) A provision that all benefits payable under the policy other than benefits for loss of time will be paid not more than sixty days after receipt of proof of the loss. Subject to proof of loss, all accrued benefits payable under the policy for loss of time will be paid not less frequently than monthly during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of liability will be paid as soon as possible after receipt of the proof.  (k) A provision that benefits for loss of life of the person insured are payable to the beneficiary designated by the person insured. If the policy contains conditions pertaining to family status the beneficiary may be the family member specified by the policy terms. In either case, payment of these benefits is subject to the provisions of law of this State if no such designated or specified beneficiary is living at the death of the person insured. All other benefits of the policy are payable to the person insured. The policy also may provide that if any benefit is payable to the estate of a person or to a person who is a minor or otherwise not competent to give a valid release, the insurer may pay the benefit, up to an amount not exceeding five thousand dollars, to any relative by blood or connection by marriage of the person who is considered by the insurer to be equitably entitled to the benefit.  (l) A provision that the insurer at its own expense may examine the person of the individual for whom claim is made as often as reasonably necessary while a claim is pending and in cases of death of the insured the insurer at its own expense also may have an autopsy performed during the period of contestability unless prohibited by law. The autopsy must be performed in this State.  (m) A provision that no action at law or in equity may be brought to recover on the policy before the expiration of sixty days after written proof of loss has been filed in accordance with the requirements of the policy and that no such action may be brought at all unless brought within six years after the time written proof of loss is required to be furnished.  (n) In the case of a policy issued to a creditor, a provision that the insurer will furnish the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the benefits payable first must be applied to reduce or extinguish the indebtedness.  HISTORY: 1988 Act No. 394, Section 10; 1993 Act No. 181, Section 768.
 (A) An offer to sell a group health insurance policy must include an offer of an optional rider or endorsement to provide benefits for psychiatric conditions as defined in this section. The offer of coverage may contain provisions prescribing different benefits for psychiatric conditions and physical conditions with respect to any deductible amount, coinsurance provision, or contract term affecting benefit determinations based upon use or nonuse of preferred providers.  (B) The offer of an optional rider or endorsement for a group health insurance policy must provide minimum benefits for psychiatric conditions not less than two thousand dollars for each member for each benefit year with a lifetime maximum benefit of ten thousand dollars. In the case of group health insurance coverage, as defined in Section 38-71-840, the requirements of Section 38-71-880 regarding parity in the application of certain limits to mental health benefits shall apply to those benefits defined as mental health benefits in Section 38-71-880(E). However, if group health insurance coverage is exempted from the requirements of Section 38-71-880, then the requirements of this provision shall apply. In addition, for group health insurance coverage, the requirements of this provision shall apply to benefits for psychiatric conditions which are not considered mental health benefits.  (C) This section does not prohibit an insurer from issuing or continuing to issue a health insurance policy which provides benefits greater than the minimum benefits required by this section or benefits generally more favorable to the insured than those required by this section.  (D) As used in this section, "psychiatric conditions" means those mental and nervous conditions, drug and substance addiction or abuse, alcoholism, or other conditions that are defined, described, or classified as psychiatric disorders or conditions in the most current publication of the American Psychiatric Association entitled "The Diagnostic and Statistical Manual of Mental Disorders".  HISTORY: 1994 Act No. 377, Section 1; 1997 Act No. 5, Section 9.
 No mass-marketed accident, health, or accident and health insurance may be effected on a person in this State if the charges to the individual insureds are unreasonable in relation to the benefits provided. "Mass-marketed accident, health, or accident and health insurance" for purposes of this chapter means coverage under any group or blanket policy which is offered by means of direct response solicitation whether through a sponsoring organization or the mails or other media, except that it does not include coverage offered to an employee or union member through his employer or union, to a member of a professional association, to a member of a national association of retired or aged persons through the association, or to a member of a national association of war veterans either chartered by Congress or composed of veterans of a particular ethnic, racial, or religious background through the association. This coverage offered through a trust formed by one or more employers, labor unions, or both, or by a professional association or association of retired or aged persons or war veterans to provide insurance coverage for employees, union members, and their dependents, or for association members and their dependents, is considered to be offered through the employer, union, or association respectively. "Direct response solicitation" means any offer by an insurer to persons in this State to effect such insurance coverage which enables the individual to apply or enroll for the insurance on the basis of that offer.  HISTORY: Former 1976 Code Section 38-35-942 [1962 Code Section 37-532.3; 1976 Act No. 732 Section 7] recodified as Section 38-35-942 by 1987 Act No. 155, Section 1.
 (1) No group accident, group health, or group accident and health insurance coverage may be extended to residents of this State under a policy issued outside this State which does not provide in substance the provisions of this article unless the director or his designee determines that certain provisions are not appropriate for the coverage provided.  (2) Any insurer extending blanket or group accident, health, or accident and health insurance under a policy issued outside this State to residents of this State shall comply with the requirements of this State relating to advertising and to claims settlement practices with respect to the insurance.  (3) Upon request of the director or his designee, copies of policies and certificates under a policy of group accident, group health, or group accident and health insurance issued outside this State and covering residents of this State must be made available on an informational basis only. However, mass-marketed accident, health, or accident and health insurance policies and certificates must receive approval of the director or his designee pursuant to Section 38-71-720 before they can be offered for sale to residents of this State.  HISTORY: Former 1976 Code Section 38-35-944 [1962 Code Section 37-532.4; 1976 Act No. 732 Section 7; 1985 Act No. 131, Section 2] recodified as Section 38-71-750 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 769, eff July 1, 1995; 2001 Act No. 82, Section 25, eff July 20, 2001.
 (a) This section applies to a group accident, group health, or group accident and health insurance or health maintenance organization policy or certificate that is delivered, issued for delivery, or renewed in this State which provides hospital, surgical, or major medical expense insurance, or any combination of these coverages, on an expense incurred basis. It specifically includes a certificate issued under a policy that was issued to a trust located out of the State but which includes participating units located in the State. Renewal of these policies or certificates is presumed to occur on the anniversary date of the date that coverage was first effective unless another renewal date is specifically stated in the certificate.  (b) If a policy or contract subject to this article provides for automatic discontinuance of the policy or contract after a premium or subscription charge has remained unpaid through the grace period allowed for the payment, the carrier is liable for valid claims for covered losses incurred prior to the end of the grace period.  (c) If the actions of the carrier after the end of the grace period indicate that it considers the policy or contract as continuing in force beyond the end of the grace period such as by continuing to recognize claims subsequently incurred, the carrier is liable for valid claims for losses beginning on or before the effective date of the written notice of discontinuance to the policyholder or other entity responsible for making payments or submitting subscription charges to the carrier. The effective date of discontinuance may not be prior to midnight at the end of the third scheduled work day after the date upon which the notice is delivered.  (d) In addition to the notice required under Section 38-71-870 or Section 38-71-675, any notice of discontinuance by the carrier shall include a request to the group policyholder or other entity involved to notify certificate holders covered under the policy or subscriber contract of the date when the group policy or contract will discontinue and advise that, unless otherwise provided in the policy or contract, the carrier is not liable for claims for losses incurred after such date. The notice also shall advise, when the plan involves certificate holder contributions, that, if the policyholder or other entity continues to collect contributions for the coverage beyond the date of discontinuance, the policyholder or other entity may be held solely liable for the benefits for which the contributions are collected.  (e) The carrier shall prepare and furnish to the policyholder or other entity at the same time an appropriate sample notice form to be distributed to the certificate holders concerned indicating the effective date of the discontinuance and urge the certificate holders to refer to their certificates or contracts in order to determine what rights are available to them as a result of the discontinuance.  (f) Every group policy, contract, or certificate issued subject to this article or under which the level of benefits is modified or amended shall provide a reasonable provision for extension of benefits in the event of total disability at the date of discontinuance of the group policy, contract, or certificate as required by the following subsections.  (g) In the case of a group life plan which contains a disability benefit extension of any type such as premium waiver extension, extended death benefit in the event of total disability, or payment of income for a specified period during total disability, the discontinuance of the group policy, contract or certificate does not operate to terminate the extension.  (h) In the case of a group plan providing benefits for loss of time from work or specific indemnity during hospital confinement, discontinuance of the group policy, contract or certificate during a disability has no effect on benefits payable for that disability or confinement.  (i) In the case of hospital or medical expense coverages other than dental expense, a reasonable extension of benefits or accrued liability provision is required. The provision is considered reasonable if it provides an extension of at least twelve months under major medical and comprehensive medical type coverages and under other types of hospital or medical expense coverages provides either an extension of at least ninety days or an accrued liability for expenses incurred during a period of disability or during a period of at least ninety days starting with a specific event which occurred while coverage was in force such as an accident.  (j) Any applicable extension of benefits or accrued liability must be described in any policy, contract, or certificate involved. The benefits payable during any period of extension or accrued liability are subject to the policy's, contract's, or certificate's regular benefit limits such as benefits ceasing at exhaustion of a benefit period or of maximum benefits. For hospital or medical expense coverages, the benefit payments are limited to payments applicable to the disabling condition only. However, the carrier may not charge any premium during any period of extension.  (k) A replacement carrier is considered to be a succeeding carrier within the meaning of this section if the effective date of the coverage provided by it is sixty-two days or less after the date of termination of coverage of the prior carrier.  (l) This subsection applies to the prior carrier.  (1) The prior carrier remains liable only to the extent of its accrued liabilities and extensions of benefits. The position of the prior carrier is the same whether the group policyholder or other entity secures replacement coverage from a new carrier, self-insures, or foregoes the provision of coverage.  (2) For health insurance coverage as defined in Section 38-71-840, in all situations except the prior carrier's withdrawal from the large group market, the small group market or both markets in this State, the liability of the prior carrier for extension of benefits terminates at the earliest of the following:  (A) The date the individual has full coverage for the disabling condition under a group health plan with similar benefits and that plan makes reasonable provision for continuity of care for the disabling condition.  (B) The date the individual is no longer totally disabled.  (C) The date the extension period required in subparagraph (i) expires.  (D) The date of exhaustion of a benefit period of the payment of maximum benefits as provided for in subparagraph (j).  (m) This subsection applies to all groups.  (1) Each person who is eligible for coverage in accordance with the succeeding carrier's plan of benefits with respect to classes eligible and actively at work and nonconfinement rules must be covered by the succeeding carrier's plan of benefits. For health insurance coverage as defined in Section 38-71-840, nonconfinement rules are not permitted and absence from work due to any health status-related factor must be treated as being actively at work.  (2) Each person not covered under the succeeding carrier's plan of benefits in accordance with item (1) of this subsection (m) nevertheless must be covered by the succeeding carrier in accordance with the following rules if the individual was validly covered, including benefit extension, under the prior plan on the date of discontinuance and if the individual is a member of the class of individuals eligible for coverage under the succeeding carrier's plan. Any reference in the following rules to an individual who was or was not totally disabled is a reference to the individual's status immediately prior to the date the succeeding carrier's coverage becomes effective.  (A) The minimum level of benefits to be provided by the succeeding carrier must be the applicable level of benefits of the succeeding carrier's plan reduced by any benefits payable by the prior plan.  (B) Coverage must be provided by the succeeding carrier until at least the earliest of the following dates:  (i) The date the individual becomes eligible under the succeeding carrier's plan as described in item (1) of this subsection (m).  (ii) For each type of coverage, the date the individual's coverage would terminate in accordance with the succeeding carrier's plan provisions applicable to individual termination of coverage, such as at termination of employment or ceasing to be an eligible dependent, as the case may be.  (iii) In the case of an individual who was totally disabled, and in the case of a type of coverage for which subsections (f) through (j) of this section require an extension of benefits or accrued liability, the end of any period of extension or accrued liability which is required of the prior carrier by those subsections or, if the prior carrier's policy or contract is not subject to those subsections, would have been required of that carrier had its policy or contract been subject to those subsections at the time the prior plan was discontinued and replaced by the succeeding carrier's plan.  (3) For health insurance coverage as defined in Section 38-71-840, in the case of an individual who was totally disabled at the time the prior plan was discontinued and replaced by a group health plan with similar benefits, and in the case in which subsection (1) requires an extension of benefits or accrued liability, the minimum level of benefits to be provided by the succeeding carrier must be the applicable level of benefits of the succeeding carrier's plan. This benefit may be reduced by any benefits paid by the prior plan.  (4) In the case of a preexisting conditions limitation included in the succeeding carrier's plan, the level of benefits applicable to preexisting conditions of persons becoming covered by the succeeding carrier's plan in accordance with this subsection (m) during the period of time this limitation applies under the new plan must be the lesser of:  (A) the benefits of the new plan determined without application of the preexisting conditions limitation; and  (B) the benefits of the prior plan.  (5) The succeeding carrier, in applying any deductibles, coinsurance amounts applicable to the out-of-pocket maximums or waiting periods in its plan, shall give credit for the satisfaction or partial satisfaction of the same or similar provisions under a prior plan providing similar benefits. In the case of deductible provisions or coinsurance amounts applicable to the out-of-pocket maximums, the credit must apply for the same or overlapping benefit periods and must be given for expenses actually incurred and applied against the deductible provisions or to the out-of-pocket maximums of the prior carrier's plan during the ninety days preceding the effective date of the succeeding carrier's plan but only to the extent these expenses are recognized under the terms of the succeeding carrier's plan and are subject to similar deductible or coinsurance provisions.  (6) In any situation where a determination of the prior carrier's benefit is required by the succeeding carrier, at the succeeding carrier's request the prior carrier shall furnish a statement of the benefits available or pertinent information sufficient to permit verification of the benefit determination or the determination itself by the succeeding carrier. For the purposes of this section, benefits of the prior plan are determined in accordance with all of the definitions, conditions, and covered expense provisions of the prior plan rather than those of the succeeding plan. The benefit determination must be made as if coverage had not been replaced by the succeeding carrier.  HISTORY: Former 1976 Code Section 38-35-941 [1985 Act No. 131, Section 1] recodified as Section 38-71-760 by 1987 Act No. 155, Section 1; 1991 Act No. 131, Sections 8, 9; 2002 Act No. 228, Section 9, eff 90 days after approval by the Governor (approved May 1, 2002).
 A group policy issued for delivery or renewed in this State which provides hospital, surgical, or major medical expense insurance, or any combination of these coverages, on an expense incurred basis must provide that an employee or member who has been insured continuously under the group policy for at least six months whose insurance under the group policy has been terminated for any reason other than nonpayment of the required contribution is entitled to continue coverage under the group policy for the fractional policy month remaining at termination plus six additional policy months. A group policy is considered to be a successor policy within the meaning of this section if the effective date of the coverage provided by it is sixty-two days or less after the date of termination of coverage of the prior carrier. The employee or member is not entitled to have his coverage continued if the employee or member was entitled under federal law to continuation of his coverage for a period of greater duration than provided by this section. Continuation of coverage is subject to the group policy or a successor policy remaining in force and the employee paying the entire group premium, including any portion usually paid by the former employer, before the date each month that the group policy month begins. Policies which provide benefits for other than hospital, surgical, major medical, or which provide benefits for specific diseases or accidental injuries only are not affected by this section.  A notification of the privilege to continue coverage after termination must be included in each certificate of coverage. In addition, the employer shall clearly and meaningfully advise an employee upon termination of the right to continue insurance and shall advise the employee of the amount of premium required and of the employee's responsibility to pay the premium each month before the date that the policy month begins. An employee is not entitled to continue coverage under the group if eligible for other group coverage which provides similar benefits nor if the person is eligible for medicare benefits provided by Title XVIII of the United States Social Security Act or of any successor acts. Any benefits, except extended benefits payable by the policy during the period of continuation, are considered secondary to benefits under any other group health policy that is in force on a person insured through this continuation privilege.  HISTORY: Former 1976 Code Section 38-35-946 [1978 Act No. 547, 1979 Act No. 149 Section 1] recodified as Section 38-71-770 by 1987 Act No. 155, Section 1; 1989 Act No. 127, Section 9; 1991 Act No. 131, Section 10.
 A group hospital or medical expense insurance policy, hospital service plan contract, or medical service plan contract delivered or issued for delivery in this State which provides that coverage of a dependent child of an employee or other member of the coverage group terminates upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of the limiting age does not operate to terminate the coverage of the child while the child is and continues to be both (a) incapable of self-sustaining employment by reason of intellectual disability or physical handicap, and (b) chiefly dependent upon the employee or member for support and maintenance, as long as proof of the incapacity and dependency is furnished to the insurer by the employee or member within thirty-one days of the child's attainment of the limiting age and subsequently as may be required by the insurer, but not more frequently than annually after the two-year period following the child's attainment of the limiting age.  HISTORY: Former 1976 Code Section 38-35-950 [1962 Code Section 37-532.2; 1970 (56) 2465] recodified as Section 38-71-780 by 1987 Act No. 155, Section 1.
 (A) As used in this section:  (1) "Dependent child" means a beneficiary under a policy or certificate of coverage who:  (a) is a dependent child, under the terms of the coverage, of a participant or beneficiary under the coverage; and  (b) was enrolled in the coverage, on the basis of being a student at a postsecondary educational institution immediately before the first date of the medically necessary leave of absence involved.  (2) "Health insurance coverage" means as defined in Section 38-71-840(14).  (3) "Health insurance issuer" or "issuer" means an entity that provides health insurance coverage in this State as defined in Section 38-71-840(16).  (4) "Medically necessary leave of absence" means a leave of absence of a dependent child from a postsecondary educational institution, including an institution of higher education as defined in Section 102 of the Higher Education Act of 1965, or any other change in enrollment of the child at such an institution, that:  (a) commences while the child is suffering from a serious illness or injury;  (b) is medically necessary; and  (c) causes the child to lose student status for purposes of coverage under the terms of the policy or certificate of coverage.  (5) "State health plan" means the employee and retiree insurance program provided for in Article 5, Chapter 11, Title 1.  (B) This section applies to health insurance coverage offered by a health insurance issuer, including the state health plan, that is delivered, issued for delivery, or renewed in this State and which provides health insurance coverage in the group market.  (C)(1) In the case of a dependent child, a health insurance issuer may not terminate health insurance coverage of the child due to a medically necessary leave of absence before the date that is the earlier of:  (a) one year after the first day of the medically necessary leave of absence; or  (b) the date on which the coverage would otherwise terminate under the terms of the policy or certificate of coverage.  (2) The provisions of this subsection apply to health insurance coverage offered by a health insurance issuer only if the issuer has received written certification by a treating physician of the dependent child that states the child is suffering from a serious illness or injury and that the leave of absence or other change of enrollment is medically necessary.  (D) Each health insurance issuer shall include with a notice regarding a requirement for certification of student status for coverage under the policy or coverage in a plain-language description of the terms of this section for continued coverage during medically necessary leaves of absence.  (E) A dependent child whose benefits are continued under this section is entitled to the same benefits during the medically necessary leave of absence as if the child continued to be a covered student at the institution of higher education and was not on a medically necessary leave of absence.  (F) Coverage of the dependent child shall continue for the remainder of the period of the medically necessary leave of absence under the changed coverage in the same manner as it would have under the previous coverage in the case where:  (1) a dependent child is in a period of health insurance coverage pursuant to a medically necessary leave of absence;  (2) the manner in which the participant or beneficiary is covered under the policy or certificate of coverage changes, whether through a change in health insurance coverage or health insurance issuer, a change from self-insured coverage to health insurance coverage, or otherwise; and  (3) the coverage as changed continues to provide coverage of dependent children.  HISTORY: 2010 Act No. 217, Section 3, eff June 7, 2010.
 The benefits payable under any policy or contract of group accident, group health, and group accident and health insurance are payable to the employee or to some beneficiary or beneficiaries designated by him, other than the employer. However, if there is no designated beneficiary as to all or any part of the insurance at the death of the employee or member, then the amount of insurance payable for which there is no designated beneficiary is payable to the estate of the employee or member, except that:  (1) the insurer may in such case, at its option, pay the insurance to any one or more of the following surviving relatives of the employee or member: wife, husband, mother, father, child or children, or brothers or sisters; and  (2) payment of benefits for expenses incurred on account of hospitalization or medical or surgical aid, as provided in Section 38-71-800, may be made by the insurer to the hospital or other person furnishing the aid. Payment so made discharges the insurer's obligation with respect to the amount of insurance so paid.  HISTORY: Former 1976 Code Section 38-35-960 [1947 (45) 322; 1952 Code Section 37-534; 1962 Code Section 37-534] recodified as Section 38-71-790 by 1987 Act No. 155, Section 1.
 A policy issued in violation of this chapter is held valid but must be construed as provided in this chapter, and, when any provision in the policy is in conflict with any provision of this chapter, the rights, duties, and obligations of the insurer, the policyholder, and the beneficiary are governed by the provisions of this chapter.  HISTORY: Former 1976 Code Section 38-35-210 [1947 (45) 322; 1952 Code Section 37-454; 1962 Code Section 37-454] recodified as Section 38-71-80 by 1987 Act No. 155, Section 1.
 Any policy or contract of group accident, group health, or group accident and health insurance may include provisions for the payment by the insurer of benefits to the employee or other member of the insured group on account of hospitalization or medical or surgical aid for himself, his spouse, his child or children, or other individuals chiefly dependent upon him for support and maintenance.  HISTORY: Former 1976 Code Section 38-35-970 [1947 (45) 322; 1952 Code Section 37-535; 1962 Code Section 37-535] recodified as Section 38-71-800 by 1987 Act No. 155, Section 1.
 Any policy or contract of group accident, group health, or group accident and health insurance may provide for readjustment of the rate of premium based on experience thereunder at the end of the first year or of any subsequent year of insurance thereunder. The readjustment may be retroactive only for that policy year. Any refund under any plan for readjustment of the rate of premium based on the experience under group policies and any dividend paid under these policies may be used to reduce the policyholder's contribution to group insurance for the insureds of the policyholder and the excess over the contribution by the employer must be applied by the policyholder for the sole benefit of the insureds.  HISTORY: Former 1976 Code Section 38-35-980 [1947 (45) 322; 1952 Code Section 37-536; 1962 Code Section 37-536] recodified as Section 38-71-810 by 1987 Act No. 155, Section 1; 1988 Act No. 394, Section 11.  Subarticle 2  Requirements for Issuers and Group Health Insurance Coverage Under the Health Insurance Portability and Accountability Act of 1996
 (A) As used in this subarticle:  (1) "Affiliation period" means a period which, under the terms of the health insurance coverage offered by a health maintenance organization, must expire before the health insurance coverage becomes effective. The organization is not required to provide health care services or benefits during the period, and no premium may be charged to the participant or beneficiary for any coverage during the period. The period begins on the enrollment date and runs concurrently with any waiting period under the plan.  (2) "Beneficiary" has the meaning given the term under Section 3(8) of the Employee Retirement Income Security Act of 1974.  (3) "Bona fide association" means, with respect to health insurance coverage offered in the State, an association which:  (a) has been actively in existence for at least five years;  (b) has been formed and maintained in good faith for purposes other than obtaining insurance;  (c) does not condition membership in the association on any health status-related factor relating to an individual, including an employee of an employer or a dependent of an employee;  (d) makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to the members or individuals eligible for coverage through a member;  (e) does not make health insurance coverage offered through the association available other than in connection with a member of the association; and  (f) meets additional requirements as may be imposed under state law.  (4) "COBRA continuation provision" means any of the following:  (a) Part 6, Subtitle B, Title I of the Employee Retirement Income Security Act of 1974 other than Section 609 of the act;  (b) Section 4908B of the Internal Revenue Code of 1986, other than subsection (f)(1) of the section insofar as it relates to pediatric vaccines; or  (c) Title XXII of the Public Health Service Act.  (5) "Church plan" has the meaning given the term under Section 3(33) of the Employee Retirement Income Security Act of 1974.  (6) "Director of Insurance" or "director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. "Director" also includes a designee or deputy director upon whom the director has bestowed any duty or function required of the director by law in managing or supervising the Department of Insurance.  (7) "Employee" has the meaning given the term under Section 3(6) of the Employee Retirement Income Security Act of 1974.  (8) "Employer" has the meaning given the term under Section 3(5) of the Employee Retirement Income Security Act of 1974, except that the term includes only employers of two or more employees.  (9) "Employer contribution rule" means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of participants and beneficiaries.  (10) "Enrollment date" means, with respect to an individual covered under a group health plan or health insurance coverage, the date of enrollment of the individual in the plan or coverage or, if earlier, the first day of the waiting period for the enrollment.  (11) "Governmental plan" has the meaning given the term under Section 3(32) of the Employee Retirement Income Security Act of 1974 and any governmental plan established or maintained for its employees by the government of the United States or by any agency or instrumentality of the government.  (12) "Group health insurance coverage" means, in connection with a group health plan, health insurance coverage offered by a health insurance issuer in connection with the plan.  (13) "Group health plan" means an employee welfare benefit plan, as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, to the extent that the plan provides medical care, including items and services paid for as medical care, to employees or their dependents, as defined under the terms of the plan, directly or through insurance, reimbursement, or otherwise.  (14) "Health insurance coverage" means benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer, except:  (a) coverage only for accident, or disability income insurance, or any combination of accident and disability income insurance;  (b) coverage issued as a supplement to liability insurance;  (c) liability insurance, including general liability insurance and automobile liability insurance;  (d) workers' compensation or similar insurance;  (e) automobile medical payment insurance;  (f) credit-only insurance;  (g) coverage for on-site medical clinics;  (h) other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits;  (i) if offered separately:  (i) limited scope dental or vision benefits;  (ii) benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these;  (iii) other similar, limited benefits as are specified in regulations;  (j) if offered as independent, noncoordinated benefits:  (i) coverage only for a specified disease or illness;  (ii) hospital indemnity or other fixed indemnity insurance;  (k) if offered as a separate insurance policy:  (i) Medicare supplemental health insurance as defined under Section 1882(g)(1) of the Social Security Act;  (ii) coverage supplemental to the coverage provided under Chapter 55, Title 10 of the United States Code; and  (iii) similar supplemental coverage under a group health plan.  (15) "Group participation rule" means a requirement relating to the minimum number of participants or beneficiaries that must be enrolled in relation to a specified percentage of number of eligible individuals or employees of an employer.  (16) "Health insurance issuer" or "issuer" means any entity that provides health insurance coverage in this State. For purposes of this section, "issuer" includes an insurance company, a health maintenance organization, and any other entity providing health insurance coverage which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (17) "Health maintenance organization" means an organization as defined in Section 38-33-20(7).  (18) "Health status-related factor" means any of the following factors in relation to the individual or a dependent of the individual: health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; or disability.  (19) "Individual health insurance coverage" means health insurance coverage offered to individuals in the individual market but does not include short-term limited duration insurance.  (20) "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan. The term includes coverage offered in connection with a group health plan that has fewer than two participants as current employees on the first day of the plan year unless the State elects to regulate coverage as coverage issued to small employers as defined in Section 38-71-1330.  (21) "Large group market" means the health insurance market under which individuals obtain health insurance coverage, directly or through any arrangement, on behalf of themselves and their dependents through a group health plan maintained by an employer that is not a small employer, as defined in Section 38-71-1330.  (22) "Late enrollee" means, with respect to coverage under a group health plan, a participant or beneficiary who enrolls under the plan other than during:  (a) the first period in which the individual is eligible to enroll under the plan if the initial enrollment period is a period of at least thirty days; or  (b) a special enrollment period under Section 38-71-850(E).  (23) "Medical care" means amounts paid for:  (a) the diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of affecting any structure or function of the body;  (b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and  (c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).  (24) "Network plan" means health insurance coverage of a health insurance issuer under which the financing and delivery of medical care, including items and services paid for as medical care, are provided, in whole or in part, through a defined set of providers under contract with the issuer.  (25) "Participant" has the meaning given the term under Section 3(7) of the Employee Retirement Income Security Act of 1974.  (26) "Placement" or being "placed" for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by the person of a legal obligation for total or partial support of the child in anticipation of adoption of the child. The child's placement with the person terminates upon the termination of such legal obligation.  (27) "Plan sponsor" has the meaning given the term under Section 3(16)(B) of the Employee Retirement Income Security Act of 1974.  (28) "Preexisting condition exclusion" means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for the coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before the date. Genetic information may not be treated as a preexisting condition in the absence of a diagnosis of the condition related to the information.  (29) "Small group market" means the health insurance market under which individuals obtain health insurance coverage, directly or through any arrangement, on behalf of themselves and their dependents through a group health plan maintained by a small employer, as defined in Section 38-71-1330.  (30) "Waiting period" means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.  HISTORY: 1997 Act No. 5, Section 3.
 (A) Subject to subsection (C), a health insurance issuer offering group health insurance coverage, may, with respect to a participant or beneficiary, impose a preexisting condition exclusion only if the:  (1) exclusion relates to a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the enrollment date;  (2) exclusion extends for not more than twelve months without medical care, treatment, or supplies ending after the effective date of coverage or twelve months after the enrollment date, whichever occurs first, or eighteen months after the enrollment date in the case of a late enrollee; and  (3) period of any preexisting condition exclusion is reduced by the aggregate of the periods of creditable coverage if any, as defined in subsection (B)(1), applicable to the participant or beneficiary as of the enrollment date.  (B)(1) For purposes of this subarticle, "creditable coverage" means, with respect to an individual, coverage of the individual under:  (a) a group health plan;  (b) health insurance coverage;  (c) Part A or Part B, Title XVIII of the Social Security Act;  (d) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under Section 1928;  (e) Chapter 55, Title 10 of the United States Code;  (f) a medical care program of the Indian Health Service or of a tribal organization;  (g) a state health benefits risk pool, including the South Carolina Health Insurance Pool;  (h) a health plan offered under Chapter 89 of Title 5, United States Code;  (i) a public health plan as defined in regulations;  (j) a health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)); or  (k) Title XXI of the Social Security Act (State Children's Health Insurance Program).  The term does not include coverage consisting only of those benefits excepted from the definition of health insurance coverage.  (2)(a) A period of creditable coverage shall not be counted, with respect to enrollment of an individual under a group health plan, if, after the period and before the enrollment date, there was a sixty-three-day period during all of which the individual was not covered under any creditable coverage.  (b) For purposes of item (2)(a) and subsection (C)(4), any period that an individual is in a waiting period for any coverage under a group health plan or for group health insurance coverage or is in an affiliation period, as defined in Section 38-71-840, shall not be taken into account in determining the continuous period under subitem (a).  (3)(a) Except as otherwise provided under subitem (b), for purposes of applying subsection (A)(3), a health insurance issuer offering group health insurance coverage, shall count a period of creditable coverage without regard to the specific benefits covered during the period.  (b) A health insurance issuer offering group health insurance, may elect to apply subsection (A)(3) based on coverage of benefits within each of several classes or categories of benefits specified in regulations rather than as provided under subitem (a). The election must be made on a uniform basis for all participants and beneficiaries. Under the election an issuer shall count a period of creditable coverage with respect to any class or category of benefits if any level of benefits is covered within the class or category.  (c) In the case of an election under subitem (b) with respect to health insurance coverage offered by an issuer in the small or large group market, the issuer:  (i) shall prominently state in any disclosure statements concerning the coverage, and to each employer at the time of the offer or sale of the coverage, that the issuer has made such election; and  (ii) shall include in the statements a description of the effect of the election.  (4) Periods of creditable coverage with respect to an individual shall be established through presentation of certifications described in subsection (D) or in such other manner as may be specified in regulations.  (C)(1) Subject to item (4), a health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the thirty-one-day period beginning with the date of birth, is covered under creditable coverage.  (2) Subject to item (4), a health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion in the case of a child who is adopted or placed for adoption before attaining eighteen years of age and who, as of the last day of the thirty-one-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. This item does not apply to coverage before the date of such adoption or placement for adoption.  (3) A health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition.  (4) Items (1) and (2) no longer apply to an individual after the end of the first sixty-three-day period during all of which the individual was not covered under any creditable coverage.  (D)(1)(a) A health insurance issuer offering group health insurance coverage, shall provide the certification described in subitem (b):  (i) at the time an individual ceases to be covered under the plan or otherwise becomes covered under a COBRA continuation provision;  (ii) in the case of an individual becoming covered under such a provision, at the time the individual ceases to be covered under such provision; and  (iii) on the request on behalf of an individual made not later than twenty-four months after the date of cessation of the coverage described in subitem (a)(i) or (ii), whichever is later.  The certification under subsubitem (i) may be provided, to the extent practicable, at a time consistent with notices required under any applicable COBRA continuation provision.  (b) The certification described in this subitem is a written certification of:  (i) the period of creditable coverage of the individual under the plan and the coverage, if any, under the COBRA continuation provision; and  (ii) the waiting period, if any, and affiliation period, if applicable, imposed with respect to the individual for any coverage under the plan.  (2) In the case of an election described in subsection (B)(3)(b) by a group health plan or health insurance issuer, if the plan or issuer enrolls an individual for coverage under the plan and the individual provides a certification of coverage of the individual under item (1):  (a) upon request of the plan or issuer, the issuer which issued the certification provided by the individual shall promptly disclose to the requesting plan or issuer information on coverage of classes and categories of health benefits available under the entity's plan or coverage; and  (b) the issuer may charge the requesting plan or issuer for the reasonable cost of disclosing the information.  (3) The Director of Insurance shall establish rules to prevent an issuer's failure to provide information under item (1) or (2) with respect to previous coverage of an individual from adversely affecting any subsequent coverage of the individual under another group health plan or health insurance coverage.  (E)(1) A health insurance issuer offering group health insurance coverage in connection with a group health plan, shall permit an employee who is eligible, but not enrolled, for coverage under the terms of the plan, or a dependent of the employee if the dependent is eligible, but not enrolled, for coverage under such terms, to enroll for coverage under the terms of the plan if each of the following conditions is met:  (a) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or dependent.  (b) The employee stated in writing at the time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan sponsor or issuer, if applicable, required such a statement at the time and provided the employee with notice of the requirement and the consequences of the requirement at the time.  (c) The employee's or dependent's coverage described in subitem (a):  (i) was under a COBRA continuation provision and the coverage under the provision was exhausted; or  (ii) was not under such a provision and either the coverage was terminated as a result of loss of eligibility for the coverage, including as a result of legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment, or employer contributions toward the coverage were terminated;  (iii) was one of multiple health insurance plans offered by an employer and the employee elects a different plan during an open enrollment period.  (d) Under the terms of the plan, the employee requests the enrollment not later than thirty days after the date of exhaustion of coverage described in subitem (c)(i) or termination of coverage or employer contribution described in subitem (c)(ii).  (2)(a) If:  (i) a group health plan makes coverage available with respect to a dependent of an individual;  (ii) the individual is a participant under the plan, or has met any waiting period applicable to becoming a participant under the plan and is eligible to be enrolled under the plan but for a failure to enroll during a previous enrollment period; and  (iii) a person becomes a dependent of the individual through marriage, birth, or adoption or placement for adoption, the health insurance issuer offering health insurance coverage in connection with the group health plan shall provide for a dependent special enrollment period described in subitem (b) during which the person or, if not otherwise enrolled, the individual may be enrolled under the plan as a dependent of the individual, and in the case of the birth or adoption of a child, the spouse of the individual may be enrolled as a dependent of the individual if such spouse is otherwise eligible for coverage.  (b) A dependent special enrollment period under this subitem must be not less than thirty-one days and begins on the later of:  (i) the date dependent coverage is made available; or  (ii) the date of the marriage, birth, or adoption or placement for adoption as the case may be described in subitem (a)(iii).  (c) If an individual seeks to enroll a dependent during the first thirty-one days of a dependent special enrollment period, the coverage of the dependent shall become effective:  (i) in the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is received;  (ii) in the case of a dependent's birth or a dependent's adoption or placement for adoption within thirty-one days of birth, as of the date of the birth; or  (iii) in the case of a dependent's adoption or placement for adoption beyond thirty-one days from the date of birth, the date of the adoption or placement for adoption.  (3) A health insurance issuer offering group health insurance coverage in connection with a group health plan, shall permit a dependent, spouse, or minor or dependent child, of an employee, if the dependent is eligible, but not enrolled for coverage, to enroll for coverage under the terms of the plan if a court has ordered that coverage be provided for the dependent under a covered employee's health insurance plan and a request for enrollment is made within thirty days after the issuance of the court order.  (4) A health insurance issuer offering group health insurance coverage in connection with a group health plan shall permit an employee who is eligible, but not enrolled for coverage, or a dependent of the employee if the dependent is eligible, but not enrolled for coverage, to enroll for coverage under the terms of the plan if one of the following conditions is met:  (a) the employee or dependent was covered under a Medicaid plan pursuant to Title XIX of the Social Security Act or under a State Children's Health Insurance Program pursuant to Title XXI of the Social Security Act and coverage of the employee or dependent under the plan or program is terminated as a result of loss of eligibility for the coverage and the employee requests enrollment not later than sixty days after the date of termination of the coverage; or  (b) the employee or dependent becomes eligible for assistance with respect to coverage under the group health plan under a Medicaid plan or State Children's Health Insurance Program, including under any waiver or demonstration project conducted under or in relation to the plan or program, if the employee requests enrollment not later than sixty days after the date the employee or dependent is determined to be eligible for assistance.  An individual who requests enrollment as specified in this item must be enrolled, even if there is otherwise no open enrollment period, without any penalties for late enrollment.  (F)(1) A health maintenance organization which offers health insurance coverage in connection with a group health plan and which does not impose any preexisting condition exclusion allowed under subsection (A) with respect to any particular coverage option may impose an affiliation period for such coverage option, but only if:  (a) the period is applied uniformly without regard to any health status-related factors; and  (b) the period does not exceed two months, or three months in the case of a late enrollee.  (2) A health maintenance organization described in item (1) may use alternative methods from those described in item (1) to address adverse selection as approved by the Director of Insurance or his designee.  (G)(1)(a)(i) Subject to subitem (a)(ii), no period before July 1, 1996, shall be taken into account in determining creditable coverage.  (ii) The Director of Insurance shall provide for a process either by bulletin or by order whereby individuals who need to establish creditable coverage for periods before July 1, 1996, and who would have the coverage credited but for subitem (a)(i) may be given credit for creditable coverage for the periods through the presentation of documents or other means.  (b)(i) Subject to subsubitems (b)(ii) and (iii), subsection (D) applies to events occurring after June 30, 1996.  (ii) In no case is a certification required to be provided under subsection (D) before June 1, 1997.  (iii) In the case of an event occurring after June 30, 1996, and before October 1, 1996, a certification is not required to be provided under subsection (D) unless an individual, with respect to whom the certification is otherwise required to be made, requests the certification in writing.  (c) In the case of an individual who seeks to establish creditable coverage for any period for which certification is not required because it relates to an event occurring before June 30, 1996:  (i) the individual may present other credible evidence of the coverage in order to establish the period of creditable coverage; and  (ii) a health insurance issuer shall not be subject to any penalty or enforcement action with respect to the issuer's crediting or not crediting the coverage if the issuer has sought to comply in good faith with the applicable requirements under this section.  HISTORY: 1997 Act No. 5, Section 3; 2010 Act No. 217, Sections 4, 5, eff June 7, 2010.
 (A)(1) Subject to item (2), a health insurance issuer offering group health insurance coverage in connection with a group health plan, may not establish rules for eligibility, including continued eligibility, of any individual to enroll under the terms of the plan based on any of the following health status-related factors in relation to the individual or a dependent of the individual:  (a) health status;  (b) medical condition, including both physical and mental illnesses;  (c) claims experience;  (d) receipt of health care;  (e) medical history;  (f) genetic information;  (g) evidence of insurability, including conditions arising out of acts of domestic violence;  (h) disability.  (2) To the extent consistent with Sections 38-71-850 and 38-71-1360 and any other applicable state law, item (1) shall not be construed:  (a) to require group health insurance coverage to provide particular benefits other than those provided under the terms of such coverage; or  (b) to prevent such a plan or coverage from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the plan or coverage.  (3) For purposes of item (1), rules for eligibility to enroll under a plan include rules defining any applicable waiting periods for the enrollment.  (B)(1) A health insurance issuer offering health insurance coverage in connection with a group health plan, may not require any individual, as a condition of enrollment or continued enrollment under the plan, to pay a premium or contribution which is greater than the premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health status-related factor in relation to the individual or to an individual enrolled under the plan as a dependent of the individual.  (2) To the extent consistent with Sections 38-71-940, 38-71-200, and 38-55-50 and any other applicable state law, nothing in item (1) shall be construed to:  (a) restrict the amount that an employer may be charged for coverage under a group health plan under applicable state law; or  (b) prevent a group health plan, and a health insurance issuer offering group health insurance coverage, from establishing premium discounts or rebates or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with applicable state law.  HISTORY: 1997 Act No. 5, Section 3.
 (A) Except as provided in this section, if a health insurance issuer offers health insurance coverage in the small or large group market in connection with a group health plan, the issuer must renew or continue in force such coverage for all eligible employees and dependents at the option of the plan sponsor of the plan.  (B) A health insurance issuer may nonrenew or discontinue health insurance coverage offered in connection with a group health plan in the small or large group market based only on one or more of the following:  (1) The plan sponsor has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the issuer has not received timely premium payments.  (2) The plan sponsor has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage or, with respect to coverage of an insured individual, fraud, or intentional misrepresentation by the insured individual or the individual's representative. If the fraud or intentional misrepresentation is made by a person with respect to any person's prior health condition, the insurer has the right also to deny coverage to that person or to impose as a condition of continued coverage the exclusion of the condition misrepresented.  (3) The plan sponsor has failed to comply with a material plan provision relating to employer contribution or group participation rules as permitted under Section 38-71-1360(A)(4) in the case of the small group market or pursuant to applicable state law in the large group market.  (4) The issuer is ceasing to offer coverage in such market in accordance with subsection (C) and applicable state law.  (5) In the case of a health insurance issuer that offers health insurance coverage in the market through a network plan, there is no longer any enrollee in connection with such plan who lives, resides, or works in the service area of the issuer or in the area for which the issuer is authorized to do business and, in the case of the small group market, the issuer would deny enrollment with respect to such plan under Section 38-71-1360(C)(1).  (6) In the case of health insurance coverage that is made available in the small or large group market only through one or more bona fide associations, the membership of an employer in the association, on the basis of which the coverage is provided, ceases but only if such coverage is terminated under this item uniformly without regard to any health status-related factor relating to any covered individual.  (C)(1) In any case in which an issuer decides to discontinue offering a particular type of group health insurance coverage offered in the small or large group market, coverage of such type may be discontinued by the issuer in accordance with applicable state law in such market only if the issuer:  (a) provides notice to each plan sponsor provided coverage of this type in such market, and participants and beneficiaries covered under the coverage, of the discontinuation at least ninety days before to the date of the discontinuation of the coverage;  (b) offers to each plan sponsor provided coverage of this type in the market, the option to purchase all or, in the case of the large group market, any other health insurance coverage currently being offered by the issuer to a group health plan in such market; and  (c) in exercising the option to discontinue coverage of this type and in offering the option of coverage under subitem (b), the issuer acts uniformly without regard to the claims experience of those sponsors or any health status-related factor relating to any participants or beneficiaries covered or new participants or beneficiaries who may become eligible for the coverage.  (2)(a) In any case in which a health insurance issuer elects to discontinue offering all health insurance coverage in the small group market or the large group market, or both markets, in this State, health insurance coverage may be discontinued by the issuer only in accordance with applicable state law and if:  (i) the issuer provides notice to the Director of Insurance and to each plan sponsor, and participants and beneficiaries covered under the coverage, of the discontinuation at least one hundred eighty days before the date of the discontinuation of the coverage; and  (ii) all health insurance coverage issued or delivered for issuance in the State in such market is discontinued and coverage under the health insurance coverage in the market is not renewed.  (b) In the case of a discontinuation under subitem (a) in a market, the issuer may not provide for the issuance of any health insurance coverage in the market in this State during the five-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed.  (D) At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a product offered to a group health plan in the:  (1) large group market; or  (2) small group market if, for coverage that is available in the market other than only through one or more bona fide associations, the modification is consistent with state law and effective on a uniform basis among group health plans with that product.  (E) In applying this section in the case of health insurance coverage that is made available by a health insurance issuer in the small or large group market to employers only through one or more associations, a reference to "plan sponsor" is deemed, with respect to coverage provided to an employer member of the association, to include a reference to such employer.  HISTORY: 1997 Act No. 5, Section 3.
 (A)(1) In the case of health insurance coverage offered in connection with a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits:  (a) if the coverage does not include an aggregate lifetime limit on substantially all medical and surgical benefits, the coverage may not impose any aggregate lifetime limit on mental health or substance use disorder benefits;  (b) if the coverage includes an aggregate lifetime limit, also referred to in this item as the "applicable lifetime limit", on substantially all medical and surgical benefits, the coverage must either:  (i) apply the applicable lifetime limit both to the medical and surgical benefits to which it otherwise would apply and to mental health and substance use disorder benefits and not distinguish in the application of the limit between the medical and surgical benefits and mental health and substance use disorder benefits; or  (ii) not include any aggregate lifetime limit on mental health or substance use disorder benefits that is less than the applicable lifetime limit;  (c) in the case of coverage that is not described in subitem (a) or (b) and that includes no or different aggregate lifetime limits on different categories of medical and surgical benefits, the director or his designee may promulgate regulations under which subitem (b) is applied to the coverage with respect to mental health and substance use disorder benefits by substituting for the applicable lifetime limit an average aggregate limit that is computed taking into account the weighted average of the aggregate lifetime limits applicable to the categories.  (2) In the case of health insurance coverage offered in connection with a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits:  (a) if the coverage does not include an annual limit on substantially all medical and surgical benefits, the coverage may not impose any annual limit on mental health or substance use disorder benefits;  (b) if the coverage includes an annual limit on substantially all medical and surgical benefits, referred to as the "applicable annual limit", the coverage must either:  (i) apply the applicable annual limit both to medical and surgical benefits to which it otherwise would apply and to mental health and substance use disorder benefits and not distinguish in the application of such limit between such medical and surgical benefits and mental health and substance use disorder benefits; or  (ii) not include any annual limit on mental health or substance use disorder benefits that is less than the applicable annual limit;  (c) in the case of coverage that is not described in subitem (a) or (b) and that includes no or different annual limits on different categories of medical and surgical benefits, the director or his designee may promulgate regulations under which subitem (b) is applied to the coverage with respect to mental health and substance use disorder benefits by substituting for the applicable annual limit an average annual limit that is computed taking into account the weighted average of the annual limits applicable to the categories.  (3) In the case of a group health plan, or health insurance coverage offered in connection with a plan, that provides both medical and surgical benefits and mental health or substance use disorder benefits, the plan or coverage must ensure that:  (a) the financial requirements applicable to the mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan or coverage and there are no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits; and  (b) the treatment of limitations applicable to the mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan or coverage and there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.  (4) In the case of a plan or coverage that provides both medical and surgical benefits and mental health or substance use disorder benefits, if the plan or coverage provides coverage for medical or surgical benefits provided by out-of-network providers, the plan or coverage must provide coverage for mental health or substance use disorder benefits provided by out-of-network providers in a manner that is consistent with the requirements of this section.  (B) To the extent consistent with Section 38-71-737 and another applicable state law, nothing in this section may be construed:  (1) as requiring health insurance coverage offered in connection with a group health plan to provide any mental health or substance use disorder benefits; or  (2) in the case of a group health plan or health insurance coverage offered in connection with a plan that provides mental health or substance use disorder benefits, as affecting the terms and conditions of the plan or coverage relating to benefits under the plan or coverage, except as provided in subsection (A).  (C)(1) This section does not apply to a group health insurance coverage offered in connection with a group health plan for any plan year of a small employer.  (2) For purposes of this subsection, "small employer" means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least two but not more than fifty employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year.  (3) For purposes of this subsection:  (a) All persons treated as a single employer under subsection (b), (c), (m), or (o) of Section 414 of the Internal Revenue Code of 1986 are treated as one employer.  (b) In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether the employer is a small employer is based on the average number of employees that it is reasonably expected the employer will employ on business days in the current calendar year.  (c) A reference in this subsection to an employer includes a reference to any predecessor of the employer.  (4) This section does not apply with respect to health insurance coverage offered in connection with a group health plan if the application of this section to this coverage results in an increase in the actual total cost for the coverage of at least two percent in the case of the first plan year or at least one percent in the case of a subsequent plan year. Determinations as to increases in actual total costs under a plan or coverage for purposes of this subsection must be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries. Determinations must be in a written report prepared by the actuary. The report, and all underlying documentation relied upon by the actuary, must be maintained by the group health plan and the health insurance issuer for a period of six years.  (5) When a group health insurance coverage offered in connection with a group health plan that qualifies for exemption pursuant to the provisions of item (2), the plan or coverage must continue to apply the requirements of applicable state law, including Sections 38-71-290 and 38-71-737, where required.  (D) In the case of health insurance coverage offered in connection with a group health plan that offers a participant or beneficiary two or more benefit package options under the plan, the requirements of this section are applied separately with respect to each option.  (E) For purposes of this section:  (1) "Aggregate lifetime limit" means, with respect to benefits under health insurance coverage, a dollar limitation on the total amount that may be paid with respect to the benefits under the health insurance coverage with respect to an individual or other coverage unit.  (2) "Annual limit" means, with respect to benefits under health insurance coverage, a dollar limitation on the total amount of benefits that may be paid with respect to the benefits in a twelve-month period under the health insurance coverage with respect to an individual or other coverage unit.  (3) "Financial requirement" includes deductibles, copayments, coinsurance, and out-of-pocket expenses, but excludes an aggregate lifetime limit and annual limit subject to subsections (A)(3)(a) and (A)(3)(b).  (4) "Medical or surgical benefits" means benefits with respect to medical or surgical services, as defined under the terms of the plan, but does not include mental health benefits.  (5) "Mental health benefits" means benefits with respect to services for mental health conditions, as defined under the terms of the plan and in accordance with applicable federal and state law.  (6) "Predominant" means a financial requirement or treatment limit that is the most common or frequent of the type of requirement or limit.  (7) "Substance use disorder benefits" means benefits with respect to services for substance use disorders, as defined under the terms of the plan and in accordance with applicable federal and state law.  (8) "Treatment limitation" includes limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.  HISTORY: 1997 Act No. 5, Section 3; 2002 Act No. 228, Section 10, eff May 1, 2002; 2003 Act No. 73, Section 15, eff June 25, 2003; 2006 Act No. 332, Section 6, eff June 1, 2006; 2009 Act No. 50, Section 2, eff upon approval (became law without the Governor's signature on June 3, 2009).  Editor's Note  2009 Act No. 50 Section 6 provides as follows:  "This act takes effect upon approval by the Governor and applies to group health plans for plan years beginning after October 2, 2009."Subarticle 3  Small Group Health Insurance
 An insurer, health maintenance organization, or its officer or agent that issues or delivers to any person in this State any policy in wilful violation of any of the provisions of this chapter or any other applicable state or federal law governing the transaction of business of insurance the Department of Insurance is authorized to enforce is subject to the provisions of Section 38-2-10 for each offense.  HISTORY: Former 1976 Code Section 38-35-220 [1947 (45) 322; 1952 Code Section 37-459; 1962 Code Section 37-459] recodified as Section 38-71-90 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 38; 2018 Act No. 219 (H.4657), Section 6, eff May 18, 2018.  Effect of Amendment  2018 Act No. 219, Section 6, inserted ", health maintenance organization," following "An insurer", and inserted "or any other applicable state or federal law governing the transaction of business of insurance the Department of Insurance is authorized to enforce" following "provisions of this chapter".
 The intent of this subarticle is to promote the availability of health insurance coverage to small employers, to prevent abusive rating practices, to require disclosure of rating practices to purchasers, to establish rules for continuity of coverage for employers and covered individuals, and to improve the efficiency and fairness of the small group health insurance marketplace.  HISTORY: 1991 Act No. 131, Section 5.
 As used in this subarticle:  (1) "Small employer" means, in connection with a health insurance plan with respect to a calendar year and a plan year, any person, firm, corporation, partnership, association, or employer, as defined in Section 3(5) of the Employee Retirement Income Security Act of 1974 that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar year, employed no more than fifty eligible employees or employed an average of not more than fifty employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.  (a) in determining the number of eligible employees, companies which are affiliated companies, or which are eligible to file a combined tax return for purposes of state taxation, or that are treated as a single employer under subsections (b), (c), (m), or (o) of Section 414 of the Internal Revenue Code of 1986 must be considered one employer; and  (b) in the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of employees that it is reasonably expected to employ on business days in the current calendar year; and  (c) any reference in the subarticle to an employer includes a reference to any predecessor of the employer.  (2) "Insurer" means any person who provides health insurance in this State. For the purposes of this subarticle, insurer includes a licensed insurance company, a health maintenance organization, a multiple employer welfare arrangement, or any other person providing a plan of health insurance subject to state insurance regulation.  (3) "Health insurance plan" or "plan" means any hospital or medical policy or certificate, major medical expense insurance, hospital or medical service plan contract, or health maintenance organization subscriber contract which provides benefits consisting of medical care, provided directly, through insurance or reimbursement, or otherwise and including items and services paid for medical care. It includes the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application, if attached. "Health insurance plan" does not include: accident-only; blanket accident and sickness; specified disease or hospital indemnity or other fixed indemnity insurance if offered as independent noncoordinated benefits; credit; limited scope dental or vision if offered separately; Medicare supplement if offered as a separate policy; long-term care if offered separately; disability-income insurance; coverage issued as a supplement to liability or other liability insurance, including general liability insurance and automobile liability insurance; coverage designed solely to provide payments on a per diem, fixed indemnity, or nonexpense incurred basis; coverage for Medicare or Medicaid services pursuant to a contract with state or federal government; workers' compensation or similar insurance; automobile medical payment insurance; coverage for on-site medical clinics; or other similar coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.  (4) "Small employer insurer" means an insurer which offers health insurance plans covering the employees of a small employer.  (5) "Case characteristics" means the following characteristics of a small employer, as determined by a small employer insurer, which are considered by the insurer in the determination of premium rates for the small employer: age, gender, geographic area, industry, group size, and family composition. Geographic areas smaller than a county may not be used without prior approval of the director or his designee. Claim experience, health status, and duration of coverage since issue are not case characteristics for the purposes of this subarticle. The adjustment for case characteristics must be objective and meet sound actuarial practices.  (6) "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. "Director" also includes a designee or deputy director upon whom the director has bestowed any duty or function required of the director by law in managing or supervising the Department of Insurance.  (7) "Department" means the Department of Insurance.  (8) "New business premium rate" means, for each class of business as to a rating period, the lowest premium charged or offered, or which could have been charged or offered, by the small employer insurer to small employers with similar case characteristics for newly issued health insurance plans with the same or similar coverage.  (9) "Class of business" means all or a distinct grouping of small employers as shown on the records of the small employer insurer.  (a) A distinct grouping may be established only by the small employer insurer on the basis that the applicable health insurance plans:  (i) are marketed and sold through individuals and organizations which are not participating in the marketing or sale of other distinct groupings of small employers for such small employer;  (ii) have been acquired from another small employer insurer as a distinct grouping of plans;  (iii) are provided through an association with membership of not less than fifty small employers which have been formed for purposes other than obtaining insurance; or  (iv) are provided through a common group formed solely for the purpose of obtaining insurance as permitted by Section 38-71-730(1)(b).  (b) A small employer insurer may establish no more than two additional groupings on the basis of criteria, except group size, which are expected to produce substantial variation in administrative and marketing costs.  (c) The director or his designee may approve the establishment of additional distinct groupings upon application to the director or his designee and a finding by the director or his designee that action would enhance the efficiency and fairness of the small employer insurance marketplace.  (10) "Actuarial certification" means a written statement by a member of the American Academy of Actuaries or other individual acceptable to the director or his designee that a small employer insurer is in compliance with the provisions of Section 38-71-940 and that the rating methods used in establishing premium rates for applicable health insurance plans are objective and based on sound actuarial practices. This statement must be based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the insurer in establishing premium rates for applicable health insurance plans.  (11) "Rating period" means the calendar period for which premium rates established by a small employer insurer are assumed to be in effect as determined by the small employer insurer.  (12) "Base premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or which could have been charged under a rating system for that class of business, by the small employer insurer to small employers with similar case characteristics for health insurance plans with the same or similar coverage.  (13) "Index rate" means, for each class of business for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate.  (14) "Restricted network provision" means any provision of a health insurance plan that conditions the payment of benefits, in whole or in part, on the use of health care providers that have entered into a contractual arrangement with the insurer pursuant to the laws and regulations of the State to provide health care services to covered individuals.  HISTORY: 1991 Act No. 131, Section 5; 1994 Act No. 339, Section 15; 1997 Act No. 5, Section 10; 1997 Act No. 70, Sections 1, 2.
 (A) Except as provided in subsection (B), the provisions of this subarticle apply to any health insurance plan which provides coverage to one or more employees of a small employer.  (B) The provisions of this subarticle do not apply to individual health insurance policies which are subject to policy form and premium rate approval as may be provided in Title 38.  HISTORY: 1991 Act No. 131, Section 5.
 (A) Premium rates for health insurance plans subject to this subarticle are subject to the following requirements:  (1) The index rate for a rating period for a class of business may not exceed the index rate for any other class of business by more than twenty percent.  (2) For a class of business, the premium rates charged during a rating period to small employers with similar case characteristics for the same or similar coverage, or the rates which could be charged to these employers under the rating system for that class of business, may not vary from the index rate by more than twenty-five percent of the index rate.  (3) The percentage increase in the renewal premium rate charged to a small employer for a new rating period may not exceed the sum of:  (a) the percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a class of business for which the small employer insurer is not issuing new policies, the insurer shall use the percentage change in the base premium rate. However, in the case of health insurance plans issued prior to the effective date of this section, if the change in the new business premium rate used to determine the maximum percentage increase in the premium rate is less than zero percent, then zero percent may be used as the percentage change in the new business premium rate during the first twelve-month period from the effective date of this section;  (b) an adjustment, not to exceed fifteen percent annually and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status, or duration of coverage of the employees or dependents of the small employer as determined from the insurer's rate manual for the class of business;  (c) any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the insurer's rate manual for the class of business.  (4) A health insurance plan that contains a restricted network provision shall not be considered similar coverage to a health insurance plan that does not contain such a provision, provided that the restriction of benefits to network providers results in substantial differences in claim costs.  (5) If group size is used as a case characteristic by a small employer insurer, the highest rate factor associated with a group size classification may not exceed the lowest rate factor associated with such a classification by more than twenty percent.  (B) Nothing in this section is intended to affect the use by a small employer insurer of legitimate rating factors other than claim experience, health status, or duration of coverage in the determination of premium rates. Small employer insurers shall apply rating factors, including case characteristics, consistently with respect to all small employers within a class of business.  (C) Unless the small employer no longer meets the criteria established for its existing class of business:  (1) a small employer insurer may not transfer involuntarily a small employer into or out of a class of business; and  (2) a small employer insurer may not offer to transfer a small employer into or out of a class of business, unless the offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status, or duration since issue.  HISTORY: 1991 Act No. 131, Section 5; 1997 Act No. 70, Section 3.
 In connection with offering any health insurance plans to small employers, each small employer insurer shall make reasonable disclosure in solicitation and sales materials provided to small employers of:  (1) the extent to which premium rates for a specific small employer are established or adjusted due to case characteristics, family composition, class of business, and the claim experience, health status, or duration of coverage of the employees or dependents of the small employer;  (2) the provisions concerning the insurer's right to change premium rates and the factors, including case characteristics, which affect changes in premium rates;  (3) a description of the class of business in which the small employer is or will be included, including the applicable grouping of plans;  (4) the provisions relating to renewability of coverage;  (5) the provisions relating to any preexisting condition exclusion; and  (6) the benefits and premiums available under all health insurance plans for which the employer is qualified.  Information under this section must be provided to small employers in a manner determined to be understandable by the average small employer and must be sufficient to reasonably inform small employers of their rights and obligations under the health insurance coverage.  An insurer is not required under this section to disclose any information that is proprietary or trade secret information under applicable law.  HISTORY: 1991 Act No. 131, Section 5; 1997 Act No. 5, Section 11; 1997 Act No. 70, Section 4.
 (A) A small employer insurer shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation which demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.  (B) Each small employer insurer shall file each March first with the department an actuarial certification certifying that the insurer is in compliance with this section and that the rating methods of the insurer are actuarially sound. A copy of the certification must be retained by the insurer at its principal place of business.  (C) A small employer insurer shall make the information and documentation described in subsection (A) available to the director or his designee upon request. The information must be considered proprietary and trade secret information and is not subject to disclosure by the director or his designee to persons outside of the department except as agreed to by the insurer or as ordered by a court of competent jurisdiction.  HISTORY: 1991 Act No. 131, Section 5; 1993 Act No. 181, Section 774.
 The director or his designee may suspend all or any part of Section 38-71-940 as to the premium rates applicable to one or more small employers for one or more rating periods upon a filing by the small employer insurer and a finding by the director or his designee that either the suspension is reasonable in light of the financial condition of the insurer or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.  HISTORY: 1991 Act No. 131, Section 5; 1993 Act No. 181, Section 775.
 The provisions of this subarticle apply to each health insurance plan for a small employer that is delivered, issued for delivery, renewed, or continued in this State after the effective date of this subarticle. For purposes of this section, the date a plan is continued is the first rating period which commences after the effective date of this subarticle.  HISTORY: 1991 Act No. 131, Section 5.
 The purpose of this chapter is to promote the public interest, to promote the availability of long term care insurance policies, to protect applicants for long term care insurance as defined from unfair or deceptive sales or enrollment practices, to establish standards for long term care insurance, to facilitate public understanding and comparison of long term care insurance policies, and to facilitate flexibility and innovation in the development of long term care insurance coverage.  HISTORY: 1988 Act No. 466, Section 1.
 Any premiums paid for long term care insurance must be excluded in determining the amount an individual must contribute towards the cost of any Medicaid services he receives.  HISTORY: 1988 Act No. 466, Section 10.  
 This chapter is not intended to supersede the obligations of entities subject to this chapter to comply with the substance of other applicable insurance laws insofar as they do not conflict with this chapter, except that laws and regulations designed and intended to apply to medicare supplement insurance policies must not be applied to long term care insurance.  HISTORY: 1988 Act No. 466, Section 2; 1990 Act No. 409, Section 1.
 This chapter may be known and cited as the "Long Term Care Insurance Act".  HISTORY: 1988 Act No. 466, Section 3.
 Unless the context requires otherwise, as used in this chapter:  (1)(a) "Long term care insurance" means an insurance policy or a rider advertised, marketed, offered, or designed to provide coverage for not less than twelve consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. The term includes group and individual annuities and life insurance policies or riders that provide directly or that supplement long term care insurance. It also includes a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. The term also includes qualified long term care contracts. Long term care insurance may be issued by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service corporations, prepaid health plans, health maintenance organizations, or a similar organization to the extent they otherwise are authorized to issue life or health insurance. Long term care insurance does not include an insurance policy offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage.  (b) With regard to life insurance, this term does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement, and that provide the option of a lump-sum payment for those benefits and where neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long term care. Notwithstanding another provision of this chapter, a product advertised, marketed, or offered as long term care insurance is subject to the provisions of this chapter.  (2) "Applicant" means:  (a) in the case of an individual long term care insurance policy the person who seeks to contract for benefits; and  (b) in the case of a group long term care insurance policy, the proposed certificate holder.  (3) "Certificate" means any certificate issued under a group long term care insurance policy, which policy has been delivered or issued for delivery in this State.  (4) "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the insurance department.  (5) "Group long term care insurance" means a long term care insurance policy which is delivered or issued for delivery in this State and issued to:  (a) one or more employers or labor organizations, or to a trust or to the trustees of a fund established by one or more employers or labor organizations or a combination thereof, for employees or former employees or a combination thereof, or for members or former members or a combination thereof of the labor organizations; or  (b) any professional, trade, or occupational association for its members or former or retired members or combination thereof if such association:  (i) is composed of individuals all of whom are or were actively engaged in the same profession, trade, or occupation; and  (ii) has been maintained in good faith for purposes other than obtaining insurance; or  (c) an association or to a trust or to the trustee of a fund established, created, or maintained for the benefit of members of one or more associations. Prior to advertising, marketing, or offering the policy within this State, the association or the insurer of the association shall file evidence with the department that the association has at the outset a minimum of one hundred persons and has been organized and maintained in good faith for purposes other than that of obtaining insurance, has been in active existence for at least one year, and has a constitution and bylaws which provide that the association holds regular meetings not less than annually to further the purposes of its members, except for credit unions, the association collects dues or solicits contributions from members, and the members have voting privileges and representation on the governing board and committees. Ninety days after the filing, the association is considered to have satisfied the organizational requirements unless the director or his designee makes a finding that the association does not satisfy those organizational requirements; or  (d) a group other than as described in subitems (a), (b), and (c), subject to a finding by the director or his designee that the issuance of the group policy is not contrary to the best interest of the public, the issuance of the group policy would result in economies of acquisition or administration, and the benefits are reasonable in relation to the premiums charged.  (6) "Policy" means any policy, contract, subscriber agreement, rider, or endorsement delivered or issued for delivery in this State by an insurer, fraternal benefit society, nonprofit health, hospital, or medical service corporation, prepaid health plan, health maintenance organization, or any similar organization.  (7)(a) "Qualified long term care insurance contract" or "federally tax-qualified long term care insurance contract" means an individual or a group insurance contract that meets the requirements of Section 7702B(b) of the Internal Revenue Code of 1986, as amended, as follows:  (i) the only insurance protection provided under the contract is coverage of qualified long term care services. A contract does not fail to satisfy the requirements of this item by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;  (ii) the contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, as amended, or would be so reimbursable but for the application of a deductible or coinsurance amount. The requirements of this subsubitem do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor. A contract does not fail to satisfy the requirements of this subsubitem by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which payments relate;  (iii) the contract is guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended;  (iv) the contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed except as provided in subsubitem (v);  (v) all refunds of premiums, and all policyholder dividends or similar amounts, under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund if death occurs of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract; and  (vi) the contract meets the consumer protection provisions provided in Section 7702B(g) of the Internal Revenue Code of 1986, as amended.  (b) "Qualified long term care insurance contract" or "federally tax-qualified long term care insurance contract" also means the portion of a life insurance contract that provides long term care insurance coverage by rider or as part of the contract and that satisfies the requirements of Section 7702B(b) and (e) of the Internal Revenue Code of 1986, as amended.  HISTORY: 1988 Act No. 466, Section 4; 1990 Act No. 409, Section 2; 1993 Act No. 181, Section 779; 2008 Act No. 274, Sections 2, 3, eff June 4, 2008.
 No group long term care insurance coverage may be offered to a resident of this State under a group policy issued in another state to a group described in Section 38-72-40(5)(d) unless this State or another state having statutory and regulatory long term care insurance requirements substantially similar to those adopted in this State has made a determination that the requirements have been met.  HISTORY: 1988 Act No. 466, Section 5.
 (A) The director or his designee shall submit to the General Assembly for approval regulations to carry out the purposes of this chapter. These regulations may include standards for full and fair disclosure setting forth the manner, content, and required disclosures for the sale of long term care insurance policies, terms of renewal, initial and subsequent conditions of eligibility, nonduplication of coverage provision, coverage of dependents, preexisting conditions, termination of insurance, continuation or conversion, probationary periods, limitations, exceptions, reductions, elimination periods, requirements for replacement, recurrent conditions, and definitions of terms.  (B) A long term care insurance policy may not:  (1) be canceled, nonrenewed, or otherwise terminated except for nonpayment of the premium;  (2) contain a provision establishing a new waiting period if existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder; or  (3) provide coverage for skilled nursing care only or provide significantly more coverage for skilled care in a facility than coverage for lower levels of care.  (C) The following applies to preexisting conditions:  (1) A long term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in Section 38-72-40(5)(a), may not use a definition of "preexisting condition" that is more restrictive than the following: "Preexisting condition" means a condition for which medical advice or treatment was recommended by or received from a provider of health care services within six months preceding the effective date of coverage of an insured person.  (2) A long term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in Section 38-72-40(5)(a), may not exclude coverage for a loss or confinement that is the result of a preexisting condition unless loss or confinement begins within six months following the effective date of coverage of an insured person.  (3) The director or his designee may extend the limitation periods provided in items (1) and (2) as to specific age group categories in specific policy forms upon findings that the extension is in the best interest of the public.  (4) The definition of "preexisting condition" does not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant and, on the basis of the answers on that application, from underwriting in accordance with that insurer's established underwriting standards. Unless otherwise provided in the policy or certificate, a preexisting condition, regardless of whether it is disclosed on the application, need not be covered until the waiting period described in item (2) expires. A long term care insurance policy or certificate may not exclude or use waivers or riders of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period in item (2).  (D)(1) A long term care insurance policy may not be delivered or issued for delivery in this State if the policy conditions eligibility for benefits:  (a) on a prior hospitalization requirement;  (b) provided in an institutional care setting on the receipt of a higher level of institutional care; or  (c) other than waiver of premium, post-confinement, post-acute care, or recuperative benefits on a prior institutionalization requirement.  (2)(a) A long term care insurance policy containing post-confinement, post-acute care, or recuperative benefits clearly must label in a separate paragraph of the policy or certificate entitled "Limitations or Conditions on Eligibility for Benefits" limitations or conditions, including the required number of days of confinement.  (b) A long term care insurance policy or rider that conditions eligibility of post-confinement, post-acute care, or recuperative benefits on the prior receipt of institutional care may not require a prior institutional stay of more than thirty days.  (c) A long term care insurance policy or rider that provides benefits only following institutionalization may not condition these benefits upon admission to a facility for the same or related conditions within a period of less than thirty days after discharge from the institution.  (E) The director may adopt regulations establishing loss ratio standards for long term care insurance policies provided that a specific reference to long term care insurance policies is contained in the regulation.  (F) The following applies to the right of the policyholder to return the policy:  (1) Long term care insurance applicants have the right to return the policy or certificate within thirty days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason. Long term care insurance policies and certificates must have a notice prominently printed on the first page or attached to it stating in substance that the applicant has the right to return the policy or certificate within thirty days of its delivery and to have the premium refunded if, after examination of the policy or certificate, other than a certificate issued pursuant to a policy issued to a group as defined in Section 38-72-40(5)(a), the applicant is not satisfied for any reason.  (2) This subsection applies to denials of applications and any refund must be made within thirty days of the return or denial.  (G)(1) An outline of coverage must be delivered to a prospective applicant for long term care insurance at the time of initial solicitation through means that prominently direct the attention of the recipient to the document and its purpose.  (a) The director or his designee shall prescribe a standard format, including style, arrangement, and overall appearance, and the content of an outline of coverage.  (b) For agent solicitations, an agent shall deliver the outline of coverage before the presentation of an application or enrollment form.  (c) For direct response solicitations, the outline of coverage must be presented in conjunction with an application or enrollment form.  (d) In the case of a policy issued to a group defined in Section 38-72-40(5)(a), an outline of coverage is not required to be delivered, provided that the information described in this subsection is contained in other materials relating to enrollment. Upon request, these other materials must be made available to the director.  (2) The outline of coverage must include a:  (a) description of the principal benefits and coverage provided in the policy;  (b) statement of the principal exclusions, reductions, and limitations contained in the policy;  (c) statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including a reservation in the policy of a right to change the premium. Continuation or conversion provisions of group coverage must be described specifically;  (d) statement that the outline of coverage is a summary only, not a contract of insurance, and that the policy or group master policy contains governing contractual provisions;  (e) description of the terms under which the policy or certificate may be returned and premium refunded;  (f) brief description of the relationship of cost of care and benefits;  (g) statement that discloses to the policyholder or certificate holder whether the policy is intended to be a federally tax-qualified long term care insurance contract under 7702B(b) of the Internal Revenue Code of 1986, as amended.  (H) A certificate issued pursuant to a group long term care insurance policy delivered or issued for delivery in this State must include a:  (1) description of the principal benefits and coverage provided in the policy;  (2) statement of the principal exclusions, reductions, and limitations contained in the policy; and  (3) statement that the group master policy determines governing contractual provisions.  (I) If an application for a long term care insurance contract or certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than thirty days after the date of approval.  (J) At the time of policy delivery, a policy summary must be delivered for an individual life insurance policy that provides long term care benefits within the policy or by rider. For direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request but, regardless of a request, shall make the delivery no later than at the time of policy delivery. In addition to complying with all applicable requirements, the summary also must include:  (1) an explanation of how the long term care benefit interacts with other components of the policy, including deductions from death benefits;  (2) an illustration of the amount of benefits, the length of benefits, and the guaranteed lifetime benefits, if any, for each covered person;  (3) exclusions, reductions, and limitations on benefits of long term care;  (4) if applicable to the policy type:  (a) a disclosure of the effects of exercising other rights under the policy;  (b) a disclosure of guarantees related to long term care costs of insurance charges; and  (c) current and projected maximum lifetime benefits; and  (5) the provisions of the policy summary listed in this subsection may be incorporated into a basic illustration required to be delivered in accordance with regulation 69-40, Life Insurance Policy Illustration Regulation or into the life insurance summary which is required to be delivered in accordance with regulation 69-30, Solicitation of Life Insurance Regulation.  (K) When a long term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in benefit payment status, a monthly report must be provided to the policyholder. The report must include:  (1) long term care benefits paid out during the month;  (2) an explanation of changes in the policy, such as death benefits or cash values, due to long term care benefits being paid out;  (3) the amount of long term care benefits existing or remaining.  (L) If a claim under a long term care insurance contract is denied, the issuer, within sixty days of the date of a written request by the policyholder or certificate holder, or a representative of the issuer, shall:  (1) provide a written explanation of the reasons for the denial; and  (2) make available all information directly related to the denial.  (M) A policy or rider advertised, marketed, or offered as long term care or nursing home insurance must comply with the provisions of this chapter.  (N) All insurers issuing long term care insurance policies must offer, at time of application, an optional benefit which provides that when an insured meets the requirements under the policy that care in a nursing home or community residential care facility is necessary, the insured shall have the option of receiving necessary care in the home or community, with daily benefits at the same level that would have been paid for care in a nursing home or community residential care facility. This optional coverage may be provided by rider to the policy or included as part of the policy.  Notwithstanding the foregoing, insurers issuing long term care insurance policies may offer a home health care benefit which would provide benefits when care in the home only is necessary. This home health care benefit may provide lesser benefits than that provided by the policy for care in a nursing home or community residential care facility and may be provided either by rider to the policy or included as part of the policy.  HISTORY: 1988 Act No. 466, Section 6; 1990 Act No. 409, Section 3; 1991 Act No. 165, Section 1; 1993 Act No. 181, Sections 780-782; 2008 Act No. 274, Section 4, eff June 4, 2008.
 (A) For a policy or certificate that has been in force for less than six months, an insurer may rescind a long term care insurance policy or certificate or deny an otherwise valid long term care insurance claim upon a showing of misrepresentation that is material to the acceptance of coverage.  (B) For a policy or certificate that has been in force for at least six months but less than two years, an insurer may rescind a long term care insurance policy or certificate or deny an otherwise valid long term care insurance claim upon a showing of misrepresentation that is both material to the acceptance for coverage and which pertains to the condition for which benefits are sought.  (C) After a policy or certificate has been in force for two years, it is not contestable upon the grounds of misrepresentation alone; this policy or certificate may be contested only upon a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health.  (D)(1) A long term care insurance policy or certificate may be field issued if the compensation to the field issuer is not based on the number of policies or certificates issued.  (2) For purposes of this section, "field issued" means a policy or certificate issued by a producer or a third party administrator pursuant to the underwriting authority granted to the producer or third party administrator by an insurer and using the insurer's underwriting guidelines.  (E) If an insurer has paid benefits under the long term care insurance policy or certificate, the benefit payments may not be recovered by the insurer if the policy or certificate is rescinded.  (F) If the insured dies, this section does not apply to the remaining death benefit of a life insurance policy that accelerates benefits for long term care. In this situation, the remaining death benefits under these policies are as provided by Section 38-63-220(d). In all other situations, this section applies to life insurance policies that accelerate benefits for long term care.  HISTORY: 2008 Act No. 274, Section 1, eff June 4, 2008.
 Each insurer offering long-term care insurance shall, as a protection against unintentional lapse, comply with the following:  (1)(a)(i) No individual long-term care policy or certificate may be issued until the insurer has received from the applicant a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium. The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation must not constitute acceptance of any liability on the third party for services provided to the insured. The form used for the written designation must provide space clearly designated for listing at least one person. The designation must include each person's full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver must state: "Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until thirty (30) days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice." The insurer shall notify the insured of the right to change this written designation no less often than once every two years.  (ii) For existing long-term care policies, the insurer must provide written notice to the insured that they may make a written designation of a least one person, in addition to the insured, who is to receive notice of lapse or termination of the policy or certificate. The notice called for in this subsection must be provided to the insured within ninety days of the effective date of this section. As provided in this subitem, the insurer shall notify the insured of the right to change this written designation no less often than once every two years.  (b) When the policyholder or certificate holder pays a premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in subsubitem (i) of subitem (a) need not be met until sixty days after the policyholder or certificate holder is no longer on such a payment plan. The application or enrollment form for such policies or certificates must clearly indicate the payment plan selected by the applicant.  (c) Lapse or termination for nonpayment of a premium. No individual long-term care policy or certificate shall lapse or be terminated for nonpayment of a premium unless the insurer, at least thirty days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to subsubitem (i) of subitem (a), at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice must be given by first class United States mail, postage prepaid, and notice may not be given until thirty days after a premium is due and unpaid. Notice must be considered to have been given as of five days after the date of mailing.  (2) In addition to the requirement in item (1), a long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage in the event of lapse or termination if the insurer is provided proof that the policyholder or certificate holder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy expired. This option must be available to the insured if requested within five months after termination and must allow for the collection of the past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity must not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate.  HISTORY: 2014 Act No. 209 (H.4916), Section 1, eff June 2, 2014.  Code Commissioner's Note  At the direction of the Code Commissioner, in subsection (1)(a)(i), "either" was deleted in the first sentence following "from the applicant", to correct a typographical error.
 (A) Except as provided in subsection (B), a long term care insurance policy may not be delivered or issued for delivery in this State unless the policyholder or certificate holder has been offered the option of purchasing a policy or certificate including a nonforfeiture benefit. The offer of a nonforfeiture benefit may be in the form of a rider that is attached to the policy. If the policyholder or certificate holder declines the nonforfeiture benefit, the insurer shall provide a contingent benefit upon lapse that must be available for a specified period of time following a substantial increase in premium rates.  (B) When a group long term care insurance policy is issued, the offer required in subsection (A) must be made to the group policyholder. However, if the policy is issued as group long term care insurance as defined in Section 39-72-40(5)(d) other than to a continuing care retirement community or other similar entity, the offering must be made to each proposed certificate holder.  (C) The director may promulgate regulations specifying the type or types of nonforfeiture benefits to be offered as part of long term care insurance policies and certificates, the standards for nonforfeiture benefits, and the rules regarding contingent benefit upon lapse, including a determination of the specified period of time during which a contingent benefit upon lapse will be available and the substantial premium rate increase that triggers a contingent benefit upon lapse as described in subsection (A).  HISTORY: 2008 Act No. 274, Section 1, eff June 4, 2008.
 (A)(1) An individual may not sell, solicit, or negotiate long term care insurance unless the individual is licensed as an insurance producer for accident and health or life and has completed a one-time training course by July 1, 2009, and ongoing training every twenty-four months after that time. The training must meet the requirements provided in subsection (B).  (2) The training requirements of subsection (B) may be approved as continuing education courses under Section 38-43-106.  (B)(1) The one-time training required by this section must be no less than eight hours and the ongoing training required by this section must be no less than four hours.  (2) The training required under item (1) consists of topics related to long term care insurance, long term care services, and, if applicable, qualified state long term care insurance partnership programs including, but not limited to:  (a) state and federal regulations and requirements and the relationship between qualified state long term care insurance partnership programs and other public and private coverage of long term care services including Medicaid;  (b) available long term care services and providers;  (c) changes or improvements in long term care services or providers;  (d) alternatives to the purchase of private long term care insurance;  (e) the effect of inflation on benefits and the importance of inflation protection; and  (f) consumer suitability standards and guidelines.  (3) The training required by this section does not include training that is insurer or company product specific or that includes any sales or marketing information, materials, or training, other than those required by state or federal law.  (C)(1) An insurer subject to the provisions of this chapter shall obtain verification that a producer receives training required by subsection (A)(1) before a producer is permitted to sell, solicit, or negotiate the insurer's long term care insurance products, maintain records subject to the state's record retention requirements, and make that verification available to the director upon request.  (2) An insurer subject to the provisions of this chapter shall maintain records with respect to the training of its partnership policies that allows the Department of Insurance to provide assurance to the state Medicaid agency that producers have received the training contained in subsection (B)(2)(a) as required by subsection (A)(1) and that producers have demonstrated an understanding of the partnership policies and their relationship to public and private coverage of long term care, including Medicaid, in this State. These records must be maintained in accordance with the state's record retention requirements and must be made available to the director upon request.  (D) The satisfaction of these training requirements in any state are considered to satisfy the training requirements in this State.  HISTORY: 2008 Act No. 274, Section 1, eff June 4, 2008.
 (A) The director may issue reasonable regulations to promote premium adequacy and to protect the policyholder if there is a substantial rate increase, and to establish minimum standards for producer education, marketing practices, producer compensation, producer testing, penalties, and reporting practices for long term care.  (B) Regulations adopted pursuant to this chapter must be in accordance with the provisions of Chapter 23, Title 1.  HISTORY: 1988 Act No. 466, Section 7; 2008 Act No. 274, Section 5, eff June 4, 2008.
 (A) All premium rate schedules for long-term care insurance must be filed with the department and are subject to the prior approval of the director or his designee.  (1) An insurer may not charge a premium to an insured under a policy or contract of long-term care insurance before the applicable premium rate is filed with and approved by the director or his designee.  (2) An insurer may not change the premium charged to an insured under a policy or contract of long-term care insurance until the applicable premium rate change has been filed with and approved by the director or his designee.  (3) The director or his designee may disapprove or modify premium rates if he determines that the benefits provided are unreasonable in relation to the premiums charged, appear to be inadequate, unfairly discriminatory, or excessive in relation to benefits or appear to have assumptions that are unreasonable in the aggregate or for each assumption individually. The director or his designee shall notify the insurer of his decision in writing as soon as is practicable. In the event of disapproval, the notice must contain the reasons for disapproval, and the insurer is entitled to appeal the decision or determination of disapproval before the Administrative Law Court as provided by law. If no action has been taken to approve or disapprove the premium rates after they have been filed for ninety days, they are deemed to be approved. This period may be extended by the director or his designee for an additional period or periods not to exceed ninety days per period if he gives written notice within the waiting period to the insurer which made the filing that he needs additional time for the consideration of the filing. Upon written application by the insurer, the director or his designee may authorize a filing which he has reviewed to become effective before the expiration of the waiting period or any extension thereof.  (4) The director may disapprove a previously approved filing at any time following notice to the insurer.  (B)(1) Any applicable premium rate or premium rate change of an insurer must be filed with the director or his designee in accordance with guidance issued by the director or his designee by bulletin, regulation, or other method.  (2) In addition to the factors set forth in this chapter and in regulation, the director or his designee shall consider the following to the extent appropriate when determining whether to disapprove or modify a premium rate filing of an insurer:  (a) past and prospective loss experience in and outside the State;  (b) underwriting practice and judgment;  (c) a reasonable margin for reserve needs;  (d) past and prospective expenses, both countrywide and those specifically applicable to the State;  (e) prior approved rate changes; and  (f) any other relevant factors necessary including the factors set forth in the regulation.  (C) The director or his designee may hold a public hearing or solicit public comments as a part of the process to review long-term care insurance rate filings received by the director or his designee. The director or his designee shall provide all individuals present at a public hearing held pursuant to this section an opportunity to offer testimony or written comments. The director or his designee may place time limits on the testimony.  (D)(1) Each premium rate filing and any supporting information filed under this chapter and subject to disclosure must be open to public inspection after the filing becomes effective.  (2) Notwithstanding the provisions of item (1), if the director or his designee holds a public hearing or solicits public comments on a premium rate filing pursuant to subsection (D), he may open to public inspection some or all portions of the filing that are subject to disclosure as a part of the public hearing or solicitation of public comments.  (E) Each decision of the director or his designee about premium rates made under this section is subject to judicial review in accordance with Section 38-3-210.  HISTORY: 2019 Act No. 6 (S.360), Section 2, eff July 1, 2019.
 (A) An insurer must notify a policyholder of a long-term care insurance policy issued in accordance with this chapter of a proposed premium rate increase that affects policyholders no later than thirty days after the filing by the insurer of the premium rate increase with the Department of Insurance. An insurer must provide written notice by first class mail to the last known mailing address of all affected individual and group policyholders and others who are directly billed for group coverage. The notice must:  (1) show the proposed rate;  (2) state that the rate is subject to regulatory approval;  (3) direct policyholders to present their concerns or objections to the Department of Insurance; and  (4) include contact information for the Department of Insurance.  (B) An increase in premium rate may not be implemented until approved by the Department of Insurance pursuant to Section 38-72-75 or until the effective date of the premium rate increase, whichever is later.  HISTORY: 2022 Act No. 195 (H.4832), Section 2, eff May 16, 2022.
 (A) If a provision of this chapter or the application of it to a person or circumstance is for any reason held to be invalid, the remainder of the chapter and the application of the provisions to other persons or circumstances is not affected.  (B) The requirements of this chapter apply to policies delivered or issued for delivery in this State on or after its effective date.  HISTORY: 1988 Act No. 466, Section 8; 2008 Act No. 274, Section 6, eff June 4, 2008.
 Any insurer violating any provision of this chapter is subject to the penalties provided for in Sections 38-5-120 and 38-5-130.  HISTORY: 1988 Act No. 466, Section 9.
 (a) The purposes of this chapter are to:  (1) promote the public welfare by regulating insurance rates to the end that they may not be excessive, inadequate, or unfairly discriminatory and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter;  (2) empower the director or his designee to fix, establish, and promulgate any uniform statistical plan necessary or appropriate to obtain all automobile insurance loss and loss adjustment expense experience, other expense experience, and all other appropriate statistical and financial data from insurers, rating organizations, and advisory organizations engaged in an automobile insurance business in this State to the end that the department shall promulgate the risk classification and territorial plans to be used by all insurers of automobile insurance in this State and in order that the director or his designee may test the risk and territorial differentials previously established against the most recently available loss experience;  (3) provide that investment income accruing to automobile insurers is taken into consideration in the approval of rates or premium charges and in the determination of any net loss incurred by the South Carolina Reinsurance Facility and to make provision for the securing by the department of all necessary or appropriate financial data for purposes of ascertaining and determining the investment income and the profits from realized and unrealized capital gains of each automobile insurer doing business in this State;  (4) provide for reasonable competition for commercial property and casualty insurers of insureds who make large purchases of insurance.  Nothing in this chapter is intended to prohibit or discourage reasonable competition.  (b) This chapter must be liberally interpreted to carry into effect the purposes of this chapter.  HISTORY: Former 1976 Code Section 38-43-10 [1947 (45) 322; 1952 Code Section 37-651; 1962 Code Section 37-651] recodified as Section 38-73-10 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 6; 1993 Act No. 181, Section 783; 2000 Act No. 235, Section 5.
 If, within thirty days after a specific inland marine rate on a risk specially rated by a rating organization subject to Section 38-73-970 has become effective, the director or his designee finds that the filing does not meet the requirements of this chapter, he shall send to the rating organization which made the filing written notice of disapproval of the filing specifying therein in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is no longer effective. This disapproval does not affect any contract made or issued prior to the expiration of the period set forth in the notice.  HISTORY: Former 1976 Code Section 38-43-680 [1947 (45) 322; 1952 Code Section 37-698; 1962 Code Section 37-698] recodified as Section 38-73-1000 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If, within thirty days after a special surety or guaranty filing subject to Section 38-73-980 has become effective, the director or his designee finds that the filing does not meet the requirements of this chapter, he shall send to the insurer or rating organization which made the filing written notice of disapproval of the filing specifying therein in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. This disapproval does not affect any contract made or issued prior to the expiration of the period set forth in the notice.  HISTORY: Former 1976 Code Section 38-43-690 [1947 (45) 322; 1952 Code Section 37-699; 1962 Code Section 37-699] recodified as Section 38-73-1010 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If at any time after the applicable review period provided for in Sections 38-73-990 to 38-73-1010 the director or his designee finds that a filing does not meet the requirements of this chapter, he shall, after a hearing held upon not less than thirty days' written notice to every insurer and rating organization which made the filing, specifying the matters to be considered at the hearing, issue an order specifying in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. Copies of the order must be sent to every insurer and rating organization which made the filing. The order does not affect any contract or policy made or issued prior to the expiration of the period set forth in the order.  HISTORY: Former 1976 Code Section 38-43-700 [1947 (45) 322; 1952 Code Section 37-700; 1962 Code Section 37-700] recodified as Section 38-73-1020 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Any person or organization aggrieved with respect to any filing which is in effect may make written application to the director or his designee for a hearing thereon, except that the insurer or rating organization that made the filing may not proceed under this section. The application shall specify the grounds to be relied upon by the applicant. If, within thirty days after receipt of the application, the director or his designee finds that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, and that the grounds otherwise justify holding a hearing, he shall hold a hearing upon not less than thirty days' written notice to the applicant and to every insurer and rating organization which made the filing. If, after the hearing, the director or his designee finds that the filing does not meet the requirements of this chapter, he shall issue an order specifying in what respects he finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, the filing is considered no longer effective. Copies of the order must be sent to the applicant and to every insurer and rating organization which made the filing. The order does not affect any contract or policy made or issued prior to the expiration of the period set forth in the order.  HISTORY: Former 1976 Code Section 38-43-710 [1947 (45) 322; 1952 Code Section 37-701; 1962 Code Section 37-701] recodified as Section 38-73-1030 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 No manual, minimum, or class rate, rating schedule, rating plan, or rating rule of or with respect to fire and allied lines or inland marine insurance, or any modification of the foregoing, which has been filed pursuant to the requirements of Section 38-73-340 may be disapproved if the rates thereby produced meet the requirements of this chapter.  HISTORY: Former 1976 Code Section 38-43-720 [1947 (45) 322; 1952 Code Section 37-702; 1962 Code Section 37-702] recodified as Section 38-73-1040 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 No manual of classifications, rules, rating plans, or any modification of any of the foregoing for casualty insurance or automobile insurance which establishes standards for measuring variations in hazards or expense provisions, or both, and which has been filed pursuant to the requirements of Section 38-73-520 may be disapproved if the rates thereby produced meet the requirements of this chapter.  HISTORY: Former 1976 Code Section 38-43-730 [1947 (45) 322; 1952 Code Section 37-703; 1962 Code Section 37-703] recodified as Section 38-73-1050 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (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.  HISTORY: Former 1976 Code Section 38-43-740 [1947 (45) 322; 1952 Code Section 37-704; 1962 Code Section 37-704] recodified as Section 38-73-1060 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 1997 Act No. 68, Section 8.
 Under regulations the department promulgates, the director or his designee may, by written order, suspend or modify the requirements of filing as to any kind of insurance, subdivision, or combination thereof or as to classes of risks, the rates for which cannot practicably be filed before they are used. These orders and regulations must be made known to insurers and rating organizations affected thereby. The director or his designee may make any examination he considers advisable to ascertain whether any rates affected by the order meet the standards set forth in Section 38-73-330(2) or Section 38-73-430(4), as the case may be.  HISTORY: Former 1976 Code Section 38-43-750 [1947 (45) 322; 1952 Code Section 37-705; 1962 Code Section 37-705] recodified as Section 38-73-1070 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charge as it may make, furnish to any insured affected by a rate made by it or to the authorized representative of the insured all pertinent information as to the rate. Every rating organization and every insurer which makes its own rates shall provide within this State reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which the rating system has been applied in connection with the insurance afforded him. If the rating organization or insurer fails to grant or reject the request within thirty days after it is made, the applicant may proceed in the same manner as if his application had been rejected. Any party affected by the action of the rating organization or the insurer on the request may, within thirty days after written notice of the action, appeal to the director or his designee, who, after a hearing held upon not less than thirty days' written notice to the appellant and to the rating organization or insurer, may affirm or reverse the action.  HISTORY: Former 1976 Code Section 38-43-760 [1947 (45) 322; 1952 Code Section 37-706; 1962 Code Section 37-706] recodified as Section 38-73-1080 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 The director or his designee shall no less than annually cause to have published and make available a representative sample of the private passenger premiums being charged by at least the twenty insurance companies having the largest market share in each territory to facilitate price comparisons by insureds and prospective insureds who are seeking new coverage.  HISTORY: 1989 Act No. 148, Section 29; 1993 Act No. 181, Section 783.
 The director or his designee, upon his own motion, or upon written complaint, has the power in the first instance to determine whether or not any rate fixed by any individual, bureau, or insurer is unfairly discriminatory. If he concludes, after careful and diligent inquiry and a full hearing and investigation, that there is unfair discrimination, he shall order the discrimination removed and require the individual rate maker, bureau, or insurer to promulgate a rate which is not unfairly discriminatory.  HISTORY: Former 1976 Code Section 38-43-770 [1947 (45) 322; 1952 Code Section 37-707; 1962 Code Section 37-707] recodified as Section 38-73-1090 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A) Any private insurer licensed to underwrite "essential property insurance" as defined by Section 38-75-310(1), notwithstanding any limitations included within this title, may file and use any rates for the coverages detailed within Section 38-75-310(1) which result in insurance premium rates of ninety percent, or less, of the insurance premium rates then approved for the South Carolina Wind and Hail Underwriting Association for use within the coastal area of South Carolina as defined by Section 38-75-310(5). Filings for these insurance premium rates must be made upon forms prescribed by the director or his designee and must apply only to essential property insurance premium rates for the coastal area. Within thirty days after the filing of the rates, the director or his designee must notify the insurer or rating organization filing the rates of his approval or his disapproval of those rates. If the rates are disapproved, then the director or his designee must notify the insurer or the rating organization of the specific reason for disapproval. The director or his designee may extend for up to an additional thirty days the period within which he must approve or disapprove the rates. Any rates received, which are neither approved nor disapproved by the director, must be deemed approved at the expiration of the thirty-day period or, if that period has been extended, at the expiration of the extended period. However, no insurer or rating organization may use rates considered approved under the provisions of this section unless and until the insurer or rating organization has filed a written notice of its intent to use the rates. The notice must be filed with the director or his designee at least ten days before the insurer's or rating organization's use of the deemed rates.  (B) In considering any rate filing for insurance premium rates for essential property insurance in the coastal area or in the seacoast area, the director or his designee, in addition to other factors considered under this title, may consider past and prospective expenses and recoveries associated with catastrophe reinsurance and past and prospective loss experience including windstorm catastrophe models and simulations.  (C) Rating plans for essential property insurance in the coastal area or in the seacoast area, shall include discounts and credits or surcharges and debits calculated upon the following rating factors:  (1) use of storm shutters;  (2) use of roof tie downs;  (3) construction standards;  (4) building codes;  (5) distance from water;  (6) elevation;  (7) flood insurance;  (8) policy deductibles; and  (9) other applicable factors requested by the insurer or rating organization or selected by order of the director involving the risk or hazard. An order issued pursuant to this section must comply with the requirements of Section 1-23-140.  The department may by regulation define how the implementation of these factors qualify for credits or discounts. The regulation must specify what evidence or proof the policyholder or applicant shall present to obtain the credit or discount. This section applies to policies issued or renewed after December 31, 2007.  (D) This section does not preclude any insurer from using consent-to-rate pursuant to Section 38-73-1060 for any essential property insurance risk in the coastal area or the seacoast area of this State.  HISTORY: 1996 Act No. 360 Section 1 and 1996 Act No. 378, Section 1; 2007 Act No. 78, Section 9, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 Notwithstanding any other provision of law, the provisions of Section 38-73-1095(C) and Section 38-75-755 do not apply to an insurer who issues a single or dual interest coverage property insurance policy provided through, placed by, or obtained by the creditor, lender, finance company, financial institution, bank, mortgage company, or entity having a security interest in or mortgage on the property.  HISTORY: 2008 Act No. 326, Section 15, eff June 16, 2008.
 The director or his designee may suspend the license of any rating organization or insurer which fails to comply with an order of the director or his designee within the time limited by the order or any extension thereof which the director or his designee may grant. The director or his designee may not suspend the license of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal therefrom has expired or, if an appeal has been taken, until the order has been affirmed. The director or his designee may determine when a suspension of license becomes effective and it remains in effect for the period fixed by him unless he modifies or rescinds the suspension or until the order upon which the suspension is based is modified, rescinded, or reversed.  HISTORY: Former 1976 Code Section 38-43-130 [1947 (45) 322; 1952 Code Section 37-662; 1962 Code Section 37-662] recodified as Section 38-73-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If at any time it appears to the director or his designee that rates charged for property, casualty, surety, marine, title, or allied lines of insurance in this State are excessive or unreasonable, in that the results of the business of the insurer in this State during the five years immediately preceding the year in which the investigation is made, as indicated by the insurer's annual statements and any supplements to them, show an aggregate operating profit in excess of a reasonable amount, then the director or his designee may order a general reduction in rates which will reduce the operating profit to a reasonable amount. Any reduction ordered by the director or his designee must be applied to the class or classes of risks as the insurer or rating bureau may elect, and they may not be compelled to reduce rates on classes which have not produced a reasonable operating profit for the five-year period. In addition to ordering a general reduction in rates, the director or his designee may also order a pro rata refund of any excessive or unreasonable profits found to have been realized by the insurer, together with interest. The director or his designee shall determine the rate of interest which must be the insurer's average rate of return for the five-year period. Any refund which is ordered must be equitably apportioned among the policyholders entitled to it, and may be given either in the form of a cash refund or as a credit toward future premiums or a combination of these two methods. In determining the question of a reasonable operating profit under this section, the director or his designee as a protection to policyholders shall give proper and reasonable consideration to conflagration liabilities, both within and without this State.  HISTORY: Former 1976 Code Section 38-43-780 [1947 (45) 322; 1952 Code Section 37-708; 1962 Code Section 37-7] recodified as Section 38-73-1100 by 1987 Act No. 155, Section 1; 1988 Act No. 442, Section 1; 1988 Act No. 673, Section 1; 1993 Act No. 181, Section 783.
 The definition of "underinsured motor vehicle" contained in Section 38-77-30(15) may not be used by an insurer unless the insurer reduces his rate for underinsured motorist coverage by an amount determined appropriate by the director or his designee and refunds any such premium that the director or his designee determines is necessary to correspond with the new definition. An insurer may not use the definition in its settlement negotiations unless the insurer has filed and the director or his designee has approved an endorsement to its contract. If an insurer uses the new definition in its negotiations with a person before having the contract endorsed it is an unfair claims practice and, in addition, is bad faith entitling the injured person to reasonable attorney fees, punitive damages, and all actual damages.  HISTORY: 1988 Act No. 503; 1993 Act No. 181, Section 783.
 In order to assure fair implementation of Section 38-73-1100, the department shall promulgate a regulation concerning the calculation and refunding of excess profits. The regulation shall include consideration of:  (1) the total operating profits of each insurer in this State for the lines of insurance enumerated in Section 38-73-1100;  (2) the margin by which any insurer's operating results differ from the insurance industry's total results;  (3) the amount of excessive profits earned after the effective date of the refund provision of Section 38-73-1100;  (4) the insurers that operate in this State as affiliates of a group; and  (5) the development period used to determine if unpaid losses are fairly estimated.  HISTORY: 1988 Act No. 673, Section 2; 1993 Act No. 181, Section 783.
 (A) No automobile insurer or representative of any automobile insurer may wilfully include in a private passenger automobile insurance rate filing any expense or loss which was generated in whole or part by either another line of insurance or general expenses or overhead applicable to all lines, unless the insurer has allocated properly the expense or loss among all its lines of insurance. The insurer's compliance with generally accepted accounting and actuarial principles constitutes a complete defense to an action brought under this section. No insurer may adopt a different method or usage of allocating or treating expenses or losses for purposes of rate filings in South Carolina from that which it uses in other states for similar lines of insurance, unless different treatment is required by statute or regulation.  (B) The director or his designee, at least once every four years, shall make or cause to be made, for each insurer which writes more than one percent of the private passenger market in South Carolina, an examination of each insurer's books, records, and accounts to ensure that the expenses are being allocated or treated properly. In lieu of an independent examination, the director or his designee may request a sworn affidavit from the insurer's controller, accountant, or actuary that the companies' expenses are being allocated and treated properly and that private passenger automobile insureds are not being charged an inequitable or unfair share of the insurer's expenses, acquisition costs, overhead, or other expenses. The director or his designee shall survey for the companies at appropriate intervals a comparison of the acquisition cost of private passenger business in South Carolina versus other similar states in which the companies do business.  (C) An insurer violating the provisions of this section is subject to a civil penalty of not less than twenty-five thousand dollars. A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be imprisoned for not more than ten years or fined not less than ten thousand dollars, or both.  HISTORY: 1989 Act No. 148, Section 32; 1993 Act No. 181, Section 783.
 No penalty may be imposed and no license may be suspended or revoked except upon a written order of the director or his designee, stating his findings, made after a hearing held upon not less than thirty days' written notice to the person or organization specifying the alleged violation.  HISTORY: Former 1976 Code Section 38-43-140 [1947 (45) 322; 1952 Code Section 37-663; 1962 Code Section 37-663] recodified as Section 38-73-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A)(1) This item applies to property and casualty insurance but does not apply to workers' compensation insurance. An insurer may satisfy its obligation to make required filings by becoming a member of, or a subscriber to, a licensed rating organization which makes filings and by authorizing the director or his designee to accept the filings on its behalf. However, notwithstanding another provision of this article, a member or subscriber, within twelve months after its membership or subscribership, may not file to adopt a rate approved for use for the rating organization if the rate is more than the rate in use by the member or subscriber before its membership or subscribership in the rating organization. Further, notwithstanding the provisions of Sections 38-73-1300 and 38-73-1310, a member or subscriber, within twelve months after its membership or subscribership, may not be granted an upward deviation from its rate in use when becoming a member or subscriber. However, if a rate increase for the rating organization is approved within twelve months after an insurer becomes a member or subscriber, the member or subscriber may increase its rates by the same percentage of increase granted the rating organization. Nothing contained in this chapter may be construed to require an insurer to become a member of or a subscriber to a rating organization.  (2) This item applies to workers' compensation insurance. An insurer may satisfy its obligation to make required filings by becoming a member of, or a subscriber to, a licensed rating organization that makes filings and by authorizing the director or his designee to accept the filings on its behalf. However, a licensed rating organization may not satisfy the insurer's obligation to make filings required pursuant to Section 38-73-525.  (B) In addition to other activities not prohibited by this chapter, a rating organization may collect, compile, and disseminate to insurers compilations of past and current premiums of insurers.  HISTORY: Former 1976 Code Section 38-43-910 [1947 (45) 322; 1952 Code Section 37-721; 1962 Code Section 37-721; 1977 Act No. 162] recodified as Section 38-73-1210 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 1998 Act No. 291, Section 2; 2016 Act No. 213 (S.1064), Section 2, eff June 3, 2016.  Effect of Amendment  2016 Act No. 213, Section 2, rewrote (A), establishing that an insurer writing workers' compensation insurance may satisfy its filing obligation by becoming a member of or subscriber to a licensed rating organization.
 Nothing in Section 38-73-1210 applies to self-insurers.  HISTORY: 1998 Act No. 291, Section 3.
 A corporation, an unincorporated association, a partnership, or an individual, whether located within or outside this State, may make application to the director or his designee for a license as a rating organization for the kinds of insurance or subdivisions thereof or, in the case of insurance to which Article 3 of this chapter is applicable, classes of risk or parts or combinations thereof as are specified in its application and shall file therewith:  (1) a copy of its constitution, its articles of agreement or association or certificate of incorporation, and its bylaws, rules, and regulations governing the conduct of its business;  (2) a list of its members and subscribers;  (3) the name and address of a resident of this State upon whom notices or orders of the director or his designee or process affecting the rating organization may be served;  (4) a statement of its qualification as a rating organization.  HISTORY: Former 1976 Code Section 38-43-920 [1947 (45) 322; 1952 Code Section 37-722; 1962 Code Section 37-722] recodified as Section 38-73-1220 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If the director or his designee finds that the applicant is competent, trustworthy, and otherwise qualified to act as a rating organization and that its constitution, articles of agreement or association or certificate of incorporation, and its bylaws, rules, and regulations governing the conduct of its business conform to the requirements of law, he shall issue a license specifying the kinds of insurance or subdivision or class of risk or part or combination thereof for which the applicant is authorized to act as a rating organization. Every application must be granted or denied in whole or in part by the director or his designee within sixty days of the date of its filing with him. Licenses issued pursuant to this section remain in effect for an indefinite term unless sooner suspended or revoked by the director or his designee. The fee for the license is two hundred dollars owed and payable annually by March first.  HISTORY: Former 1976 Code Section 38-43-930 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-723; 1962 Code Section 37-723; 1980 Act No. 306, Section 2] recodified as Section 38-73-1230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Licenses issued pursuant to Section 38-73-1230 may be suspended or revoked by the director or his designee, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this article.  HISTORY: Former 1976 Code Section 38-43-940 [1947 (45) 322; 1952 Code Section 37-724; 1962 Code Section 37-724] recodified as Section 38-73-1240 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Every rating organization shall notify the director or his designee promptly of every change in:  (1) its constitution, its articles of agreement or association or certificate of incorporation, or its bylaws, rules, and regulations governing the conduct of its business;  (2) its lists of members and subscribers;  (3) the name and address of the resident of this State designated by it upon whom notices or orders of the director or his designee or process affecting the rating organization may be served.  HISTORY: Former 1976 Code Section 38-43-950 [1947 (45) 322; 1952 Code Section 37-725; 1962 Code Section 37-725] recodified as Section 38-73-1250 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Subject to rules and regulations which have been approved by the department as reasonable, each rating organization shall permit any insurer, not a member, to be a subscriber to its rating services for any kind of insurance, subdivision, or class of risk or part or combination thereof for which it is authorized to act as a rating organization. If the rating organization refuses to admit an insurer as a subscriber or fails to grant or reject an insurer's application for subscribership within thirty days after it was made, the insurer may request a review by the director or his designee. Upon review the failure to act must be treated as a rejection of the application. If the director or his designee finds at a hearing, held upon at least thirty days' written notice to the rating organization, that the insurer has been refused admittance to the rating organization as a subscriber without justification, he shall order the rating organization to admit the insurer as a subscriber. If he finds that the action of the rating organization was justified, the director or his designee shall make an order affirming its action.  Each rating organization shall furnish its rating services without discrimination to its members and subscribers.  HISTORY: Former 1976 Code Section 38-43-960 [1947 (45) 322; 1952 Code Section 37-726; 1962 Code Section 37-726] recodified as Section 38-73-1260 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Notice of proposed changes in the rules and regulations referred to in Section 38-73-1260 must be given to subscribers.  The reasonableness of any rule or regulation in its application to subscribers must, at the request of any subscriber or any insurer, be reviewed by the director or his designee at a hearing held upon at least thirty days' written notice to the rating organization and to the subscriber or insurer. If the director or his designee finds that the rule or regulation is unreasonable in its application to subscribers, he shall order that the rule or regulation is not applicable to subscribers.  HISTORY: Former 1976 Code Section 38-43-970 [1947 (45) 322; 1952 Code Section 37-727; 1962 Code Section 37-727] recodified as Section 38-73-1270 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 No rating organization may adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.  HISTORY: Former 1976 Code Section 38-43-980 [1947 (45) 322; 1952 Code Section 37-728; 1962 Code Section 37-728] recodified as Section 38-73-1280 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Every member of or subscriber to a rating organization shall adhere to the filings made on its behalf by the organization, except as provided in Sections 38-73-1300 and 38-73-1310.  HISTORY: Former 1976 Code Section 38-43-990 [1947 (45) 322; 1952 Code Section 37-729; 1962 Code Section 37-729] recodified as Section 38-73-1290 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Any insurer or rating organization aggrieved by any order or decision of the director or his designee made without a hearing may, within thirty days after notice of the order to the insurer or organization, make written request to the Administrative Law Court for a hearing. The Administrative Law Court shall hear the party or parties within twenty days after receipt of the request and shall give not less than ten days' written notice of the time and place of the hearing. Within fifteen days after the hearing the Administrative Law Court shall affirm, reverse, or modify the previous action, specifying his reasons therefor. Pending the hearing and decision thereon the director or his designee may suspend or postpone the effective date of his previous action.  HISTORY: Former 1976 Code Section 38-43-150 [1947 (45) 322; 1952 Code Section 37-664; 1962 Code Section 37-664] recodified as Section 38-73-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 A member of or subscriber to a rating organization to whom the provisions of Article 3 of this chapter are applicable may make written application to the director or his designee for permission to file a modification from the class loss costs, schedules, rating plans, or rules respecting any kind of insurance or class of risk within a kind of insurance or any combination of them. The application must specify the basis for the modification. A copy of the application must be sent simultaneously to the rating organization.  HISTORY: Former 1976 Code Section 38-43-1000 [1947 (45) 322; 1952 Code Section 37-730; 1962 Code Section 37-730] recodified as Section 38-73-1300 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2001 Act No. 82, Section 28, eff July 20, 2001.
 A member of or subscriber to a rating organization to whom the provisions of Article 5 of this chapter are applicable may make written application to the department for permission to file a uniform percentage decrease or increase to be applied to the premiums produced by the rating system filed for a kind of insurance or for a class of insurance which is found by the director or his designee to be a proper rating unit for the application of such uniform percentage decrease or increase or for a subdivision of a kind of insurance. The application must specify the basis for the modification and must be accompanied by the data upon which the applicant relies. A copy of the application and data must be sent simultaneously to the rating organization.  HISTORY: Former 1976 Code Section 38-43-1010 [1947 (45) 322; 1952 Code Section 37-731; 1962 Code Section 37-731] recodified as Section 38-73-1310 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2001 Act No. 82, Section 29, eff July 20, 2001.
 Any rating organization acting for insurers to whom the provisions of Article 3 of this chapter are applicable may provide with respect to such insurers for the examination of policies, daily reports, binders, renewal certificates, endorsements, or other evidences of insurance, or the cancellation thereof, and may make reasonable rules governing their submission. The rules shall contain a provision that, in the event an insurer does not within sixty days furnish satisfactory evidence to the rating organization of the correction of any error or omission previously called to its attention by the rating organization, the rating organization shall notify the director or his designee thereof. All information so submitted for examination is confidential.  HISTORY: Former 1976 Code Section 38-43-1030 [1947 (45) 322; 1952 Code Section 37-733; 1962 Code Section 37-733] recodified as Section 38-73-1330 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Any member of or subscriber to a rating organization may appeal to the Administrative Law Court from the action or decision of the rating organization in approving or rejecting any proposed change in or addition to the filings of the rating organization. The Administrative Law Court shall, after a hearing held before it upon not less than thirty days' written notice to the appellant and to the rating organization, issue an order approving the action or decision of the rating organization or directing it to give further consideration to the proposal, or, if the appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, Administrative Law Court may, in the event it finds that the action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings on behalf of its members and subscribers in a manner consistent with its findings, within a reasonable time after the issuance of the order.  If the appeal in the case of an insurer to whom the provisions of Article 5 of this chapter are applicable is based upon the failure of the rating organization to make a filing on behalf of the member or subscriber which is based on a system of expense provisions which differs, in accordance with the right granted in item (2) of Section 38-73-430, from the system of expense provisions included in a filing made by the rating organization, the Administrative Law Court shall, if it grants the appeal, order the rating organization to make the requested filing for use by the appellant. In deciding the appeal the Administrative Law Court shall apply the standards set forth in Section 38-73-430.  The actual cost to the Administrative Law Court, and the Department of Insurance provided it participates in the hearing, in connection with the appeal may be charged by the Administrative Law Court to the parties making the appeal in any proportion he considers proper and must be immediately paid by the respective parties.  HISTORY: Former 1976 Code Section 38-43-1040 [1947 (45) 322; 1952 Code Section 37-734; 1960 (51) 1646; 1962 Code Section 37-734] recodified as Section 38-73-1340 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Notwithstanding the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, 38-73-1410, 38-73-1420, and 38-73-1430, after public hearing the director or his designee may prohibit cooperation among or within property/casualty rating or advisory organizations by insurers or among or within these rating or advisory organizations and insurers in rate making or in other matters within the scope of this chapter, except to the extent that these organizations may compile and disseminate only historic loss data with no mathematical trending or analytical methodologies, upon a finding by the director or his designee that the anti-competitive effects of this cooperation outweigh practical constraints of prohibitions. All property/casualty filings are subject to prior approval by the director or his designee. The provisions of Title 1, Chapter 23 (Administrative Procedures Act) apply to all property/casualty rate filings.  HISTORY: Former 1976 Code Section 38-43-1050 [1947 (45) 322; 1952 Code Section 37-735; 1962 Code Section 37-735] recodified as Section 38-73-1350 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 41(A); 1993 Act No. 181, Section 783.
 Any rating organization serving insurers to which the provisions of Article 3 of this chapter apply may subscribe for or purchase actuarial, technical, or other services and these services must be available to all insurers who are members and subscribers of the organization without discrimination.  HISTORY: Former 1976 Code Section 38-43-1060 [1947 (45) 322; 1952 Code Section 37-736; 1962 Code Section 37-736] recodified as Section 38-73-1360 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 After June 30, 1989, no rating organization may file a rate increase with the department for any previously approved final rate or premium charge for any private passenger automobile insurance coverage. A rating organization may file the pure loss component of the rate or premium charge for any private passenger automobile insurance coverage, by class and territory, for the approval of the director or his designee. The director or his designee may approve the pure loss component of the rate or premium charge for use by the members or subscribers of the rating organization. No member or subscriber may use the approved pure loss component of the rate or premium charge unless and until the expense component of the rate or premium charge has also been filed with the department and approved by the director or his designee pursuant to Section 38-73-1380.  HISTORY: 1989 Act No. 148, Section 41(B); 1993 Act No. 181, Section 783; 2000 Act No. 312, Section 18.
 After June 30, 1989, no member or subscriber of a rating organization may utilize a rate or premium charge for any private passenger automobile insurance coverage unless and until the final rate or premium charge has been filed with the division and approved by the director or his designee. After the effective date of this section, the final rate or premium charge is the pure loss component filed and approved by a rating organization on behalf of its members or subscribers added to the expense component of the rate or premium charge, filed with the department and approved by the director or his designee, by each member or subscriber of a rating organization independently.  Any expense component filed by a member or subscriber of a rating organization may be approved by the director or his designee subject to Section 38-73-1370 and all other requirements of this chapter.  HISTORY: 1989 Act No. 148, Section 41(B); 1991 Act No. 129, Section 1; 1993 Act No. 181, Section 783; 2000 Act No. 312, Section 19.
 (1) After June 30, 1989, the "pure loss component" of the final rate or premium charge for private passenger automobile insurance is that portion of the final rate or premium charge applicable to calendar/accident year incurred losses (the sum of paid losses plus loss reserves including incurred but not reported loss reserves) and loss adjustment expense (those expenses directly related to the payment of claims) in this State, trended to include both the past and prospective loss experience. If the insurer writes one percent or more of the written premium for automobile insurance during the previous calendar year, that insurer must file its own trending methodology as independently derived.  (2) The "expense component" of the final rate or premium charge for private passenger automobile insurance is that portion of the final rate or premium charge applicable to production costs (including commissions and other acquisition expenses), underwriting costs, administrative costs (including the actual costs of taxes, licenses and fees), and profit margin in this State.  (3) The "final rate or premium charge" is the approved pure loss component added to the approved expense component. In the determination of whether the pure loss component should be approved and in the determination of whether the expense component should be approved, neither may be inadequate, excessive, nor unfairly discriminatory and the director or his designee shall take into account investment income from unearned premium and loss reserves, surplus and realized capital gains.  HISTORY: 1989 Act No. 148, Section 41(B); 1993 Act No. 181, Section 783.
 After June 30, 1989, upon the effective date of this section, nothing herein should be construed to require a rating organization or its members or subscribers to immediately refile final rates or premium charges previously approved by the director or his designee for private passenger automobile insurance coverages. Members or subscribers of a rating organization are authorized to continue to use automobile insurance rates or premium charges, approved before the effective date of this section, or decreases from those rates or premium charges filed by the rating organization and, subsequently, approved after the effective date of this section.  HISTORY: 1989 Act No. 148, Section 41(B); 1993 Act No. 181, Section 783.
 After June 30, 1989, the Board of Governors of the South Carolina Reinsurance Facility shall file an expense component for private passenger automobile insurance rate or premium charges after the rating organization with the largest number of members or subscribers has filed a pure loss component for private passenger automobile insurance with the director or his designee. Upon the approval of such component by the director or his designee, those automobile insurers designated pursuant to Section 38-77-590(A), for risks written by them through producers designated pursuant to that same section, shall utilize these final rate or premium charges. Automobile insurers designated pursuant to Section 38-77-590(A) are not required to use those same final rates or premium charges for risks written through their agents not appointed pursuant to Section 38-77-590.  HISTORY: 1989 Act No. 148, Section 41(B); 1993 Act No. 181, Section 783.
 The final rate or premium charge for a private passenger automobile insurance risk ceded to the facility which does not qualify for the safe driver discount in Section 38-73-760(e) is the final rate or premium charge required by Section 38-73-1420 or the final rate or premium charge approved for use by the insurer, whichever is greater.  HISTORY: 1991 Act No. 113, Section 1; 1993 Act No. 181, Section 783.
 After June 30, 1989, the director or his designee may extend the provisions of Sections 38-73-1370, 38-73-1380, 38-73-1400, and 38-73-1410 to other lines of property and casualty insurance, by order, after public hearing, when the determination is made that to do so is in the public interest.  HISTORY: 1989 Act No. 148, Section 41(B); 1993 Act No. 181, Section 783.
 Every group, association, or other organization of insurers, whether located within or outside this State, which assists insurers which make their own filings or rating organizations in rate making by the collection and furnishing of loss or expense statistics or by the submission of recommendations, but which does not make filings under this chapter, is known as an "advisory organization".  HISTORY: Former 1976 Code Section 38-43-1210 [1947 (45) 322; 1952 Code Section 37-741; 1962 Code Section 37-741] recodified as Section 38-73-1510 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Every advisory organization shall file with the department:  (1) a copy of its constitution, its articles of agreement or association or certificate of incorporation, and its bylaws, rules, and regulations governing its activities;  (2) a list of its members;  (3) the name and address of a resident of this State upon whom notices or orders of the director or his designee or process issued at his discretion may be served;  (4) an agreement that the director or his designee may examine the advisory organization in accordance with the provisions of Section 38-73-90.  HISTORY: Former 1976 Code Section 38-43-1220 [1947 (45) 322; 1952 Code Section 37-742; 1962 Code Section 37-742] recodified as Section 38-73-1520 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If, after a hearing, the director or his designee finds that the furnishing of information or assistance involves any act or practice which is unfair, unreasonable, or otherwise inconsistent with the provisions of this chapter, he may issue a written order specifying in what respects the act or practice is unfair, unreasonable, or otherwise inconsistent with the provisions of this chapter and requiring the discontinuance of the act or practice.  HISTORY: Former 1976 Code Section 38-43-1230 [1947 (45) 322; 1952 Code Section 37-743; 1962 Code Section 37-743] recodified as Section 38-73-1530 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 No insurer which makes its own filings nor any rating organization may support its filings by statistics or adopt rate-making recommendations furnished to it by an advisory organization which has not complied with this article or with an order of the director or his designee involving statistics or recommendations issued under Section 38-73-1530. If the director or his designee finds an insurer or rating organization to be in violation of this section, he may issue an order requiring the discontinuance of the violation.  HISTORY: Former 1976 Code Section 38-43-1240 [1947 (45) 322; 1952 Code Section 37-744; 1962 Code Section 37-744] recodified as Section 38-73-1540 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Every group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance is subject to regulation with respect thereto as herein provided, subject, however, with respect to joint underwriting, to all other provisions of this chapter, and, with respect to joint reinsurance, to Sections 38-73-90 to 38-73-130.  HISTORY: Former 1976 Code Section 38-43-1310 [1947 (45) 322; 1952 Code Section 37-751; 1962 Code Section 37-751] recodified as Section 38-73-1710 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If, after a hearing, the director or his designee finds that any activity or practice of any such group, association, or other organization is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, he may issue a written order specifying in what respects the activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter and requiring the discontinuance of the activity or practice.  HISTORY: Former 1976 Code Section 38-43-1320 [1947 (45) 322; 1952 Code Section 37-752; 1962 Code Section 37-752] recodified as Section 38-73-1720 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (a) This chapter applies to (1) fire and allied lines and inland marine insurance, as defined in Section 38-73-310 and (2) casualty insurance, including fidelity, surety, and guaranty bonds, and to all other forms of automobile insurance, in either case on risks located or operations in this State. However, Article 3 and Article 5 of this chapter apply only to the respective classes of insurance as stated in Sections 38-73-310 and 38-73-410.  (b) This chapter does not apply to:  (1) reinsurance, other than joint reinsurance to the extent stated in Article 15 of this chapter;  (2) insurance of vessels or craft or their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine, insurance policies;  (3) accident and health insurance;  (4) insurance against loss of or damage to aircraft or against liability arising out of the ownership, maintenance, or use of aircraft; or  (5) life insurance.  HISTORY: Former 1976 Code Sections 38-43-20 [1947 (45) 322; 1952 Code Section 37-652; 1962 Code Section 37-652] and 38-43-30 [1947 (45) 322; 1952 Code Section 37-653; 1962 Code Section 37-653] recodified as Section 38-73-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 This article is known as the "Property and Casualty Insurance Personal Lines Modernization Act" and applies only to personal lines insurance.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004.
 (A) Except as provided in subsection (B), overall average rate-level increases or decreases, for all coverages combined, of seven percent above or below the insurer's rates then in effect may take effect without prior approval on a file and use basis with respect to rates for fire, allied lines, and homeowner's insurance policies. The seven percent cap does not apply on an individual insured basis.  (B) Notwithstanding another provision of this chapter, for any policies governed by this section, filings that produce rate-level changes within the limitation specified in subsection (A) become effective without prior approval. No more than two rate increases within the limitation specified in subsection (A) may be implemented during any twelve-month period and the second rate-increase filing in the twelve-month period is subject to prior approval.  (C) A rate increase or decrease falling within the limitation in subsection (B) may become effective not less than thirty days after the date of the filing with the director. The filing is considered to meet the requirements of this chapter. If the director finds that this filing is not in compliance with this chapter, he shall issue a written order specifying in detail the provisions with which the insurer has not complied and state a reasonable period in which the filing is considered no longer effective. An order by the director pursuant to this section that is issued more than thirty days from the date on which the director received the rate filing is on a prospective basis only and does not affect any contract issued or made before the effective date of the order.  (D) Rate filings falling outside the limitation specified in subsection (B) are subject to the prior approval of the director. The director shall approve or disapprove these filings in accordance with the provisions of Sections 38-73-960 and 38-73-990.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004; 2006 Act No. 332, Section 8, eff June 1, 2006.
 (A) The director may declare a line of insurance competitive by providing public notice on the department website and in major newspapers in South Carolina of the intention of declaring a market competitive in sixty days. A separate notice must be sent to the Consumer Advocate. A report that provides the support for that declaration must be available upon request and posted on the department's website. A party may send a request to the department requesting a public hearing before the Administrative Law Court. If a public hearing is requested, the department shall cooperate in establishing a hearing.  (B) The following factors must be considered by the director for purposes of determining if a reasonable degree of competition exists in a particular line of insurance:  (1) the number of insurers or groups of affiliated insurers providing coverage in the market;  (2) measures of market concentration and changes of market concentration over time;  (3) ease of entry and the existence of financial or economic barriers that could prevent new firms from entering the market;  (4) the extent to which any insurer or group of affiliated insurers controls all or a portion of the market;  (5) whether the total number of companies writing the line of insurance in this State is sufficient to provide multiple options;  (6) the availability of insurance coverage to consumers in the markets by specific geographic area, by line of insurance, and by class of risk; and  (7) the opportunities available to consumers in the market to acquire pricing and other consumer information.  Each factor must indicate a competitive market in order for a determination that there is a competitive market to be made.  (C) The director shall monitor the degree and continued existence of competition in this State on an on-going basis. The director may utilize existing relevant information, analytical systems, and other sources, or rely on a combination of them. Activities may be conducted internally within the insurance department, in cooperation with other state insurance departments, through outside contractors, or in any other appropriate manner.  (D) An affected person or organization may make a written request to the director or his designee to initiate a hearing to determine whether a particular line of insurance continues to be competitive. The request for hearing must specify the grounds to be relied upon by the applicant. Within thirty days after the receipt of the request, the director or his designee shall transmit the request for hearing to the Administrative Law Court.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004.
 (A) In a line of insurance declared competitive, each insurer shall file with the director all rates, supplementary rate information, and supporting information for competitive markets at least thirty days before the proposed effective date. The director or his designee may give written notice, within thirty days of the receipt of the filing, that additional time is needed, not to exceed thirty days from the date of the notice, to consider the filing. Upon written application of the insurer, the director or his designee may authorize rates to be effective before the expiration of the waiting period or an extension of it. A filing is considered to meet the requirements of this chapter and to become effective unless disapproved pursuant to this section by the director or his designee before the expiration of the waiting period or an extension of it. Residual market mechanisms or advisory organizations may file residual market rates.  (B) The filing is considered in compliance with the filing provisions of this section unless the director or his designee informs the insurer within ten days after receipt of the filing as to what supplementary rate information or supporting information is required to complete the filing.  (C) An insurer may file its rates by either filing its final rates or by filing a multiplier and, if applicable, an expense-constant adjustment to be applied to prospective loss costs that have been filed by a rating organization on behalf of the insurer as permitted by this chapter.  (D) All rates, supplementary rate information, and any supporting information filed pursuant to this chapter is open to public inspection after the filing becomes effective.  (E) With respect to applications for rate increases for fire, allied lines, and homeowner's insurance that exceed the seven percent cap as provided for in Section 38-73-260(A) and if an applicant insurer had earned premiums in this State in the previous calendar year of more than ten million dollars for the line or type of insurance for which the rate increase is sought, the director or his designee shall provide a copy of the filing to the Consumer Advocate or, in the alternative, shall direct the insurer to provide a copy simultaneously to the Consumer Advocate. Within ten business days of the receipt of the filing, the Consumer Advocate may request from the insurer additional information. A copy of the request must be served on the director or his designee. Within ten business days of the receipt of the information sought, the Consumer Advocate shall inform the insurer and the director if, in his opinion, the filing is not in compliance with this chapter and specify in detail the reason for his opinion. If the filing is accepted by the director and becomes effective, the Consumer Advocate, upon good cause shown, may request a hearing before the Administrative Law Court. An order of the administrative law judge issued pursuant to the provisions of this section is on a prospective basis only and does not affect any contract issued or made before the effective date of the order.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004; 2006 Act No. 332, Section 9, eff June 1, 2006; 2022 Act No. 195 (H.4832), Section 8, eff May 16, 2022.  Effect of Amendment  2022 Act No. 195, Section 8, in (C), substituted "a rating organization" for "an advisory organization".
 (A) If the director or his designee determines that competition does not exist in a line of insurance and issues a ruling to that effect pursuant to Section 38-73-230, the rates applicable to insurance sold in that market must be regulated pursuant to Section 38-73-260. The director may simply declare a line of insurance noncompetitive and release a report providing the support for that decision. The decision may be appealed to the Administrative Law Court. The market is considered not competitive during the appeal process.  (B) A rate filing in effect at the time the director or his designee determines that competition does not exist pursuant to Section 38-73-230 must be considered to be in compliance with the laws of this State unless disapproved pursuant to the procedures and rating standards contained in Section 38-73-260 applicable to noncompetitive markets.  (C) An insurer having a rate filing in effect at the time the director determines that competition does not exist pursuant to Section 38-73-240 may be required to furnish supporting information within thirty days of a written request by the director or his designee.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004.
 (A) Except as provided in subsection (B), overall average rate-level increases or decreases, for all coverages combined, of seven percent above or below the insurer's rates then in effect may take effect without prior approval on a file and use basis with respect to rates for fire, allied lines, and homeowner's insurance policies. The seven percent cap does not apply on an individual insured basis.  (B) Notwithstanding another provision of this chapter, for any policies governed by this section, filings that produce rate-level changes within the limitation specified in subsection (A) become effective without prior approval. No more than two rate increases within the limitation specified in subsection (A) may be implemented during a twelve-month period and the second rate increase filing in the twelve-month period is subject to prior approval.  (C) A rate increase or decrease falling within the limitation in subsection (B) may become effective not less than thirty days after the date of the filing with the director. The filing is considered to meet the requirements of this chapter. If the director finds that this filing is not in compliance with this chapter, he shall issue a written order specifying in detail the provisions with which the insurer has not complied and state a reasonable period in which the filing is considered no longer effective. An order by the director pursuant to this section that is issued more than thirty days from the date on which the director received the rate filing is on a prospective basis only and does not affect a contract issued or made before the effective date of the order.  (D) Rate filings falling outside the limitation specified in subsection (B) are subject to the prior approval of the director or his designee. The director or his designee shall approve or disapprove these filings pursuant to the provisions of Sections 38-73-960 and 38-73-990.  (E) With respect to applications for rate increases for fire, allied lines, and homeowner's insurance that exceed the seven percent cap as provided in subsection (A) and if an applicant insurer had earned premiums in this State in the previous calendar year of more than ten million dollars for the line or type of insurance for which the rate increase is sought, the director or his designee shall provide a copy of the filing to the Consumer Advocate or, in the alternative, shall direct the insurer to provide a copy simultaneously to the Consumer Advocate. Within ten business days of the receipt of the filing, the Consumer Advocate may request from the insurer additional information. A copy of the request must be served on the director or his designee. Within ten business days of the receipt of the information sought, the Consumer Advocate shall inform the insurer and the director if, in his opinion, the filing is not in compliance with this chapter and specify in detail the reason for his opinion. If the filing is accepted by the director and becomes effective, the Consumer Advocate, upon good cause shown, may request a hearing before the Administrative Law Court. An order of the administrative law judge issued pursuant to the provisions of this section is on a prospective basis only and does not affect any contract issued or made before the effective date of the order.  (F)(1) Nothing in this section prevents the director or his designee from considering the impact on individual territories or individual insureds when determining whether the rate is excessive, inadequate, or unfairly discriminatory. Rate level increases or decreases falling within the limitation specified in this subsection must comply with the requirements of this chapter prohibiting rate increases from being excessive, inadequate, or unfairly discriminatory.  (2) With respect to fire, allied lines, and homeowner's rates, the director or his designee shall specifically review all rate filings made on or after June 1, 2007, to ensure that each insurer's rates for policies that exclude wind coverage reflect a discount commensurate with that insurer's previously filed surcharge for policies that include wind coverage.  (3) This subsection does not apply to private passenger automobile insurance nor to insurance against liability arising out of the ownership, maintenance, or the use of:  (a) an individual private passenger automobile as defined in Section 38-77-30(5.5)(a); or  (b) property having wheels.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004; 2006 Act No. 332, Section 10, eff June 1, 2006; 2007 Act No. 78, Section 8, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 The director shall utilize, develop, or cause to be developed, a consumer information system which provides and disseminates price and other relevant information on a readily available basis to purchasers of homeowner's, private passenger nonfleet automobile, or property insurance for personal, family, or household needs. The director may utilize, develop, or cause to be developed, a consumer information system which provides and disseminates price and other relevant information on a readily available basis to purchasers of insurance for commercial risks and personal risks not otherwise specified. The activity may be conducted internally within the insurance department, in cooperation with other state insurance departments, through outside contractors, or in another appropriate manner. As necessary and appropriate, the director, insurers, advisory organizations, statistical agents, and other persons or organizations involved in conducting the business of insurance in this State, pursuant to the provisions of this chapter, shall cooperate in the development and utilization of a consumer information system.  HISTORY: 2004 Act No. 290, Section 1, eff July 29, 2004; 2006 Act No. 332, Section 11, eff June 1, 2006.
 If any kind of insurance, subdivision, or combination thereof or type of coverage subject to this chapter is also subject to regulation by another rate regulatory act of this State or other law of this State, an insurer to which the other act or law and this chapter are otherwise applicable shall file with the department a designation as to which rate regulatory chapter or act or law is applicable to it with respect to that kind of insurance, subdivision, or combination thereof or type of coverage.  HISTORY: Former 1976 Code Section 38-43-40 [1947 (45) 322; 1952 Code Section 37-654; 1962 Code Section 37-654] recodified as Section 38-73-30 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 This article applies only to fire and allied lines and inland marine insurance, on risks located in this State. Inland marine insurance includes insurance (a) defined by statute or by interpretation thereof, (b) if not so defined or interpreted, defined by ruling of the director or his designee, or (c) as established by general custom of the business as inland marine insurance. This article does not apply to automobile insurance nor to insurance against liability arising out of the ownership, maintenance, or use of motor vehicles.  HISTORY: Former 1976 Code Section 38-43-310 [1947 (45) 322; 1952 Code Section 37-671; 1962 Code Section 37-671] recodified as Section 38-73-310 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If any kind of insurance, subdivision, or combination thereof or type of coverage subject to this article is also subject to regulation under Article 5 of this chapter, an insurer to which both articles are otherwise applicable shall file with the department a designation as to which regulatory article shall be applicable to it with respect to that kind of insurance, subdivision, or combination thereof or type of coverage.  HISTORY: Former 1976 Code Section 38-43-320 [1947 (45) 322; 1952 Code Section 37-672; 1962 Code Section 37-672] recodified as Section 38-73-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Absence of credit information may be used by an insurer for underwriting purposes only if the insurer presents information satisfactory to the director that the absence is related to the risk.  HISTORY: 2004 Act No. 290, Section 5, eff July 29, 2004.
 Rates must be made in accordance with the following provisions:  (1) Manual, minimum, and class rates, rating schedules, or rating plans must be made and adopted, except in the case of specific inland marine rates on risks specially rated.  (2) Rates may not be excessive, inadequate, or unfairly discriminatory. Due consideration must be given for installation and maintenance of nationally recognized hazard reducing systems.  (3) Due consideration must be given to past and prospective loss experience within and outside this State, to the conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers, to past and prospective expenses, both countrywide and those specially applicable to this State, and to all other relevant factors within and outside this State, and in the case of fire insurance rates consideration must be given to the experience of the fire insurance business during a period of not less than the most recent five-year period for which the experience is available.  Except to the extent necessary to meet the provisions of item (2) of this section, uniformity among insurers in any matters within the scope of this section is neither required nor prohibited. Rates made in accordance with this section may be used subject to the provisions of this chapter.  HISTORY: Former 1976 Code Section 38-43-330 [1947 (45) 322; 1952 Code Section 37-673; 1962 Code Section 37-673; 1975 (59) 192] recodified as Section 38-73-330 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Every insurer shall file with the department, except as to inland marine risks which by general custom of the business are not written according to manual rates or rating plans and except as to exempt commercial policies, every manual, minimum, or class rate, rating schedule or rating plan, and every other rating rule and every modification of any of these which it proposes to use. The filing exemption shall not apply to loss cost filings by advisory or rating organizations. Every filing shall state the proposed effective date and shall indicate the character and extent of coverage contemplated. Specific inland marine rates on risks specially rated, made by a rating organization, must be filed with the department.  HISTORY: Former 1976 Code Section 38-43-340 [1947 (45) 322; 1952 Code Section 37-674; 1962 Code Section 37-674] recodified as Section 38-73-340 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2000 Act No. 235, Section 6; 2002 Act No. 300, Section 2, eff January 1, 2003.
 The department may promulgate statistical plans, reasonably adapted to each of the rating systems on file with the department, which may be modified from time to time and which must be used thereafter by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid him in determining whether rating systems comply with the standards set forth in Sections 38-73-330 and 38-73-430, as the case may be. The plans may also provide for the recording and reporting of expense experience items which are specially applicable to this State and are not susceptible of determination by a prorating of countrywide expense experience. In promulgating these plans, the department shall give due consideration to the rating systems on file with it and, in order that such plans may be as uniform as is practicable among the several states, to the form of the plans used for rating systems in other states. The department may designate one or more rating organizations or other agencies to assist him in gathering the experience and making compilations thereof. These compilations must be made available, subject to plans promulgated by the department, to insurers and rating organizations.  HISTORY: Former 1976 Code Section 38-43-50 [1947 (45) 322; 1952 Code Section 37-655; 1962 Code Section 37-655; 1974 (58) 2718] recodified as Section 38-73-40 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 7; 1993 Act No. 181, Section 783.
 This article applies only to casualty insurance, including fidelity, surety, and guaranty bonds, and to all other forms of automobile insurance, on risks or operations in this State.  HISTORY: Former 1976 Code Section 38-43-410 [1947 (45) 322; 1952 Code Section 37-681; 1962 Code Section 37-681] recodified as Section 38-73-410 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 If any kind of insurance, subdivision, or combination thereof or type of coverage subject to this article is also subject to regulation under Article 3 of this chapter, an insurer to which both articles are otherwise applicable shall file with the department a designation as to which regulatory article shall be applicable to it with respect to that kind of insurance, subdivision, or combination thereof or type of coverage.  HISTORY: Former 1976 Code Section 38-43-420 [1947 (45) 322; 1952 Code Section 37-682; 1962 Code Section 37-682] recodified as Section 38-73-420 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Absence of credit information may be used by an insurer for underwriting purposes only if the insurer presents information satisfactory to the director that the absence is related to the risk.  HISTORY: 2004 Act No. 290, Section 6, eff July 29, 2004.
 Rates must be made in accordance with the following provisions:  (1) Due consideration must be given to past and prospective loss experience within and outside this State, to catastrophe hazards, if any, to a reasonable margin for underwriting profit and contingencies, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers, to past and prospective expenses, both countrywide and those specially applicable to this State, and to all other relevant factors within and outside of this State.  (2) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of the insurer or group with respect to any kind of insurance or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.  (3) Risks may be grouped by classifications for the establishment of rates and minimum premiums, and classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring any variations in hazards or expense provisions, or both, that can be demonstrated to have a probable effect upon losses or expenses.  (4) Rates may not be excessive, inadequate, or unfairly discriminatory.  (5) Due consideration must be given to assessments for purposes such as the guaranty fund, wind and hail joint underwriting association, and similar mechanisms.  Except to the extent necessary to meet the provisions of item (4) of this section, uniformity among insurers in any matters within the scope of this section is neither required nor prohibited.  HISTORY: Former 1976 Code Section 38-43-430 [1947 (45) 322; 1952 Code Section 37-683; 1962 Code Section 37-683] recodified as Section 38-73-430 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2004 Act No. 315, Section 1, eff October 12, 2004.
 In determining the premium rates to be charged on automobile insurance, it is unlawful to consider race, religion, national origin, or economic status.  HISTORY: Former 1976 Code Section 38-37-360 [1962 Code Section 37-591.16; 1974 (58) 2718] recodified as Section 38-73-440 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Two dollars of the yearly premium for uninsured motorist coverage is directed to be paid to the South Carolina Department of Motor Vehicles to be allocated in the manner provided in Section 56-10-552 on a quarterly basis. Interest earned by the "Uninsured Fund" must be retained by that fund. There is no requirement for an insurer or an agent to offer underinsured motorist coverage at limits less than the statutorily required bodily injury or property damage limits.  HISTORY: Former 1976 Code Section 56-9-840 [1962 Code Section 46-750.33:1; 1971 (57) 854; 1974 (58) 2718] recodified as Section 38-73-470 by 1987 Act No. 155, Section 1; Reenacted, 1991 Act No. 11, Section 1; 1993 Act No. 181, Section 787; 1993 Act No. 181, Section 783; 1997 Act No. 154, Section 3; 2002 Act No. 324, Section 9, eff July 1, 2002; 2012 Act No. 264, Section 1, eff June 18, 2012; 2016 Act No. 275 (S.1258), Section 10, eff July 1, 2016.  Editor's Note  2002 Act No. 324, Section 12, provides as follows:  "This act takes effect July 1, 2002; provided, however, that Section 56-10-650 and Sections 5, 6, and 9 are effective one hundred eighty days after the latter of certification by the department to the President Pro Tempore of the Senate and the Speaker of the House of Representatives that the program has been implemented and is fully prepared to accept data transmitted by the insurers or publication of final regulations by the department."  Effect of Amendment  2016 Act No. 275, Section 10, amended the section, providing that all or a portion of the fees or fines collected by the department of motor vehicles shall be credited to the state highway fund.
 An automobile insurance contract sold on the basis of a group plan or contract pursuant to Section 38-77-130 shall have a rate not less than five percent less than the individual rate for which the insurer markets a substantially similar policy.  HISTORY: Former 1976 Code Section 38-37-350 [1962 Code Section 37-591.15; 1974 (58) 2718] recodified as Section 38-73-480 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 To secure fair, reasonable, adequate, and nondiscriminatory rates for workers' compensation insurance the director or his designee shall approve the rate for each classification under which workers' compensation insurance is written, which rate and classification must be the same for all insurers. The director or his designee shall, in approving the rates, make use of the experience data which may be available and any other helpful information that may be obtainable.  A proceeding under this section is considered a proceeding to fix or alter rates for consumer services in relation to the duties of the Division of Consumer Advocacy.  HISTORY: Former 1976 Code Section 42-5-90 [1936 (39) 1231; 1937 (40) 613; 1942 Code Section 7035-76; 1952 Code Section 72-409; 1962 Code Section 72-409; 1960 (51) 1646; 1980 Act No. 517 Part II, Section 20] recodified as Section 38-73-490 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 The director or his designee may:  (1) disapprove a previously approved rate for any classification for workers' compensation insurance upon a finding that the rate for that classification is excessive, inadequate, or unfairly discriminatory;  (2) require the division of a particular classification into separate classifications, or the joining of separate classifications into one classification, upon a finding that such action is in the public interest;  (3) direct that a particular risk be classified in a particular classification upon a finding that a risk is classified incorrectly;  (4) disapprove an experience modification rate for workers' compensation insurance upon a finding that the rate is excessive, inadequate, or unfairly discriminatory. This includes an experience modification rate that fails to account for third party reimbursements, including the Second Injury Fund. Appeals regarding experience modification rates must first be exhausted through the National Council on Compensation Insurance's dispute resolution process prior to appealing with the Department of Insurance.  Appeals to the department must be filed within one year of policy expiration date or cancellation date, whichever comes first.  HISTORY: 1990 Act No. 321, Section 1; 1990 Act No. 600, Section 1; 1993 Act No. 181, Section 783; 2000 Act No. 312, Section 17; 2007 Act No. 111, Pt II, Section 1, eff July 1, 2007, applicable to injuries that occur on or after that date.
 Reasonable regulations and plans may be promulgated by the department for the interchange of data necessary for the application of rating plans.  HISTORY: Former 1976 Code Section 38-43-60 [1947 (45) 322; 1952 Code Section 37-656; 1962 Code Section 37-656] recodified as Section 38-73-50 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A) For the purpose of uniformity and equality the director or his designee shall approve a system of merit rating for use in the writing of workers' compensation insurance. No system of merit rating except the one so approved may be used.  (B) This system of merit rating shall include a credit of at least five percent for an insured who participates in a program designed to prevent the use of drugs or alcoholic beverages on the job by employees of the insured. The credit must be actuarially sound and filed with the director or his designee. However, if the director determines that a credit of at least five percent is not actuarially sound, the director shall allow and order a credit of less than five percent which is actuarially sound. The director or his designee shall provide for certification of an employer drug prevention program and shall promulgate regulations for the implementation of this subsection including, but not limited to, the establishment of guidelines or a plan defining a qualified employer drug prevention program eligible for the credit which shall be used by the insurer unless the insurer has established its own guidelines or plan. In the establishment of guidelines or a plan by the director or insurer concerning a qualified drug prevention program eligible for the credit, the guidelines or plan shall include the policy statement and employee notification requirement pursuant to Section 41-1-15.  (C) The testing procedure established by the insurer, employer, or his designee, or, approved by the director, must include a provision for random sampling of all persons who receive wages and compensation in any form from the employer. If a second test is administered, the testing procedure may allow for a single sample to be split for use in the first and second tests. Positive test results must be provided in writing to the employee within twenty-four hours of the time the employer receives the test results. Each employer must keep records of each test for up to one year.  HISTORY: Former 1976 Code Section 42-5-100 [1936 (39) 1231; 1937 (40) 613; 1942 Code Section 7035-76; 1952 Code Section 72-410; 1960 (51) 1646; 1962 Code Section 72-410] recodified as Section 38-73-500 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 1997 Act No. 92, Section 1; 2014 Act No. 197 (S.826), Section 1, eff June 2, 2014.  Effect of Amendment  2014 Act No. 197, Section 1, in subsection (C), substituted "If a second test is administered, the testing procedure may allow for a single sample to be split for use in the first and second tests" for "and must provide for a second test to be administered within thirty minutes of the administration of the first test".
 For each policy of workers' compensation insurance issued or renewed in the State on or after October 1, 1997, there shall be granted by the insurer a reduction in premium of not less than five percent pursuant to Section 38-73-500 as contained and amended in Section 1 of 1997 Act No. 92.  HISTORY: 1997 Act No. 92, Section 3.
 Every workers' compensation insurer, including the parties to any mutual insurance association, must be a member of a nonpartisan rating bureau. The stock and nonstock insurers which are members of the bureau must be represented in the bureau management and on all committees of the bureau. One-half of the members of each committee must be chosen by the stock companies and one-half by the nonstock companies. In a case of a tie vote on any committee the director or his designee shall cast the deciding vote.  HISTORY: Former 1976 Code Section 42-5-110 [1936 (39) 1231; 1937 (40) 613; 1942 Code Section 7035-76; 1952 Code Section 72-411; 1960 (51) 1646; 1962 Code Section 72-411] recodified as Section 38-73-510 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A) Each insurer issuing a policy of workers' compensation insurance shall offer, as a part of the policy or as an optional endorsement to the policy, deductibles optional to the policyholder for benefits payable under Title 42. Deductible amounts offered must be disclosed fully to the prospective policyholder in writing in the amount of one hundred dollars, two hundred dollars, three hundred dollars, four hundred dollars, five hundred dollars, or increments of five hundred dollars up to a maximum of two thousand five hundred dollars for each compensable claim. The policyholder exercising the deductible option shall choose only one deductible amount.  (B) If the policyholder exercises the option and chooses a deductible, the insured employer is liable for the amount of the deductible for benefits paid for each compensable claim of work injury suffered by an employee. The insurer shall pay all or part of the deductible amount, whichever is applicable to a compensable claim, to the person or provider entitled to the benefits conferred by this chapter and then seek reimbursement from the insured employer for the applicable deductible amount. The payment or nonpayment of deductible amounts by the insured employer to the insurer must be treated under the policy insuring the liability for workers' compensation in the same manner as payment or nonpayment of premiums.  (C) Optional deductibles must be offered in each policy insuring liability for workers' compensation which is issued, delivered, issued for delivery, or renewed after June 30, 1996, unless an insured employer and insurer agree to renegotiate a workers' compensation insurance policy in effect on July 1, 1996, so as to include a provision allowing for a deductible.  (D) Premium reduction for deductibles must be determined before the application of any experience modification, premium surcharge, or premium discounts. To the extent that an employer's experience rating or safety record is based on benefits paid, money paid by the insured employer under a deductible as provided in this section must not be included as benefits paid so as to harm the experience rating of the employer.  (E) This section does not apply to employers who are approved to self-insure against liability for workers' compensation or group self-insurance funds for workers' compensation established pursuant to the laws of this State.  HISTORY: 1996 Act No. 424, Section 9.
 Every insurer must file with the department, except as to exempt commercial policies, every manual of classifications, rules, and rates, every rating plan, and every modification of any of these which it proposes to use. The filing exemption shall not apply to loss cost filings by advisory or rating organizations or to the multiplier for expenses, assessments, profit, and contingencies and any modifications to loss costs used by a workers' compensation insurer to be applied to approved loss costs to develop the insurer's rates as provided in Section 38-73-525. Every filing must state the proposed effective date and indicate the character and extent of the coverage contemplated.  HISTORY: Former 1976 Code Section 38-43-440 [1947 (45) 322; 1952 Code Section 37-684; 1962 Code Section 37-684] recodified as Section 38-73-520 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2000 Act No. 235, Section 7; 2002 Act No. 300, Section 3, eff January 1, 2003; 2007 Act No. 111, Pt III, Section 1, eff July 1, 2007, applicable to injuries that occur on or after that date.
 (A) Each insurer writing workers' compensation insurance shall adopt the most recent loss costs within sixty days after approval of these loss costs. This loss costs adoption must become effective no later than one hundred twenty days after the effective date of the approved loss costs. An insurer must notify the department of its adoption of the most recently approved loss costs by filing a notification on a form and in a manner prescribed by the director or his designee. The notification filing required by this subsection does not constitute a rate filing and is not subject to prior approval.  (B)(1) At least sixty days before using a new multiplier for expenses, assessments, profits, and contingencies, each insurer writing workers' compensation shall file its multiplier for expenses, assessments, profit, and contingencies and any information relied upon by the insurer to support the multiplier and any modifications to loss costs. A copy of the filing must be provided simultaneously to the consumer advocate.  (2) Filings submitted pursuant to item (1) must be filed on a form and in the manner prescribed by the director or his designee and must contain, at a minimum, the following information: commission expense; other acquisition expense; general expense; expenses associated with recoveries from the Second Injury Fund; guaranty fund assessments; other assessments; premium taxes; miscellaneous taxes, licenses, or fees; a provision for profit and contingencies, and the date of approval of the loss costs to which the multiplier is applied, which must be the most recently approved loss costs.  (3) Filings submitted pursuant to item (1) are subject to approval of the director or his designee and must be reviewed by an actuary employed or retained by the department who is a member of the American Academy of Actuaries or an associate or fellow of the Casualty Actuarial Society.  (4)(a) Within the sixty-day period, if the director or his designee believes the information filed is not complete, the director or his designee shall notify the insurer of additional information to be provided. Within fifteen days of receipt of the notification, the insurer shall provide the requested information or file for a hearing challenging the reasonableness of the director's or his designee's request. The burden is on the insurer to justify the denial of the additional information.  (b) Unless a hearing is requested, upon expiration of the sixty-day period or the fifteen-day period, whichever is later, the insurer may use the multiplier for expenses, assessments, profit, and contingencies.  HISTORY: 2007 Act No. 111, Pt III, Section 2, eff July 1, 2007, applicable to injuries that occur on or after that date; 2016 Act No. 213 (S.1064), Section 1, eff June 3, 2016.  Effect of Amendment  2016 Act No. 213, Section 1, rewrote the section, requiring an insurer writing workers' compensation insurance to adopt loss costs within a certain time frame, and requiring an insurer to file its multiplier for expenses, assessments, profit and contingencies sixty days before using a new multiplier.
 The director or his or her designee must issue a report to the General Assembly by the first of January each year that evaluates the state of the workers' compensation insurance market in this State. The report must contain an analysis of the availability and affordability of workers' compensation coverage and document that the department has complied with the provisions of Sections 38-73-430 and 38-73-525 with regard to both workers' compensation loss cost filings submitted by an advisory or rating organization and multiplier filings submitted by every insurer writing workers' compensation insurance.  HISTORY: 2007 Act No. 111, Pt III, Section 7, eff July 1, 2007, applicable to injuries that occur on or after that date.
 The director or his designee may, upon the filing with him of an affidavit setting forth information required by him, grant permission to a licensed insurer to make a rate competing with any nonlicensed insurer in any specific risk.  HISTORY: Former 1976 Code Section 38-43-450 [1947 (45) 322; 1952 Code Section 37-685; 1962 Code Section 37-685] recodified as Section 38-73-530 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A)(1) Assigned risk agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to, but who are unable to procure, insurance through ordinary methods, and the insurers may agree among themselves on the use of reasonable rate modifications for this insurance. Such residual market agreement and any mechanism designed to implement such agreement, and any amendments thereto, must be submitted in writing to the director or his designee for approval prior to use, together with such additional information as the director or his designee may reasonably require. Insurers that participate in the voluntary market shall participate in these mechanisms and shall pay their assessments, if any.  (2) If, after a hearing, the director or his designee finds that any activity or practice of insurers participating in the residual market mechanism is unfair, unreasonable, or otherwise inconsistent with the provisions of this title, the director or his designee must issue a written order specifying in what respects such activity or practice is unfair, unreasonable, or otherwise inconsistent with the provisions of this title and require the discontinuance of such activity or practice. The director or his designee may establish, by written order, an assigned risk plan or mechanism if he finds that insurers have failed to agree pursuant to item (1), or to implement assigned risk agreements if the director or his designee finds that the existing residual market mechanism is unfair, unreasonable, or inconsistent with the provisions of this chapter.  (3) The servicing carriers for the workers' compensation assigned risk pool may be competitively bid as provided for in this subsection. If the workers' compensation assigned risk pool is competitively bid, then the director or his designee must appoint a committee or committees of individuals as he considers qualified to establish standards and procedures for the consideration and evaluation of bids. Insurers, or other vendors in conjunction with a licensed workers' compensation insurer, may submit bids. The committee or committees must evaluate and award contracts pursuant to the bidding process established by the committee or committees, subject to the final approval of the director or his designee. The director may require a bid fee to cover the expenses of implementing this section.  (4) Notwithstanding any other provision of this section or of this article, assigned risk pools must accept a policy of workers' compensation insurance on the basis that it provides coverage to a vendor who provides logging services to a named insured or on the basis that the policy provides coverage to an association of these vendors.  (B) Notwithstanding the provisions of subsection (A), no insurer may act as a servicing carrier for any assigned risk pool for workers' compensation insurance authorized pursuant to subsection (A) unless such insurer participates in the voluntary market for workers' compensation insurance in this State.  (C) It is essential for maintaining the viability of the assigned risk plan to establish and maintain rates at a level which permits the plan to operate as a self-funded mechanism. The plan administrator shall maintain necessary rate making data in order to permit the actuarial determination of rates and rating plans appropriate for the business insured through the plan. All assigned carriers shall report their experience on business written under the plan to the plan administrator in a format prescribed by the plan administrator. The plan administrator shall monitor rate adequacy and plan results and shall notify the director of the Department of Insurance in the event that excessive losses are indicated so as to enable the director to take corrective action.  HISTORY: Former 1976 Code Section 38-43-460 [1947 (45) 322; 1952 Code Section 37-686; 1962 Code Section 37-686] recodified as Section 38-73-540 by 1987 Act No. 155, Section 1; 1991 Act No. 104, Section 1; 1992 Act No. 436, Section 1; 1993 Act No. 181, Section 783; 1996 Act No. 451, Section 1; 1998 Act No. 291, Section 1.
 Nothing in Section 38-73-540 applies to self-insurers.  HISTORY: 1998 Act No. 291, Section 3.
 In order to further uniform administration of rate regulatory laws, the director or his designee and every insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers, and rating organizations in other states and may consult with them with respect to rate making and the application of rating systems.  HISTORY: Former 1976 Code Section 38-43-70 [1947 (45) 322; 1952 Code Section 37-657; 1962 Code Section 37-657] recodified as Section 38-73-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 The department may make reasonable regulations necessary to effect the purposes of this chapter.  HISTORY: Former 1976 Code Section 38-43-80 [1947 (45) 322; 1952 Code Section 37-658; 1962 Code Section 37-658]; Section 38-43-90 [1960 (51) 1646; 1962 Code Section 37-658.1; 1969 (56) 239; 1972 (57) 2750] recodified as Section 38-73-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 There is established within the department a State Rating and Statistical Division which is under the administrative direction of the Director of the Department of Insurance. Nothing precludes the appointment by the director of a deputy director of any person who is now or may hereafter be an employee of the department, in addition to or substitution for his other duties or responsibilities.  HISTORY: Former 1976 Code Section 38-37-510 [1962 Code Section 37-591.21; 1974 (58) 2718] recodified as Section 38-73-710 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A) As used in this section:  (1) "Approved driver training course" means a driver's training course that:  (a) is approved by the Department of Motor Vehicles or exempt pursuant to Chapter 23, Title 56;  (b) is administered by a driver's training school that is licensed or approved by the Department of Motor Vehicles or exempt pursuant to Chapter 23, Title 56;  (c) is conducted by a person holding a valid driver's instructor permit pursuant to Chapter 23, Title 56; and  (d) includes a minimum of four hours of classroom instruction.  (2) "Satisfactory evidence of course completion" means a certificate signed by an official of the licensed driver's training school or the Department of Motor Vehicles, which certifies that:  (a) the person has successfully completed the course; and  (b) the course is an approved driver training course and meets the requirements of Chapter 23, Title 56.  (3) "Youthful operator" means a person under the age of twenty-five for which premium rates charged for liability coverages and collision coverage under a private passenger automobile insurance policy are determined by a youthful driver classification.  (B) Premium rates charged for liability coverages and collision coverage under a private passenger automobile insurance policy are subject to an appropriate driver training course credit once satisfactory evidence of course completion is presented by an applicant for the credit that is the named insured or principal operator of the vehicle and is not a youthful operator. The amount of the credit may be determined by each individual insurer based upon factually or statistically supported data and is subject to prior approval or review by the director. The credit must be afforded for a minimum of thirty-six months from the date the approved driver training course was completed. The insurer may require, as a condition of providing and maintaining the credit, that the applicant not be involved in an accident for which the applicant is at fault for a three-year period after course completion. The credit must be afforded by each insurer in a nondiscriminatory manner to all applicants, other than those considered youthful operators.  (C) Only the vehicle driven by an applicant that has completed successfully an approved driver training course qualifies for the insurance credit required by this section. Other vehicles under the private passenger automobile insurance policy do not qualify for the insurance credit required by this section unless the named insured or principal operator of the additional vehicle has successfully completed an approved driver training course.  (D) The insurer must provide the driver training course credit upon receipt of satisfactory evidence of course completion. Nothing in this section may be construed so as to require the insurer to provide the credit for any period of time before the date of receipt of satisfactory evidence of course completion.  (E) An applicant qualifying for the insurance credit required by this section only may claim the credit for successful completion of one approved driver training course during any private passenger automobile insurance policy period.  (F) Only an approved driver training course taken on a voluntary basis qualifies for the insurance credit. A driver training course taken as a requirement of a driving offense including, but not limited to, ADSAP or driver training courses taken to reduce the number of traffic violation points against a driver's license, do not qualify for the insurance credit provided in this section.  (G) A schedule of rates, rate classification, or rating plan for private passenger automobile insurance must provide for an appropriate reduction in premium charges for an insured person who is not a youthful operator and who qualifies as provided in this section.  HISTORY: 1997 Act No. 154, Section 5; 2011 Act No. 7, Section 1, eff December 31, 2011; 2015 Act No. 26 (S.361), Section 1, eff June 1, 2015.  Effect of Amendment  2015 Act No. 26, Section 1, in (A)(1)(d), substituted "four hours" for "six hours"; deleted former (2), definition of "Approved driver training refresher course"; redesignated the paragraphs accordingly; and deleted references to "approved driver training refresher course" throughout.
 (A) As used in this section:  (1) "Approved driver's education course" means a driver's training course that:  (a) is approved by the Department of Motor Vehicles pursuant to Chapter 23, Title 56 or is approved by the Department of Education pursuant to Section 59-39-320;  (b) is administered by a driver's training school that is licensed by the Department of Motor Vehicles or a state institution or duly accredited and approved college, private, parochial, or public high school pursuant to Chapter 23, Title 56; and  (c) is conducted by a person holding a valid driver's instructor permit pursuant to Chapter 23, Title 56.  (2) "Satisfactory evidence of course completion" means a certificate signed by an official of the school, the Department of Motor Vehicles, the Department of Education, or other responsible educational entity which certifies that:  (a) the person has successfully completed the course; and  (b) the course is an approved driver's education course and meets the requirements of Chapter 23, Title 56 or Section 59-39-320.  (3) "Youthful operator" means a person under the age of twenty-five for which premium rates charged for liability coverages and collision coverage under a private passenger automobile insurance policy are determined by a youthful driver classification.  (B) Premium rates charged for liability coverages and collision coverage under a private passenger automobile insurance policy are subject to an appropriate driver's education course credit once satisfactory evidence of course completion is presented by an applicant for the credit that is the named insured or principal operator of the vehicle and is a youthful operator. The amount of the credit may be determined by each individual insurer based upon factually or statistically supported data and is subject to prior approval or review by the director. The credit must be afforded from the date the approved driver's education course was completed for as long as the premium rates continue to be determined by a youthful driver classification. The insurer may require, as a condition of providing and maintaining the credit, that the applicant not be involved in an accident for which the applicant is at fault or be convicted of, plead guilty to, or plead nolo contendere to a violation of the motor vehicle laws for any moving violation. The credit required by this section must be afforded by each insurer in a nondiscriminatory manner to all applicants.  (C) Only the vehicle driven by an applicant that has completed successfully an approved driver's education course qualifies for the insurance credit required by this section. Other vehicles under the private passenger automobile insurance policy do not qualify for the insurance credit required by this section unless the named insured or principal operator of the additional vehicle has successfully completed an approved driver's education course.  (D) The insurer must provide the driver's education course credit upon receipt of satisfactory evidence of course completion. Nothing in this section may be construed so as to require the insurer to provide the credit for any period of time before the date of receipt of satisfactory evidence of course completion.  (E) An applicant qualifying for the insurance credit required by this section only may claim the credit for successful completion of one approved driver's education course during any private passenger automobile insurance policy period.  (F) An approved driver's education course taken on a voluntary basis or taken as a requirement of driver licensing qualifies for the insurance credit. Driver training courses taken as a requirement of a driving offense including, but not limited to, ADSAP or driver training courses taken to reduce the number of traffic violation points against a driver's license, do not qualify for the insurance credit provided in this section.  (G) A schedule of rates, rate classification, or rating plan for private passenger automobile insurance must provide for an appropriate reduction in premium charges for an insured person who is a youthful operator and who qualifies as provided in this section.  HISTORY: 1994 Act No. 496, Section 1; 2011 Act No. 7, Section 2, eff December 31, 2011.
 All information, including investigative and credit reports used in determining the classification or premium rates of any person applying for automobile insurance, must be kept on file by the insurer for at least three years from the date the application was made. Upon request of the applicant, the contents of the file must be made available for inspection by the applicant and copies of the documents must be furnished the applicant if he pays the cost of reproducing the copies.  HISTORY: Former 1976 Code Section 38-37-330 [1962 Code Section 37-591.13; 1974 (58) 2718] recodified as Section 38-37-740 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 No person or organization may wilfully withhold information from or knowingly give false or misleading information to the director or his designee, any statistical agency designated by the director or his designee, any rating organization, or any insurer which will affect the rates or premiums chargeable under this chapter. A violation of this section subjects the one guilty of the violation to the penalties provided in Chapter 2 of this title.  HISTORY: Former 1976 Code Section 38-43-100 [1947 (45) 322; 1952 Code Section 37-659; 1962 Code Section 37-659] recodified as Section 38-73-80 by 1987 Act No. 155, Section 1; 1988 Act No. 374, Section 40; 1993 Act No. 181, Section 783.
 The director or his designee shall, at least once in five years, make or cause to be made an examination of each rating organization licensed in this State as provided in Section 38-73-1230. The director or his designee may, as often as he considers advisable, make or cause to be made an examination of each advisory organization referred to in Section 38-73-1510 and of each group, association, or other organization referred to in Section 38-73-1710. The reasonable costs of the examination must be paid by the rating organization, advisory organization, or group, association, or other organization examined upon presentation to it of a detailed account of the costs. The officers, manager, agents, and employees of these rating organizations, advisory organizations, or groups, associations, or other organizations may be examined at any time under oath and shall exhibit all books, records, accounts, documents or agreements governing their method of operation. These examinations are subject to the provisions of Sections 38-13-40 to 38-13-60. In lieu of an examination the director or his designee may accept the report of an examination made by the insurance supervisory official of another state pursuant to the laws of that state.  HISTORY: Former 1976 Code Section 38-43-110 [1947 (45) 322; 1952 Code Section 37-660; 1962 Code Section 37-660] recodified as Section 38-73-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 (A) Overall average rate level increases or decreases, for all coverages combined, of seven percent above or below the insurer's current rates in effect may take effect without prior approval on a file and use basis with respect to rates for automobile insurance policies as set forth in this section. The seven percent cap does not apply on an individually insured basis. Insurers are limited to two rate increases during any twelve-month period as set forth in subsections (B) and (C).  (B)(1) Notwithstanding any other provision of this chapter, for any policies governed by this section, filings that produce rate level changes based on the limitation specified in subsection (A) become effective without prior approval; provided, that no more than one rate increase of seven percent above or below the insurer's current rates in effect may be implemented during any twelve-month period on a file and use basis. Any other increase request is subject to prior approval. A rate increase may not be implemented until the onset of the new policy period.  (2) A rate increase or decrease falling within the limitation in subsection (A) may become effective no less than thirty days after the date of the filing with the director. The filing is considered to meet the requirements of this chapter unless the director or his designee notifies the insurer that the filing does not comply with this chapter within that thirty-day time period. If, after the filing becomes effective, the director finds the filing does not comply with the requirements of this chapter, the director shall issue a written order specifying in detail the provisions with which the insurer has not complied and state a reasonable period thereafter in which the filing is considered no longer effective. Any order by the director pursuant to this section that is issued more than thirty days from the date on which the director received the rate filing must be on a prospective basis only and may not affect any contract issued or made before the effective date of the order.  (C) Rate filings for automobile insurance also may be made outside the limitation specified in subsection (A), however those filings are subject to the prior approval of the director. The director shall approve or disapprove these filings in accordance with the provisions of Sections 38-73-960 and 38-73-990. No more than two rate increases may be implemented during a twelve-month period. If the two rate increases fall above or below seven percent as specified in subsection (B), the second rate increase request within a twelve-month period is subject to prior approval. The limitation provided in Section 38-73-920 relating to the number of permissible filings within a twelve-month period does not apply to automobile filings made pursuant to the provisions of this section.  (D) Individual automobile insurance companies and member companies of an affiliated group of automobile insurers may utilize different filed rates for automobile insurance coverages in accordance with rating plans filed with and approved by the director. These rating plans may provide for different rates, rating tiers, and rating plans among affiliated companies. For the purposes of this subsection, an affiliated group of automobile insurers includes a group of automobile insurers under common ownership, management, or control.  (E) The Director of the Department of Insurance or his designee may promulgate regulations to implement the provisions of this section.  (F) This section does not apply to rate or rule filings of insurers who write only exempt commercial policies. Rate or rule filings for exempt commercial policies must comply with the requirements of S.C. Code Ann. Regs. Section 69-64, Section 38-73-920, and other applicable provisions of this title.  HISTORY: 2021 Act No. 33 (S.623), Section 1, eff May 6, 2021.
 (A) This section applies to all types of property and casualty insurance coverage except as set forth in this section. Overall rate level increases or decreases for all property and casualty insurance coverages except for property insurance filings governed by Sections 38-73-220 and 38-73-260 and automobile insurance filings governed by Section 38-73-905 are subject to prior approval as set forth in this section. All rate, rule, and form filings, including loss-cost filings and other supplementary filings, submitted by a rating organization are subject to the prior approval of the department. Every filing must state the proposed effective date and must indicate the type of coverage to which it applies. The director must approve or disapprove these filings in accordance with the applicable provisions of this chapter.  (B) An increase in the premium rates may not be granted for workers' compensation insurance, nor for any other line or type of insurance with respect to which the director or his designee has, by order, made a finding that (a) legal or other compulsion upon the part of the insured to purchase the insurance interferes with competition, or (b) under prevailing circumstances there does not exist substantial competition, unless notice is given in all newspapers of general, statewide circulation at least thirty days in advance of the insurer's proposed effective date of the increase in premium rates. The notice must state the amount of increase, the type and line of coverage, and the proposed effective date and must allow any insured or affected party to request within fifteen days a public hearing upon the propriety of the rate increase request before the Administrative Law Court. A copy of the notice must be sent to the Consumer Advocate.  (C) However, the requirements of public notices and public hearings in this section do not apply to applications for rate increases when the applicant insurer had earned premiums in this State in the previous calendar year of less than two million dollars for the line or type of insurance for which the rate increase is sought or, if the rate increase is sought by a modeling organization, the earned premiums in this State for all members and subscribers of the organization for whom an increase is sought were less than two million dollars for the previous calendar year for the line or type of insurance for which the rate increase is sought. The two million dollars must be increased by a factor equal to the increase in the consumer price index, all items, every three years.  (D) If the director finds that a filing is not in compliance with this chapter, he shall issue a written notice of disapproval in accordance with the provisions of Section 38-73-990.  (E) The Director of the Department of Insurance or his designee may promulgate regulations to implement the provisions of this section.  (F) This section does not apply to rate or rule filings of insurers who write only exempt commercial policies. Rate or rule filings for exempt commercial policies must comply with the requirements of S.C. Code Ann. Regs. Section 69-64, Section 38-73-920, and other applicable provisions of this title.  HISTORY: Former 1976 Code Section 38-43-90 [1960 (51) 1646; 1962 Code Section 37-658.1; 1969 (56) 239; 1972 (57) 2750] recodified as Section 38-73-910 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 1996 Act No. 300, Section 1; 1996 Act No. 360, Section 4; 1996 Act No. 378 Section 4; 1997 Act No. 154, Section 4; 1999 Act No. 4, Section 1; 2000 Act No. 235, Section 8; 2004 Act No. 290, Section 4, eff July 29, 2004; 2021 Act No. 33 (S.623), Section 2, eff May 6, 2021; 2022 Act No. 195 (H.4832), Section 9, eff May 16, 2022.  Effect of Amendment  2021 Act No. 33, Section 2, rewrote the section.  2022 Act No. 195, Section 9, in (A), inserted the third sentence, and in the fifth sentence, substituted "must approve" for "shall approve".
 (A) The director or his designee in reviewing rate filings may take into consideration recently passed legislation or recently rendered court decisions which will have an effect on insurance rates. The director or his designee may use such information to reduce or increase the rate level of the insurer or the rating organization.  (B) The director or his designee may order an insurer or rating organization to reduce or increase its current rate levels as a result of recently passed legislation or recently rendered court decisions. The director or his designee shall give the insurer or rating organization and the Consumer Advocate thirty days notice of his intention to order a reduction or increase in an insurer's or rating organization's rate level. The insurer or rating organization or the Consumer Advocate may request a hearing before the director or his designee under the Administrative Procedures Act to contest the proposed order. The Consumer Advocate may participate as a party in any such hearings.  HISTORY: 1989 Act No. 148, Section 30; 1993 Act No. 181, Section 783.
 An insurer may not make or issue a contract or policy except in accordance with the filings which are in effect for the insurer as provided in this chapter or in accordance with Section 38-73-1060. Notwithstanding Section 38-73-10, Section 38-73-330(2), and Section 38-73-430(4), filings for property and casualty rate increases may not be approved for any insurer or rating organization for any line, subline, or otherwise identifiable property and casualty insurance coverage for which a rate increase has previously been granted within the immediately preceding twelve months. However, if satisfactory evidence is presented to the director or his designee by an insurer or rating organization that the continued use of the previously approved rates for the line, subline, or otherwise identifiable property and casualty insurance coverage may result in the insolvency of an insurer, more frequent rate increases may be approved. Rate changes proposed where the sole factor for the change is the impact of a revised assessment does not constitute a rate increase for purposes of this section. No rate increase based upon an assessment may become effective unless the assessment has been paid. This section does not apply to contracts or policies for inland marine risks as to which filings are not required.  However, a private insurer licensed to underwrite essential property insurance as defined by Section 38-75-310(1), notwithstanding any limitations included within this title, may file and use, pursuant to the provisions of Section 38-73-1095, any rates which result in insurance premium rates of ninety percent, or less, of the insurance premium rates then approved for the South Carolina Wind and Hail Underwriting Association which result in an insurance premium increase for any policyholder situated within a coastal area of South Carolina as defined by Section 38-75-310(5) not more than once in any six-month period.  HISTORY: Former 1976 Code Section 38-43-610 [1947 (45) 322; 1952 Code Section 37-691; 1962 Code Section 37-691; 1977 Act No. 107] recodified as Section 38-73-920 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 1996 Act No. 378, Section 5; 2004 Act No. 315, Section 2, eff October 12, 2004.
 The department shall, when it is considered appropriate, issue by regulation specific mandatory guidelines and formats for filing with the department so as to promote uniformity and consistency and facilitate meaningful comparisons. Any guidelines and formats issued shall include requirements for detailed breakdowns on the total expense component of any filing.  HISTORY: Former 1976 Code Section 38-43-615 [1962 Code Section 37-691.1; 1977 Act No. 151 Section 1] recodified as Section 38-73-930 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 No rate filing for private passenger automobile insurance may include or be based upon actual or projected loss or expense data which includes payments made on policies, wherein the amount of the settlement, judgment, or other payment by the insurer was in excess of the policy limits, exclusive of interest and costs. No rate filing for private passenger automobile insurance may include or be based upon actual or projected loss or expense data which includes payments made as a result of the insurer's tortious breach of it's duty of good faith and fair dealing.  HISTORY: 1989 Act No. 148, Section 31; 1993 Act No. 181, Section 783.
 A filing and any supporting information are open to public inspection after the filing becomes effective.  The information furnished in support of a filing under Section 38-73-340 or 38-73-520 may include:  (1) the experience or judgment of the insurer or rating organization making the filing;  (2) its interpretation of any statistical data it relies upon;  (3) the experience of other insurers or rating organizations; and  (4) any other relevant factors.  A filing and any supporting information are open to public inspection after the filing becomes effective.  HISTORY: Former 1976 Code Section 38-43-620 [1947 (45) 322; 1952 Code Section 37-692; 1962 Code Section 37-692] recodified as Section 38-73-940 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 When a filing is not accompanied by the information upon which the insurer supports the filing and the director or his designee does not have sufficient information to determine whether the filing meets the requirements of this chapter, he shall require the insurer to furnish the information upon which it supports the filing, and in this event the waiting period commences as of the date the information is furnished.  HISTORY: Former 1976 Code Section 38-43-630 [1947 (45) 322; 1952 Code Section 37-693; 1962 Code Section 37-693] recodified as Section 38-73-950 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 The director or his or her designee must review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this chapter. Subject to the exceptions specified in Sections 38-73-965, 38-73-970, and 38-73-980, each filing must be on file for a waiting period of sixty days before it becomes effective. This period may be extended by the director or his or her designee for an additional period not to exceed sixty days if he or she gives written notice within the waiting period to the insurer or rating organization which made the filing that he or she needs additional time for the consideration of the filing. Upon written application by the insurer or rating organization, the director or his or her designee may authorize a filing which he or she has reviewed to become effective before the expiration of the waiting period or any extension thereof. A filing meets the requirements of this chapter unless disapproved by the director or his or her designee within the waiting period or any extension thereof.  HISTORY: Former 1976 Code Section 38-43-640 [1947 (45) 322; 1952 Code Section 37-694; 1962 Code Section 37-694; 1978 Act No. 627] recodified as Section 38-73-960 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2007 Act No. 111, Pt III, Section 3, eff July 1, 2007, applicable to injuries that occur on or after that date.
 A filing made pursuant to Section 38-73-525 is governed by the effective dates specified in that section.  HISTORY: 2007 Act No. 111, Pt III, Section 4, eff July 1, 2007, applicable to injuries that occur on or after that date.
 Specific inland marine rates on risks specially rated by a rating organization become effective when filed and are considered to meet the requirements of this chapter until the time the director or his designee reviews the filing and so long thereafter as the filing remains in effect.  HISTORY: Former 1976 Code Section 38-43-650 [1947 (45) 322; 1952 Code Section 37-695; 1962 Code Section 37-695] recodified as Section 38-73-970 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Any special filing with respect to a surety or guaranty bond required by law, or by court or executive order, or by order or regulation of a public body, not covered by a previous filing, becomes effective when filed and is considered to meet the requirements of this chapter until the time the director or his designee reviews the filing and so long thereafter as the filing remains in effect.  HISTORY: Former 1976 Code Section 38-43-660 [1947 (45) 322; 1952 Code Section 37-696; 1962 Code Section 37-696] recodified as Section 38-73-980 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783.
 Except as provided in Section 38-73-995, if within the waiting period or any extension thereof as provided in Section 38-73-960 the director or his or her designee finds that a filing or a part of a filing does not meet the requirements of this chapter, he or she must send to the insurer or rating organization which made the filing written notice of disapproval of the filing or part of a filing specifying therein in what respects he or she finds the filing or part thereof fails to meet the requirements of this chapter and stating that the filing or the part may not become effective.  HISTORY: Former 1976 Code Section 38-43-670 [1947 (45) 322; 1952 Code Section 37-697; 1962 Code Section 37-697; 1978 Act No. 486] recodified as Section 38-73-990 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 783; 2007 Act No. 111, Pt III, Section 5, eff July 1, 2007, applicable to injuries that occur on or after that date.
 An insurer's workers' compensation rates developed using its most recent multiplier for expenses, assessments, profit, and contingencies and any modifications to loss costs may be disapproved at any time after they become effective if the director or his or her designee determines that they do not meet the requirements of this chapter.  HISTORY: 2007 Act No. 111, Pt III, Section 6, eff July 1, 2007, applicable to injuries that occur on or after that date.
 As used in this chapter:  (1) "Pool" means the South Carolina Health Insurance Pool.  (2) "Board" means the board of directors of the pool.  (3) "Insured" means any individual resident of this State who is eligible to receive benefits from any insurer.  (4) "Insurer" means any entity that provides health insurance in this State. For purposes of this section, insurer includes an insurance company, a health maintenance organization, and any other entity providing health insurance which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.  (5) "Health insurance" or "health insurance coverage" means benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care under a hospital or medical service policy or certificate, hospital, or medical service plan contract, or health maintenance organization contract offered by an insurer, except:  (a) coverage only for accident or disability income insurance, or any combination thereof;  (b) coverage issued as a supplement to liability insurance;  (c) liability insurance, including general liability insurance and automobile liability insurance;  (d) workers' compensation or similar insurance;  (e) automobile medical payment insurance;  (f) credit-only insurance;  (g) coverage for on-site medical clinics;  (h) other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits;  (i) if offered separately:  (i) limited scope dental or vision benefits;  (ii) benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof;  (iii) such other similar, limited benefits as are specified in regulations;  (j) if offered as independent, noncoordinated benefits:  (i) coverage only for a specified disease or illness; and  (ii) hospital indemnity or other fixed indemnity insurance;  (k) if offered as a separate insurance policy, coverage supplement to the coverage provided under Chapter 55, Title 10 of the United States Code.  (6) "Medicare" means Title XVIII of the Social Security Act, 42 U.S.C. 1395, et seq., as amended.  (7) "Physician" means any practitioner of the healing arts, other than an insured person or a person related to an insured person, who is legally licensed to perform any service for which benefits are provided by the insurance policy issued by the pool.  (8) "Hospital" means an institution operated pursuant to law under the supervision of a staff of duly licensed physicians which is primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the public on a prearranged basis, medical, diagnostic, and major surgical facilities for the medical care and treatment of sick or injured persons on an inpatient basis for which a charge is made and provides twenty-four hour nursing service under the supervision of registered nurses.  (9) "Health maintenance organization" means an organization as defined in Section 38-33-20(7).  (10) "Plan of operation" means the plan of operation of the pool, including articles, bylaws, and operating rules adopted by the board.  (11) "Benefits plan" means the coverages to be offered by the pool to eligible persons.  (12) "Department" means the South Carolina Insurance Department.  (13) "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the Insurance Department.  (14) "Member" means each insurer participating in the pool.  (15) "Net loss" means the excess of incurred claims plus expenses over the sum of earned premiums, accrued investment income, and other appropriate gains and losses.  (16) "Affiliation period" means a period which, under the terms of the health insurance coverage offered by a health maintenance organization, must expire before the health insurance coverage becomes effective. The organization is not required to provide health care services or benefits during this period and no premium shall be charged to the participant or beneficiary for any coverage during the period. The period begins on the enrollment date and runs concurrently with any waiting period under the plan.  (17) "Beneficiary" has the meaning given under Section 3(8) of the Employee Retirement Income Security Act of 1974.  (18) "COBRA continuation provision" means:  (a) Part 6 of subtitle B of Title I of the Employee Retirement Income Security Act of 1974, other than Section 609 of the act;  (b) Section 4908B of the Internal Revenue Code of 1986, other than subsection (f)(1) of the section insofar as it relates to pediatric vaccines; or  (c) Title XXII of the Public Health Service Act.  (19) "Church plan" has the meaning given the term under Section 3(33) of the Employee Retirement Income Security Act of 1974.  (20) "Creditable coverage" means, with respect to an individual, coverage of the individual under:  (a) a group health plan;  (b) health insurance;  (c) Part A or B of Title XVIII of the Social Security Act;  (d) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under Section 1928;  (e) Chapter 55, Title 10 of the United States Code;  (f) a medical care program of the Indian Health Service or of a tribal organization;  (g) a state health benefits risk pool, including the South Carolina Health Insurance Pool;  (h) a health plan offered under Chapter 89, Title 5 of the United States Code;  (i) a public health plan, as defined in regulations;  (j) a health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)); or  (k) Title XXI of the Social Security Act (State Children's Health Insurance Program).  The term does not include coverage consisting only of those benefits excepted from the definition of health insurance.  A period of creditable coverage is not counted if, after such period and before the enrollment date, there was a sixty-three day period during all of which the individual was not covered under any creditable coverage. However, in determining whether there has been continuous coverage, no period must be taken into account during which the individual is in a waiting period for any coverage under a group health plan or for group health insurance coverage or is in an affiliation period.  Periods of creditable coverage with respect to an individual must be established through presentation of certifications as described in Section 38-71-850(D) or in a manner specified in regulations.  (21) "Employee" has the meaning given the term under Section 3(6) of the Employee Retirement Income Security Act of 1974.  (22) "Enrollment date" means, with respect to an individual covered under a group health plan or health insurance coverage, the date of enrollment of the individual in the plan or coverage or, if earlier, the first day of the waiting period for the enrollment.  (23) "Federally defined eligible individual" means an individual:  (a) for whom, as of the date on which the individual seeks coverage under this chapter, the aggregate of the periods of creditable coverage is eighteen or more months;  (b) whose most recent prior creditable coverage was under a group health plan, governmental plan, or church plan or health insurance coverage offered in connection with one of these plans;  (c) who is not eligible for coverage under a group health plan, part A or part B of Title XVIII of the Social Security Act, or a state plan under Title XIX of the Social Security Act or any successor program and who does not have other health insurance coverage;  (d) with respect to whom the most recent coverage within the period of aggregate creditable coverage was not terminated based on a factor relating to nonpayment of premiums or fraud;  (e) who, if offered the option of continuation coverage under a COBRA continuation provision or under a similar state program, elected the coverage; and  (f) who, if the individual elected the continuation coverage, has exhausted the continuation coverage under the provision or program.  (24) "Governmental plan" has the meaning given the term under Section 3(32) of the Employee Retirement Income Security Act of 1974 and any governmental plan established or maintained for its employees by the government of the United States or by an agency or instrumentality of the government.  (25) "Group health insurance coverage" means, in connection with a group health plan, health insurance offered by an insurer in connection with the plan.  (26) "Group health plan" means an employee welfare benefit plan, as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, to the extent that the plan provides medical care, including items and services paid for as medical care, to employees or their dependents, as defined under the terms of the plan, directly or through insurance, reimbursement, or otherwise.  (27) "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan. The term includes coverage offered in connection with a group health plan that has fewer than two participants as current employees on the first day of the plan year unless the State elects to regulate the coverage as coverage issued to small employers as defined in Section 38-71-1330.  (28) "Medical care" means amounts paid for:  (a) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;  (b) amounts paid for transportation primarily for and essential to medical care referred to in subitem (a); and  (c) amounts paid for insurance covering medical care referred to in subitems (a) and (b).  (29) "Participant" has the meaning given the term under Section 3(7) of the Employee Retirement Income Security Act of 1974.  (30) "Preexisting condition exclusion" means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for the coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before the date. Genetic information may not be treated as a preexisting condition in the absence of a diagnosis of the condition related to the information.  (31) "Waiting period" means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.  (32) "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.  HISTORY: 1989 Act No. 127, Section 1; 1993 Act No. 181, Section 788; 1997 Act No. 4, Sections 2, 3; 2002 Act No. 240, Section 1, eff January 1, 2003; 2003 Act No. 73, Section 24.H, eff June 25, 2003; 2010 Act No. 217, Section 6, eff June 7, 2010.
 (A) There is created a nonprofit entity to be known as the South Carolina Health Insurance Pool. All insurers authorized to issue or provide health insurance in this State on or after the effective date of this chapter are members of the pool.  (B) The director or his designee shall give notice to all insurers of the time and place for the initial organizational meetings. The pool members shall select five directors to sit on the board. The Governor shall appoint three directors to the board. One must be appointed to represent consumers and two must be appointed to represent businesses, other than the insurance industry. In the event of a tie vote of the board on any matter, the issue must be presented to the director for his approval or disapproval. The selection of the administering insurer is subject to approval by the director. The board shall include, to the extent possible, at least two domestic insurance companies selling health insurance in South Carolina, including the domestic company selling the largest amount of health insurance.  (C) If, within sixty days of the organizational meeting the board is not selected, the director shall appoint the initial board.  (D) The board shall submit to the director or his designee a plan of operation for the pool and any amendments necessary or suitable to assure the fair, reasonable, and equitable administration of the pool. The director or his designee shall approve the plan of operation provided it is determined to be suitable to assure the fair, reasonable, and equitable administration of the pool and provides for the sharing of pool gains or losses on an equitable basis. The plan of operation is effective upon approval in writing by the director or his designee consistent with the date on which the coverage under this chapter must be made available. If the board fails to submit a suitable plan of operation within one hundred twenty days after the appointment of the board of directors, or at any time thereafter fails to submit suitable amendments to the plan, the department, after notice and hearing, shall promulgate reasonable regulations necessary to effectuate the provisions of this chapter. The regulations shall continue in force until modified by the department or superseded by a plan submitted by the board and approved by the director or his designee.  (E) In its plan the board shall:  (1) establish procedures for the handling and accounting of assets and monies of the pool;  (2) select an administering insurer in accordance with Section 38-74-40 and establish procedures for filling vacancies on the board of directors;  (3) establish procedures for the collection of assessments from all members to provide for claims incurred or estimated to be incurred under the plan and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made. The level of payments must be established by the board, pursuant to Section 38-74-50. Assessment occurs at the end of each fiscal year. The board may provide also for interim assessments against members of the pool if necessary to assure the financial capability of the pool. Assessments are due and payable within thirty days of receipt of the assessment notice;  (4) develop and implement a program to publicize the existence of the plan, the eligibility requirements, and procedures for enrollment, and to maintain public awareness of the plan.  (F) The pool has the general powers granted under the laws of this State to insurance companies licensed to transact accident and health insurance including, but not limited to, the specific authority to:  (1) enter into contracts necessary to carry out the provisions of this act, including the authority, with the approval of the director or his designee, to enter into contracts with similar pools of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions;  (2) sue or be sued, including taking legal actions necessary or proper for recovery of assessments for, on behalf of, or against pool members;  (3) take legal action as necessary to avoid the payment of improper claims against the pool or the coverage provided by or through the pool;  (4) establish appropriate rates, rate schedules, rate adjustments, expense allowances, claim reserve formulas, and any other actuarial function appropriate to the operation of the pool;  (5) assess members of the pool in accordance with the provisions of this act;  (6) subject to the approval of the director or his designee, issue policies of insurance in accordance with the requirements of this chapter;  (7) appoint from among members appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the pool, policy, and other contract design, and any other function within the authority of the pool;  (8) borrow money to effect the purposes of this act. Notes or other evidence of indebtedness of the pool not in default are legal investments for domestic insurers and may be carried as admitted assets. The pool may not borrow money unless there is a net loss of the operation of the pool which exhausts the assessments of the pool for that year. No money may be borrowed in excess of the loss after assessments have been exhausted. No more than three million dollars may be borrowed in any one year, and the total amount borrowed at any one time may not exceed five million dollars. The members of the pool are responsible for any debt which is incurred by the pool;  (9) cause to be audited on an independent basis every two years the finances of the pool and submit the report of audit to the department who shall submit it to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee with recommendations on the operations of the pool.  (G) In addition to its general powers, the board may take measures to contain insurance costs subject to the approval of the director or his designee, including, but not limited to:  (1) provide for and employ cost containment measures and requirements, including, but not limited to, preadmission screening, second surgical opinion, concurrent utilization review, and individual case management for the purpose of making the benefit plan more cost effective;  (2) design, utilize, contract, or otherwise arrange for delivery of cost effective health care services, including establishing or contracting with preferred provider organizations, health maintenance organizations, or other limited network provider arrangements.  HISTORY: 1989 Act No. 127, Section 2; 1990 Act No. 568, Sections 2, 3; 1991 Act No. 75, Section 2; 1992 Act No. 309, Sections 1, 2; 1993 Act No. 181, Section 789.
 (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 under the age of sixty-five and covered under Medicare Parts A and B for reasons other than age.  (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);  (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 subsection (A)(1)(b), (A)(1)(c), (A)(2), or (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.  HISTORY: 1989 Act No. 127, Section 3; 1990 Act No. 568, Section 4; 1991 Act No. 74, Sections 2, 3; 1997 Act No. 4, Section 4; 2002 Act No. 240, Section 2, eff January 1, 2003; 2003 Act No. 73, Section 24.I, eff June 25, 2003; 2006 Act No. 332, Section 12, eff June 1, 2006.
 (A) The board shall select an insurer through a competitive bidding process to administer the pool. The board shall evaluate bids submitted based on criteria established by the board which includes:  (1) the insurer's proven ability to handle accident and health insurance;  (2) the efficiency of the insurer's claim-paying procedures;  (3) an estimate of total charges for administering the plan;  (4) the insurer's ability to administer the pool in a cost-efficient manner;  (B)(1) The administering insurer shall serve for a period of three years subject to removal for cause.  (2) At least one year prior to the expiration on each three-year period of service by an administering insurer, the board shall invite all insurers, including the current administering insurer, to submit bids to serve as the administering insurer for the succeeding three-year period. Selection of the administering insurer for the succeeding period must be made at least six months prior to the end of the current three-year period.  (C)(1) The administering insurer shall perform all eligibility and administrative claims payment functions relating to the pool.  (2) The administering insurer shall establish a premium billing procedure for collection of premium from insured persons. Billings must be made on a periodic basis as determined by the board.  (3) The administering insurer shall perform all necessary functions to assure timely payment of benefits to a covered person under the pool including:  (a) making available information relating to the proper manner of submitting a claim for benefits to the pool and distributing forms upon which submission must be made;  (b) evaluating the eligibility of each claim for payment by the pool.  (4) The administering insurer shall submit regular reports to the board regarding the operation of the pool. The frequency, content, and form of the report are determined by the board.  (5) Following the close of each fiscal year, the administering insurer shall determine the net loss for the year and report this information to the board and the department on a form prescribed by the commissioner.  (6) The administering insurer is paid as provided in the plan of operation for its expenses incurred in the performance of its services.  HISTORY: 1989 Act No. 127, Section 4.
 (A) Each insurer's assessment is determined by multiplying the net loss of pool operation by a fraction, the numerator of which equals that insurer's total premium and subscriber contract charges for health insurance written in the State during the preceding calendar year, and the denominator of which equals the total of all health premiums and subscriber contract charges written by all insurers in the State during the preceding calendar year. Health insurance premiums that are less than an amount determined by the board to justify the cost of collection are not considered for purposes of determining assessments.  (B) If assessments exceed the net loss of pool operation, the excess must be held at interest and used by the board to offset future losses or to reduce pool premiums. As used in this subsection, "future losses" includes reserves for incurred but not reported claims.  (C)(1) Each member's proportion of participation in the pool is determined annually by the board based on annual statements and other reports considered necessary by the board and filed by the member with it.  (2) Any deficit incurred by the pool may be recouped by assessments apportioned under subsection (A) of this section by the board among members.  (D) The board may abate or defer, in whole or in part, the assessment of a member if, in the opinion of the board, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations. In the event an assessment against a member is abated or deferred in whole or in part, the amount by which the assessment is abated or deferred may be assessed against the other members in a manner consistent with the basis for assessments set forth in subsection (A) of this section. The member receiving abatement or deferment shall remain liable to the pool for the deficiency for four years.  HISTORY: 1989 Act No. 127, Section 5.
 (A)(1) Except as provided in Section 38-74-60(B), the pool shall offer major medical expense coverage to every eligible person. The coverage to be issued by the pool, its schedule of benefits, exclusions, and other limitations must be established by the board and approved by the director taking into consideration the advice and recommendations of the pool members.  (2) In establishing and reviewing the pool's major medical expense coverage, the board shall take into consideration the levels of health insurance provided in the State and medical and economic factors considered appropriate and promulgate benefit levels, deductibles, coinsurance factors, exclusions, and limitations determined to be generally reflective of and commensurate with health insurance provided through a representative number of large employers in the State. At least one policy form of coverage must be comparable to comprehensive health insurance coverage offered in the individual market in this State or to the standard health insurance plan as defined in Section 38-71-1330.  (B) The pool shall offer Medicare supplemental health insurance coverage to each person who is under age sixty-five covered under Medicare Parts A and B for reasons other than age. The benefit plans to be offered must include Medicare supplement plan A and plan C.  (C) The pool shall provide a choice of health insurance coverage to all eligible individuals.  (D)(1) Premium rates charged for pool coverage may not be unreasonable in relation to the benefits provided, the risk experience, and the reasonable expenses of providing the coverage. Separate schedules of premium rates based on age, sex, and geographical location may apply for individual risks.  (2) The board shall determine the standard risk rate for major medical expense coverage by taking into account the individual standard rate charged by the five largest insurers offering individual coverages in the State comparable to the pool coverage. If five insurers do not offer comparable coverage, the standard risk rate must be established using reasonable actuarial techniques and must reflect anticipated experience and expenses for coverage. Rates initially established for pool coverage are two hundred percent of rates established as applicable for individual standard risks. Rates subsequently established must provide fully for the expected costs of claims and expenses of operation taking into account investment income and any other cost factors but may not exceed two hundred percent of rates established as applicable for individual standard risks subject to the limitations described in this section. All rates and rate schedules must be submitted to the director or his designee for approval.  (3) Premium rates charged for Medicare supplemental insurance coverage may not be unreasonable in relation to the benefits provided, the risk experience, and the reasonable expenses of providing the coverage. Rates established must provide fully for the expected costs of claims and expenses of operation taking into account investment income and any other cost factors.  (E) Except as provided in Section 38-74-30(B), (C), and (D), pool coverage excludes charges or expenses incurred during the first six months following the effective date of coverage as to any condition which during the six-month period immediately preceding the effective date of coverage:  (1) had manifested itself in a manner so as to cause an ordinarily prudent person to seek diagnosis, care, or treatment; or  (2) for which medical advice, care, or treatment was recommended or received as to the condition.  (F)(1) A benefit otherwise payable under pool coverage for covered expenses must be reduced by all amounts paid or payable for the same expenses through any other health insurance or health coverage and by all hospital and medical expense benefits paid or payable under any workers' compensation coverage, automobile medical payment, or liability insurance whether provided on the basis of fault or nonfault, and by any hospital or medical benefits paid or payable under or provided pursuant to any state or federal law or program.  (2) The insurer or the pool has a cause of action against an eligible person for the recovery of the amount of benefits paid which are not for covered expenses. Benefits due from the pool may be reduced or refused as a setoff against any amount recoverable under this paragraph.  HISTORY: 1989 Act No. 127, Section 6; 1993 Act No. 181, Section 790; 1997 Act No. 4, Section 5; 2002 Act No. 240, Section 3, eff January 1, 2003; 2006 Act No. 332, Section 13, eff June 1, 2006.
 (A) Neither the participation in the pool as members, the establishment of rates, forms, or procedures nor any other joint or collective action required by this chapter may be the basis of any legal action, criminal or civil liability, or penalty against the pool or any of its members.  (B) There is no liability on the part of, and no cause of action of any nature may arise against, a member insurer or its agents or employees, the pool's agents, employees, or board of directors, or the director, his designees or his representatives, for any act or omission in the performance of their powers and duties under this chapter. This section does not relieve the pool of any of its liability.  HISTORY: 1989 Act No. 127, Section 7; 1993 Act No. 181, Section 791.
 The pool established pursuant to this chapter is exempt from all taxes and assessments. Any member subject to tax liability imposed by any state statute may take credit for any assessment paid to the pool in the previous year against its premium or income tax payable. The tax credit is in addition to any other tax credits to which the member may be entitled pursuant to South Carolina law, but the credit may not reduce the member's tax liability below zero. Any unused credit may be carried forward three years. The credits are subject to the provisions of Section 38-7-120(c). The members are responsible for any loss of the operation of the pool, including any loss in excess of assessments paid to the pool. This State is not responsible for any loss of the operation of the pool, and no state funds may be used to defray any loss. If the total assessment for all members of the pool exceeds ten million dollars in any one year, the credit for any member shall be limited to the amount determined by multiplying the member's assessment by a fraction, the numerator of which equals ten million dollars and the denominator of which equals the total assessment in the year for all members of the pool.  HISTORY: 1989 Act No. 127, Section 8; 2002 Act No. 240, Section 4, eff January 1, 2003.
 The Director of the Department of Insurance may promulgate regulations necessary or appropriate to carry out the provisions of this chapter.  HISTORY: 1997 Act No. 4, Section 1.  
 Every fire insurer doing business in this State shall cause to be plainly written or printed on the face of each fire insurance policy written and issued by it the name of the county entitled to the allocation of the premiums on the business and the location of the property so insured. This information must be incorporated in all daily reports or other evidence furnished by the agent of coverage assumed.  HISTORY: Former 1976 Code Section 38-43-160 [1948 (45) 1961; 1952 Code Section 37-665; 1962 Code Section 37-665; 1978 Act No. 585 Section 1] recodified as Section 38-75-10 by 1987 Act No. 155, Section 1; 1988 Act No. 329.
 A title insurer may not pay a commission, directly or indirectly, of greater than sixty percent on a title insurance policy.  HISTORY: 1988 Act No. 562.
 (A) Notwithstanding Section 38-5-30, a title insurer may issue closing or settlement protection to a person who is a party to a transaction in which a title insurance policy will be issued, but may not provide any other coverage that purports to indemnify against improper acts or omissions of a person with regard to settlement or closing services.  (B) Closing or settlement protection may indemnify a person only against loss of closing or settlement funds because of one of the following acts of a settlement agent under the terms and conditions of the closing or settlement protection:  (1) theft or misappropriation of settlement funds in connection with a transaction in which a title insurance policy will be issued by or on behalf of the title insurer issuing the closing or settlement protection, but only to the extent that the theft relates to the status of the title to that interest in land or to the validity, enforceability, and priority of the lien of the mortgage on that interest in land; or  (2) failure to comply with the written closing instructions when agreed to by the settlement agent, title agent, or employee of the title insurer, but only to the extent that the failure to follow the instructions relates to the status of the title to that interest in land or the validity, enforceability, and priority of the lien of the mortgage on that interest in land.  (C) A premium charged by a title insurer for each party receiving closing or settlement protection must be submitted to and approved by the department in accordance with this article and must not be subject to any agreement requiring a division of fees or premiums collected on behalf of the title insurer.  HISTORY: 2012 Act No. 217, Section 1, eff June 11, 2012.
 (A) The purposes of this article are to:  (1) promote the public welfare by regulating insurance rates to the end that they may not be excessive, inadequate, or unfairly discriminatory and to authorize and regulate cooperative action among insurers in ratemaking and in other matters within the scope of this chapter; and  (2) empower the director or his designee to review and evaluate natural hazard catastrophe models that are used in rate filings.  (B) Nothing in this chapter is intended to prohibit or discourage reasonable competition.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A) The director or his designee shall issue a report by February 1, 2005, regarding cause of and potential solutions to coastal insurance issues.  (B) The report must be provided to the Speaker of the House and the President of the Senate.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A) This article applies only to property insurance on risks located in this State.  (B) This article does not apply to automobile insurance nor to insurance against liability arising out of the ownership, maintenance, or use of motor vehicles. The director or his designee may exempt from this article various specialty lines of insurance.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A) In recognition of the use of natural hazard catastrophe computer models and other recently developed or improved actuarial methodologies for projecting natural hazard losses, the director or his designee may make or cause to be made an evaluation of any natural hazard catastrophe model used in property rate filings in this State. Natural hazard catastrophe models are computer programs that estimate losses from potential natural hazard disasters, combining data on property exposures with information on natural hazards, such as storms or earthquakes, to generate estimates of potential losses.  (B) If required to do so by the director, a modeling organization that prepares catastrophe models used by insurers in rate filings in this State shall submit an initial report to the director or his designee consisting of but not limited to:  (1) a statement of its qualification as a modeling organization;  (2) an outline of the background and experience of the staff of the modeling organization engaged in the development and preparation of the catastrophe models used by insurers in rate filings; and  (3) one or more statements describing and attesting to the validity of the model for use in predicting losses associated with natural hazard catastrophes in this State. A separate statement must be made by an individual possessing expertise appropriate to the hazard being modeled in fields such as meteorology, engineering, building codes, geology, and actuarial science as they apply to natural hazard catastrophes faced by this State.  (C) The modeling organization shall submit a supplemental report to the director or his designee following any substantially material revision of the model if the revision is used by insurers in determining rates for this State. The supplemental report must specify the changes made to the catastrophe model, specify a list of variables that are subject to insurer input, and contain one or more statements by experts attesting to the continuing validity of the model for use in predicting losses associated with natural hazard catastrophes in this State.  (D) If the director or his designee determines the expert statements provided to be insufficient, he may reject the report.  (E) In conducting his evaluation of a model, the director or his designee may rely on the report of an official of another state who has made such an evaluation pursuant to the laws of that state.  (F) Proprietary or trade secret information that is submitted in a report, or is obtained, developed, or compiled in the course of any evaluation must be kept confidential by the director.  (G)(1) To recover the costs associated with the review and evaluation of catastrophe models, the director or his designee may impose a filing fee on:  (a) all insurers who use catastrophe or other computer simulated models; and  (b) modelers or modeling organizations that submit a model to the department for its review, evaluation, or approval. This fee must be retained by the department to defray the costs of retaining actuaries and other experts to evaluate such models.  (2) The fees collected pursuant to this section must be used only to offset expenses associated with the review of catastrophe models.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004); 2007 Act No. 78, Sections 12, 13, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 An insurer shall provide a separate premium for fire coverage and for allied lines coverage on a policy that includes fire and allied lines coverages. This includes a homeowner's and a businessowner's policy.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A)(1) Except for a cancellation pursuant to Section 38-75-730, a cancellation or refusal to renew by an insurer of a policy of insurance covered in this article is not effective unless the insurer delivers or mails to the named insured at the address shown in the policy a written notice of the cancellation or refusal to renew. This notice must:  (a) be approved as to form by the director or his designee before use;  (b) state the date not less than sixty days for any cancellation or refusal to renew after the date of the mailing or delivering on which the cancellation or refusal to renew becomes effective;  (c) state the specific reason of the insurer for cancellation or refusal to renew and provide for the notification required by Section 38-75-1180(B);  (d) inform the insured of his right to request in writing within thirty days of the receipt of notice that the director review the action of the insurer. The notice of cancellation or refusal to renew must contain the following statement in bold print to inform the insured of this right:  "IMPORTANT NOTICE: Within thirty days of receiving this notice, you or your attorney may request in writing that the director review this action to determine whether the insurer has complied with South Carolina laws in canceling or nonrenewing your policy. If this insurer has failed to comply with the cancellation or nonrenewal laws, the director may require that your policy be reinstated. However, the director is prohibited from making underwriting judgments. If this insurer has complied with the cancellation or nonrenewal laws, the director does not have the authority to overturn this action."  (e) inform the insured of the possible availability of other insurance which may be obtained through his agent, or through another insurer; and  (f) state that the Department of Insurance has available a buyer's guide regarding property insurance shopping and availability, and provide applicable mailing addresses and telephone numbers, including a toll-free number, if available, for contacting the Department of Insurance.  (2) Nothing in this subsection prohibits any insurer or agent from including in the notice of cancellation or refusal to renew, any additional disclosure statements required by state or federal laws, or any additional information relating to the availability of other insurance.  (B) Subsection (A) does not apply if the:  (1) insurer has manifested to the insured its willingness to renew by actually issuing or offering to the insured to issue a renewal policy, certificate, or other evidence of renewal, or has manifested this intention to the insured by another means;  (2) named insured has demonstrated by some overt action to the insurer or its agent that he expressly intends that the policy be canceled or that it not be renewed; or  (3) the notice of cancellation or refusal to renew by an insurer regarding private passenger automobile insurance or to insurance against liability arising out of ownership, maintenance, or use of:  (a) an individual private passenger automobile as defined in Section 38-77-30(5.5)(a); or  (b) property having wheels.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004); 2007 Act No. 78, Section 15, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2021 Act No. 13 (H.3585), Section 8, eff April 12, 2021.  Effect of Amendment  2021 Act No. 13, Section 8, in (A)(1)(b), deleted "that is effective between November first and May thirty-first and not less than ninety days for any cancellation or refusal to renew that is effective between June first and October thirty-first" following "refusal to renew".
 (A) If an individual, after proper identification, submits a written request to an insurance-support organization for access to recorded personal information about the individual that reasonably is described by the individual and reasonably able to be located and retrieved by the insurance-support organization, the insurance-support organization, within thirty business days from the date the request is received shall:  (1) inform the individual of the nature and substance of the recorded personal information in writing, by telephone, or by other oral communication, whichever the insurance-support organization prefers;  (2) permit the individual to see and obtain a copy of the recorded personal information pertaining to him or to obtain a copy of the recorded personal information by mail, whichever the individual prefers, unless the recorded personal information is in coded form, in which case an accurate translation in plain language must be provided in writing;  (3) disclose to the individual the identity, if recorded, of those persons to whom the insurance-support organization has disclosed the personal information within two years before the request, and if the identity is not recorded, the names of those insurance-support organizations or other persons to whom the information is disclosed in the regular course of business; and  (4) provide the individual with a summary of the procedures by which he may request correction, amendment, or deletion of recorded personal information.  (B) Personal information provided pursuant to subsection (A) must identify the source of the information if it is an institutional source.  (C) Medical record information supplied by a medical care institution or medical professional and requested pursuant to the provisions of subsection (A), together with the identity of the medical professional or medical care institution that provided the information, must be supplied either directly to the individual or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, whichever the insurer, agent, or insurance-support organization prefers. If it elects to disclose the information to a medical professional designated by the individual, the insurer, agent, or insurance-support organization shall notify the individual, at the time of the disclosure, that it has provided the information to the medical professional.  (D) Except for personal information provided by this section, an insurer, agent, or insurance-support organization may charge a reasonable fee to cover the costs incurred in providing a copy of recorded personal information to individuals.  (E) The obligations imposed by this section upon an insurer or agent may be satisfied by another insurer or agent authorized to act on its behalf. With respect to the copying and disclosure of recorded personal information pursuant to a request provided by subsection (A), an insurer, agent, or insurance-support organization may make arrangements with an insurance-support organization or a consumer reporting agency to copy and disclose recorded personal information on its behalf.  (F) The rights granted to individuals in this section must extend to all natural persons to the extent information about them is collected and maintained by an insurer, agent, or insurance-support organization in connection with an insurance transaction. The rights granted to all natural persons by this subsection do not extend to information about them that relates to and is collected in connection with or in reasonable anticipation of a claim or civil or criminal proceeding involving them.  (G) For purposes of this section, "insurance-support organization" does not include "consumer reporting agency".  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A) If there is a cancellation or nonrenewal of an insurance policy covered pursuant to the provisions of this article, the insurer or agent responsible for the cancellation or nonrenewal shall give a written notice in a form approved by the director that:  (1) either provides the applicant, policyholder, or individual proposed for coverage with the specific reason or reasons for the cancellation or nonrenewal in writing or advises the person that upon written request he may receive the specific reason or reasons in writing; and  (2) provides the applicant, policyholder, or individual proposed for coverage with a summary of the rights provided by subsection (B) and Section 38-75-1160.  (B) Upon receipt of a written request within ninety business days from the date of the mailing of notice or other communication of a cancellation or nonrenewal to an applicant, policyholder, or individual proposed for coverage, the insurer or agent shall furnish to the person within twenty-one business days from the date of receipt of the written request:  (1) the specific reason or reasons for the cancellation or nonrenewal in writing, if that information was not furnished initially in writing pursuant to subsection (A)(1);  (2) the specific items of personal and privileged information that support those reasons; however:  (a) the insurer or agent is not required to furnish specific items of privileged information if it has a reasonable suspicion, based upon specific information available for review by the director, that the applicant, policyholder, or individual proposed for coverage has engaged in criminal activity, fraud, material misrepresentation, or material nondisclosure; and  (b) specific items of medical record information supplied by a medical care institution or medical professional must be disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, whichever the insurer or agent prefers; and  (3) the names and addresses of the institutional sources that supplied the specific items of information given pursuant to subsection (B)(2). However, the identity of any medical professional or medical care institution must be disclosed either directly to the individual or to the designated medical professional, whichever the insurer or agent prefers.  (C) The obligations imposed by this section upon an insurer or agent may be satisfied by another insurer or agent authorized to act on its behalf. However, the insurer or agent making the cancellation or nonrenewal remains responsible for compliance with the obligations imposed by this section.  (D) If a cancellation or nonrenewal results only from an insured's oral request or inquiry, the explanation of reasons and summary of rights required by subsection (A) may be given orally.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 There is no liability on the part of and no cause of action of any nature may arise against the director or his designees, any insurer, or the authorized representatives, agents, and employees of any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation or refusal to write or renew, for any statement made by any of them in complying with this article, or for the providing of information pertaining to it, unless the person asserting the cause of action establishes that the person against whom the cause of action is asserted was motivated by express malice or gross negligence.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A) An application for the original issuance of a policy of insurance covered in the article must have the following statement printed on or attached to the first page of the application form, in boldface type:  "THE INSURER CAN CANCEL THIS POLICY FOR WHICH YOU ARE APPLYING WITHOUT CAUSE DURING THE FIRST 120 DAYS. THAT IS THE INSURER'S CHOICE. AFTER THE FIRST 120 DAYS, THE INSURER CAN ONLY CANCEL THIS POLICY FOR REASONS STATED IN THE POLICY."  (B) An application for the original issuance of a policy of insurance covered in this article that requires the insured to disclose information as to any previous cancellation or refusal to renew also must permit the insured to offer or provide a full explanation of the reason for the cancellation or refusal to renew.  (C) The notice required by this section must accompany the initial declarations page if the applicant is not provided a written copy at the time of the application and the coverage has been bound by the insurer.  (D) The insurer may cancel without cause at any time in the first one hundred twenty days during which the policy is in effect.  (E) This section does not apply to the renewal of any policy of insurance.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004); 2019 Act No. 6 (S.360), Section 9.B, eff July 1, 2019.  Effect of Amendment  2019 Act No. 6, Section 9.B, in (A), substituted "THE FIRST 120 DAYS" for "THE FIRST 90 DAYS" in two places; and in (D), substituted "one hundred twenty days" for "ninety days".
 (A)(1) An insurer or agent may not refuse to issue an insurance policy as defined in this article because of any one or more of the following factors:  (a) age;  (b) sex;  (c) race;  (d) color;  (e) creed;  (f) national origin;  (g) ancestry;  (h) marital status; or  (i) income level.  (2) An insurer or agent may not refuse to issue an insurance policy defined in this article only because of any one of the following factors:  (a) the previous refusal of property insurance by another insurer; or  (b) lawful occupation, including the military service, of the person seeking the coverage.  (3) Nothing in this section prohibits an insurer from limiting the issuance of insurance policies covered in this article only to persons engaging in or who have engaged in a particular profession or occupation, or who are members of a particular religious sect.  (4) Nothing in this section prohibits an insurer from setting rates in accordance with relevant actuarial data.  (5) Nothing in this section prohibits an insurer from refusing to issue policies of insurance due to the catastrophe exposure of wind.  (B)(1) In determining the premium rates to be charged for an insurance policy covered in this article, it is unlawful to consider:  (a) race;  (b) color;  (c) creed;  (d) religion;  (e) sex;  (f) national origin;  (g) ancestry;  (h) economic status; or  (i) income level.  (2) An insurer, agent, or a broker may not refuse to write an insurance policy covered in this article based upon:  (a) age;  (b) sex;  (c) race;  (d) color;  (e) creed;  (f) religion;  (g) national origin;  (h) ancestry;  (i) economic status; or  (j) income level.  (3) However, nothing in this subsection may preclude the use of a territorial plan approved by the director.  (C) An insurer or agent who violates this section is subject to the penalties as provided in Section 38-2-10. If the Director of the Department of Insurance or his designee finds that an insurer or agent is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. However, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer, agent, or a broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 (A)(1) An insurer may not refuse to renew an insurance policy covered in this article because of any one or more of the following factors:  (a) age;  (b) sex;  (c) race;  (d) color;  (e) creed;  (f) national origin;  (g) ancestry;  (h) marital status; or  (i) income level.  (2) An insurer may not refuse to renew an insurance policy covered in this article only because of any one of the following factors:  (a) lawful occupation, including the military service;  (b) lack of supporting business or lack of the potential for acquiring the business;  (c) one or more claims that occurred more than thirty-six months immediately preceding the upcoming anniversary date; or  (d) inquiries concerning coverage submitted to the insurer where no notice of claim was made.  (3) Nothing contained in subsection (A)(1)(e), (f), and (g) prohibits an insurer from refusing to renew a policy where a claim is false or fraudulent. Nothing in this section prohibits an insurer from setting rates in accordance with relevant actuarial data except that no insurer may set rates based in whole or in part on race, color, creed, religion, sex, national origin, ancestry, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director.  (4) Nothing in this section prohibits an insurer from refusing to renew policies of insurance due to the catastrophe exposure of wind.  (B) There is no liability on the part of and no cause of action of any nature shall arise against the director or his designees; an insurer, its authorized representatives, its agents, or its employees; or a person furnishing to the insurer information as to reasons for cancellation or refusal to renew, for any statement made by any of them in complying with this section or for providing information pertaining to the cancellation or refusal to renew. For the purposes of this section, an insurer is not required to furnish a notice of cancellation or refusal to renew to anyone other than the named insured, a person designated by the named insured, or any other person to whom the notice is required to be given by the terms of the policy and the director.  (C) Within fifteen days of receipt of the notice of cancellation or refusal to renew, an insured or his attorney is entitled to request in writing to the director that he review the action of the insurer in canceling or refusing to renew the policy of the insured. Upon receipt of the request, the director promptly shall begin a review to determine whether the insurer's cancellation or refusal to renew complies with the requirements of this section. If the director finds from the review that the cancellation or refusal to renew has not complied with the requirements of this section, he immediately shall notify the insurer, the insured, and any other person to whom the notice was required to be given by the terms of the policy that the cancellation or refusal to renew is not effective. Nothing in this section authorizes the director to substitute his judgment as to underwriting for that of the insurer.  (D) Each insurer shall maintain for at least three years, records of cancellation and refusal to renew and copies of each notice or statement referred to in Section 38-75-1160 that it sends to any of its insureds.  (E) The provisions of this section do not apply to an insurer that limits the issuance of insurance policies covered in this article to one class or group of persons engaged in any one particular profession, trade, occupation, or business. Nothing in this section requires an insurer to renew a policy of insurance covered in this article if the insured does not conform to the occupational or membership requirements of an insurer who limits its writings to an occupation or membership of an organization. An insurer is not required to renew a policy if the insured becomes a nonresident of South Carolina.  (F) An insurer who violates this section is subject to the penalties as provided in Section 38-2-10. If the director of the Department of Insurance or his designee finds that an insurer, agent, or a broker is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. However, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer, agent, or a broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 An insurer may not exclude wind and hail on a fire, allied lines, or homeowner's policy unless the property is in the area served by the South Carolina Wind and Hail Underwriting Association or the exclusion has been approved by the director or his designee.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004).
 An insurer shall provide upon the request of the director a listing of underwriting restrictions. These restrictions do not require approval of the director or his designee and are not public information.  HISTORY: 2004 Act No. 290, Section 2.A, eff six months after approval by the Governor (approved July 29, 2004); 2021 Act No. 13 (H.3585), Section 9, eff April 12, 2021.  Effect of Amendment  2021 Act No. 13, Section 9, in the first sentence, substituted "provide upon the request of the director a listing of underwriting restrictions" for "provide the director each year a listing of underwriting restrictions based upon geography and also provide notice of new changes to current underwriting restrictions".
 No insurer doing business in this State may issue a fire insurance policy for more than the value stated in the policy or the value of the property to be insured. The amount of insurance must be fixed by the insurer and insured at or before the time of issuing the policy. In case of total loss by fire the insured is entitled to recover the full amount of insurance. In case of a partial loss by fire the insured is entitled to recover the actual amount of the loss but in no event more than the amount of the insurance stated in the contract. If two or more policies are written upon the same property, they are considered to be contributive insurance, and, if the aggregate sum of all such insurance exceeds the insurable value of the property, as agreed by the insurer and the insured, each insurer, in the event of a total or partial loss, is liable for its pro rata share of insurance. This section does not apply to insurance on chattels or personal property.  HISTORY: Former 1976 Code Section 38-9-190 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-154; 1962 Code Section 37-154] recodified as Section 38-75-20 by 1987 Act No. 155, Section 1.
 Notwithstanding any other provision of law:  (1) No policy of hazard insurance issued or delivered to cover a mobile home risk situate in South Carolina may be written to provide for a policy period in excess of three years.  (2) Every such policy, and the manual of rules and rates of every insurer issuing such policies in this State, shall provide that all premiums held by the insurer in respect to that part of the policy term subsequent to the anniversary date of the then current policy year are considered unearned and must be refunded in full if the policy is cancelled, without respect to whether cancellation is effected by the insured or insurer. In the event of cancellation during the first year of the policy term, refund of premium for that portion of the policy term must be on a pro rata basis if cancellation is effected by the insurer or on the short rate basis if cancellation is effected by the insured. In the event of cancellation during the second year of the policy term, refund of that portion of the unearned premium attributable to the second year must be on a pro rata basis if cancellation is effected by the insurer or on the short rate basis if cancellation is effected by the insured, subject, however, to the provision that the portion of the unearned premium attributable to the third year is considered entirely unearned and must be returned in full regardless of the party responsible for cancellation. In the event of cancellation during the third year of the policy term, refund of that portion of the unearned premium attributable to the third year must be on a pro rata basis if cancellation is effected by the insured.  (3) Upon the cancellation of any such policy, without respect to the party effecting the cancellation, any unearned premium must be returned to the insured or to the mortgagee. If returned to the mortgagee the unearned premium must be applied to any payment then due or to the next payment or payments to become due. No agreement may be made requiring or permitting the mortgagee to apply the returned premiums to the final payment or payments on the indebtedness.  HISTORY: Former 1976 Code Section 38-41-10 [1975 (59) 157] recodified as Section 38-75-210 by 1987 Act No. 155, Section 1; 1988 Act No. 399, Section 10.
 No insurer transacting a mobile home insurance business in this State and writing hazard insurance covering loss from physical damage to the mobile homes may issue a policy for more than the value stated in the policy or the value of the property to be insured. The amount of insurance must be fixed by the insurer and insured at or before the time of issuing the policy. In case of total loss as a result of a hazard insured against, the insured is entitled to recover the full amount of insurance. In case of partial loss the insured is entitled to recover the actual amount of loss but in no event more than the amount of insurance stated in the contract. If two or more such policies are written upon the same property and covering the same interests, they are considered to be contributive insurance, and, if the aggregate sum of all such insurance exceeds the insurable value of the property, as agreed by the insured and insurer, each insurer, in the event of a total or partial loss, is liable for its pro rata share of insurance. This section does not preclude an agreement by an insurer with its insured to effect replacement in the event of total loss of the mobile home as a result of a hazard insured against if the insured has maintained insurance of a given percentage in relationship to the market value of the mobile home.  HISTORY: Former 1976 Code Section 38-41-20 [1975 (59) 157] recodified as Section 38-75-220 by 1987 Act No. 155, Section 1.
 Any contract to purchase a mobile home shall on its face:  (1) clearly include the provisions of Section 38-75-210; and  (2) clearly inform the purchaser that it is a violation of the law of this State for the seller of a mobile home or for any person lending money upon the security thereof to require or to attempt to require that hazard insurance be purchased from any particular insurer or agent and shall include the address of the office of the Department of the Insurance with instructions to report any violation or attempted violation to his office.  HISTORY: Former 1976 Code Section 38-41-30 [1975 (59) 157] recodified as Section 38-75-230 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 792.
 Notwithstanding Section 38-75-20, insurers may, at the request of owners of property used principally for manufacturing purposes, including places of residence for occupancy by employees, issue policies wholly exempt from Section 38-75-20. Riders or endorsements may, in consideration of an adequate premium or premium deposit, be attached to policies insuring property, indemnifying the insured for the difference between the actual value stated in the policy and the amount actually expended to repair, rebuild, or replace with new materials of like size, kind, and quality the insured property that has been damaged or destroyed by fire or other perils insured against.  HISTORY: Former 1976 Code Section 38-9-200 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-155; 1962 Code Section 37-155] recodified as Section 38-75-30 by 1987 Act No. 155, Section 1.
 In this article, unless the context otherwise requires:  (1) "Essential property insurance" means insurance against direct loss to property as defined and limited in the wind and hail insurance policy and forms approved by the director or his designee; and after January 1, 1995, at the request of the insured, coverage for:  (a) actual loss of business income;  (b) additional living expense; or  (c) fair rental value loss.  Before November 1, 1994, the South Carolina Wind and Hail Underwriting Association must file with the department for approval additional policy forms defining the terms of and providing coverage for actual loss of business income, additional living expense, and fair rental value loss.  (2) "Association" means the South Carolina Wind and Hail Underwriting Association established pursuant to the provisions of this article.  (3) "Plan of operation" means the plan of operation of the association approved or promulgated by the department pursuant to the provisions of this article.  (4) "Insurable property" means immovable property at fixed locations in coastal areas of the State as that term is defined, or tangible personal property located in it, which property is determined by the association to be in an insurable condition as determined by reasonable underwriting standards, but not to include farm or manufacturing property, or motor vehicles which are eligible to be licensed for highway use. A structure commenced on or after September 15, 1971, not built in substantial compliance with the most recent building code, adopted by the Building Codes Council as referenced in Section 6-9-50, or the approved building code in existence at the time of construction or the standards promulgated under the National Manufactured Housing Construction Standards and Safety Act, including the design-wind requirements in it, is not an insurable risk under the terms of this article. A structure commenced on or after September 15, 1971, must comply with any construction and zoning requirements affecting the structure, promulgated or adopted pursuant to the requirements of the Federal Flood Insurance Program.  (5) "Coastal area" means:  (a) all areas in Beaufort County and Colleton County which are east of the west bank of the intracoastal waterway;  (b) the following areas in Georgetown County: all areas between the Harrell Siau Bridge and the Georgetown-Horry County border which are east of a line paralleling U.S. Highway No. 17, and Cedar Island, North Island, and South Island;  (c) all areas in Horry County east of U.S. Highway No. 17 or By-Pass 17, whichever is farther to the west;  (d) the following areas in Charleston County: Edisto Island, Edingsville Beach, Kiawah Island, Botany Bay Island, Folly Island, Seabrook Island, Morris Island, and all areas north of the City of Charleston which are east of the west bank of the intracoastal waterway and the following areas:  (i) the portion of James Island which is east of the west bank of the James Island Creek;  (ii) the portion of John's Island which is east of a line paralleling Exchange Road which becomes Plow Ground Road to Hoopstick Island Road to Church Creek; and  (iii) the portion of Wadmalaw Island which is east of a line paralleling Roseville Road to west of Cherry Point Road to Maybank Highway to Brigger Hill Road.  (6) "Net direct premiums" means gross direct premiums excluding reinsurance assumed and ceded written on property other than farm or manufacturing in this State for fire and extended coverage insurance, including the fire and extended coverage components of homeowners policy and commercial multiple peril package policies, less return premiums upon canceled contracts, dividends paid or credited to policyholders, or the unused or unabsorbed portion of premium deposits.  (7) "Seacoast area" means all areas within Horry, Georgetown, Berkeley, Charleston, Dorchester, Colleton, Beaufort, and Jasper Counties.  HISTORY: Former 1976 Code Section 38-39-10 [1962 Code Section 37-772; 1971 (57) 744] recodified as Section 38-75-310 by 1987 Act No. 155, Section 1; 1988 Act No. 479, Section 2; 1990 Act No. 469, Section 1; 1993 Act No. 181, Section 793; 1994 Act No. 504, Sections 1, 2; 1996 Act No. 360 Section 3 and 1996 Act No. 378, Section 3; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.  Editor's Note  Under the provisions of Chapter 34, Title 1, an agency is required to adopt the latest edition of a nationally recognized code which it is charged by statute or regulation with enforcing by giving notice in the State Register.
 The purpose of this article is to assure an adequate market for wind and hail insurance in the coastal areas of this State.  HISTORY: Former 1976 Code Section 38-39-20 [1962 Code Section 37-771; 1971 (57) 744] recodified as Section 38-75-320 by 1987 Act No. 155, Section 1; 1990 Act No. 469, Section 2; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) There is created the South Carolina Wind and Hail Underwriting Association, an unincorporated association whose responsibilities, liability, and regulations are governed and defined by this article. The association shall function as a residual market mechanism to provide wind and hail insurance for residential and commercial property to applicants who are unable to procure this insurance in the coastal area.  (B) The association consists of all private insurers authorized to write and engage in writing property insurance within this State on a direct and statewide basis, but excluding insurers whose writings are limited to property wholly owned by parent, subsidiary, or allied organizations, or insurers whose writings are limited to property wholly owned by religious organizations. However, as a condition of exemption from membership these insurers providing property insurance for insurable property in the coastal area as defined by this article also shall provide essential property insurance for these risks. Each insurer must be a member of the association and shall remain a member of the association so long as the association is in existence as a condition of its authority to continue to transact the business of insurance in this State.  HISTORY: Former 1976 Code Section 38-39-30 [1962 Code Section 37-773; 1971 (57) 744] recodified as Section 38-75-330 by 1987 Act No. 155, Section 1; 1990 Act No. 469, Section 3; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) The association shall operate pursuant to a plan of operation which provides for the following:  (1) the number, qualifications, terms of office, and manner of election of the members of the board of directors, provided that four members of the board of directors must be consumers who are representative of business policyholders, residential single-family dwelling policyholders, and apartment, condominium, or multiple-family dwelling policyholders, and who are selected from recommendations from the members of the legislative delegations from the seacoast area;  (2) the efficient, economical, fair, and nondiscriminatory administration of the association;  (3) the prompt and efficient provision of essential property insurance in the coastal areas of the State;  (4) the manner of election of officers;  (5) the establishment of necessary facilities;  (6) the management of the association;  (7) the assessment of members to defray losses and expenses;  (8) reasonable underwriting standards, rating subdivisions, and rates including, but not limited to, developing multiple-tiered rates within the coastal area territory that reflect the relative risks of the properties located within a particular tier;  (9) commissions to be paid to agents or brokers;  (10) procedures for an open, competitive process for the acceptance and cession of reinsurance, provided that the association is not required to follow the provisions of the South Carolina Consolidated Procurement Code, and for determining the amounts of insurance to be provided to specific risks;  (11) time limits and procedures for processing applications for insurance; and  (12) other provisions considered necessary by the director or his designee to carry out the purposes of this article.  (B) Insurance effected pursuant to this article must have limits of liability provided in the plan of operation. The director or his designee shall approve the limits. Excess insurance is not permitted until the maximum available under the plan has been purchased. After that, excess insurance may be purchased and must be included for the purpose of meeting any coinsurance requirement.  (C) The board of the association, subject to the approval of the director or his designee, may amend the plan of operation at any time. The director or his designee shall review the plan of operation annually. The director or his designee shall review the rate structure and loss experience semi-annually in accordance with Section 38-75-400. After review of the plan, the director or his designee may amend the plan and the amendment takes effect immediately upon ratification by the board.  HISTORY: Former 1976 Code Section 38-39-50 [1962 Code Section 37-777; 1971 (57) 744; 1972 (57) 2736; 1976 Act No. 460; 1978 Act No. 562] recodified as Section 38-75-340 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) A person having an insurable interest in insurable property is entitled to apply to the association for coverage and for an inspection of the property. The application must be made on behalf of the applicant by a licensed broker or agent authorized by him. An application must be submitted on a form prescribed by the association and approved by the director or his designee. The application must contain a statement as to whether or not there are any unpaid premiums due from the applicant for fire insurance on the property. The term "insurable interest" as used in this section includes any lawful and substantial economic interest in the safety or preservation of property from loss, destruction, or pecuniary damage.  (B) If the association determines that the property is insurable and that there is no unpaid premium due from the applicant for prior insurance on the property, the association upon receipt of the premium, or a portion of it as is prescribed in the plan of operation, shall cause to be issued a policy of essential property insurance for a term of at least one year.  (C) If the association, for any reason, denies an application and refuses to cause to be issued an insurance policy on insurable property to an applicant or takes no action on an application within the time prescribed in the plan of operation, the applicant may appeal to the director or his designee and the director or a member of his staff designated by him, after reviewing the facts, may direct the association to issue or cause to be issued an insurance policy to the applicant. In carrying out its duties pursuant to this section, the director or his designee may request, and the association shall provide, any information the director or his designee considers necessary to a determination concerning the reasons for the denial or delay of the application.  HISTORY: Former 1976 Code Section 38-39-50 [1962 Code Section 37-777; 1971 (57) 744; 1972 (57) 2736; 1976 Act No. 460; 1978 Act No. 562] recodified as Section 38-75-350 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) The association, pursuant to the provisions of this article and the plan of operation, and with respect to essential property insurance on insurable property, has the power on behalf of its members to:  (1) cause to be issued policies of insurance to applicants;  (2) assume reinsurance from its members;  (3) cede reinsurance to its members and to purchase reinsurance on risks insured by the association in amounts that are in accordance with procedures adopted by the board;  (4) receive, hold, and transfer personal and real property in the name of the association;  (5) contract for goods and services that may not be reasonably performed by its employees;  (6) solicit and accept goods, loans, grants, etc. in the name of the association;  (7) borrow funds; and  (8) issue bonds, surplus notes, or other debentures.  (B) The association, pursuant to the provisions of this article and the plan of operation, and with respect to essential property insurance on insurable property, shall perform other acts necessary or proper to effectuate the purpose of this subsection.  HISTORY: Former 1976 Code Section 38-39-60 [1962 Code Section 37-774; 1971 (57) 744] recodified as Section 38-75-360 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) All members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premium of the member written in this State during the calendar year two years before the current year bears to the aggregate net direct premiums written in this State by all members of the association, as certified to the association by the department after review of annual statements, other reports, and other statistics which the department considers necessary to provide the information required and which the department is authorized to obtain from a member of the association. After certification by the department, the association may rely on the member company's annual statement in determining the company's participation in profits and losses for each year.  (B) Each member's participation in the association must be determined annually in the same manner as the initial determination. An insurer authorized to write and engage in writing insurance, the writing of which requires the insurer to be a member of the association pursuant to Section 38-75-330, becomes a member of the association on January first immediately following the authorization. The determination of the insurer's participation in the association must be made as of the date of the membership in the same manner as for all other members of the association. Member insurers shall receive credit annually for essential property insurance voluntarily written in the coastal area and their participation in the writings of the association must be reduced accordingly. The board of directors shall authorize the method of determining the credit. In order to receive credit for essential property voluntarily written in the coastal area, each member company shall submit its requests by March thirty-first of the year preceding the year for which credit is sought.  (C) 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 director or his designee, payment of the assessment would render the insurer insolvent or in danger of insolvency or would otherwise leave the insurer in a condition so that further transaction of the insurer's business would 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 director or his designee 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 its order of deferral, or in necessary subsequent orders, the director or his designee shall prescribe a plan by which the assessment so deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semi-annually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled must not be distributed to the impaired insurer but must be applied toward repayment of an assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest, to the other member insurers on the basis at which assessments were made.  HISTORY: Former 1976 Code Section 38-39-70 [1962 Code Section 37-776; 1971 (57) 744; 1983 Act No. 12] recodified as Section 38-75-370 by 1987 Act No. 155, Section 1; 1992 Act No. 342, Section 2; 1993 Act No. 181, Section 793; 2006 Act No. 332, Section 30, eff June 1, 2006; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) If a member company perceives an assessment or interest levied by the association to be unjust or illegal, the company shall pay the assessment or interest under protest in writing within thirty days of the assessment or interest charge. Upon receiving this payment, the association shall pay the money collected into the association account and designate the money as having been paid under protest.  (B) A member company paying an assessment or interest under protest shall appeal to the association within thirty days after making the payment. If it is determined in that appeal that the assessment or interest was collected unjustly or illegally, the association shall refund the assessment or interest to the payor.  (C) If a member company fails to pay an assessment or interest within thirty days of the assessment or interest charge by the association, the company is subject to disciplinary procedures pursuant to Section 38-5-120 or 38-5-130.  HISTORY: 1992 Act No. 342, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 There may be no liability on the part of and no cause of action of any nature may arise against the department or any of its staff or the association or its agents, employees, or any participating insurer for any inspections made hereunder or any statements made in good faith by them in any reports or communications concerning risk submitted to the association or at any administrative hearings conducted in connection with it under the provisions of this article.  HISTORY: Former 1976 Code Section 38-39-80 [1962 Code Section 37-782; 1971 (57) 744] recodified as Section 38-75-380 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 There is no liability on the part of, and no cause of action of any nature may arise against, any member insurer, the association's agents or employees, the board of directors, or the director, his designees, or his representatives for any act or omission in the performance of their powers and duties under this article. This section does not relieve the association of any of its liability.  HISTORY: 1988 Act No. 479, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 No liability on the part of, and no cause of action of any nature may arise against, the director, the Department of Insurance or its staff, the association, any member insurer, the association's agents or employees, its board of directors, or the legal representatives of any of the above persons, for any act or omission made in good faith or for any statement made to, or for information provided to, any insurer regarding rates; premiums; classifications; cancellations, determinations, or nonrenewals of coverage; underwriting; inspections; or claims experience history made to facilitate the underwriting of essential property insurance for risks in the coastal area by private insurers or to facilitate competition for the underwriting of essential property insurance for risks in the coastal area among private insurers.  HISTORY: 1996 Act No. 360 Section 2 and 1996 Act No. 378, Section 2; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 A member of the association who is designated to receive and write essential property insurance from or through the association shall cede one hundred percent to the association the essential property insurance.  HISTORY: Former 1976 Code Section 38-39-90 [1962 Code Section 37-778; 1971 (57) 744] recodified as Section 38-75-390 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 No insurer or agency licensed to do business in this State may issue any policy or contract of insurance covering property in this State which contains any clause or provision requiring the insured to take or maintain a larger amount of insurance than that expressed in the policy or in any way provides that the insured is liable as a coinsurer with the insurer issuing the policy for any part of the loss or damage to the property described in the policy. Any such clause or provision is void. However, such a clause or provision may be used if there is stamped on the filing face of the policy or printed in bold type at the top of the clause the words "coinsurance clause". If there is a difference in the rate for insurance with and without the coinsurance clause, the rates for each must be furnished the insured upon request.  HISTORY: Former 1976 Code Section 38-9-220 [1947 (45) 322; 1952 Code Section 37-157; 1962 Code Section 37-157] recodified as Section 38-75-40 by 1987 Act No. 155, Section 1.
 (A) The rates, rating plans, and rating rules applicable to the insurance written by the association are those approved for use of the association by the director or his designee. Surcharges may be used as approved by the director or his designee. Rates may include rules for classification of risks insured under the provisions of this article and rate modifications of it.  (B) As a residual market mechanism, the association is not intended to offer rates competitive with the admitted market. Rates for policies issued by the association must be adequate and established at a level that permits the association to operate as a self-sustaining mechanism. The association shall maintain the necessary rate-making data in order to permit the actuarial determination of rates and rating plans appropriate for the business insured by the association. The association shall monitor rate adequacy and shall notify the director semi-annually to enable the director to take corrective action by an order. Rates adjusted by a corrective action order are exempt from the twelve-month limitation requirement of Section 38-73-920. The corrective action order is subject to judicial review by the Administrative Law Court.  HISTORY: Former 1976 Code Section 38-39-100 [1962 Code Section 37-779; 1971 (57) 744] recodified as Section 38-75-400 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) A person insured pursuant to this article or his representative or a member company who is aggrieved by an act, ruling, or decision of the association:  (1) regarding rates, classification of risks, assessments, voluntary credits, cancellation or termination of policies, or underwriting shall appeal to the director or his designee within sixty days after the act, ruling, or decision;  (2) other than those specified in item (1), may appeal to the director or his designee within thirty days after the act, ruling, or decision.  (B) A hearing held by the director or his designee pursuant to this section must be in accordance with the procedures set forth in Chapter 3, Title 38 and Article 3, Chapter 23, Title 1, "Administrative Procedures".  HISTORY: Former 1976 Code Section 38-39-110 [1962 Code Section 37-780; 1971 (57) 744] recodified as Section 38-75-410 by 1987 Act No. 155, Section 1; 1992 Act No. 342, Section 3; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 All reports of inspection performed by or on behalf of the association must be made available to the members of the association, applicants, agents, brokers, and the department.  All reports of inspection performed by or on behalf of the association must be made available to the members of the association, applicants, agent, broker, and the department.  HISTORY: Former 1976 Code Section 38-39-120 [1962 Code Section 37-781; 1971 (57) 744] recodified as Section 38-75-420 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 The association shall file with the department by March thirty-first of each year a statement which summarizes the transactions, conditions, operations, and affairs of the association during the preceding fiscal year ending October thirty-first. The statement must contain any matters and information prescribed by the department and must be in the form required by it. The department may at any time require the association to furnish to it any additional information with respect to its transactions or any other matter which it considers material to assist it in evaluating the operation and experience of the association.  HISTORY: Former 1976 Code Section 38-39-130 [1962 Code Section 37-783; 1971 (57) 744; 1976 Act No. 529] recodified as Section 38-75-430 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 The department may make an examination into the affairs of the association and in undertaking the examination may hold a public hearing. The expense of the examination must be borne and paid by the association.  HISTORY: Former 1976 Code Section 38-39-140 [1962 Code Section 37-784; 1971 (57) 744] recodified as Section 38-75-440 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 The department has authority to make reasonable regulations, not inconsistent with law, to enforce, carry out, and make effective the provisions of this article after notice and hearing before the Administrative Law Court.  HISTORY: Former 1976 Code Section 38-39-150 [1962 Code Section 37-785; 1971 (57) 744] recodified as Section 38-75-450 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 793; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.
 (A) In order to maintain stability in the property insurance market and to assure the continued, consistent availability of essential property insurance coverage in the coastal area, the Director of the Department of Insurance, who is selected as defined in Section 38-1-20(16), or his designee, by written order complying with the requirements of Section 1-23-140, may expand the coastal area in which the association shall provide essential property insurance for periods up to twenty-four months. The order is subject to renewal by the director but no renewal shall exceed twenty-four months. In determining whether expansion of the coastal area is warranted, the director or his designee shall consider:  (1) changes in the number of insurers writing essential property insurance in the seacoast area and the capacity of those insurers including, but not limited to, the number of policies those insurers have cancelled or nonrenewed, as provided in Sections 38-75-730, 38-75-740, and 38-75-1160, during the previous twelve months;  (2) changes in the extent to which (a) nonadmitted or surplus lines insurers, or (b) South Carolina Coastal Captive Insurance Companies, pursuant to Article 5, Chapter 90, Title 38, are providing essential property insurance in the seacoast area;  (3) changes in reinsurance activity impacting insurers writing essential property insurance in the seacoast area;  (4) changes in the demand for property insurance in the seacoast area; and  (5) any other information considered relevant to effectuate the purpose of this chapter including, but not limited to, the availability of essential property insurance coverage for insurable property that is within the coastal area and is located in a Coastal Barrier Resource Act (CBRA) zone.  (B) The director or his designee shall find and declare the existence of conditions that threaten to destabilize the property insurance market and jeopardize the continued, consistent availability of essential property insurance in the seacoast area. The director or his designee shall utilize market surveys, data calls, catastrophe models, reinsurance information, and other objective sources to support the order of expansion.  (C)(1) The director or his designee may expand the coastal area in which the association shall provide essential property insurance. The expansion may encompass a portion of the seacoast area or the entire seacoast area, but may not extend further than the seacoast area. The area must not be expanded more than reasonably necessary to ensure a stable property insurance market.  (2) In expanding the coastal area, the director or his designee may provide for the coastal area territory to be divided into multiple tiers to allow the association to develop multiple-tiered rates that reflect the relative risks of the properties located within a particular tier.  (3) An expansion of the coastal area is subject to the plan of operation as amended and approved by the director or his designee.  (4) The director or his designee shall report any expansion of the coastal area to the General Assembly within thirty days of the order of expansion or upon commencement of the next term of the General Assembly, if expansion occurs when the General Assembly is not in session. The General Assembly may approve, revise, or vacate any expansion order by passage of a joint resolution.  (D) On the effective date of this section, the General Assembly ratifies the director's May 23, 2007, coastal area expansion order and the multiple-tier structure described in the order for the time period stated in the order and authorized by this section.  HISTORY: 1988 Act No. 479, Section 3; 1993 Act No. 181, Section 793; 2003 Act No. 73, Section 20, eff June 25, 2003; 2007 Act No. 78, Section 10, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.  Editor's NoteARTICLE 5, Chapter 90, Title 38 was repealed by 2018 Act No. 251, Section 2, effective May 18, 2018.
 (A) The Director of Insurance shall appoint an advisory committee to the director to study issues associated with the development of strategies for reducing loss of life and to address the mitigation of property losses due to hurricane, earthquake, flood, and fire. The advisory committee also shall consider the associated costs to individual property owners. The advisory committee is composed of:  (1) the director or his designee;  (2) the Chairman of the Building Codes Council or his designee;  (3) a representative from Clemson University involved with wind engineering;  (4) a representative from an academic institution involved with the study of earthquakes;  (5) a representative from an insurer writing property insurance in South Carolina;  (6) a representative from the Department of Commerce;  (7) a representative from the South Carolina's Municipal Association;  (8) a representative from the South Carolina Association of Counties;  (9) a representative from the Homebuilders Association;  (10) a representative from the Manufactured Housing Institute of South Carolina;  (11) a representative from the State Fire Marshal's office;  (12) a representative from the South Carolina Emergency Management Division;  (13) a representative from the State Flood Mitigation Program;  (14) two at-large members appointed by the director;  (15) two at-large members appointed by the Governor;  (16) a general contractor;  (17) a representative from the South Carolina Association of Realtors; and  (18) a structural engineer.  (B) Members shall serve for terms of two years and shall receive no per diem, mileage, or subsistence. Vacancies must be filled in the same manner as the original appointment.  (C) Within thirty days after its appointment, the advisory committee shall meet at the call of the Director of Insurance. The advisory committee shall elect from its members a chairman and a secretary and shall adopt rules not inconsistent with this chapter. Meetings may be called by the chairman on his own initiative and must be called at the request of three or more members of the advisory committee. All members must be notified by the chairman of the time and place of the meeting at least seven days in advance of the meeting. All meetings must be open to the public. At least two-thirds vote of those members in attendance at the meeting shall constitute an official decision of the advisory committee. Implementation of this program and continued existence of this program is subject to the availability of funding through legislative appropriations or alternative funding sources.  HISTORY: 1997 Act No. 123, Section 5; 2000 Act No. 312, Section 20; 2002 Act No. 190, Section 6, eff March 12, 2002; 2007 Act No. 78, Section 11, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2017 Act No. 28 (S.315), Section 1, eff May 10, 2017.  Effect of Amendment  2017 Act No. 28, Section 1, in (A), deleted "and the South Carolina Building Codes Council" following "to the director", substituted "to address the mitigation of" for "mitigating", inserted "flood," after "earthquake,", and substituted "associated costs" for "costs associated with these strategies".
 (A) There is established within the Department of Insurance a loss mitigation grant program. Funds may be appropriated to the grant program, and any funds appropriated must be used for the purpose of making grants to local governments or for the study and development of strategies for reducing loss of life and mitigating property losses due to hurricane, flood, earthquake, and fire. Grants to local governments must be for the following purposes:  (1) mitigating losses for eligible residential properties within the local jurisdiction in accordance with the guidelines established by the director or his designee; and  (2) providing technical assistance to and acting as an information resource for local governments in the development of proactive hazard mitigation strategies as they relate to reducing the loss of life and mitigating property losses due to natural hazards to include hurricane, flood, earthquake, and fire.  (B) Funds may be appropriated for a particular grant only after a majority affirmative vote on each grant by the advisory committee and submission of a resolution approved by a majority of the members of the relevant local governing body approving the application for grant funds.  (C) The Department of Insurance may make application and enter into contracts for and accept grants in aid from federal and state government and private sources for the purposes of:  (1) mitigating losses for eligible residential properties in accordance with the guidelines established by the director or his designee; and  (2) conducting loss mitigation studies for the development of strategies or measures aimed at reducing loss of life and mitigating property losses due to hurricane, flood, earthquake, and fire; or  (3) any other purposes consistent with this article.  HISTORY: 1997 Act No. 123, Section 5; 2000 Act No. 312, Section 21; 2007 Act No. 78, Section 11, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2017 Act No. 28 (S.315), Section 2, eff May 10, 2017.  Effect of Amendment  2017 Act No. 28, Section 2, rewrote the section, providing that grants may be made to local governments to mitigate losses and provide technical assistance for the development of proactive hazard mitigation strategies and allowing the Department of Insurance to accept grants in aid for the mitigation of losses for eligible properties.
 (A) There is established within the Department of Insurance, the South Carolina Hurricane Damage Mitigation Program. The advisory committee, established pursuant to Section 38-75-470, shall provide advice and assistance to the program administrator with regard to his administration of the program.  (B) This section does not create an entitlement for property owners or obligate the State in any way to fund the inspection or retrofitting of residential property in this State. Implementation of this program is subject to annual legislative appropriations.  (C) The program shall develop and implement a comprehensive and coordinated approach for hurricane damage mitigation that includes the following:  (1) The program may award matching or nonmatching grants based upon the availability of funds. The program administrator also shall apply for financial grants to be used to assist single-family, site-built or manufactured or modular, owner-occupied, residential property owners to retrofit their primary legal residence to make them less vulnerable to hurricane damage.  (a) To be eligible for a matching grant, a residential property must:  (i) be the applicant's primary legal residence;  (ii) be actually owned and occupied by the applicant;  (iii) be the owner's legal residence as described in Section 12-43-220(c);  (iv) be a single family, site-built, manufactured, or modular, owner-occupied residential property;  (v) be a residential property covered by a current homeowners or dwelling insurance policy that:  (A) is issued by an insurer licensed in this State or a surplus lines insurer, where the policy is lawfully placed by a broker authorized to do business in this State; and  (B) provides insurance coverage of the residential property equal to or greater than the fair market value of the residential property as defined in Section 12-37-3135(a)(2) and reflected in the county records;  (vi) have undergone an acceptable wind certification and hurricane mitigation inspection in accordance with program requirements.  (b) All matching grants must be matched on a dollar-for-dollar basis for a total of ten thousand dollars for the mitigation project. No grant issued by the program for any mitigation project for a residential property may exceed five thousand dollars.  (c) The program must create a process in which mitigation contractors agree to participate and seek reimbursement from the State and homeowners selected from a list of participating contractors. All mitigation projects must be based upon the securing of all required local permits and inspections. Mitigation projects are subject to random reinspection. The program may reinspect up to ten percent of all projects.  (d) Matching fund grants also must be made available to local governments and nonprofit entities, on a first-come, first-served basis, for projects that reduce hurricane damage to single-family, site-built or manufactured or modular owner-occupied, residential property, provided that:  (i) no matching grant for any one local government or nonprofit entity may exceed fifty thousand dollars in any fiscal year;  (ii) the total amount of matching grants awarded to all local governments and nonprofit entities combined may not exceed two hundred fifty thousand dollars in any fiscal year; and  (iii) the difference between two hundred fifty thousand dollars and the total amount of grants awarded to all local governments and nonprofit entities combined in any fiscal year may be applied to grants to individual homeowners who meet the qualifications for a grant described in subitems (a) through (d) or in subitem (g).  (e) Grants may be used for the following improvements:  (i) roof deck attachment;  (ii) secondary water barrier;  (iii) roof covering;  (iv) brace gable ends;  (v) reinforce roof-to-wall connections;  (vi) opening protection;  (vii) exterior doors, including garage doors;  (viii) tie downs;  (ix) problems associated with weakened trusses, studs, and other structural components;  (x) inspection and repair or replacement of manufactured home piers, anchors, and tiedown straps; and  (xi) any other mitigation techniques approved by the advisory committee.  (f) To be eligible for a nonmatching grant, a residential property must comply with the requirements set forth in subsection (C)(1)(a), (c), and (e).  (i) For nonmatching grants, applicants who otherwise meet the requirements of subitems (a), (c), and (e) may be eligible for a grant of up to five thousand dollars and may not be required to provide a matching amount to receive the grant. These grants must be used to retrofit single-family, site-built or manufactured or modular, owner-occupied, residential properties in order to make them less vulnerable to hurricane damage. The grant must be used for the retrofitting measures set forth in Section 38-75-485(C)(1)(e).  (ii) Nonmatching grant award amounts will be determined based on the cost of the mitigation project and a percentage of the total adjusted household income of the applicant according to the most recent federal income tax return. Those applicants with a total annual adjusted gross household income of which does not exceed eighty percent of the median annual adjusted gross income for households within the county in which the person or family resides may be eligible for the maximum grant award amount of five thousand dollars. Applicants with a higher total annual adjusted household income may be awarded a lower amount. The director or his designee shall issue a bulletin annually that sets forth the maximum grant award amounts based on the total annual adjusted gross household income of the applicant adjusted for family size relative to the county area median income or the state median family income, whichever is higher, as published annually by the United States Department of Housing and Urban Development. If the cost of the mitigation project exceeds the amount of the grant award, the remaining cost is the applicant's responsibility. No grant award may exceed five thousand dollars.  (2) The department shall define by regulation the details of the mitigation measures necessary to qualify for the grants described in this section.  (3) Multimedia public education, awareness, and advertising efforts designed to specifically address mitigation techniques must be employed, as well as a component to support ongoing consumer resources and referral services.  (4) The department shall use its best efforts to obtain grants or funds from the federal government to supplement the financial resources of the program. In addition to state appropriations, if any, this program must be implemented by the department through the use of the premium taxes due to this State by the South Carolina Wind and Hail Underwriting Association, and one percent of the premium taxes collected annually and remitted to the Department of Insurance.  (5) The director or his designee may promulgate regulations necessary to implement the provisions of this article.  HISTORY: 2007 Act No. 78, Section 11, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2017 Act No. 28 (S.315), Section 3, eff May 10, 2017.  Effect of Amendment  2017 Act No. 28, Section 3, rewrote the section, establishing criteria that a residential property must meet in order to be eligible for a nonmatching grant, allowing for matching grant funds to be made available to local governments and nonprofit entities, and establishing a formula for determining nonmatching grant awards based on an applicant's household income.
 (A) The Department of Insurance, in consultation with the Department of Consumer Affairs, the Department of Commerce, the Federal Alliance for Safe Homes, the Manufactured Housing Institute of South Carolina, South Carolina Building Codes Council, the Home Builders Association of South Carolina, the Civil Engineering Department of Clemson University, and the Institute for Business and Homes Safety shall study and prepare a proposal to develop an objective rating system that will allow homeowners to evaluate the relative ability of South Carolina's coastal properties to withstand the wind load from a hurricane.  (B) The rating system must be designed in a manner the property owner may easily understand, based on proven readily verifiable mitigation techniques and devices, and able to be implemented through a visual inspection program. The rating system must be designed to facilitate a home inspection process to determine a home's existing as well as projected wind resistance capabilities.  (C) The rating system must contemplate the use of certified wind resistance and loss mitigation inspectors.  (D) The department must provide a report to the Governor, the President of the Senate, and the Speaker of the House of Representatives by March 5, 2008, detailing the nature and construction of the rating scale, its projected effectiveness based on implementation in a pilot program, an operational plan for statewide implementation of the rating scale, and any recommendations for additional legislation.  HISTORY: 2007 Act No. 78, Section 11, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006.  Editor's Note  2019 Act No. 1, Section 97, provides as follows:  "SECTION 97. The Code Commissioner is directed to change all references to 'President Pro Tempore', 'President Pro Tempore of the Senate', or 'President of the Senate Pro Tempore' not specifically addressed in this act to 'President of the Senate'."ARTICLE 9  Cancellation, Nonrenewal, and Renewal of Property Insurance and Casualty Insurance
 Any clause in any policy of insurance purporting or undertaking to limit or invalidate the force of the policy in case of encumbrance by real estate mortgage of the property insured by the policy is void.  HISTORY: Former 1976 Code Section 38-9-210 [1947 (45) 322; 1952 Code Section 37-156; 1962 Code Section 37-156] recodified as Section 38-75-50 by 1987 Act No. 155, Section 1.
 Notwithstanding any other provision of law, no insurer has a cause of action against a tenant who causes damage to real or personal property leased by the landlord to the tenant when the insurer is liable to the landlord for the damages under an insurance contract between the landlord and the insurer, unless the damage is caused by the tenant intentionally or in reckless disregard of the rights of others.  HISTORY: Former 1976 Code Section 38-9-370 [En, 1977 Act No. 151 Section 2] recodified as Section 38-75-60 by 1987 Act No. 155, Section 1.
 This article applies to all property insurance and casualty insurance, as defined in Section 38-1-20, except for automobile insurance and any other type of property or casualty insurance as to which there are specific statutory provisions of law governing cancellation, nonrenewal, or renewal of policies. This article further applies to policies issued by licensed insurers and to policies issued by eligible surplus lines insurers.  HISTORY: Former 1976 Code Section 38-9-810 [1986 Act No. 338] recodified as Section 38-75-710 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 11.
 For the purposes of this article:  (1) "Renewal" or "to renew" means the issuance of or the offer to issue by an insurer a policy succeeding a policy previously issued and delivered by the same insurer or an insurer within the same group of insurers, or the issuance of a certificate or notice extending the term of an existing policy for a specified period beyond its expiration date.  (2) "Nonpayment of premium" means the failure or inability of the named insured to discharge when due any obligation in connection with the payment of premiums on a policy of insurance subject to this article, whether such payment is payable directly to the insurer or its agent or indirectly payable under a premium finance plan or extension of credit.  (3) "Cancellation" means termination of a policy at a date other than its expiration date.  (4) "Expiration date" means the date upon which coverage under a policy ends. It also means, for a policy written for a term longer than one year or with no fixed expiration date, each annual anniversary date of such policy.  (5) "Nonrenewal" means termination of a policy at its expiration date.  HISTORY: Former 1976 Code Section 38-9-820 [1986 Act No. 338] recodified as Section 38-75-720 by 1987 Act No. 155, Section 1.
 (a) No insurance policy or renewal thereof may be canceled by the insurer prior to the expiration of the term stated in the policy, except for one of the following reasons:  (1) nonpayment of premium;  (2) material misrepresentation of fact which, if known to the company, would have caused the company not to issue the policy;  (3) substantial change in the risk assumed, except to the extent that the insurer had notice of the risk or should reasonably have foreseen the change or contemplated the risk in writing the policy;  (4) substantial breaches of contractual duties, conditions, or warranties;  (5) loss of the insurer's reinsurance covering all or a significant portion of the particular policy insured, or where continuation of the policy would imperil the insurer's solvency or place that insurer in violation of the insurance laws of this State. Prior to cancellation for reasons permitted in this item, the insurer shall notify the director or his designee, in writing, at least sixty days prior to such cancellation and the director or his designee shall, within thirty days of such notification, approve or disapprove such action.  (b) Cancellation under subsection (a)(1) of this section is not effective unless written notice of cancellation has been delivered or mailed to the insured and the agent of record, if any, not less than ten days prior to the proposed effective date of cancellation. Cancellation under subsection (a)(2) through (5) is not effective unless written notice of cancellation has been delivered or mailed to the insured and the agent of record, if any, not less than thirty days prior to the proposed effective date of cancellation. The notice must be given or mailed to the insured and the agent at their addresses shown in the policy or, if not reflected therein, at their last known addresses. Any notice of cancellation shall state the precise reason for cancellation. Proof of mailing is sufficient proof of notice.  (c) Subsections (a) and (b) do not apply to any insurance policy which has been in effect for less than one hundred twenty days and is not a renewal of a previously existing policy. The policy may be canceled for any reason by furnishing to the insured at least thirty days' written notice of cancellation, except where the reason for cancellation is nonpayment of premium, in which case not less than ten days' written notice must be furnished. Insurers may not cancel a policy outside of the one hundred twenty-day period if they had notice of the change in risk prior to the expiration of the one hundred twenty-day underwriting period.  (d) For purposes of subsection (a)(3), substantial change in the risk assumed, if based upon changes in climatic conditions, must be based on statistical data relative to South Carolina that has been approved by the director or his designee as a basis for substantial change in the risk assumed.  (e) Cancellation of a workers' compensation insurance policy under this section is not effective unless written notice of cancellation is delivered or mailed to the South Carolina Workers' Compensation Commission, and to the insured, not less than the time frame required for notice to the insured under this section.  HISTORY: Former 1976 Code Section 38-9-830 [1986 Act No. 338] recodified as Section 38-75-730 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 794; 2007 Act No. 78, Section 14, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2019 Act No. 6 (S.360), Section 9.A, eff July 1, 2019; 2021 Act No. 13 (H.3585), Section 6, eff April 12, 2021.  Effect of Amendment  2019 Act No. 6, Section 9.A, in (a), in (3), inserted "had notice of the risk or" following "except to the extent that the insurer"; and in (c), added the third sentence, prohibiting an insurer from cancelling a policy outside of the one hundred twenty-day period if they had notice of a change in risk prior to the expiration of the time period.  2021 Act No. 13, Section 6, added (e).
 (a) No insurance policy may be nonrenewed by an insurer except in accordance with the provisions of this section or Section 38-75-730, and any nonrenewal attempted which is not in compliance with this section or Section 38-75-730 is ineffective.  (b) A policy written for a term of one year or less may be nonrenewed by the insurer at its expiration date by giving or mailing written notice of nonrenewal to the insured and the agent of record, if any, not less than sixty days prior to the expiration date of the policy.  (c) Subject to subsection (c) of Section 38-75-760, a policy written for a term of more than one year or for an indefinite term may be nonrenewed by the insurer at its anniversary date by giving or mailing written notice of nonrenewal to the insured and the agent of record, if any, not less than sixty days prior to the anniversary date of the policy.  (d) The notice required by this section must be given or mailed to the insured and the agent at their addresses shown in the policy or, if not reflected therein, at their last known addresses. Proof of mailing is sufficient proof of notice.  (e) Any notice of nonrenewal shall state the precise reason for nonrenewal.  HISTORY: Former 1976 Code Section 38-9-840 [1986 Act No. 338] recodified as Section 38-75-740 by 1987 Act No. 155, Section 1; 2007 Act No. 78, Section 14, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2021 Act No. 13 (H.3585), Section 7, eff April 12, 2021.  Effect of Amendment  2021 Act No. 13, Section 7, in (b), deleted "for any nonrenewal that would be effective between November first and May thirty-first and not less than ninety days for any nonrenewal that would be effective between June first and October thirty-first" following "date of the policy"; and in (c), deleted "for any nonrenewal that is effective between November first and May thirty-first and not less than ninety days prior to the anniversary date of the policy for any nonrenewal that is effective between June first and October thirty-first" following "date of the policy".
 (a) If an insurer intends to renew a policy, the insurer shall furnish renewal terms and a statement of the amount of premium or estimated premium due for the renewal policy period in the manner required by this section.  (b) If the policy being renewed (hereinafter "original policy") is written for a term of one year or less, the renewal terms and statement of premium or estimated premium due must be furnished to the insured not less than thirty days prior to the expiration date of the original policy.  (c) If the original policy is written for a term of more than one year or for an indefinite term, the renewal terms and statement of premium or estimated premium due must be furnished to the insured not less than thirty days prior to the anniversary date of the original policy.  (d) The insurer may satisfy its obligation to furnish renewal terms and statement of premium or estimated premium due by either of the following methods:  (1) mailing or delivering renewal terms and statement to the insured at his address shown in the policy or, if not reflected therein, at his last known address, not less than thirty days prior to expiration or anniversary; or  (2) mailing or delivering renewal terms and statement to the agent of record, if any, not less than forty-five days prior to expiration or anniversary, along with instructions that the agent furnish the renewal terms and statement to the insured not less than thirty days prior to expiration or anniversary.  (e) If the insurer fails to furnish the renewal terms and statement of premium or estimated premium due in the manner required by this section, the insured may elect to cancel the renewal policy within the thirty-day period following receipt of the renewal terms and statement of premium or estimated premium due. Earned premium for any period of coverage must be calculated pro rata based upon the premium applicable to the original policy and not the premium applicable to the renewal policy.  HISTORY: Former 1976 Code Section 38-9-850 [1986 Act No. 338] recodified as Section 38-75-750 by 1987 Act No. 155, Section 1.
 (A) All insurers, at the issuance of a new policy and at each renewal, clearly shall notify the applicant or policyholder of a personal lines residential property insurance policy of the availability and the range of each premium discount, credit, other rate differential, or reduction in deductibles for properties on which fixtures or construction techniques demonstrated to reduce the amount of loss in a windstorm have been installed or implemented, including information related to catastrophe savings accounts. The notice must describe generally what measures the policyholders may take to reduce their windstorm premium.  (B)(1) All insurers, at the issuance of a new policy and at each renewal, shall notify the applicant or policyholder of a personal lines residential property insurance policy of the following:  (a) whether or not the insured has coverage for flood or mold. The disclosure also shall state that insurance is available through the National Flood Insurance Program and that excess flood insurance may be available through an additional policy;  (b) a distinction between replacement cost for losses and actual cash value, the use of depreciation in determining payment for losses, and that the policy may contain time limitations for repairs to be completed in order to receive full replacement cost for the losses;  (c) that the policy determines the process for providing the insurer with a notification of a loss and the requirements of Section 38-59-10;  (d) that the insured may have the option to increase the deductible and thus lower the potential premium cost paid;  (e) whether a separate deductible is required for hurricane, wind, or named storm damage, as opposed to some other type of loss, and if so, include an example which illustrates how the deductible functions for a policy valued at one hundred thousand dollars and this illustration will include a clear explanation of the event which will trigger the deductible to the requirements of South Carolina Code of Regulations 69-56.  (2) The director or his designee shall prescribe the form and manner for insurer notices or disclosures issued pursuant to this subsection.  (3) Any disclosure provided pursuant to this section shall be for informational purposes only and shall not amend, extend, or alter coverage provided in a policy. Any notice or disclosure provided shall not be admissible in any action brought concerning a policy except for the sole purpose of showing that the notice was or was not provided pursuant to this section.  (C) All insurers, at the issuance of a new policy and at each renewal of a commercial property insurance policy, shall include a notice that advises the policyholder that a reduction in premium may be available if the policyholder has taken steps to prevent or reduce damage from windstorm and that the policyholder may contact its agent, broker, or insurer for additional information.  HISTORY: 2007 Act No. 78, Section 6, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006; 2014 Act No. 191 (S.569), Section 3.A, eff June 2, 2014.  Editor's Note  2014 Act No. 191, Section 4.B, provides as follows:  "3.A. The provisions of this section apply to policies issued or renewed after December 31, 2014."  Effect of Amendment  2014 Act No. 191, Section 3, in subsection (A), inserted "implemented, including information related to catastrophe savings accounts" at the end of the first sentence; added subsection (B) redesignated former subsection (B) as subsection (C); and deleted former subsection (C), relating to application of the section.
 (a) It is unlawful for any insurer to cancel, nonrenew, or renew a policy of insurance except in compliance with the requirements of this article.  (b) Midterm cancellation of an entire block, line, or class of business is presumed to be unfair, inequitable, and contrary to the public interest and is unlawful.  (c) If a policy has been issued for a term longer than one year and for additional premium consideration renewal of the policy or an annual premium has been guaranteed, it is unlawful for the insurer to refuse to renew the policy or to increase the annual premium during the term of that policy.  HISTORY: Former 1976 Code Section 38-9-860 [1986 Act No. 338] recodified as Section 38-75-760 by 1987 Act No. 155, Section 1.
 For eligible surplus lines insurers, the timely giving of all notices required by this article to the licensed broker who placed the insurance and represents the insured is considered notice to the insured.  HISTORY: Former 1976 Code Section 38-9-870 [1986 Act No. 338] recodified as Section 38-75-770 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 12.
 (A) All property and casualty insurance carriers issuing medical malpractice policies of insurance within South Carolina for licensed health care providers, as defined in Section 38-79-110, shall provide and maintain coverage to all qualified applicants who timely remit payments for the coverage period and who meet and comply with the provisions of Chapter 75, Title 38, all underwriting criteria of the policy at the time of issuance and renewal and with all other applicable statutes and regulations. Nothing in this section shall be construed to constitute a mandate to write medical malpractice insurance coverage.  (B) The provisions of this section apply only to policies written on or after January 1, 2006.  HISTORY: 2005 Act No. 32, Section 7, eff July 1, 2005 for causes arising after that date; redesignated from former Section 38-79-155 by 2005 Act No. 144 Section 2.A; 2005 Act No. 144, Section 2.B, eff June 7, 2005.
 There is no liability on the part of and no cause of action of any nature may arise against the director or his designees, any insurer, or the authorized representatives, agents, and employees of either or any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation or refusal to write or renew, for any statement made by any of them in complying with this article, or for the providing of information pertaining thereto, unless the person asserting the cause of action establishes that the person against whom the cause of action is asserted was motivated by express malice or gross negligence.  HISTORY: Former 1976 Code Section 38-9-880 [1986 Act No. 338] recodified as Section 38-75-780 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 795.
 No insurer may nonrenew a policy of homeowners insurance because the insured has filed a claim with that insurer for damages resulting from an act of God.  HISTORY: Former 1976 Code Section 38-9-890 [1987 Act No. 166, Section 32] recodified as Section 38-75-790 by 1987 Act No. 155, Section 24.
 As used in this article, unless the context otherwise requires:  (1) "Associate" means any one of the following:  (a) a business organized for profit in which a producer of title business is a director, officer, partner, employee, or owner of one percent or more of the equity capital thereof;  (b) an employee of a producer of title business;  (c) a franchisor or franchisee of a producer of title business;  (d) a spouse, parent, or child of a producer of title business;  (e) a person, other than an individual, that controls, is controlled by, or is under common control with, a producer of title business;  (f) a person with whom a producer of title business or any associate of such producer has any agreement, arrangement, or understanding or pursues any course of conduct, the purpose or substantial effect of which is to evade the provisions of this article.  (2) "Financial interest" means any interest, legal or beneficial, that entitles the holder directly or indirectly to one percent or more of the net profits or net worth of the entity in which the interest is held.  (3) "Producer of title business" or "producer" means any person, including any officer, director, or owner of five percent or more of the equity or capital of any person engaged in this State in the trade, business, occupation, or profession of any one of the following:  (a) buying or selling interests in real property;  (b) making loans secured by interests in real property;  (c) acting as broker, agent, representative, or attorney of a person who buys or sells any interest in real property or who lends or borrows money with such interest as security.  HISTORY: 1988 Act No. 562.
 No insurer transacting title insurance business in this State may expose itself to any one risk in an amount exceeding fifty percent of the aggregate amount of its total capital and surplus and its reserves other than its loss or claim reserves. As used in this section, the words "any one risk" mean the risk or hazard attaching to or arising in connection with any one piece or parcel of property, whether or not the policy insures other property. Any risk or portion of any risk which has been reinsured as authorized in this title must be deducted in determining the limitation of risk prescribed in this section.  HISTORY: Former 1976 Code Section 38-9-185 [1980 Act No. 402] recodified as Section 38-75-910 by 1987 Act No. 155, Section 1.
 (A) A domestic title insurer shall establish and maintain a reinsurance reserve computed in accordance with this section, and all sums attributed to the reserve are at all times and for all purposes considered unearned portions of the original premiums. This reserve must be reported as a liability of the title insurer in its financial statements.  (B) The reinsurance reserve must be maintained by the title insurer for the protection of holders of title insurance policies. Except as provided in this section, assets equal in value to the reinsurance reserve are not subject to distribution among creditors or stockholders of the title insurer until all claims of policyholders or claims under reinsurance contracts have been paid in full, and all liability on the policies or reinsurance contracts has been paid in full and discharged or lawfully reinsured.  (C) A foreign or alien title insurer licensed to transact title insurance business in this State shall maintain at least the same reserves on title insurance policies issued on properties located in this State as are required of domestic title insurers, unless the laws of jurisdiction of domicile of the foreign or alien title insurer require a higher amount.  (D) The reinsurance reserve consists of:  (1) the amount of the reinsurance reserve on the effective date of this act; and  (2) one dollar and fifty cents a policy and, in addition, a sum equal to twelve and one-half cents for each one thousand dollars of net retained liability under each title insurance policy on a single risk written on properties located in this State written after the effective date of this act.  (E) Amounts placed in the reinsurance reserve in any year in accordance with subsection (D)(2) of this section must be deducted in determining the net profit of the title insurer for that year.  (F) A title insurer shall release from the reinsurance reserve a sum equal to ten percent of the amount added to the reserve during a calendar year on July first of each of the five years following the year in which the sum was added and shall release from the reinsurance reserve a sum equal to three and one-third percent of the amount added to the reserve during that year on each succeeding July first until the entire amount for that year has been released. The amount of the reinsurance reserve or similar unearned premium reserve maintained before the effective date of this act must be released in accordance with the law in effect before the effective date of this act.  HISTORY: 1988 Act No. 562.
 (A) If a domestic title insurer becomes insolvent, is in the process of liquidation or dissolution, or is in the possession of the director or his designee:  (1) the amount of the assets of the title insurance company equal to the reinsurance reserve then remaining may be used with the written approval of the director or his designee to pay for reinsurance of the liability of each title insurer upon all outstanding title insurance policies or reinsurance agreements to the extent for which claims for losses by the holders are not then pending. The balance of the assets, if any, equal to the reinsurance reserve then may be transferred to the general assets of the title insurer;  (2) the assets net of the reinsurance reserve must be available to pay claims for losses sustained by holders of title insurance policies then pending or arising up to the time reinsurance is effected. If claims for losses exceed other assets of the title insurer, the claims, when established, must be paid pro rata out of the surplus assets attributable to the reinsurance reserve, to the extent of the surplus, if any.  (B) If reinsurance is not obtained, assets equal to the reinsurance reserve and assets constituting minimum capital, or so much as remains after outstanding claims have been paid, constitute a trust fund to be held and invested by the director or his designee for twenty years, out of which claims of policyholders must be paid as they arise. The balance, if any, of the trust fund shall revert to the general assets of the title insurer at the expiration of twenty years.  HISTORY: 1988 Act No. 562; 1993 Act No. 181, Section 796.
 (A) All title insurers licensed in this State shall establish and maintain reserves against unpaid losses and loss expenses.  (B) Upon receiving written notice from or on behalf of the insured of a title defect in or lien or adverse claim against the title of the insured that may result in a loss or cause expense to be incurred in the proper disposition of the claim, the title insurer shall determine the amount to be added to the reserve which shall reflect a careful estimate of the loss or loss expense likely to result by reason of the claim.  (C) Reserves required under this section may be revised from time to time and must be redetermined at least once each year.  (D) If the director or his designee determines that the loss and loss expense reserves of the title insurer are inadequate, he may require the title insurer to increase the amount of reserves to an amount he considers reasonable.  HISTORY: 1988 Act No. 562; 1993 Act No. 181, Section 797.
 (A) A title insurer may obtain reinsurance for all or any part of its liability under one or more of its title insurance policies or reinsurance agreements and also may reinsure title insurance policies issued by other title insurers on risks located in this State or elsewhere. Reinsurance on policies issued on properties located in this State must be obtained from title insurers licensed to transact title insurance business in this State.  (B) Upon application by a title insurer, the director or his designee may permit the insurer to obtain reinsurance from a title insurer not licensed in this State upon the following conditions:  (1) the title insurer is unable to obtain reinsurance from a title insurer licensed in this State; and  (2) the unlicensed title insurer meets the requirements of approved reinsurers in Section 38-5-60.  HISTORY: 1988 Act No. 562; 1993 Act No. 181, Section 798.
 (A) No title insurer or title insurance agent may accept an order for, issue a title insurance policy to, or provide services to an applicant if it knows or has reason to believe that the applicant was referred to it by any producer of title business or by any associate of the producer where the producer, the associate, or both, have a financial interest in the title insurer or title agent to which business is referred unless the producer has disclosed to the buyer, seller, or lender the financial interest of the producer of title business or associate referring the title business. The disclosure must be made in writing on forms prescribed by the director or his designee. The title insurer or agent shall maintain the disclosure forms for a period of three years.  (B) Each title insurer and title agent shall file with the department, on forms prescribed by the director or his designee, reports setting forth the names and addresses of those persons, if any, who have had a financial interest in the title insurer or title agent during the calendar year who are known or reasonably believed by the title insurer or title agent to be producers of title business or associates of producers.  (1) Each title insurer shall file the report required under this subsection with its application for a license and at any time there is a change in the information provided in the last report.  (2) Each title agent shall file the report required under this subsection with its application for license and at any time there is a change in the information provided in its last report.  (3) Each title insurer or title agent licensed on the effective date of this act, shall file the report required under this subsection within ninety days after the effective date of this act.  HISTORY: 1988 Act No. 562; 1993 Act No. 181, Section 799.
 (A) Premium rates may not be inadequate, excessive, or unfairly discriminatory.  (B) Rates are excessive if in the aggregate they are likely to produce a long-run profit that is unreasonably high in relation to the riskiness of the class of business, or if expenses are unreasonably high in relation to the services rendered.  (C) Rates are inadequate if they are clearly insufficient, together with investment income attributable to them, to sustain projected losses and expenses or if the continued use of the fees have the effect of substantially lessening competition or the effect of tending to create a monopoly.  (D) Premium rates are unfairly discriminatory if the premium charged for any classification is not reasonably related to the services performed or the risks assumed by the insurer. Within rate classifications, premiums, to a reasonable degree, may be less in the case of smaller insurances and the excess may be charged against larger insurances without rendering the rate unfairly discriminatory.  (E) In making or reviewing rates, due consideration must be given to past and prospective loss experience, to exposure to loss, to underwriting practice and judgment, to past and prospective expenses including amounts paid to or retained by title agents, to investment income, to a reasonable margin for profit and contingencies, and to all other relevant factors both within and outside this State. A five-year experience period is required for all filings of rates provided that the filing of any insurer in existence less than five years must be supported by experience consistent with the period of its existence.  HISTORY: 1988 Act No. 562.
 (A) A title insurer shall file with the director or his designee the premium rate schedules it proposes to use in this State. If the director or his designee finds in his review of a filing that it does not violate Section 38-75-970, he shall approve the schedule within sixty days of filing. Before the approval, the director or his designee may conduct public hearings with respect to the filing. Filings that the director or his designee has failed to approve or disapprove within sixty days of filing is considered approved. Upon notice to the title insurer, the period for review of the rate filing may be extended for an additional sixty days.  (B) If after the approval of filing the director or his designee believes that the filing does not meet the requirements of this section or is otherwise contrary to law, or if any party having an interest in the filing makes a written complaint to the director or his designee setting forth specific and reasonable grounds for the complaint, or if any insurer, upon notice of disapproval by the director or his designee of a filing pursuant to this section, should so request, the director or his designee shall hold a hearing within thirty days and give written notice of the hearing to all parties in interest. The director or his designee may confirm, modify, change, or rescind any previous action if warranted by the facts shown at the hearing.  HISTORY: 1988 Act No. 562; 1993 Act No. 181, Section 800.
 (A) Each title insurer and title agent shall print and make available to the public schedules of its currently effective premiums and charges.  (B) The schedules shall:  (1) be dated to show the date the premiums and charges became effective;  (2) be kept available to the public during normal business hours in each office of the title insurer or title agent in this State; and  (3) set forth the total premium and charge for each type of title insurance policy or service issued or provided by the title insurer or title agent either by stating the premium or charge for each type of title insurance policy in given amounts of coverage or for each service, or by stating the premium or charge rate a unit amount of coverage, or by a combination of the two.  (C) Each title insurer and title agent shall keep a complete file of its schedules of premiums and charges and of all changes and amendments to those schedules until at least five years after they have ceased to be in effect.  HISTORY: 1988 Act No. 562.
 In order to effect a complete reform of automobile insurance and insurance practices in South Carolina, the purposes of this chapter are to provide:  (1) that every automobile insurance risk which is insurable on the basis of the criteria established in this chapter is entitled to automobile insurance;  (2) for a residual market mechanism, known as the Associated Auto Insurers Plan, for every person who is legally entitled to automobile insurance but has not been able to obtain a motor vehicle liability policy to apply to the director of the Department of Insurance to have his risk assigned to an insurance carrier licensed to write and writing motor vehicle liability insurance in the State who shall issue a motor vehicle liability policy which will meet at least the minimum requirements for establishing financial responsibility in this chapter;  (3) prohibitions and penalties in respect to unfairly discriminatory or unfairly competitive practices having as their purpose or effect evasion of the coverages as provided in this chapter; and  (4) medical, surgical, funeral, and disability insurance benefits without regard to fault to be offered under automobile insurance policies that provide bodily injury and property damage liability insurance, or other security, for motor vehicles registered in this State.  HISTORY: Former 1976 Code Section 38-37-10 [1962 Code Section 37-591; 1974 (58) 2718; 1976 Act No. 694, Section 1] recodified as Section 38-77-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-37-110 [1962 Code Section 37-591.1; 1974 (58) 2718; 1987 Act No. 166, Section 1] recodified as Section 38-77-10 by 1987 Act No. 155, Section 1; 1988 Act No. 399, Section 4; 1993 Act No. 181, Section 801; 1996 Act No. 326, Section 4; 1997 Act No. 154, Section 6.
 This article may be cited as the "Motor Vehicle Theft and Motor Vehicle Insurance Fraud Reporting-Immunity Act".  HISTORY: Former 1976 Code Section 38-37-1610 [1986 Act No. 513, Section 1] recodified as Section 38-77-1110 by 1987 Act No. 155, Section 1.
 An automobile insurer is not required to write coverage for automobile insurance as defined in Section 38-77-30 for an applicant or existing policyholder. An insurer or producer shall retain, for at least three years, a record of its refusals of coverage including the reason for the refusal and shall furnish this information upon the request of the Director of the Department of Insurance or his designee.  HISTORY: Former 1976 Code Section 38-37-315 [1987 Act No. 166, Section 5] recodified as Section 38-77-112 by 1987 Act No. 155, Section 24; 1988 Act No. 399, Section 6; 1989 Act No. 148, Section 12; 1997 Act No. 154, Section 9; 2011 Act No. 8, Section 1, eff April 12, 2011.
 As used in this article:  (a) "Authorized agency" means:  (1) the South Carolina State Law Enforcement Division, the Department of Public Safety, the sheriff's department of any county of this State, and any duly constituted criminal investigative department or agency of another state of the United States;  (2) the Attorney General of this State, any circuit solicitor of this State, any prosecuting attorney for a county, circuit, or district of another state or of the United States;  (3) the South Carolina Department of Insurance and the South Carolina Department of Consumer Affairs of the Attorney General's Office; and  (4) the United States Department of Justice and its Federal Bureau of Investigation.  (b) "Relevant" means having any tendency to make the existence of any fact that is of consequence to the investigation or determination of the issue more probable or less probable than it would be without the evidence.  (c) "Action" means affirmative acts and the failure to take action.  (d) "Immune" means that neither a civil action nor a criminal prosecution may arise from any action taken pursuant to this article unless actual malice on the part of the insurance company or authorized agency against the insured or gross negligence or reckless disregard for his rights is present.  HISTORY: Derived from 1976 Code Section 38-37-1620 [1986 Act No. 513, Section 2] recodified as Section 38-77-1120 by 1987 Act No. 155, Section 1; 1992 Act No. 454, Section 1; 1993 Act No. 181, Section 829; 1996 Act No. 459, Section 64.
 If a driver's license is suspended or revoked because the licensee is determined by the Department of Motor Vehicles to have no motor vehicle liability insurance, the Director of the Department of Motor Vehicles or his designee shall waive the reinstatement fee imposed pursuant to Section 56-1-390 if the licensee had motor vehicle liability coverage when his license was suspended or revoked and shall document the reasons for waiving the fee in the records of the Department of Motor Vehicles.  HISTORY: 1992 Act No. 427, Section 3; 1992 Act No. 443, Section 3; 1993 Act No. 181, Section 804; 1996 Act No. 459, Section 62.
 (a) Any authorized agency may require, in writing, the insurance company at interest to release to the requesting agency any or all relevant information or evidence considered important to the authorized agency which the company may have in its possession, relating to any specific motor vehicle theft or motor vehicle insurance fraud. Relevant information includes:  (1) pertinent insurance policy information relevant to theft or fraud under investigation and any application for a policy;  (2) policy premium payment records which are available;  (3) history of previous claims made by the insured;  (4) material relating to the investigation of the loss including statements of any person, proof of loss, and any other evidence relevant to the investigation.  (b) When an insurance company has reason to believe that a motor vehicle loss in which it has an interest may involve theft or a fraudulent claim, the company may notify, in writing, an authorized agency and provide it with any or all material developed from the company's inquiry into the loss; however, when this information includes possible evidence of motor vehicle theft or motor vehicle insurance fraud involving specifically named persons, the information in all cases may be furnished to the solicitor in the circuit where the loss occurred and he shall furnish the information to other authorized agencies if he considers the action appropriate. When an insurance company provides any one of the authorized agencies with notice of a theft or fraud, it is sufficient notice for the purpose of this article.  (c) The authorized agency provided with information may release or provide the information to any agency asked to participate in the investigation.  (d) Any insurance company providing information to an authorized agency has the right to be informed, upon written request, as to the status of the case by the agency within a reasonable time, as determined by the authorized agency.  (e) Any insurance company or authorized agency which releases information, whether oral or written, and any person acting in their behalf, pursuant to this article, is immune from any liability arising out of the release.  HISTORY: Former 1976 Code Section 38-37-1630 [1986 Act No. 513, Section 3] recodified as Section 38-77-1130 by 1987 Act No. 155, Section 1.
 Beginning on March 1, 2000 the director of the Department of Insurance shall review annually the impact of the repeal of the antirebate statutes concerning the sale of automobile insurance in South Carolina pursuant to this act and shall report annually to the General Assembly his findings and recommendations, if any, along with the data and supporting information which the director utilized. In his review, the director shall evaluate the following, but is not limited to: the impact on automobile insurance premiums; any pattern of an insurance carrier, agent, broker, and others concerning the practice of rebating; any pattern of discrimination regarding the insured or policyholder, agent, broker, insurance carrier, or others; the impact on the automobile insurance industry, such as additional market entrants, number of insurance carriers, agents, or others who engage in this practice, or any change in the number of companies writing automobile insurance or of agents selling automobile insurance; and any complaints received by or made to the Department of Insurance concerning rebates in the sale of automobile insurance or regarding the repeal of the antirebate statutes concerning the sale of automobile insurance in South Carolina. The initial report by the director of the Department of Insurance shall be submitted to the General Assembly by May 1, 2000 and notwithstanding any other provision of law, the director shall begin collecting data, material, and any information needed for this initial report on March 1, 1999. All subsequent reports shall be submitted to the General Assembly no later than March first of each year. Notwithstanding any other provision of law, the director of the Department of Insurance shall make his final report on this matter to the General Assembly as provided herein on March 1, 2003 unless otherwise directed by the General Assembly; however, the director may at his discretion continue to submit a report to the General Assembly regarding this matter at any time after March 1, 2003 and shall continue to monitor the impact of the repeal of the antirebate statutes concerning the sale of automobile insurance in South Carolina pursuant to this act. The director may promulgate regulations in order to carry out the requirements of this section.  HISTORY: 1997 Act No. 154, Section 27.
 (a) Any authorized agency or insurance company which receives any information furnished pursuant to this article shall hold the information in confidence until its release is required pursuant to a criminal or civil action or proceeding.  (b) Any authorized agency, its agents, or employees, may be required to testify in any litigation in which the insurance company at interest is named as a party.  HISTORY: Former 1976 Code Section 38-37-1640 [1986 Act No. 513, Section 4] recodified as Section 38-77-1140 by 1987 Act No. 155, Section 1.
 (a) No person may intentionally or knowingly refuse to release any information requested pursuant to this article.  (b) No person may fail to hold in confidence information required to be held in confidence by this article.  HISTORY: Former 1976 Code Section 38-37-1650 [1986 Act No. 513, Section 5] recodified as Section 38-77-1150 by 1987 Act No. 155, Section 1.
 Any person who violates the provisions of this article is guilty of a misdemeanor and upon conviction must be fined not more than three thousand dollars or imprisoned for not more than two years, or both.  HISTORY: Former 1976 Code Section 38-37-1660 [1986 Act No. 513, Section 6] recodified as Section 38-77-1160 by 1987 Act No. 155, Section 1.
 (a) No cancellation or refusal to renew by an insurer of a policy of automobile insurance is effective unless the insurer delivers or mails to the named insured at the address shown in the policy a written notice of the cancellation or refusal to renew. This notice:  (1) must be approved as to form by the director or his designee before use;  (2) must state the date not less than fifteen days after the date of the mailing or delivering on which the cancellation or refusal to renew becomes effective;  (3) must state the specific reason of the insurer for cancellation or refusal to renew and provide for the notification required by subsection (B) of Section 38-77-390. However, those notification requirements must not apply when the policy is being canceled or not renewed for the reason set forth in Section 38-77-123(B),  (4) must inform the insured of his right to request in writing within fifteen days of the receipt of notice that the director review the action of the insurer. The notice of cancellation or refusal to renew must contain the following statement to inform the insured of such right:  "IMPORTANT NOTICE  Within fifteen days of receiving this notice, you or your attorney may request in writing that the director review this action to determine whether the insurer has complied with South Carolina laws in canceling or nonrenewing your policy. If this insurer has failed to comply with the cancellation or nonrenewal laws, the director may require that your policy be reinstated. However, the director is prohibited from making underwriting judgments. If this insurer has complied with the cancellation or nonrenewal laws, the director does not have the authority to overturn this action.";  (5) must inform the insured of the possible availability of other insurance which may be obtained through his agent, through another insurer, or through the Associated Auto Insurers Plan. It must also state that the Department of Insurance has available an automobile insurance buyer's guide regarding automobile insurance shopping and availability, and provide applicable mailing addresses and telephone numbers, including a toll-free number, if available, for contacting the Department of Insurance.  Nothing in this subsection prohibits any insurer or agent from including in the notice of cancellation or refusal to renew, any additional disclosure statements required by state or federal laws, or any additional information relating to the availability of other insurance. The insurer must disclose in writing whether the insured is ceded to the facility.  (b) Subsection (a) does not apply if the:  (1) insurer has manifested to the insured its willingness to renew or to renew with a reduction in coverage by actually issuing or offering to the insured to issue a renewal policy, certificate, or other evidence of renewal, or has manifested such intention to the insured by any other means; provided, however, that in the case of a reduction in coverage, the insurer provides notice of a reduction in coverage to the named insured in a separate document entitled the 'Notice of Reduction in Coverage' no less than fifteen days prior to the effective date of the renewal that includes the proposed reduction in coverage. This notice must:  (i) inform the insured of the reduction or elimination by the coverage section in the renewal policy or certificate; and  (ii) provide that it is a notice of coverage changes.  The Notice of Reduction in Coverage does not amend, extend, or alter coverage provided in a policy. An insurer's Notice of Reduction in Coverage must be provided to the director or his designee upon request when investigating a consumer complaint or when otherwise requested. The director or his designee may direct the insurer to provide the renewal without the reduction in coverage if the insurer fails to meet the requirements of this section. The director or his designee may issue guidance to an insurer or to the industry regarding the form and contents of the Notice of Reduction in Coverage in response to consumer inquiries or complaints;  (2) named insured has demonstrated by some overt action to the insurer or its agent that he expressly intends that the policy be canceled or that it not be renewed.  HISTORY: Former 1976 Code Sections 38-37-1450 [1962 Code Section 47-750.65; 1970 (56) 2540] and 38-37-1510 [1962 Code Section 46-750.66; 1970 (56) 2540] recodified as Section 38-77-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 806; 1997 Act No. 154, Section 10; 2020 Act No. 174 (H.3755), Section 2, eff September 30, 2020; 2021 Act No. 14 (H.3587), Section 2, eff April 12, 2021.  Validity  For the validity of the amendment by 2020 Act No. 174, see Mercury Funding, LLC v. Chesney, 433 S.C. 591, 861 S.E.2d 35 (2021).  Effect of Amendment  2020 Act No. 174, Section 2, rewrote (b).  2021 Act No. 14, Section 2, in (b)(1), in the first sentence, substituted "other means; provided, however," for "other means provided".
 (A) Any application for the original issuance of a policy of insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle as defined in Section 38-77-30 must have the following statement printed on or attached to the first page of the application form, in boldface type: "THE INSURER CAN CANCEL THIS POLICY FOR WHICH YOU ARE APPLYING WITHOUT CAUSE DURING THE FIRST 90 DAYS. THAT IS THE INSURER'S CHOICE. AFTER THE FIRST 90 DAYS, THE INSURER CAN ONLY CANCEL THIS POLICY FOR REASONS STATED IN THE POLICY."  (B) Any application for the original issuance of a policy of insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle defined in Section 38-77-30 that requires the insured to disclose information as to any previous cancellation or refusal to renew must also permit the insured to offer or provide a full explanation of the reason for the cancellation or refusal to renew.  (C) The notice required by this section must accompany the initial declarations page in the event the applicant is not provided a written copy at the time of the application and the coverage has been bound by the insurer.  (D) The insurer may cancel without cause at any time in the first ninety days during which the policy is in effect subject to Section 38-77-122.  This section does not apply to the renewal of any policy of insurance.  HISTORY: 1997 Act No. 154, Section 11.
 (A) No insurer or agent shall refuse to issue an automobile insurance policy as defined in Section 38-77-30 because of any one or more of the following factors: the age, sex, location of residence in this State, race, color, creed, national origin, ancestry, marital status, or income level. No insurer or agent shall refuse to issue an automobile insurance policy as defined in Section 38-77-30 solely because of any one of the following factors: the previous refusal of automobile insurance by another insurer, prior purchase of insurance through the Associated Auto Insurers Plan, or lawful occupation, including the military service, of the person seeking the coverage. Nothing in this section prohibits any insurer from limiting the issuance of motor vehicle insurance policies only to persons engaging in or who have engaged in a particular profession or occupation, or who are members of a particular religious sect.  Nothing in this section prohibits any insurer from setting rates in accordance with relevant actuarial data.  (B) In determining the premium rates to be charged for an automobile insurance policy as defined in Section 38-77-30, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. Nor may an insurer, agent, or broker refuse to write or renew an automobile insurance policy as defined in Section 38-77-30 based upon age, sex, race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director. Any insurer or agent who violates this section shall be subject to the penalties as provided in Section 38-2-10. If the director of the Department of Insurance or his designee finds that an insurer or agent is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. Provided, however, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer or agent to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.  HISTORY: 1997 Act No. 154, Section 11.
 (A)(1) No insurer shall refuse to renew an automobile insurance policy because of any one or more of the following factors:  (a) age;  (b) sex;  (c) location of residence in this State;  (d) race;  (e) color;  (f) creed;  (g) national origin;  (h) ancestry;  (i) marital status;  (j) income level.  (2) No insurer shall refuse to renew an automobile insurance policy solely because of any one of the following factors:  (a) lawful occupation, including the military service;  (b) lack of driving experience or number of years of driving experience;  (c) lack of supporting business or lack of the potential for acquiring such business;  (d) one or more accidents or violations that occurred more than thirty-six months immediately preceding the upcoming anniversary date;  (e) one or more claims submitted under the uninsured motorists coverage of the policy where the uninsured motorist is known or there is physical evidence of contact;  (f) single claim by a single insured submitted under the medical payments coverage or medical expense coverage due to an accident for which the insured was neither wholly nor partially at fault;  (g) one or more claims submitted under the comprehensive or towing coverages. However, nothing in this section prohibits an insurer from modifying or refusing to renew the comprehensive or towing coverages at the time of renewal of the policy on the basis of one or more claims submitted by an insured under those coverages, provided that the insurer mails or delivers to the insured at the address shown in the policy, written notice of the change in coverage at least thirty days before the renewal;  (h) two or fewer motor vehicle accidents within a three-year period unless the accident was caused either wholly or partially by the named insured, a resident of the same household, or other customary operator; or  (i) an insured who uses his personal automobile for volunteer emergency services and who provides a copy of the policy promulgated by the chief of his department to his insurer on request.  (3) Nothing contained in subsection (A)(1)(f), (g), and (h) prohibits an insurer from refusing to renew a policy where a claim is false or fraudulent. Nothing in this section prohibits an insurer from setting rates in accordance with relevant actuarial data except that no insurer may set rates based in whole or in part on race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director.  (B) No insurer shall cancel a policy except for one or more of the following reasons:  (1) The named insured or any other operator who either resides in the same household or customarily operates a motor vehicle insured under the policy has had his driver's license suspended or revoked during the policy period or, if the policy is a renewal, during its policy period or the ninety days immediately preceding the last anniversary of the effective date.  (2) The named insured fails to pay the premium for the policy or any installment of the premium, whether payable to the insurer or its agent either, directly or indirectly under any premium finance plan or extension of credit.  (C) There shall be no liability on the part of and no cause of action of any nature shall arise against the director or his designees; any insurer, its authorized representatives, its agents, or its employees; or any person furnishing to the insurer information as to reasons for cancellation or refusal to renew, for any statement made by any of them in complying with this section or for providing information pertaining to the cancellation or refusal to renew. For the purposes of this section, no insurer shall be required to furnish a notice of cancellation or refusal to renew to anyone other than the named insured, any person designated by the named insured, any other person to whom such notice is required to be given by the terms of the policy and the director.  (D) Within fifteen days of receipt of the notice of cancellation or refusal to renew, any insured or his attorney shall be entitled to request in writing to the director that he review the action of the insurer in canceling or refusing to renew the policy of the insured. Upon receipt of the request, the director shall promptly begin a review to determine whether the insurer's cancellation or refusal to renew complies with the requirements of this section and of Section 38-77-120 if the notice was sent by mail. The policy must remain in full force and effect during the pendency of the review by the director except where the cancellation or refusal to renew is for the reason set forth in subsection (B)(2) of this section, in which case the policy terminates as of the effective date stated in the notice. Where the director finds from the review that the cancellation or refusal to renew has not complied with the requirements of this section or of Section 38-77-120, he shall immediately notify the insurer, the insured, and any other person to whom such notice was required to be given by the terms of the policy that the cancellation or refusal to renew is not effective. Nothing in this section authorizes the director to substitute his judgment as to underwriting for that of the insurer.  (E) Each insurer shall maintain for at least three years, records of cancellation and refusal to renew and copies of every notice or statement referred to in Section 38-77-120 of this section that it sends to any of its insureds.  (F) The provisions of this section do not apply to any insurer that limits the issuance of policies of motor vehicle liability insurance to one class or group of persons engaged in any one particular profession, trade, occupation, or business. Nothing in this section requires an insurer to renew a policy of automobile insurance if the insured does not conform to the occupational or membership requirements of an insurer who limits its writings to an occupation or membership of an organization. No insurer is required to renew a policy if the insured becomes a nonresident of South Carolina.  (G) Any insurer who violates this section shall be subject to the penalties as provided in Section 38-2-10. If the director of the Department of Insurance or his designee finds that an insurer, agent, or broker is participating in a pattern of unfair discrimination, the director or his designee may impose a fine of up to two hundred thousand dollars. Provided, however, if the unfair discrimination is required by an insurer, only the insurer is subject to the penalty as long as the agent of the insurer has reported the pattern of unfair discrimination to the department. The director or his designee at any time may examine an insurer, agent, or broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.  HISTORY: 1997 Act No. 154, Section 11; 2008 Act No. 296, Section 4, eff June 11, 2008.
 (A) Notwithstanding the provisions of Sections 38-77-122 and 38-77-123, an insurer may refuse to issue or renew an automobile insurance policy as defined in Section 38-77-30 on the basis of location of residence where the insurer has filed with the director a territorial plan setting forth the precise geographic areas of the state in which it will issue or renew policies. This territorial plan may not limit issuances or renewals to areas at any level smaller than a county, except that an insurer may include in its territorial plan an area smaller than a county which is contiguous to a whole county contained within the territorial plan provided, that the inclusion in the territorial plan of any such area at a level smaller than a county does not have the effect of excluding populations based upon any factors set out in Section 38-77-122(A) or Section 38-77-123(A)(1). The director must reject any territorial plan which violates the provisions of this section.  (B) No insurer or agent shall refuse to issue or fail to renew a policy of motor vehicle liability insurance solely because of the age of the motor vehicle to be insured, provided the motor vehicle is licensed.  HISTORY: 1997 Act No. 154, Section 11.
 Every automobile insurance policy or other policy containing automobile insurance coverage on the face of the policy must state the complete name of the company issuing the policy, its address, and telephone number.  HISTORY: 1988 Act No. 564; 2000 Act No. 312, Section 22.
 Insurers must disclose to the insured if the rate level is higher than the lowest rate level tier for that insurer or the group to which the insurer is a member. The insurer must provide in writing the reason for the higher tier.  HISTORY: 1997 Act No. 154, Section 11.
 (A) An automobile insurer may issue verification concerning the existence of coverage it provides an insured in an electronic format to a mobile electronic device upon request of the insured.  (B) For purposes of this section, "mobile electronic device" means a portable computing and communication device that has a display screen with touch input or a miniature keyboard and is capable of receiving information transmitted in an electronic format.  HISTORY: 2014 Act No. 128 (H.3623), Section 1, eff March 4, 2014.
 An automobile insurer may negotiate and contract for the sale of automobile insurance with any bona fide group of twenty or more persons who are employed by a common employer or who have been members for six months or more of a fraternal order, labor union, or employment association. The insurer may negotiate, enter a contractual relationship, and service the contract solely and directly with the bona fide representative of the group. An insurance contract sold on the basis of a group plan or contract shall have a rate not less than five percent less than the individual rate for which the insurer markets a substantially similar policy.  HISTORY: Former 1976 Code Sections 38-37-340 [1962 Code Section 37-591.14; 1974 (58) 2718] and 38-37-350 [1962 Code Section 37-591.15; 1974 (58) 2718] recodified as Section 38-77-130 by 1987 Act No. 155, Section 1.
 (A) An automobile insurance policy may not be issued or delivered in this State to the owner of a motor vehicle or may not be issued or delivered by an insurer licensed in this State upon a motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the persons defined as insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles within the United States or Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle, as follows:  (1) twenty-five thousand dollars because of bodily injury to one person in any one accident and, subject to the limit for one person;  (2) fifty thousand dollars because of bodily injury to two or more persons in any one accident; and  (3) twenty-five thousand dollars because of injury to or destruction of property of others in any one accident.  (B) Nothing in this article prevents an insurer from issuing, selling, or delivering a policy providing liability coverage in excess of these requirements.  HISTORY: Former 1976 Code Section 56-9-820 [1962 Code Section 46-750.32; 1963 (53) 526; 1974 (58) 2718] recodified as Section 38-77-140 by 1987 Act No. 155, Section 1; 1997 Act No. 154, Section 12; 2006 Act No. 395, Section 3.A, eff June 14, 2006 affecting policies issued or renewed on or after January 1, 2007.  Editor's Note  2013 Act No. 47, Section 5, provides as follows:  "SECTION 5. An automobile liability insurer is not required to make a new offer of coverage or obtain a new prescribed form on any automobile insurance policy, within the contemplation of Section 38-77-350, to comply with statutory changes to the minimum required limits set forth in Section 38-77-140 and Section 38-77-150."
 No new policy or original premium notice of insurance covering liability arising out of the ownership, maintenance, or use of a motor vehicle may be issued or delivered unless it contains the following statement printed in boldface type, or unless the statement is attached to the front of or is enclosed with the policy or premium notice:  "IMPORTANT NOTICE  IN ADDITION TO THE INSURANCE COVERAGE REQUIRED BY LAW TO PROTECT YOU AGAINST A LOSS CAUSED BY AN UNINSURED MOTORIST, IF YOU HAVE PURCHASED LIABILITY INSURANCE COVERAGE THAT IS HIGHER THAN THAT REQUIRED BY LAW TO PROTECT YOU AGAINST LIABILITY ARISING OUT OF THE OWNERSHIP, MAINTENANCE, OR USE OF THE MOTOR VEHICLES COVERED BY THIS POLICY, AND YOU HAVE NOT ALREADY PURCHASED UNINSURED MOTORIST INSURANCE COVERAGE EQUAL TO YOUR LIABILITY INSURANCE COVERAGE:  (1) YOUR UNINSURED AND UNDERINSURED MOTORIST INSURANCE COVERAGE HAS INCREASED TO THE LIMITS OF YOUR LIABILITY COVERAGE AND THIS INCREASE WILL COST YOU AN EXTRA PREMIUM CHARGE; AND  (2) YOUR TOTAL PREMIUM CHARGE FOR YOUR MOTOR VEHICLE INSURANCE COVERAGE WILL INCREASE IF YOU DO NOT NOTIFY YOUR AGENT OR INSURER OF YOUR DESIRE TO REDUCE COVERAGE WITHIN TWENTY DAYS OF THE MAILING OF THE POLICY OR THE PREMIUM NOTICE, AS THE CASE MAY BE;  (3) IF THIS IS A NEW POLICY AND YOU HAVE ALREADY SIGNED A WRITTEN REJECTION OF SUCH HIGHER LIMITS IN CONNECTION WITH IT, PARAGRAPHS (1) AND (2) OF THIS NOTICE DO NOT APPLY."  After twenty days, the insurer is relieved of the obligation imposed by this subsection to attach or imprint the foregoing statement to any subsequently delivered renewal policy, extension certificate, other written statement of coverage continuance, or to any subsequently mailed premium notice.  HISTORY: 1997 Act No. 154, Section 11.
 (A) No policy or contract of bodily injury or property damage liability insurance covering liability arising from the ownership, maintenance, or use of a motor vehicle may be issued or delivered in this State to the owner of the vehicle or may be issued or delivered by an insurer licensed in this State upon a motor vehicle that is principally garaged, docked, or used in this State unless the policy contains a provision insuring the named insured and any other person using or responsible for the use of the motor vehicle with the expressed or implied consent of the named insured against liability for death or injury sustained or loss or damage incurred within the coverage of the policy or contract as a result of negligence in the operation or use of the vehicle by the named insured or by any such person. Each policy or contract of liability insurance, or endorsement to the policy or contract, insuring private passenger automobiles principally garaged, docked, or used in this State, that has as the named insured an individual or husband and wife who are residents of the same household and that includes, with respect to any liability insurance provided by the policy, contract, or endorsement for use of a nonowner automobile a provision requiring permission or consent of the owner of the automobile for the insurance to apply.  (B) No policy or contract of bodily injury or property damage liability insurance relating to the ownership, maintenance, or use of a motor vehicle may be issued or delivered in this State to the owner of a vehicle or may be issued or delivered by an insurer licensed in this State upon a motor vehicle principally garaged or used in this State without an endorsement or provision insuring the named insured, and any other person using or responsible for the use of the motor vehicle with the expressed or implied consent of the named insured, against liability for death or injury sustained, or loss or damage incurred within the coverage of the policy or contract as a result of negligence in the operation or use of the motor vehicle by the named insured or by any other person. If an insurer has actual notice of a motion for judgment or complaint having been served on an insured, the mere failure of the insured to turn the motion or complaint over to the insurer may not be a defense to the insurer, nor void the endorsement or provision, nor in any way relieve the insurer of its obligations to the insured, provided the insured otherwise cooperates and in no way prejudices the insurer.  Where the insurer has elected to provide a defense to its insured under such circumstances and files responsive pleadings in the name of its insured, the insured is not subject to sanctions for failure to comply with discovery pursuant to the South Carolina Rules of Civil Procedure unless it can be shown that the suit papers actually reached the insured, and that the insurer has failed after exercising due diligence to locate its insured, and as long as the insurer provides such information in response to discovery as it can without the assistance of the insured.  (C) Any endorsement, provision, or rider attached to or included in any policy of insurance which purports or seeks to limit or reduce the coverage afforded by the provisions required by this section is void.  HISTORY: 1997 Act No. 154, Section 11.
 A policy or contract of insurance relating to the maintenance, selling, repairing, servicing, storing, or parking of motor vehicles shall be primary.  HISTORY: 1997 Act No. 154, Section 11.
 There is no personal injury protection (PIP) coverage mandated under the automobile insurance laws of this State. Any reference to personal injury protection in Title 38 or 56 or elsewhere is deleted. If an insurer sells no-fault insurance coverage which provides personal injury protection, medical payment coverage, or economic loss coverage, the coverage shall not be assigned or subrogated and is not subject to a setoff.  HISTORY: 2000 Act No. 344, Section 2.
 (A) No automobile insurance policy or contract may be issued or delivered unless it contains a provision by endorsement or otherwise, herein referred to as the uninsured motorist provision, undertaking to pay the insured all sums which he is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within limits which may be no less than the requirements of Section 38-77-140. The uninsured motorist provision also must provide for no less than twenty-five thousand dollars' coverage for injury to or destruction of the property of the insured in any one accident but may provide an exclusion of the first two hundred dollars of the loss or damage. The director or his designee may prescribe the form to be used in providing uninsured motorist coverage and when prescribed and promulgated no other form may be used.  (B) No action may be brought under the uninsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the uninsured motorist provision. The insurer has the right to appear and defend in the name of the uninsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record.  (C) Benefits paid pursuant to this section are subject to subrogation and assignment if an uninsured motorist has selected the option to be uninsured by paying the fee pursuant to Section 56-10-510.  HISTORY: Former 1976 Code Section 56-9-830 [1962 Code Section 46-750.33; 1963 (53) 526; 1971 (57) 854; 1974 (58) 2718] recodified as Section 38-77-150 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 807; 1997 Act No. 154, Section 13; 2013 Act No. 47, Section 1, eff January 1, 2014.  Editor's Note  2013 Act No. 47, Section 5, provides as follows:  "SECTION 5. An automobile liability insurer is not required to make a new offer of coverage or obtain a new prescribed form on any automobile insurance policy, within the contemplation of Section 38-77-350, to comply with statutory changes to the minimum required limits set forth in Section 38-77-140 and Section 38-77-150."
 All funds collected by the director of the Department of Motor Vehicles under the provisions of Chapter 10, Title 56 must be placed on deposit with the State Treasurer and held in a special fund to be known as the "Uninsured Motorists Fund" to be disbursed as provided by law. Interest earned by the "Uninsured Motorists Fund" must be retained by that fund. The director of the Department of Insurance, as provided in Sections 38-77-154 and 38-77-155, may expend such funds for the administration of this chapter; provided, however, that the Department of Insurance shall retain ten percent of the Uninsured Motorists Fund to be used by the Department of Insurance to enforce the provisions of Title 38 including Sections 38-77-112, 38-77-122, and 38-77-123, to publish for consumers an automobile insurance buyer's guide, a brochure comparing automobile insurance premiums, and to provide for a public awareness campaign.  HISTORY: 1997 Act No. 154, Section 11.
 The Uninsured Motorists Fund shall be under the supervision and control of the Department of Insurance. Payments from the Uninsured Motorists Fund shall be made on warrants of the Comptroller General issued on vouchers signed by a person designated by the director. The purpose of the Uninsured Motorists Fund is to reduce the cost of the insurance required by Section 38-77-150 and to protect and educate consumers as provided by Section 38-77-151.  HISTORY: 1997 Act No. 154, Section 11.
 The director shall distribute monies annually from the Uninsured Motorists Fund among the several insurers writing motor vehicle bodily injury and property damage liability insurance on motor vehicles registered in this State. Monies must be distributed in the proportion that each insurer's premium income for the auto liability coverage bears to the total premium income for auto liability coverage written in this State during the preceding year. Premium income must be gross premiums less cancellation and return premiums for coverage required by Section 38-77-150. The director shall obtain premium information from the annual statement filed by each insurer.  HISTORY: 1997 Act No. 154, Section 11; 2004 Act No. 291, Section 12, eff July 29, 2004.
 Automobile insurance carriers shall offer, at the option of the insured, uninsured motorist coverage up to the limits of the insured's liability coverage in addition to the mandatory coverage prescribed by Section 38-77-150. Such carriers shall also offer, at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage to provide coverage in the event that damages are sustained in excess of the liability limits carried by an at-fault insured or underinsured motorist or in excess of any damages cap or limitation imposed by statute. If, however, an insured or named insured is protected by uninsured or underinsured motorist coverage in excess of the basic limits, the policy shall provide that the insured or named insured is protected only to the extent of the coverage he has on the vehicle involved in the accident. If none of the insured's or named insured's vehicles is involved in the accident, coverage is available only to the extent of coverage on any one of the vehicles with the excess or underinsured coverage. Benefits paid pursuant to this section are not subject to subrogation and assignment.  No action may be brought under the underinsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the underinsured motorist provision. The insurer has the right to appear and defend in the name of the underinsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record. In the event the automobile insurance insurer for the putative at-fault insured chooses to settle in part the claims against its insured by payment of its applicable liability limits on behalf of its insured, the underinsured motorist insurer may assume control of the defense of action for its own benefit. No underinsured motorist policy may contain a clause requiring the insurer's consent to settlement with the at-fault party.  HISTORY: Former 1976 Code Section 56-9-831 [1978 Act No. 569, Section 1; 1987 Act No. 166, Section 22; repealed by 1987 Act No. 155, Section 25] recodified as Section 38-77-160 by 1987 Act No. 155, Section 1 [amendment to former 1976 Code Section 56-9-831 by 1987 Act No. 166, Section 22, transferred to Section 38-77-160 by 1987 Act No. 155, Section 24]; 1989 Act No. 148, Section 21; 1994 Act No. 461, Section 7.
 No uninsured or underinsured motorist coverage need be provided in this State by any excess or umbrella policy of insurance.  HISTORY: 1989 Act No. 148, Section 5.
 If the owner or operator of any motor vehicle which causes bodily injury or property damage to the insured is unknown, there is no right of action or recovery under the uninsured motorist provision, unless:  (1) the insured or someone in his behalf has reported the accident to some appropriate police authority within a reasonable time, under all the circumstances, after its occurrence;  (2) the injury or damage was caused by physical contact with the unknown vehicle, or the accident must have been witnessed by someone other than the owner or operator of the insured vehicle; provided however, the witness must sign an affidavit attesting to the truth of the facts of the accident contained in the affidavit;  (3) the insured was not negligent in failing to determine the identity of the other vehicle and the driver of the other vehicle at the time of the accident.  The following statement must be prominently displayed on the face of the affidavit provided in item (2) above: A FALSE STATEMENT CONCERNING THE FACTS CONTAINED IN THIS AFFIDAVIT MAY SUBJECT THE PERSON MAKING THE FALSE STATEMENT TO CRIMINAL PENALTIES AS PROVIDED BY LAW.  HISTORY: Former 1976 Code Section 56-9-850 [1962 Code Section 46-750.34; 1963 (53) 526; 1987 Act No. 166, Section 25; repealed by 1987 Act No. 155, Section 25] recodified as Section 38-77-170 by 1987 Act No. 155, Section 1 [amendment to former 1976 Code Section 56-9-850 by 1987 Act No. 166, Section 25, transferred to Section 38-77-150 by 1987 Act No. 155, Section 24]; 1989 Act No. 148, Section 53.
 If the owner or operator of any vehicle causing injury or damages by physical contact is unknown, an action may be instituted against the unknown defendant as "John Doe" and service of process may be made by delivery of a copy of the summons and complaint or other pleadings to the clerk of the court in which the action is brought. The insurer has the right to defend in the name of John Doe. However, the bringing of an action against the unknown owner or operator as John Doe or the conclusion of that action does not constitute a bar to the insured, if the identity of the owner or operator who caused the injury or damages complained of becomes known, from bringing an action against the owner or operator previously proceeded against as John Doe. Notwithstanding the uninsured motorist provision nor any other provision of law, the joinder of any other person causing the injury as a party defendant, in an action against John Doe, is allowed.  HISTORY: Former 1976 Code Section 56-9-860 [1962 Code Section 46-750.35; 1963 (53) 526] recodified as Section 38-77-180 by 1987 Act No. 155, Section 1.
 An insurer paying a claim under the uninsured motorist provision required by Section 38-77-150 is subrogated to the rights of the insured to whom the claim was paid against any and every person causing the injury, death, or damage to the extent that payment was made. However, the insurer shall pay its proportionate part of any reasonable costs and expenses incurred in connection with any recovery, including reasonable attorneys' fees.  HISTORY: Former 1976 Code Section 56-9-870 [1962 Code Section 46-750.36; 1963 (53) 526] recodified as Section 38-77-190 by 1987 Act No. 155, Section 1.
 This chapter is to be liberally construed in order to achieve its purposes.  HISTORY: Former 1976 Code Section 38-37-160 [1962 Code Section 37-591.3; 1974 (58) 2718] recodified as Section 38-77-20 by 1987 Act No. 155, Section 1.
 The uninsured motorist provision may not require arbitration of any claim arising under it, nor may anything not otherwise herein provided for or as may be provided in the form prescribed by the director or his designee be required of the insured except the establishment of legal liability of the uninsured motorist, nor may the insured be restricted or prevented in any manner from employing legal counsel or instituting legal proceedings.  HISTORY: Former 1976 Code Section 56-9-880 [1962 Code Section 46-750.37; 1963 (53) 526] recodified as Section 38-77-200 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 808.
 The uninsured motorist provision need not insure any liability for property damages for which loss a policyholder has been compensated by insurance or otherwise.  HISTORY: Former 1976 Code Section 56-9-890 [1962 Code Section 46-750.38; 1963 (53) 526] recodified as Section 38-77-210 by 1987 Act No. 155, Section 1.
 The automobile policy need not insure any liability under the Workers' Compensation Law nor any liability on account of bodily injury to an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance, or repair of the motor vehicle nor any liability for damage to property owned by, rented to, in charge of, or transported by the insured.  HISTORY: Former 1976 Code Section 56-9-900 [1962 Code Section 46-750.39; 1963 (53) 526] recodified as Section 38-77-220 by 1987 Act No. 155, Section 1.
 No payment made under an automobile insurance policy of a claim against any insured thereunder arising from any accident or other event insured against for damage to or destruction of property owned by another person is to be construed as an admission of liability by the insured, or the insurer's recognition of liability, with respect to any other claim arising from the same accident or event.  HISTORY: Former 1976 Code Section 56-9-910 [1962 Code Section 46-750.40; 1966 (54) 2142] recodified as Section 38-77-230 by 1987 Act No. 155, Section 1.
 (A) Every insurer providing automobile insurance coverage in this State and which is or may be liable to pay all or a part of any claim shall provide, within thirty days of receiving a written request from the claimant's attorney, a statement, under oath, of a corporate officer or the insurer's claims manager stating with regard to each known policy of nonfleet private passenger insurance issued by it, the name of the insurer, the name of each insured, and the limits of coverage. The insurer may provide a copy of the declaration page of each such policy in lieu of providing such information. The request shall set forth under oath the specific nature of the claim asserted and shall be mailed to the insurer by certified mail or statutory overnight delivery. The request also must state that the attorney is authorized to make such a request and must be accompanied by a copy of the incident report from which the claim is derived.  (B) If the request provided in subsection (A) contains information insufficient to allow compliance, the insurer upon whom the request was made may so state in writing, stating specifically what additional information is needed and such compliance shall constitute compliance with this section.  (C) The information provided to a claimant or his attorney as required by subsection (A) of this section shall not create a waiver of any defenses to coverage available to the insurer and shall not be admissible in evidence.  (D) The information provided to a claimant or his attorney as required by subsection (A) shall be amended upon the discovery of facts inconsistent with or in addition to the information provided.  (E) The provisions of this section do not require disclosure of limits for fleet policy limits, umbrella coverages, or excess coverages.  (F) The information received pursuant to this section is confidential and must not be disclosed to any outside party. Upon final disposition of the case, the claimant's attorney must destroy all information received pursuant to this section. The court must impose sanctions for a violation of this subsection.  HISTORY: 2011 Act No. 52, Section 4, eff January 1, 2012.  Editor's Note  2011 Act No. 52, Section 7, provides as follows:  "SECTION 7. This act takes effect January 1, 2012, and applies to all actions that accrue on or after the effective date except the provisions of SECTION 3 do not apply to any matter pending on the effective date of this act."
 (a) No person making payment or settlement of benefits for which the person is obligated under Sections 38-77-240 to 38-77-340 and no insurer may in connection with the payment or settlement of a claim for these first-party benefits or for any first-party benefits arising under an automobile insurer's coverage including, but not limited to, medical payments and uninsured motorist coverage, obtain or attempt to obtain from the claimant receiving the benefits any general release, covenant not to sue, assignment, article of subrogation, or any other instrument or document which purports to assign to that person or insurer all or any portion of any claim which the claimant may have against any other party or his insurer arising out of legal liability or which purports to constitute an agreement by the claimant that any amount received as first party benefits must be deducted from any settlement or judgment recoverable from any other party or his insurer arising out of legal liability. Every such purported general release, covenant not to sue, or similar instrument is null and void unless (1) the insurer or other person has delivered to the person entitled to the first-party benefits, or his legal representative, a disclosure statement, on a form approved by the director or his designee, fully and fairly disclosing the fact that the first-party benefits payable under Sections 38-77-240 to 38-77-340 are contractual obligations of the insurer or other person and are entirely separate and distinct from any obligation which the insurer or other person may have because of the legal liability of any person and that the person receiving the first-party benefits is not required and may not be required to release or relinquish any rights which he may have arising out of the legal liability of any person in order to receive payment or settlement of the first-party benefits arising under Sections 38-77-240 to 38-77-340 and (2) an interval of not less than three days has elapsed between the later of (i) the delivery of the disclosure statement or (ii) the payment or settlement of the first-party benefits and the execution of the general release, covenant not to sue, or similar instrument.  (b) [Repealed]  (c) [Repealed]  HISTORY: Former 1976 Code Section 56-11-130 [1962 Code Section 46-750.113; 1974 (58) 2718] recodified as Section 38-77-260 by 1987 Act No. 155, Section 1; 1989 Act No. 148, Section 57; 1993 Act No. 181, Section 809.
 Nothing in this title prohibits an insurer from providing Christian Science or any licensed healing art care and treatment. Any Christian Science or any licensed healing art care and treatment constitutes economic loss.  HISTORY: Former 1976 Code Section 56-11-140 [1962 Code Section 46-750.114; 1974 (58) 2718; 1987 Act No. 166, Section 4; repealed by 1987 Act No. 155, Section 25] recodified as Section 38-77-270 by 1987 Act No. 155, Section 1 [amendment to former 1976 Code Section 56-11-140 by 1987 Act No. 166, Section 4, transferred to Section 38-77-270 by 1987 Act No. 155, Section 24]; 1988 Act No. 399, Section 7.
 (A) Any automobile insurer may, at its own election, make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage at such rates and under such rules as have been approved by the director. Automobile insurers contracted pursuant to Section 38-77-590 for risks written by them through producers assigned by the facility governing board pursuant to that section may make available collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage. Notwithstanding Section 38-77-590(g), a designated producer may have one or more voluntary outlets for automobile physical damage.  (B) Any automobile physical damage insurance coverage deductible or policy deductible does not apply to automobile safety glass.  (C) Notwithstanding Section 38-77-111, automobile physical damage insurance coverage may be ceded to the facility. However, automobile physical damage coverages ceded to the facility by an insurer or servicing carrier must be at the facility physical damage rate as defined in Section 38-77-30.  (D) In determining the premium rates to be charged on physical damage coverage or single interest collision coverage, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. Nor may an insurer, agent, or broker refuse to write or renew physical damage insurance coverage or single interest collision coverage based upon race, color, creed, religion, national origin, ancestry, location of residence in this State, economic status, or income level. However, nothing in this subsection may preclude the use of a territorial plan approved by the director. If the director of the Department of Insurance or the director's designee finds that an insurer, agent, or broker is participating in a pattern of unfair discrimination, the director or the director's designee may impose a fine of up to two hundred thousand dollars. The director or the director's designee at any time may examine an insurer, agent, or broker to enforce this section. The expense of examination must be paid by the insurer, agent, or broker.  HISTORY: Former 1976 Code Section 38-37-935 [1987 Act No. 166, Section 10] recodified as Section 38-77-280 by 1987 Act No. 155, Section 24. 1988 Act No. 399 Section 8; 1988 Act No. 641, Section 5; 1989 Act No. 148, Section 49; 1990 Act No. 557, Section 1; 1991 Act No. 113, Section 3; 1993 Act No. 181, Section 810; 1996 Act No. 326, Section 7; 1997 Act No. 154, Section 14.
 As used in this chapter, unless the context requires otherwise:  (1) "Automobile insurance" means automobile bodily injury and property damage liability insurance, including medical payments and uninsured motorist coverage, and automobile physical damage insurance such as automobile comprehensive physical damage, collision, fire, theft, combined additional coverage, and similar automobile physical damage insurance and economic loss benefits as provided by this chapter written or offered by automobile insurers. An automobile insurance policy includes a motor vehicle liability policy as defined in item (7) of Section 56-9-20 and any nonowner automobile insurance policy which covers an individual private passenger automobile not owned by the insured, a family member of the insured, or a resident of the same household as the insured.  (2) "Automobile insurer" means an insurer licensed to do business in South Carolina and authorized to issue automobile insurance policies.  (3) "Bodily injury" includes death resulting therefrom.  (3.5) "Cancellation" or "to cancel" means a termination of a policy during the policy period.  (4) "Damages" includes both actual and punitive damages.  (4.5) "Facility physical damage rate" means the final rate or premium charge for physical damage coverage which must be established by adding the physical damage loss component developed under Section 38-77-596 to the expense component developed under Section 38-77-596.  (5.2) "Facility physical damage rate" means the final rate or premium charge for physical damage coverage which must be established by adding the physical damage loss component developed under Section 38-73-780 to the expense component developed under Section 38-73-1420.  (5.5)(a) "Individual private passenger automobile" means the following types of motor vehicles owned by or leased under a long-term contract by an individual or individuals:  (i) motor vehicles of the private passenger type or station wagon type;  (ii) panel trucks, delivery sedans, vehicles with a pickup body, vans, or similar motor vehicles designed for use on streets and highways and so licensed;  (iii) motor homes, so long as the motor vehicles described in (ii) and (iii) are not used in the occupation, profession, or business of the insured other than farming and ranching; and  (iv) motorcycles.  (b) A motor vehicle is not considered "owned by or leased under a long-term contract by an individual or individuals" if the motor vehicle is owned by a partnership or corporation, unless the motor vehicle is owned by a farm family copartnership or a farm family corporation and is garaged principally on a farm or ranch.  (c) A motor vehicle is not considered "used in the occupation, profession, or business of the insured", because it is used in the course of driving to and from work.  (d) Individual private passenger automobile does not include:  (i) motor vehicles that are used for public or livery conveyance or rented to others without a driver;  (ii) fire department vehicles, police vehicles, ambulances, and rescue squad vehicles which are publicly owned;  (iii) mopeds;  (iv) dune buggies, all-terrain vehicles, go carts, and snowmobiles;  (v) golf carts; and  (vi) small commercial risks.  (6) "Institutional source" means any person or governmental entity that provides information about an individual to an agent, insurer, or insurance-support organization other than:  (a) an agent;  (b) the individual who is the subject of the information; or  (c) a natural person acting in a personal capacity rather than in a business or professional capacity.  (7) "Insured" means the named insured and, while resident of the same household, the spouse of any named insured and relatives of either, while in a motor vehicle or otherwise, and any person who uses with the consent, expressed or implied, of the named insured the motor vehicle to which the policy applies and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above.  (8) "Insurance-support organization" means any person who regularly engages, in whole or in part, in the practice of assembling or collecting information about natural persons for the primary purpose of providing the information to an insurer or agent for insurance transactions, including (i) the furnishing of consumer reports or investigative consumer reports to an insurer or agent for use in connection with an insurance transaction or (ii) the collection of personal information from insurers, agents, or other insurance-support organizations for the purpose of detecting or preventing fraud, material misrepresentation, or material nondisclosure in connection with insurance underwriting or insurance claim activity. However, the following persons shall not be considered insurance-support organizations for purposes of this chapter: agents, governmental institutions, insurers, rating organizations, medical care institutions, and medical professionals.  (9) "Motor vehicle" means every self-propelled vehicle which is designed for use upon a highway, including trailers and semitrailers designed for use with these vehicles but excepting traction engines, road rollers, farm trailers, tractor cranes, power shovels and well-drillers, and every vehicle which is propelled by electric power obtained from overhead wires but not operated upon rails. Mopeds are considered to be motor vehicles for the purposes of uninsured motor vehicle insurance coverage and underinsured motor vehicle insurance coverage only. For purposes of this chapter, the term automobile has the same meaning as motor vehicle.  (10) "Nonpayment of premium" means failure of the named insured to pay when due any of his obligations in connection with the payment of premiums on a policy, or any installment of the premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit, or failure to maintain membership in an organization if membership is a condition precedent to insurance coverage.  (10.5) "Policy of automobile insurance" or "policy" means a policy or contract for bodily injury or property damage liability insurance issued or delivered in this State covering liability arising from the ownership, maintenance, or use of any motor vehicle, insuring as the named insured one individual or husband and wife who are residents of the same household, and under which the insured vehicle designated in the policy is either:  (a) a motor vehicle of a private passenger, station wagon, or motorcycle type that is not used commercially, rented to others, or used as a public or livery conveyance where the terms "public or livery conveyance" do not include car pools, or  (b) any other four-wheel motor vehicle which is not used in the occupation, profession, or business, other than farming, of the insured, or as a public or livery conveyance, or rented to others. The term "policy of automobile insurance" or "policy" does not include:  (i) any policy issued through the Associated Auto Insurers Plan,  (ii) any policy covering the operation of a garage, sales agency, repair shop, service station, or public parking place,  (iii) any policy providing insurance on an excess basis such as an umbrella policy, or  (iv) any other contract providing insurance to the named insured even though the contract may incidentally provide insurance on motor vehicles.  (11) "Quota share reinsurance" means that form of reinsurance in which the reinsurer assumes a fixed percentage of the insured risk.  (12) "Renewal" or "to renew" means the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer or the issuance and delivery of a certificate or notice extending the terms of a policy beyond its policy period or term. However, any policy with a policy period or term of less than six months or any period with no fixed expiration date is considered as if written for successive policy periods or terms of six months.  (12.5) "Reduction in coverage" means a change made by the insurer which results in a removal of coverage, diminution in scope or less coverage, or the addition of an exclusion. Reduction in coverage does not include any change, reduction, or elimination of coverage made at the request of the insured. The correction of a typographical or scrivener's error or the application of mandated legislative changes is not a reduction in coverage.  (13) "Small commercial risk" means:  (a) Garage risks including nonmotor vehicle insurance when written in combination with automobile liability coverage.  (b) Ambulance risks.  (c) Commercial risks which have a manufacturer's gross vehicular weight less than twenty thousand pounds and are not required to have a mandatory filing by a governmental authority other than an SR-22.  (d) Church buses used by a church to transport adults or children to and from services and in activities incidental to church functions, so long as a mandatory filing by any governmental authority other than an SR-22 is not required.  (e) Privately-owned school buses used to carry school children and students, their parents or guardians, members of the faculty, school board members, nurses, doctors, and dentists, as well as guests in connection with any school activity and operations incidental thereto, including games, outings, and similar road trips, so long as a mandatory filing by any governmental authority other than an SR-22 is not required.  "Small commercial risk" does not include pulpwood trucks or dump trucks.  (14) "Uninsured motor vehicle" means a motor vehicle as defined in item (9) as to which:  (a) there is not bodily injury liability insurance and property damage liability insurance both at least in the amounts specified in Section 38-77-140; or  (b) there is nominally that insurance, but the insurer writing the same successfully denies coverage thereunder; or  (c) there was that insurance, but the insurer who wrote the same is declared insolvent, or is in delinquency proceedings, suspension, or receivership, or is proven unable fully to respond to a judgment; and  (d) there is no bond or deposit of cash or securities in lieu of the bodily injury and property damage liability insurance;  (e) the owner of the motor vehicle has not qualified as a self-insurer in accordance with the applicable provisions of law.  A motor vehicle is considered uninsured if the owner or operator is unknown. However, recovery under the uninsured motorist provision is subject to the conditions set forth in this chapter. Any motor vehicle owned by the State or any of its political subdivisions is considered an uninsured motor vehicle when the vehicle is operated by a person without proper authorization.  (15) "Underinsured motor vehicle" means a motor vehicle as defined in item (9) as to which there is bodily injury liability insurance or a bond applicable at the time of the accident in an amount of at least that specified in Section 38-77-140 and the amount of the insurance or bond is less than the amount of the insureds' damages.  HISTORY: Former 1976 Code Sections 38-37-10 [1962 Code Section 37-591; 1974 (58) 2718; 1976 Act No. 694, Section 1] and 56-9-810 [1962 Code Section 46-750.31' 1963 (53) 526; 1964 (53) 2064; 1977 Act No. 80, Section 5; 1987 Act No. 155, Section 25(a); 1987 Act No. 166, Section 21, transferred to Section 38-77-30 by 1987 Act No. 155, Section 24] recodified as Section 38-77-30 by 1987 Act No. 155, Section 1; 1988 Act No. 376, Sections 1, 2; 1988 Act No. 399, Section 5; 1989 Act No. 148, Section 52; 1992 Act No. 443, Section 1; 1993 Act No. 181, Section 802; 1996 Act No. 326, Section 5; 1997 Act No. 154, Section 7; 2017 Act No. 89 (H.3247), Section 33, eff November 19, 2018; 2020 Act No. 174 (H.3755), Section 1, eff September 30, 2020; 2021 Act No. 14 (H.3587), Section 1, eff April 12, 2021.  Validity  For the validity of the amendment by 2020 Act No. 174, see Mercury Funding, LLC v. Chesney, 433 S.C. 591, 861 S.E.2d 35 (2021).  Editor's Note  2017 Act No. 89, Section 37, provides as follows:  "This act takes effect eighteen months after approval by the Governor. The provisions of this act amending Section 38-77-30 apply to automobile insurance coverage issued or renewed on or after eighteen months following approval by the Governor."  Section 38-77-596, referenced in (4.5), was repealed by 1997 Act No. 154, Section 30, as amended by 2005 Act No. 43, Section 4, effective January 1, 2010.  Effect of Amendment  2017 Act No. 89, Section 33, in (5.5)(d)(iii), substituted "mopeds" for "motor-driven cycles, motor scooters, and mopeds"; in (9), inserted the second sentence, relating to mopeds; in (14), inserted "defined in item (9) as", and combined the two undesignated paragraphs; and in (15), inserted "defined in item (9) as".  2020 Act No. 174, Section 1, in (12), in the first sentence, deleted ", the renewal policy to provide types and limits of coverage at least equal to those contained in the policy being superseded," following "by the same insurer" and "with types and limits of coverage at least equal to those contained in the policy being extended" from the end, and inserted (12.5).  2021 Act No. 14, Section 1, in (12.5), in the third sentence, substituted "is not a reduction in coverage" for "may not be considered a reduction in coverage".
 The department has the authority to issue and promulgate all necessary regulations not inconsistent with the provisions of this article to enforce, carry out, and make effective this article and to review all policies of insurance issued, renewed, sold, or delivered in this State to determine whether they are in compliance with law and the regulations promulgated under the law.  HISTORY: Former 1976 Code Section 56-11-180 [1962 Code Section 46-750.118; 1974 (58) 2718] recodified as Section 38-77-320 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 811.
 No claim for damage to property resulting from a motor vehicle accident may be denied or payment delayed because the person who is entitled to payment or any other person has a claim pending for bodily injury which may have arisen from the same or any other accident. Whenever an insurer has the appropriate motor vehicle coverage for the party liable and there is no dispute as to either the liability for the payment of the full property damages or the amount of monetary equivalent of these damages, then the amount payable is immediately due and owing and must be paid promptly. If the director or his designee determines that the payment of the amount was unnecessarily delayed, he may assess interest on the amount at the rate of eight percent per annum.  HISTORY: Former 1976 Code Section 56-11-240 [1962 Code Section 46-750.124; 1974 (58) 2718; 1987 Act No. 155, Section 25] recodified as Section 38-77-330 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 812.
 Notwithstanding the definition of " insured" in Section 38-77-30, the insurer and any named insured must, by the terms of a written amendatory endorsement, the form of which has been approved by the director or his designee, agree that coverage under such a policy of liability insurance shall not apply while the motor vehicle is being operated by a natural person designated by name. The agreement, when signed by the named insured, is binding upon every insured to whom the policy applies and any substitution or renewal of it. However, no natural person may be excluded unless the named insured declares in the agreement that (1) the driver's license of the excluded person has been turned in to the Department of Motor Vehicles or (2) an appropriate policy of liability insurance or other security as may be authorized by law has been properly executed in the name of the person to be excluded.  HISTORY: Former 1976 Code Section 56-11-250 [1962 Code Section 46-750.125; 1974 (58) 2718; 1987 Act No. 166, Section 20; 1987 Act No. 155, Section 25] recodified as Section 38-77-340 by 1987 Act No. 155, Section 1 [amendment to former 1976 Code Section 56-11-250 by 1987 Act No. 166, Section 20, transferred to Section 38-77-340 by 1987 Act No. 155, Section 24]; 1988 Act No. 641, Section 2; 1993 Act No. 181, Section 813A; 1993 Act No. 181, Section 813B; 1996 Act No. 459, Section 63; 2004 Act No. 241, Section 8, eff January 1, 2005.
 It is an unfair trade practice as defined in Section 39-5-20 to:  (1) knowingly and wilfully make or cause to be made any false statement or representation of a material fact for use in an application for payment or for use in determining the right to payment under this chapter;  (2) submit or cause to be submitted bills or requests for payment containing charges for services rendered which are substantially in excess of the person's customary charges or in applicable cases substantially in excess of the person's costs for such services, unless there is good cause for the bills or requests containing the charges or costs;  (3) submit bills or requests for payment for work covered by insurance which are in excess of those submitted for similar work not covered by insurance;  (4) submit bills or requests for payment which are inflated for the purpose of relieving the insured of the obligation for making a payment for such goods and services as a result of a deductible or copayment clause; or  (5) in the case of a health care facility, as defined in Section 44-7-130, and a health care provider licensed pursuant to Title 40, charge a fee for:  (a) the search for and duplication of a medical record, in excess of sixty-five cents per page for the first thirty pages and fifty cents per page for all other pages;  (b) searching and handling a medical record in excess of fifteen dollars per request plus actual postage and applicable sales tax;  (c) records copied at the request of a health care provider or for records sent to a health care provider at the request of a patient for the purpose of continuing medical care;  (d) more than the actual cost of reproduction of an X-ray. Actual cost means the cost of materials and supplies used to duplicate the X-ray and the labor and overhead costs associated with the duplication.  HISTORY: 1989 Act No. 148, Section 18; 1994 Act No. 468, Section 4.
 (A) The director or his designee shall approve a form that automobile insurers shall use in offering optional coverages required to be offered pursuant to law to applicants for automobile insurance policies. This form must be used by insurers for all new applicants. The form, at a minimum, must provide for each optional coverage required to be offered:  (1) a brief and concise explanation of the coverage;  (2) a list of available limits and the range of premiums for the limits;  (3) a space to mark whether the insured chooses to accept or reject the coverage and a space to state the limits of coverage the insured desires;  (4) a space for the insured to sign the form that acknowledges that the insured has been offered the optional coverages;  (5) the mailing address and telephone number of the insurance department that the applicant may contact if the applicant has questions that the insurance agent is unable to answer.  (B) If this form is signed by the named insured, after it has been completed by an insurance producer or a representative of the insurer, it is conclusively presumed that there was an informed, knowing selection of coverage and neither the insurance company nor an insurance agent is liable to the named insured or another insured under the policy for the insured's failure to purchase optional coverage or higher limits.  (C) An automobile insurer is not required to make a new offer of coverage on any automobile insurance policy which renews, extends, changes, supersedes, or replaces an existing policy.  (D) Compliance with this section satisfies the insurer and agent's duty to explain and offer optional coverages and higher limits and no person, including, but not limited to, an insurer and insurance agent is liable in an action for damages on account of the selection or rejection made by the named insured.  (E) If the insured fails or refuses to return an executed offer form within thirty days to the insurer, the insurer shall add on uninsured motorist and underinsured motorist coverages with the same policy limits as the insured's liability limits.  HISTORY: 1989 Act No. 148, Section 22; 1994 Act No. 496, Section 2; 1997 Act No. 154, Section 15; 2006 Act No. 395, Section 1, eff June 14, 2006.  Editor's Note  2013 Act No. 47, Section 5, provides as follows:  "SECTION 5. An automobile liability insurer is not required to make a new offer of coverage or obtain a new prescribed form on any automobile insurance policy, within the contemplation of Section 38-77-350, to comply with statutory changes to the minimum required limits set forth in Section 38-77-140 and Section 38-77-150."
 (A) If an individual, after proper identification, submits a written request to an insurance-support organization for access to recorded personal information about the individual that is reasonably described by the individual and reasonably able to be located and retrieved by the insurance-support organization, the insurance-support organization, within thirty business days from the date the request is received shall:  (1) inform the individual of the nature and substance of the recorded personal information in writing, by telephone, or by other oral communication, whichever the insurance-support organization prefers;  (2) permit the individual to see and obtain a copy of the recorded personal information pertaining to him or to obtain a copy of the recorded personal information by mail, whichever the individual prefers, unless the recorded personal information is in coded form, in which case an accurate translation in plain language must be provided in writing;  (3) disclose to the individual the identity, if recorded, of those persons to whom the insurance-support organization has disclosed the personal information within two years before the request, and if the identity is not recorded, the names of those insurance-support organizations or other persons to whom the information is disclosed normally; and  (4) provide the individual with a summary of the procedures by which he may request correction, amendment, or deletion of recorded personal information.  (B) Any personal information provided pursuant to subsection (A) of this section must identify the source of the information if it is an institutional source.  (C) Medical record information supplied by a medical care institution or medical professional and requested under subsection (A) of this section, together with the identity of the medical professional or medical care institution that provided the information, must be supplied either directly to the individual or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, whichever the insurer, agent, or insurance-support organization prefers. If it elects to disclose the information to a medical professional designated by the individual, the insurer, agent, or insurance-support organization shall notify the individual, at the time of the disclosure, that it has provided the information to the medical professional.  (D) Except for personal information provided under this section, an insurer, agent, or insurance-support organization may charge a reasonable fee to cover the costs incurred in providing a copy of recorded personal information to individuals.  (E) The obligations imposed by this section upon an insurer or agent may be satisfied by another insurer or agent authorized to act on its behalf. With respect to the copying and disclosure of recorded personal information pursuant to a request under subsection (A) of this section, an insurer, agent, or insurance-support organization may make arrangements with an insurance-support organization or a consumer reporting agency to copy and disclose recorded personal information on its behalf.  (F) The rights granted to individuals in this section must extend to all natural persons to the extent information about them is collected and maintained by an insurer, agent, or insurance-support organization in connection with an insurance transaction. The rights granted to all natural persons by this subsection must not extend to information about them that relates to and is collected in connection with or in reasonable anticipation of a claim or civil or criminal proceeding involving them.  (G) For purposes of this section, "insurance-support organization" does not include "consumer reporting agency".  HISTORY: 1997 Act No. 154, Section 16.
 (A) In the event of a cancellation or nonrenewal, including those that involve policies referred to in Section 38-77-120, the insurer or agent responsible for the cancellation or nonrenewal shall give a written notice in a form approved by the director that:  (1) either provides the applicant, policyholder, or individual proposed for coverage with the specific reason or reasons for the cancellation or nonrenewal in writing or advises the person that upon written request he may receive the specific reason or reasons in writing; and  (2) provides the applicant, policyholder, or individual proposed for coverage with a summary of the rights established under subsection (B) of this section and Section 38-77-380.  (B) Upon receipt of a written request within ninety business days from the date of the mailing of notice or other communication of a cancellation or nonrenewal to an applicant, policyholder, or individual proposed for coverage, the insurer or agent shall furnish to the person within twenty-one business days from the date of receipt of the written request:  (1) the specific reason or reasons for the cancellation or nonrenewal in writing, if that information was not furnished initially in writing pursuant to subsection (A)(1);  (2) the specific items of personal and privileged information that support those reasons; however:  (a) the insurer or agent shall not be required to furnish specific items of privileged information if it has a reasonable suspicion, based upon specific information available for review by the director, that the applicant, policyholder, or individual proposed for coverage has engaged in criminal activity, fraud, material misrepresentation, or material nondisclosure; and  (b) specific items of medical-record information supplied by a medical-care institution or medical professional must be disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, whichever the insurer or agent prefers; and  (3) the names and addresses of the institutional sources that supplied the specific items of information given pursuant to subsection (B)(2) of this section. However, the identity of any medical professional or medical-care institution must be disclosed either directly to the individual or to the designated medical professional, whichever the insurer or agent prefers.  (C) The obligations imposed by this section upon an insurer or agent may be satisfied by another insurer or agent authorized to act on its behalf. However, the insurer or agent making the cancellation or nonrenewal shall remain responsible for compliance with the obligations imposed by this section.  (D) When a cancellation or nonrenewal results solely from an insured's oral request or inquiry, the explanation of reasons and summary of rights required by subsection (A) of this section may be given orally.  HISTORY: 1997 Act No. 154, Section 16.
 There is no liability on the part of and no cause of action of any nature may arise against the director or his designees, any insurer, or the authorized representatives, agents, and employees of either or any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation or refusal to write or renew, for any statement made by any of them in complying with this article, or for the providing of information pertaining thereto, unless the person asserting the cause of action establishes that the person against whom the cause of action is asserted was motivated by express malice or gross negligence.  HISTORY: 1997 Act No. 154, Section 23.
 Upon request of the director, an insurer must provide a listing of underwriting restrictions. These restrictions do not require approval of the director or his designee and are not public information.  HISTORY: 2021 Act No. 13 (H.3585), Section 2, eff April 12, 2021.
 The court of common pleas, or any inferior courts having concurrent jurisdiction, in and for each county, shall by order of reference appoint an attorney or attorneys to hear and determine, by arbitration, property damage liability claims arising out of motor vehicle collisions or accidents and to award actual and punitive damages. This order must be consistent with the provisions of this chapter and may not be inconsistent with the Rules of the Supreme Court of South Carolina. Process and procedure must be as summary and simple as may be reasonable and may provide for the taking of evidence in the form of reports, statements, or itemized bills or in any other manner without the procedural and evidentiary limitations which pertain in jury trials. The court may provide for the taking of depositions of a witness within or without the State.  HISTORY: Former 1976 Code Section 56-11-510 [1962 Code Section 47-750.135; 1974 (58) 2718] recodified as Section 38-77-710 by 1987 Act No. 155, Section 1.
 (a) The order of reference shall establish a panel of arbitrators each of whom must be a member of the bar and the members must be selected for service in particular cases on some fair rotation basis. Three arbitrators shall hear and determine each case and the decision of two of the three arbitrators shall determine the issue. However, the parties to the dispute may, by agreement, provide for determination of the disputed claim by one arbitrator.  (b) Each arbitrator assigned to determine the claim may be compensated, not to exceed thirty-five dollars for his services and time, payable out of the funds of the court and which may not be taxable as costs to either party.  (c) The claimant who is the moving party in seeking arbitration shall pay to the clerk of court a fee of ten dollars. Five dollars must be retained by the clerk as the cost of filing the claim and final judgment and five dollars must be used to pay the cost of service on the other party or parties.  HISTORY: Former 1976 Code Section 56-11-520 [1962 Code Section 46-750.136; 1974 (58) 2718] recodified as Section 38-77-720 by 1987 Act No. 155, Section 1.
 (a) Any person who is a party to the disputed property damage liability claim may submit his claim for determination through arbitration. No formal pleading or process is required. The clerk of court of each county shall prepare and keep an arbitration docket and set the cases thereon for arbitration as provided by law for the settling of cases in the court of common pleas.  (b) The claim must be filed with the clerk of court in the county in which the cause of action arose or where the plaintiff or defendant resides. The claim must be filed in triplicate with the clerk of court on forms to be provided by him. The forms shall set forth the names of the parties, the date and place of the accident, and the amount of property damage claimed. The clerk shall file one copy in his office, and one copy must be served upon the defendant as provided by law for service of summons and complaints. The sheriff, or such other person, shall promptly serve the claim upon the defendant and shall receive the sum of five dollars to defray the cost of securing this service. The sheriff, or such other person, serving the process shall promptly file an affidavit of personal service with the clerk of court on forms to be provided by the clerk.  (c) There must be attached to, or made part of, the form a summons to the defendant named notifying him that he should file a response with the clerk of court within thirty days from the date of service and that failure to file a response within thirty days entitles the plaintiff to a default judgment. The form must be signed by the party filing it or his attorney, if any, and shall by order of reference show the address of the person signing it.  HISTORY: Former 1976 Code Section 56-11-530 [1962 Code Section 46-750.137; 1974 (58) 2718] recodified as Section 38-77-730 by 1987 Act No. 155, Section 1.
 (a) The court, or the clerk acting for the court, shall assign the arbitrators to hear the matter at the courthouse, or other designated place in the county where the claim is filed, within sixty days after the date of filing, or as soon thereafter as is feasible. The clerk of court shall, on a form provided by him, advise the parties or their attorneys of record, if any, by mail as to the place, date, and time of hearing and shall advise the parties to bring all records which may pertain to the claim, including, but not limited to, the following:  (1) Two estimates of damage to the motor vehicle or its contents signed by the estimator.  (2) Signed receipts for car repairs.  (3) Bills or receipts for other property damages claimed.  The forms shall also contain notice to the parties that, if they cannot attend because of illness or otherwise, the clerk of court must be notified as soon as possible with the request that another date be set for the hearing.  (b) Property damages must be awarded as provided by law, including, but not limited to, actual damages, loss of use, depreciation, and any other property damages which are the direct and proximate result of the accident.  (c) The parties may secure the attendance of witnesses by their voluntary appearance or may secure their attendance by subpoenas prepared and issued in accordance with the laws of this State.  HISTORY: Former 1976 Code Section 56-11-540 [1962 Code Section 46-750.138; 1974 (58) 2718] recodified as Section 38-77-740 by 1987 Act No. 155, Section 1.
 (a) The court of common pleas shall, on application of the arbitrators, or any one of them, or any party or his attorney, enforce by proper proceedings the attendance and testimony of witnesses and the production of records and may punish for contempt of court, by fine or imprisonment or both, the unexcused failure or refusal to attend and give testimony or produce records required by any subpoena issued. The court may issue to the sheriff of the county in which any hearing is held a warrant requiring him to produce at the hearing any witness who has ignored or failed to comply with any subpoena issued and served upon the witness pursuant to this article and the warrant shall authorize and empower the sheriff to arrest and produce at the hearing the witness. It is the duty of the sheriff to do so, but the failure of a witness to appear may be excused on the same grounds as provided by law in the courts of this State.  (b) All records introduced in evidence which are not identified by their preparer must be certified under oath as a correct statement of the facts contained therein.  HISTORY: Former 1976 Code Section 56-11-550 [1962 Code Section 46-750.139; 1974 (58) 2718] recodified as Section 38-77-750 by 1987 Act No. 155, Section 1.
 After receiving the evidence, the arbitrators, or a majority of them, or the single arbitrator if the parties have agreed upon a single arbitrator, shall enter the decision on the back of the original claim and file it with the clerk of court, who shall enter it as a judgment on the records of his office. The arbitrator first appointed shall, on the day the decision is filed with the clerk of court, serve a copy of the decision signed by each arbitrator on each party to the arbitration, either personally or by registered mail, or as provided by agreement.  HISTORY: Former 1976 Code Section 56-11-560 [1962 Code Section 46-750.140; 1974 (58) 2718] recodified as Section 38-77-760 by 1987 Act No. 155, Section 1.
 If any party is dissatisfied with the decision of the arbitrators, or the single arbitrator, he may appeal within twenty days of the decision to the court in which the claim is filed by service upon the other parties of a notice of appeal. Every notice of appeal shall include a statement under oath that the appeal is taken in good faith and not merely for the purpose of delay. The trial on appeal must be a trial de novo.  HISTORY: Former 1976 Code Section 56-11-570 [1962 Code Section 46-750.141; 1974 (58) 2718] recodified as Section 38-77-770 by 1987 Act No. 155, Section 1.
 Beginning on March 1, 2003 and continuing thereafter, the director may promulgate reasonable standards for the assignment of risks to insurance carriers and servicing carriers, and an assigned risk plan, hereinafter referred to as the Associated Auto Insurers Plan, must be established by March 1, 2003. More than one assigned risk plan may be established. The director may make reasonable regulations for the assignment of risks to insurance carriers. He shall establish rate classifications, rating schedules, rates, and regulations to be used by insurance carriers issuing assigned risk, policies of motor vehicle liability, physical damage, and underinsured and uninsured motorist insurance in accordance with this chapter as appear to it to be proper in the establishment of rate classifications, rating schedules, rates, and regulations, it shall be guided by the principles and practices which have been established under its statutory authority to regulate motor vehicle liability, physical damage, and medical payments insurance rates, and it may act in conformity with its statutory discretionary authority in such matters.  The servicing carriers for the Associated Auto Insurers Plan may be competitively bid as provided for in this section. If the Associated Auto Insurers Plan is competitively bid, then the director or his designee shall appoint a committee or committees of individuals as he considers qualified to establish standards and procedures for the consideration and evaluation of bids. Insurers or other vendors, in conjunction with a licensed automobile insurer, may submit bids. The committee or committees shall evaluate and award contracts pursuant to the bidding process established by the committee or committees, subject to the final approval of the director or his designee. The director may require a bid fee to cover the expenses of implementing this section.  The plan for the Associated Auto Insurers Plan must contain a provision for which licensed agents and/or brokers may be certified such as to bind insurance policies. The manager of the plan shall establish and maintain an electronic means to bind policies immediately. The electronic effective date procedure shall be available only to producers of record who are certified by the plan.  HISTORY: 1997 Act No. 154, Section 21(A).
 Every person who has been unable to obtain a motor vehicle liability policy shall have the right to apply to the director to have his risk assigned to an insurance carrier licensed to write and writing motor vehicle liability insurance in the State and the insurance carrier, whether a stock or mutual company, reciprocal, or interinsurance exchange, or other type or form of insurance organization, as provided in this chapter shall issue a motor vehicle liability policy which will meet at least the minimum requirements for establishing financial responsibility as provided in this chapter, and in addition shall provide, at the option of the insured, reasonable motor vehicle physical damage and medical payments coverages, both as defined in Chapter 77, Title 38, in the same policy. Every person who has otherwise obtained a motor vehicle liability insurance policy, or who has been afforded motor vehicle liability insurance under the laws of this State, but who was not afforded motor vehicle medical payments insurance or motor vehicle physical damage insurance in the same policy, or who was not afforded such coverages under the provisions of that section, shall have the right to apply to the director to have his risk assigned to an insurance carrier, as provided above, licensed to write and writing either or both coverages, and the insurance carrier shall issue a policy providing the coverage or coverages applied for.  HISTORY: 1997 Act No. 154, Section 21(A).
 Insurance carriers may satisfy their Associated Auto Insurers Plan obligations by joining with other insurers to establish an Assigned Risk Pool whereby one or more insurers accepts the assignments of other insurers and in return, the other insurers agree to be responsible for any assessment necessary to pay losses associated with the servicing carrier's pool policies. These agreements are subject to approval by the director.  HISTORY: 1997 Act No. 154, Section 21(A).
 The director may in its discretion, after reviewing all information pertaining to the applicant or policyholder available from its records, the records of the department, or from other sources:  (1) refuse to assign an application;  (2) approve the rejection of an application by an insurance carrier;  (3) approve the cancellation of a policy of motor vehicle liability, physical damage, and medical payments insurance by an insurance carrier; or  (4) refuse to approve the renewal or the reassignment of an expiring policy.  HISTORY: 1997 Act No. 154, Section 21(A).
 The producer of each Associated Auto Insurers Plan must provide on a form promulgated by the director of the Department of Insurance the information as follows:  (1) the name of one other insurance agent and/or insurer representative who has rejected the applicant for automobile insurance;  (2) if the producer has at least one voluntary market for automobile insurance, the producer must provide the application to at least one voluntary market used by that producer and the application must be rejected;  (3) the reason why the applicant is submitting an application to the Associated Auto Insurers Plan. Such reason shall include data on traffic violations, accidents and/or reasons as to why the voluntary market has not provided coverage.  HISTORY: 1997 Act No. 154, Section 21(A).
 (A) The director or his designee, or the plan manager, may review each application. Applications which are not complete or accurate, or both, shall be considered in violation of Section 38-57-30 and are subject to penalty. The department shall promulgate regulations to enforce this section. Penalties may include suspension of binding authority, fines up to five thousand dollars, and revocation of license.  (B) The director or his designee may review each application and provide such application to other qualified insurers upon request who may provide the insurance in the voluntary market at a rate less than the Associated Auto Insurers Plan rate. In such a case, the producer shall not receive commission on the sale of such policy.  (C) In his review of the agent's or broker's residual market business, the director or his designee may consider whether the insurer, agent, or broker is participating in a pattern of unfair discrimination as provided in Section 38-77-122 and Section 38-77-123.  HISTORY: 1997 Act No. 154, Section 21(A).
 Any information filed with the director by an insurance carrier in connection with an assigned risk must be confidential and solely for the information of the director and its staff and must not be disclosed to any person, including an applicant, policyholder, and any other insurance carrier.  HISTORY: 1997 Act No. 154, Section 21(A).
 (A) The director is not required to disclose to any person, including the applicant or policyholder, its reasons for:  (1) refusing to assign an application;  (2) approving the rejection of an application by an insurance carrier;  (3) approving the cancellation of a policy of motor vehicle liability, physical damage, and medical payments insurance by an insurance carrier; or  (4) refusing to approve the renewal or the reassignment of an expiring policy.  (B) The director or anyone acting for him is not held liable for any act or omission in connection with the administration of the duties imposed upon it by the provisions of this chapter, except upon proof of actual malfeasance.  HISTORY: 1997 Act No. 154, Section 21(A).
 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.  HISTORY: 1997 Act No. 154, Section 21(A); 2003 Act No. 73, Section 16, eff June 25, 2003.
 Notwithstanding any other provision of law, the provisions of this chapter relating to assignment of risks must be available to carriers by motor vehicle who are required by law to carry public liability and property damage insurance for the protection of the public.  HISTORY: 1997 Act No. 154, Section 21(A).
 (A) The purpose of this chapter is to create a legal framework within which service contracts may be sold in this State.  (B) This chapter does not apply to:  (1) warranties;  (2) maintenance agreements;  (3) commercial transactions;  (4) warranties, service contracts, or maintenance agreements offered by public utilities on their transmission devices to the extent they are regulated by the Public Service Commission or the Department of Health and Environmental Control;  (5) service contracts sold or offered for sale to persons other than consumers.  (C) Motor vehicle manufacturer's service contracts on the motor vehicle manufacturer's products shall comply with Sections 38-78-50 (A) and (D), to (N), Section 38-78-60, and Section 38-78-100, as applicable.  (D) The types of agreements referred to in subsection (B) of this section do not have to comply with any provision of the insurance laws of this State.  HISTORY: 2000 Act No. 330, Section 2.
 (A) The director may conduct investigations or examinations of providers, administrators, insurers, or other persons to enforce the provisions of this chapter and protect service contract holders in this State. Upon request of the director, the provider shall make all accounts, books, and records concerning service contracts sold by the provider available to the director which are necessary to enable the director to reasonably determine compliance or noncompliance with this chapter.  (B) The director may take action which is necessary or appropriate to enforce the provisions of this chapter and the director's regulations and orders and to protect service contract holders in this State.  If a service contract provider violates a provision of this chapter, a regulation promulgated under this chapter, or an order issued by the director, the director may:  (1) order the service contract provider to cease and desist from committing the violation;  (2) issue an order prohibiting a service contract provider from selling or offering for sale service contracts;  (3) issue an order imposing a civil penalty; or  (4) any combination of these.  (C) A person aggrieved by an order issued under this section may request a hearing before the director. The hearing request must be filed with the director within twenty days of the date the director's order is effective.  Pending the hearing and the decision by the director, the director shall suspend the effective date of the order.  At the hearing, the burden is on the director to show why the order issued pursuant to this section is justified. If the issuance of the order is upheld by the director, the person may file an appeal with the Administrative Law Court.  (D) The director may bring an action under the Administrative Law Court or in circuit court for an injunction or other appropriate relief to enjoin threatened or existing violations of this chapter or of the director's orders or regulations. An action filed under this section may also seek restitution on behalf of persons aggrieved by a violation of this chapter or orders or regulations of the director.  (E) A person in violation of this chapter or an order or regulation of the director may be assessed a civil penalty not to exceed one thousand dollars per violation and no more than ten thousand dollars in the aggregate for all violations of a similar nature; provided, however, that if a person is found by a court of competent jurisdiction to have been in wilful violation of this chapter or an order or regulation of the director, then such person is subject to a penalty of one thousand dollars per violation with no aggregate limit.  For purposes of this section, violations of a similar nature, which are considered technical and unintentional by the Department of Insurance lacking the requisite wilful intent, are subject to the ten thousand dollar aggregate penalty limit and are defined as a violation which consists of the same or similar course of conduct, action, or practice, irrespective of the number of times the act, conduct, or practice which is determined to be a violation of this chapter occurred.  (F) The authority of the director under this section is in addition to other authority of the director as provided by law.  HISTORY: 2000 Act No. 330, Section 2.
 The director may promulgate regulations necessary to effectuate this chapter.  HISTORY: 2000 Act No. 330, Section 2.
 If any provision of this chapter, or the application of the provision to any person or circumstances, is held invalid, the remainder of the chapter, and the application of the provision to a person or circumstances other than those as to which it is held invalid, is not affected.  HISTORY: 2000 Act No. 330, Section 2.  
 As used in this chapter:  (1) "Administrator" means the person who is responsible for the administration of the service contracts or the service contracts plan or who is responsible for any filings required by this chapter.  (2) "Director" means the Director of the Department of Insurance.  (3) "Consumer" means a natural person who buys other than for purposes of resale any tangible personal property that is distributed in commerce and that is normally used for personal, family, or household purposes and not for business or research purposes.  (4) "Maintenance agreement" means a contract of limited duration that provides for scheduled maintenance only.  (5) "Motor vehicle manufacturer" means a person that:  (a) manufactures or produces motor vehicles and sells motor vehicles under its own name or label;  (b) is a wholly owned subsidiary of the person who manufactures or produces motor vehicles;  (c) is a corporation which owns one hundred percent of the person who manufactures or produces motor vehicles;  (d) does not manufacture or produce motor vehicles, but sells motor vehicles under its trade name label;  (e) manufactures or produces motor vehicles and sells such motor vehicles under the trade name or label of another person; or  (f) does not manufacture or produce motor vehicles but, pursuant to a written contract, licenses the use of its trade name or label to another person that sells motor vehicles under the licensor's trade name or label.  (6) "Nonoriginal manufacturer's parts" means replacement parts not made for or by the original manufacturer of the property commonly referred to as "after market parts".  (7) "Person" means an individual, partnership, corporation, incorporated or unincorporated association, joint stock company, reciprocal, syndicate, or any similar entity or combination of entities acting in concert.  (8) "Premium" means the consideration paid to an insurer for a reimbursement insurance policy.  (9) "Provider" means a person who is contractually obligated to the service contract holder under the terms of the service contract.  (10) "Provider fee" means the consideration paid for a service contract.  (11) "Reimbursement insurance policy" means a policy of insurance issued to a provider to either provide reimbursement to the provider under the terms of the insured service contracts issued or sold by the provider or, in the event of the provider's nonperformance, to pay on behalf of the provider all covered contractual obligations incurred by the provider under the terms of the insured service contracts issued or sold by the provider.  (12) "Service contract" means a contract or agreement for a separately stated consideration for a specific duration to perform the repair, replacement, or maintenance of property or indemnification for repair, replacement, or maintenance, for the operational or structural failure due to a defect in materials, workmanship, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances including, but not limited to, towing, rental, and emergency road service. Service contracts may provide for the repair, replacement, or maintenance of property for damage resulting from power surges and accidental damage from handling. "Service contract" includes a contract or agreement for a separately stated consideration for a specific duration to perform one or more of the following services:  (a) the repair or replacement of tires and wheels on a motor vehicle damaged as a result of coming into contact with road hazards;  (b) the removal of dents, dings, or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without sanding, bonding, painting, or replacing a vehicle body panel;  (c) the replacement of a motor vehicle key or key fob in the event that the key or key fob becomes inoperable, lost, or stolen; and  (d) other services consistent with the provisions of this chapter approved by the director.  (13) "Road hazard" means a hazard that is encountered while driving a motor vehicle including, but not limited to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps.  (14) "Service contract holder" or "contract holder" means a person who is the purchaser or holder of a service contract.  (15) "Theft protection program" means a device or system installed on or applied to a motor vehicle designed to prevent loss or damage to a motor vehicle from theft that includes a theft protection program warranty. The term "theft protection program" includes, but is not limited to, alarm systems, body-part marking products, steering locks, window etch products, pedal and ignition locks, fuel and ignition kill switches, and electronic, radio, and satellite tracking devices.  (16) "Theft protection program warranty" means a written agreement by a warrantor that provides the warrantor will pay to or on behalf of the warranty holder specified incidental costs not to exceed five thousand dollars as a result of the failure of the theft protection program to prevent loss or damage to a motor vehicle pursuant to the terms of the warranty. Specified incidental costs include expenses specified in the warranty that are incurred by the warranty holder due to the failure of the program to perform as provided in the warranty. Incidental costs include, without limitation, insurance policy deductibles, rental vehicle charges, the difference between the actual value of the stolen vehicle at the time of theft and the cost of a replacement vehicle, sales taxes, registration fees, transaction fees, and mechanical inspection fees. Incidental costs may be reimbursed in a fixed amount specified in the warranty or by use of a formula itemizing specific costs incurred by the warranty holder. A theft protection program warranty must contain a conspicuous disclosure substantially similar to the following in ten-point bold font: "This warranty is not insurance and payments or reimbursement under this warranty may not exceed five thousand dollars."  (17) "Warranty" means a warranty made solely by the manufacturer, importer, or seller of property or services without charge, that is not negotiated or separated from the sale of the product, that is incidental to the sale of the product, and that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor, or other remedial measures, such as repair or replacement of the property or repetition of services. This term includes theft protection program warranties if the warrantor has obtained a reimbursement insurance policy to insure its warranty obligations in this State.  HISTORY: 2000 Act No. 330, Section 2; 2020 Act No. 115 (H.4244), Section 1, eff May 3, 2020.  Effect of Amendment  2020 Act No. 115, Section 1, in (12), added the third sentence and (a) to (d); inserted (13), relating to the definition of "road hazard" and redesignated (13) as (14); inserted (15) and (16), relating to the definitions of "theft protection program" and "theft protection program warranty", respectively; and redesignated (14) as (17) and added the second sentence, relating to theft protection program warranties.
 (A) A provider may, but is not required to, appoint an administrator or other designee to be responsible for any or all of the administration of service contracts and compliance with this chapter.  (B) A service contract must not be issued, sold, or offered for sale in this State unless the provider or its designee has:  (1) provided a receipt for, or other written evidence of, the purchase of the service contract to the contract holder;  (2) provided a copy of the service contract to the service contract holder within a reasonable period of time from the date of purchase; and  (3) complied with this chapter.  (C) Each provider of service contracts sold in this State shall file a registration with the director on a form prescribed by the director. Each provider shall pay to the department a fee of two hundred dollars annually.  (D) In order to assure the faithful performance of a provider's obligations to its contract holders each provider shall be responsible for complying with the requirements of item (1), (2), or (3):  (1) insure all service contracts under a reimbursement insurance policy issued by an insurer authorized to transact insurance business in this State or issued pursuant to Section 38-45-110; or  (2)(a) maintain a funded reserve account for its obligations under its service contracts issued and outstanding in this State. The reserves may not be less than forty percent of gross consideration received, less claims paid, on the sale of the service contract for all in-force contracts. The reserve account is subject to examination and review by the director; and  (b) place in trust with the director a financial security deposit having a value of not less than five percent of the gross consideration received, less claims paid, on the sale of the service contract for all service contracts issued and in force, but not less than twenty-five thousand dollars, consisting of one of the following:  (i) a surety bond issued by an authorized surety;  (ii) securities of the type eligible for deposit by authorized insurers in this State;  (iii) cash;  (iv) a letter of credit issued by a qualified financial institution; or  (v) another form of security prescribed by regulations promulgated by the director; or  (3)(a) maintain, or its parent company maintain, a net worth or stockholder's equity of one hundred million dollars; and  (b) upon request, provide the director with a copy of the provider's, or the provider's parent company's, most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission (SEC) within the last calendar year, or if the provider or the provider's parent company does not file with the SEC, a copy of the provider's or the provider's parent company's audited financial statements which show a net worth of the provider or its parent company of at least one hundred million dollars. If the provider's parent company's Form 10-K, Form 20-F, or audited financial statements are filed to meet the provider's financial stability requirement, then the parent company shall agree to guarantee the obligations of the provider relating to service contracts sold by the provider in this State.  (E) Except for the requirements specified in subsection (D), no other financial security requirements shall be required by the director for service contract providers. Service contract providers that establish their financial security to pay claims by insuring their obligations under a reimbursement insurance policy as provided in subsection (D)(1) are not required to file financial statements in connection with an application for registration or the renewal of a registration.  (F) Service contracts shall require the provider to permit the service contract holder to return the service contract within twenty days of the date the service contract was mailed to the service contract holder or within ten days of delivery if the service contract is delivered to the service contract holder at the time of sale or within a longer time period permitted under the service contract. Upon return of the service contract to the provider within the applicable time period, if no claim has been made under the service contract prior to its return to the provider, the service contract is void and the provider shall refund to the service contract holder, or credit the account of the service contract holder, with the full purchase price of the service contract. The right to void the service contract provided in this subsection is not transferable and shall apply only to the original service contract purchaser and only if no claim has been made prior to its return to the provider. A ten percent penalty per month shall be added to a refund that is not paid or credited within forty-five days after return of the service contract to the provider.  (G) If the provider cancels the service contract, the provider shall mail a written notice to the contract holder at the last known address of the service contract holder contained in the records of the provider at least fifteen days prior to cancellation by the provider. Prior notice is not required if the reason for cancellation is nonpayment of the provider fee, a material misrepresentation by the service contract holder to the provider, or a substantial breach of duties by the service contract holder relating to the covered product or its use. The notice shall state the effective date of the cancellation and the reason for the cancellation.  (H) Provider fees collected on service contract are not subject to premium taxes.  (I) Except for the registration requirements in subsection (C), providers and related service contract sellers, administrators, and other persons marketing, selling, or offering to sell service contracts are exempt from state licensing requirements.  (J) The marketing, sale, offering for sale, issuance, making, proposing to make, and administration of service contracts by providers and related service contract sellers, administrators, and other persons shall be exempt from all other provisions of Title 38.  HISTORY: 2000 Act No. 330, Section 2; 2020 Act No. 115 (H.4244), Section 2, eff May 3, 2020.  Effect of Amendment  2020 Act No. 115, Section 2, in (E), added the second sentence, excluding a service contract provider that insures their obligations under a reimbursement insurance policy from the financial statement requirement for registration.
 (A) Reimbursement insurance policies insuring service contracts issued, sold, or offered for sale in this State shall conspicuously state that the insurer that issued the policy shall either reimburse or pay on behalf of the provider any covered sums the provider is legally obligated to pay or in the event of the provider's nonperformance, shall provide the service which the provider is legally obligated to perform according to the provider's contractual obligations under the service contracts issued or sold by the provider.  (B) In the event covered service is not provided by the service contract provider within sixty days of proof of loss by the service contract holder, the contract holder is entitled to apply directly to the reimbursement insurance company.  HISTORY: 2000 Act No. 330, Section 2.
 (A) Service contracts marketed, issued, sold, offered for sale, made, proposed to be made, or administered in this State shall be written, printed, or typed in clear, understandable language that is easy to read and shall disclose the requirements in this section as applicable.  (B) Service contracts insured under a reimbursement insurance policy pursuant to Section 38-78-30(D)(1) shall contain a statement in substantially the following form: "Obligations of the provider under this service contract are insured under a service contract reimbursement insurance policy." The service contract shall also conspicuously state the name and address of the insurer.  (C) Service contracts not insured under a reimbursement insurance policy pursuant to Section 38-78-30(D)(1) of this chapter shall contain a statement in substantially the following form: "Obligations of the provider under this service contract are backed by the full faith and credit of the provider." A claim against the provider shall also include a claim for return of the unearned provider fee. The service contract shall also conspicuously state the name and address of the provider.  (D) Service contracts shall identify any administrator, if different from the providers, the provider obligated to perform the service under the contract, the service contract seller, and the service contract holder to the extent that the name of the service contract holder has been furnished by the service contract holder. The identities of such parties are not required to be preprinted on the service contract and may be added to the service contract at the time of sale.  (E) Service contracts shall conspicuously state the total purchase price and the terms under which the service contract is sold. The purchase price is not required to be preprinted on the service contract and may be negotiated at the time of sale with the service contract holder.  (F) If prior approval of repair work is required, the service contracts shall conspicuously state the procedure for obtaining prior approval and for making a claim, including either a toll-free telephone number for claim service or a procedure for obtaining emergency repairs performed outside of normal business hours.  (G) Service contracts shall conspicuously state the existence of any deductible amount, if applicable.  (H) Service contracts shall specify the merchandise and services to be provided and any limitations, exceptions, or exclusions.  (I) Service contracts covering automobiles shall state the conditions upon which the use of nonoriginal manufacturers' parts, or substitute service, may be allowed. Conditions stated shall comply with applicable state and federal laws.  (J) Service contracts shall state any restrictions governing the transferability of the service contract, if applicable.  (K) Service contracts shall state the terms, restrictions, or conditions governing cancellation of the service contract prior to the termination or expiration date of the service contract by either the provider or the service contract holder.  (L) Service contracts shall set forth all of the obligations and duties of the service contract holder, such as the duty to protect against any further damage and any requirement to follow the owner's manual.  (M) Service contracts shall clearly state whether or not the service contract provides for or excludes consequential damages or preexisting conditions, if applicable.  (N) Service contracts must disclose the right of the service contract holder to return the contract and receive a full refund pursuant to Section 38-78-30(F).  (O) Service contracts must include a disclosure substantially similar to the following: "In the event of a dispute with the provider of this contract, you may contact the South Carolina Department of Insurance, Capitol Center, 1201 Main Street, Ste. 1000, Columbia, South Carolina, 29201 or by phone at (800) 768-3467".  HISTORY: 2000 Act No. 330, Section 2; 2020 Act No. 115 (H.4244), Section 3, eff May 3, 2020.  Effect of Amendment  2020 Act No. 115, Section 3, added (O), requiring service contracts to include a certain disclosure.
 (A) A provider may not use in its name the words " insurance", "casualty", "guaranty", "surety", "mutual", or any other words descriptive of the insurance, casualty, guaranty, or surety business or a name deceptively similar to the name or description of any insurance or surety corporation or any other provider. This section does not apply to a company that was using any of the prohibited language in its name before the effective date of this chapter. However, a company using the prohibited language in its name shall conspicuously include in its service contracts a statement in substantially the following form: "This agreement is not an insurance contract".  (B) A provider or its representative in its service contracts or literature may not make, permit, or cause to be made any false or misleading statement, or deliberately omit any material statement that would be considered misleading if omitted, in connection with the sale, offer to sell, or advertisement of a service contract.  (C) A person such as a bank, savings and loan association, lending institution, manufacturer, or seller of any product shall not require the purchase of a service contract as a condition of a loan or a condition for the sale of any property.  HISTORY: 2000 Act No. 330, Section 2.
 (A) A provider shall maintain accurate accounts, books, and records concerning transactions regulated under this chapter which shall include:  (1) copies of each type of service contract issued;  (2) the name and address of each service contract holder to the extent that the name and address have been furnished by the service contract holder;  (3) a list of the locations where service contracts are marketed, sold, or offered for sale; and  (4) recorded claims files which shall contain at least the dates and description of claims related to the service contracts.  Except as provided in subsection (B), the provider shall retain all records required to be maintained by this section for at least one year after the specified period of coverage has expired.  The records required under this chapter may be, but are not required to be, maintained on a computer disk or other recordkeeping technology. If records are maintained in other than hard copy, the records must be capable of duplication to legible hard copy at the request of the director.  (B) A provider discontinuing business in this State shall maintain its records until it furnishes the director satisfactory proof that it has discharged all obligations to contract holders in this State.  (C) The provider shall make all accounts, books, and records concerning transactions regulated under this chapter, or other pertinent laws, available to the director upon request.  HISTORY: 2000 Act No. 330, Section 2.
 As applicable, an insurer that issued a reimbursement insurance policy may not terminate the policy until a notice of termination in accordance with Chapter 75 of this title has been mailed or delivered to the director. The termination of a reimbursement insurance policy does not reduce the issuer's responsibility for service contracts issued by providers before the date of the termination.  HISTORY: 2000 Act No. 330, Section 2.
 (A) Insurers issuing reimbursement insurance to providers are deemed to have received the premiums for such insurance upon the payment of provider fees by consumers for service contracts issued by such insured providers.  (B) This chapter does not prevent or limit the right of an insurer which issued a reimbursement insurance policy to seek indemnification or subrogation against a provider if the issuer pays, or is obligated to pay, the service contract holder sums that the provider was obligated to pay pursuant to the provisions of the service contract or under a contractual agreement.  HISTORY: 2000 Act No. 330, Section 2.
 As used in this article:  (1) "Accumulated deficit" means the amount that the association's and the fund's liabilities exceed their assets, as reported in the association's and fund's respective most recently reported financial statements on June 30, 2019.  (2) "Association" means any joint underwriting association established by the General Assembly in 1987 and managed and operated pursuant to the provisions of this article.  (3) "Fund" means the Patients' Compensation Fund.  (4) "Future deficit" means any deficit accumulated by the association and fund after the most recently reported financial statements as of June 30, 2019.  (5) "Licensed health care providers" means physicians and surgeons, nurses, oral surgeons, dentists, pharmacists, podiatrists, hospitals, nursing homes, or any similar major category of licensed health care providers. The term "licensed health care provider" also includes blood centers which collect, process, and distribute blood to hospitals and physicians for the care of patients if these blood centers as of July 1, 1997, were insured with the Joint Underwriting Association.  (6) "Medical malpractice insurance" means medical professional liability insurance or insurance protection against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence or malpractice in rendering or failing to render professional service by any licensed physician, licensed health care provider, or hospital.  (7) "Net-direct premiums" means gross-direct premiums written on medical malpractice insurance, medical professional liability insurance, hospital professional liability insurance, and any other type of professional liability insurance covering risks of licensed health care providers and facilities as determined and computed by the director or his designee, less return premiums or the unused or unabsorbed portions of premium deposits. The net-direct premium calculation does not include premiums written by the fund.  HISTORY: 1987 Act No. 155, Section 1; 1988 Act No. 306, Section 1; 1993 Act No. 181, Section 830; 1997 Act No. 62, Section 2; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, inserted (1), relating to "Accumulated deficit" and redesignated (1) as (2); in (2), inserted "by the General Assembly in 1987 and managed and operated"; inserted (3) and (4), relating to the definitions of "Fund" and "Future deficit", and redesignated former (2) to (4) as (5) to (7); in (5), in the first sentence, deleted "chiropractors," following "pharmacists,"; and rewrote (7), relating to the definition of "Net-direct premiums".
 (1) A joint underwriting association (association) is created, containing as members all insurers authorized to write and report net-direct written premiums for medical malpractice insurance, medical professional liability insurance, hospital professional liability insurance, or any other type of professional liability insurance in this State covering the professional liability risks of licensed health care providers. Membership also includes foreign and domestic risk retention groups and captive insurers authorized to write and report net-direct premiums for medical malpractice insurance, medical professional liability insurance, hospital professional liability insurance, or any other type of professional liability insurance in this State covering the professional liability risk of licensed health care providers, and authorized to do business in accordance with the provisions of this title. The South Carolina Insurance Reserve Fund is not a member of the association. Each insurer described above is and must remain a member of the association as a condition of the authorization to transact the sale of insurance in this State. The membership of the association shall continue as members in the South Carolina Medical Malpractice Association upon its creation as provided in Section 38-79-300.  (2) The purpose of the association is to ensure the availability of medical malpractice and other types of professional liability insurance for health care providers on a self-supporting basis to the fullest extent possible. The intent of the General Assembly in enacting this section is to eliminate the accumulated deficit of the association and of the fund and to transition the association over time to a market of last resort so that it is no longer in competition with the private market. Specifically, the General Assembly does not intend that the South Carolina Joint Underwriting Association offer rates that are competitive to the private market.  HISTORY: 1987 Act No. 155, Section 1; 1988 Act No. 306, Section 2; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Editor's Note  2005 Act No. 32, Section 15, provides as follows:  "As a majority of the health care community is insured through the South Carolina Medical Malpractice Joint Underwriting Association and the Patients' Compensation Fund and as it is essential for the General Assembly to understand the effects of changes to tort laws, the South Carolina Department of Insurance is given authority to request data regarding changes in claims practices from the South Carolina Medical Malpractice Joint Underwriting Association and the Patients' Compensation Fund. Such data may include paid claims, paid loss adjustment expense, case reserves, bulk reserves, and claim counts by quarter for the previous five years. The department may make such a request of the South Carolina Medical Malpractice Joint Underwriting Association and the Patients' Compensation Fund and such information must be provided within thirty days.  "The Department of Insurance shall report annually to the Speaker of the House of Representatives, the President Pro Tempore of the Senate, and the Governor as to whether this and other related enactments have resulted in reductions in premiums and as to any other trends of significance which might impact premium cost."  2005 Act No. 32, Section 21(B), provides as follows:  "Upon approval by the Governor, this act takes effect July 1, 2005, for causes of action arising after July 1, 2005, except that as of this act's effective date, the State Treasurer shall relinquish the management of funds in the Patients' Compensation Fund, created pursuant to Section 38-79-420, to the Board of Governors of the fund, and premiums paid on or after this act's effective date must be deposited with the Board of Governors of the fund. The fund must be fully transferred to the Board of Governors, and the State Treasurer may not hold any deposits of the fund as of ninety days after this act's effective date."  Effect of Amendment  2019 Act No. 67, Section 1, rewrote the section, altering the membership of the association.
 (1) As of January 1, 2020, all insurers authorized to write on a direct basis bodily injury liability insurance, other than automobile bodily injury insurance, homeowners liability insurance, an insurer which insures only churches and their property, and farmowners liability insurance including monoline farm liability insurance, including insurers covering such peril in multiple peril package policies and bodily injury insurance, must pay an assessment equal to their proportional share of twenty percent of the accumulated deficit of the association as contained in their most recently reported financial statements as of June 30, 2019, as determined by the director. Each insurer's share of the assessment must be calculated based upon the net-direct written premiums for the insurer's liability lines as identified in this subsection on the most recent year preceding the effective date of this section. All money collected from this assessment must be applied to the accumulated deficit of the association. Each insurer may pay the assessment in one lump sum or, at the insurer's option, in equal installments over a period not to exceed five years. The assessment may be incorporated into the rate filings of the insurer. Upon satisfaction of the assessment, each insurer may withdraw as members of the association upon submission of:  (a) an application for withdrawal in the format prescribed by the director or his designee;  (b) evidence that it has not written any medical malpractice insurance, medical professional liability insurance, hospital professional liability insurance, or any other type of professional liability insurance in this State covering the professional liability risks of licensed health care providers in the consecutive five years preceding the insurer's withdrawal application; and  (c) certification by the association and the director or his designee that all obligations to the association have been fully satisfied.  HISTORY: 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.
 The association, pursuant to the provisions of this article and the approved plan of operation in respect to medical malpractice insurance, has the power on behalf of its members to:  (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages including, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed one million dollars for each claim under one policy and three million dollars for all claims under one policy in any one year; provided, however, that the association may offer higher limits per claim and for all claims under one policy in any one year only upon approval of the board of the association and with the written approval of the director;  (2) underwrite medical malpractice insurance and to adjust and pay losses with respect to it or to appoint service companies to perform those functions; and  (3) cede and assume reinsurance.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2000 Act No. 313, Section 1; 2008 Act No. 348, Section 7, eff June 16, 2008; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, in (1), substituted "one million dollars" for "two hundred thousand dollars", "three million dollars" for "six hundred thousand dollars", "higher limits per" for "policies up to one million dollars for each", "and for all claims" for "under one policy and three million dollars for all claims", and "approval of the director" for "concurrence of the Board of Governors of the South Carolina Patients' Compensation Fund"; and in (2), made a nonsubstantive change.
 (1) The association must operate pursuant to a plan of operation which shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of medical malpractice insurance and may contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of the members to defray losses and expenses, commissions arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association. The plan of operation must be amended within thirty days following the merger provided for in Section 38-79-300. The amended plan must address the orderly and expeditious winding down of the Patients' Compensation Fund.  (2) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend. If there is no accumulated deficit, any profit achieved by the association must be added to the reserves of the association.  (3) The approved plan of operation may make provisions for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that no more than one of the officers or employees of a group may serve as a director at any one time.  (4) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after due notice and public hearing.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, in (1), added the second and third sentences; in (2), added the second sentence; and rewrote (3).
 Any licensed health care provider is entitled to apply to the association for coverage. The application may be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant. If the association determines that the applicant meets the underwriting standards of the association as set forth in the approved plan of operation and there is no unpaid, uncontested premium due from the applicant for any prior insurance of the same kind, the association, upon receipt of the premium, or a portion thereof as prescribed by the plan of operation, shall cause to be issued a policy of medical malpractice liability insurance for a term of one year.  The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this article and to those provisions of Chapter 73 of this title which are not inconsistent with the purposes and provisions of this article.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, in the first undesignated paragraph, in the first sentence, deleted "in a category in which the department has declared an emergency exists" following "Any licensed health care provider".
 HISTORY: Former Section, titled Statistical data and plan, had the following history: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830. Reserved by 2019 Act No. 67, Section 1, eff May 16, 2019.
 In respect to the structuring of rates for medical malpractice liability insurance and the determination of the profit or loss of the association in respect to that insurance, due consideration must be given by the director or his designee to all investment income.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, reenacted the section with no apparent change.
 The association shall submit, for the approval of the director or his designee, all policy forms, classifications, rates, rating plans, or rules applicable to its insurance product offerings to customers in this State. Such filings must be submitted for approval to the director no less than sixty days prior to their intended effective date. The director may extend the time for his review by an additional sixty days to allow the department sufficient time to evaluate the proposed form, classification, rate, rating plan, or rule to be used by the association. Rates must be actuarially sound, self supporting, and may not be excessive, inadequate, or unfairly discriminatory.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, rewrote the section.
 (1) The board of directors shall specify whether policy forms and the rate structure must be on a "claims-made" or "occurrence" basis and coverage may be provided by the association only on the basis specified by the board of directors. The board of directors shall specify the "claims-made" basis only if the contract makes provision for residual "occurrence" coverage upon the retirement, death, disability, or removal from the State of the insured. Provision may be made for a premium charge allocable to any such residual "occurrence" coverage and the premium charges for the residual coverage must be segregated and separately maintained for such purpose which may include the reinsurance of all or a part of that portion of the risk.  (2) The policy may not contain any limitation in relation to the existing law in tort as provided by the statute of limitations of the State of South Carolina.  (3) The policy form whether on a "claims-made" or "occurrence" basis may not require as a condition precedent to settlement or compromise of any claim the consent or acquiescence of the insured. However, such settlement or compromise may never be held or considered to be an admission of fault or wrongdoing by the insured.  (4) The premium rate charged for either or both "claims-made" or "occurrence" coverage must be at rates established on an actuarially sound basis, including consideration of trends in the frequency and severity of losses. After the accumulated deficit has been eliminated, the association must function as a residual market mechanism. After that time, the association may not offer rates competitive with the admitted market but the rates for policies issued by the association must be adequate and established at a level that permits the association to operate as a self-sustaining mechanism.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 1997 Act No. 19, Section 1; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, in (4), in the first sentence, deleted ", and must be calculated to be self-supporting" following "severity of losses", and added the second and third sentences.
 All medical malpractice insurance carriers shall file with the appropriate professional or occupational licensing board all final judgments, settlements, agreements, and awards against any licensee of that board. All information relative to parties involved is and shall remain confidential.  HISTORY: 1988 Act No. 427; 1993 Act No. 181, Section 830.
 The association is authorized to provide a rate increase, assessment as provided in Section 38-79-220 or a combination thereof on policyholders which is subject to the approval of the director, or his designee, to reduce the deficit and to maintain rate adequacy.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019; 2022 Act No. 195 (H.4832), Section 10, eff May 16, 2022.  Effect of Amendment  2019 Act No. 67, Section 1, inserted "on policyholders" following "rate increase or assessment".  2022 Act No. 195, Section 10, rewrote the section.
 Any future deficit must be recouped, pursuant to the plan of operation and the rating plan then in effect, by a rate increase applicable prospectively approved by the director or his designee pursuant to the provisions of Section 38-79-180.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, rewrote the section.
 (1) All members of the association, excluding companies who have withdrawn from the association pursuant to Section 38-79-125, must contribute to the elimination of the association's and fund's accumulated deficit. Beginning on January 1, 2020, a uniform assessment of not less than two percent and not more than six percent of the net-direct written premium must be assessed against each member of the association in order to eliminate the accumulated deficits of the association and the fund. Association members must be notified of the assessment at least sixty days prior to each year end. After each quarter during the year following notification of the assessment, each member of the association must remit an amount equal to the assessment percentage of the previous quarter's direct written premiums. Monies derived from this assessment and collected must be distributed by the association to the accumulated deficits of the association and fund as determined appropriate by the director. Every member must directly recover from each policyholder one percent of the assessment and is authorized to recoup up to the remaining amount if they so choose. Amounts recouped under this section are not premium and are not subject to premium taxes, fees, or commissions. If one deficit is eliminated before the other, all subsequent monies collected must be distributed to the remaining deficit until it is eliminated. Assessments must cease when both accumulated deficits have been fully eliminated or on December 31, 2035, or whichever occurs first. Funds received by the association under this section will not be considered revenue or considered part of their operating income and will only be used to reduce the accumulated deficit.  (2) Beginning on January 1, 2020, a surcharge on premium shall be assessed on association policyholders equal to the assessment percentage amount on members in any given year pursuant to the provisions of Section 38-79-220. Association policyholders will be notified of the surcharge percentage at least sixty days prior to each year end. Surcharges levied under this section are not premiums and are not subject to premium tax, any fees, or any commissions. Monies derived from this assessment and collected under this section must be distributed by the association to the accumulated deficits of the association and fund as determined appropriate by the director. Should one deficit be eliminated before the other deficit, all subsequent monies collected shall be distributed to the remaining deficit until it is eliminated. This surcharge shall cease when the accumulated deficits of both the association and the fund have been fully eliminated or on December 31, 2035, whichever occurs first. Funds received by the association under this section will not be considered revenue or considered part of their operating income and will only be used to reduce the accumulated deficit.  (3) Each member shall remit to the association payment in full of its assessed amount under this section within thirty days of the end of each quarter. If a member fails to remit its assessed amount by the deadline, the association shall report the failure to the director or designee who may immediately take action to suspend or revoke such insurer's certificate of authority to transact the business of insurance in the State of South Carolina or issue a fine on that member until such time as the association certifies to the director or his designee that such assessment has been paid in full. The issuance of a fine, suspension, or revocation of an insurer's certificate of authority to transact business in the State of South Carolina shall not affect the right of the association to proceed against such insurer in any court for any remedy provided by law or contract to the association, including the right to collect such insurer's assessment. In addition to any other remedy, the association may offset assessments due from an insurer against any amounts in any account of such delinquent insurer. By mailing payment of its allocated amount of assessment, as provided herein, a member shall not waive any right it may have to contest the computation of its allocated amount of assessment. Such contest shall not, however, toll the time within which assessments must be paid or the report to be made to the director or his designee or affect or impede any action to be taken by the director or his designee upon receipt of such report.  (4) Beginning January 1, 2020, all surplus lines insurance producers or brokers placing insurance through nonadmitted insurers shall collect from the insured and remit to the department to be distributed to the association and fund a nonadmitted policy surcharge on all premiums for all insurance written by such surplus lines insurance producer or broker for a policy from a nonadmitted insurer for any and all medical malpractice risks in this State. By procuring or selling medical malpractice insurance in this State from a nonadmitted insurer, each surplus lines insurance producer or broker placing insurance through a nonadmitted insurer agrees to be bound by the provisions of this chapter and to collect and remit the nonadmitted policy surcharge provided for herein.  (a) The nonadmitted policy surcharge must be a percentage of the total policy premium, but the nonadmitted policy surcharge shall not be considered premium and is not subject to premium taxes or commissions. However, failure to pay the nonadmitted policy surcharge must be treated the same as failure to pay premium. "Total policy premium" includes taxes and commissions.  (b) The nonadmitted policy surcharge percentage must be the same percentage as the assessment that has been approved by the board and director as applied to the insurers writing medical malpractice insurance, medical professional liability insurance, hospital professional liability insurance, or any other type of professional liability insurance in this State covering the professional liability risks of licensed health care providers as described in Section 38-79-220.  (5) Within thirty days of the end of the quarter, surplus lines insurance producers or brokers placing insurance through nonadmitted insurers shall remit to the department all nonadmitted policy surcharges collected in the preceding quarter. Surplus lines insurance producers or brokers placing insurance through nonadmitted insurers may designate another surplus lines insurance producer or broker that actually procured the insurance from the nonadmitted carrier to collect and remit the nonadmitted policy surcharges.  (6) Each insured in this State who directly procures or renews insurance with a nonadmitted insurer on medical malpractice insurance other than insurance procured through a surplus lines licensee, must be subject to the nonadmitted policy surcharge which must be paid by the insured according to the procedures provided for premium taxes in Chapter 45 of this title.  Monies derived from the nonadmitted policy surcharge collected under this section must exclusively be used to reduce the accumulated deficits of the association and fund by equal amounts unless the director or his designee determines that different proportions are appropriate. Once the accumulated deficit of the association or the fund is eliminated, whichever occurs first, all subsequent monies collected through the assessment shall exclusively be used to reduce the remaining deficit until it has also been eliminated. The nonadmitted policy surcharge must continue until the surcharge provided in subsection (1) is eliminated.  (7) The accumulated deficits of the association and the fund have accrued and persisted over a period of decades and being partially attributable to state agencies or institutions or their employees, until the director determines that the accumulated deficits of the association and the fund have been eliminated, he may receive appropriations that are explicitly provided for purposes of reducing the accumulated deficits of the association and fund.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, rewrote the section.
 Beginning on January 1, 2021, an additional one percent surcharge on the premium must be assessed on association policyholders. The premium surcharge must increase by one additional percentage point annually until it reaches ten percent and does not sunset. Surcharges levied under this section are not premium and therefore not subject to premium taxes, fees, or commissions. Surcharges may not be considered when evaluating whether rates are excessive, adequate, or unfairly discriminatory.  HISTORY: 1987 Act No. 155, Section 1; 1989 Act No. 129, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, rewrote the section.
 Every member of the association is bound by the approved plan of operation of the association, including any amendments made, and by any other rules the board of directors of the association lawfully prescribes.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, substituted "association" for "Association" in three places, and inserted ", including any amendments made,".
 (1) If any member insurer ceases writing business in this State, voluntarily or involuntarily, or by order or authority of the director, the insurer shall continue to be a member of the association until all of its obligations have been satisfied and the director has certified the satisfaction to the association's board.  (2) If a member insurer merges into, acquires, or consolidates with another insurer transacting business subject to this article or if any other insurer or entity has reinsured or assumed a member insurer's entire liability business in this State, the surviving insurer, acquiring insurer, its legal successor, or its assuming reinsurer nonetheless remains liable for the member insurer's obligations in respect to the association.  (3) Any unsatisfied net liability of any insolvent member of the association must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned and the association shall thereupon acquire and have all rights and remedies allowed by law on behalf of the remaining members against the estate or funds of the insolvent insurer for funds due the association.  (4) The State is not responsible for any costs, expenses, liabilities, judgments, or other obligations of the association.  HISTORY: 1987 Act No. 155, Section 1; 1988 Act No. 306, Section 3; 1993 Act No. 181, Section 830; 2000 Act No. 313, Section 3; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, rewrote (1) and (2), and made a nonsubstantive change in (3).
 (1) The provisions of this section only apply until January 1, 2020.  (2) The association is governed by a board of thirteen directors, all of whom must be appointed by the Governor. The Governor shall appoint five health care providers after consultation with the South Carolina Medical Association, the South Carolina Dental Association, and the South Carolina Health Alliance; four insurance representatives after consultation with the insurance industry; one consumer representative who is unaffiliated with the insurance or health care industries or the medical or legal professions; and two licensed insurance agents or brokers. The professional associations listed and the insurance industry may nominate qualified individuals to the Governor for his consideration. The Governor may also receive nominations for appointments to the board from any other individual, group, or association. Notices of vacancies on the board must be published in newspapers of general statewide circulation. The director or his designee shall serve as an ex officio member of the board. The board shall develop a plan of operation which is subject to the approval of the director or his designee as provided in this article. The plan of operation shall provide for staggered terms of the members of the board. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of a group may serve as a director at any one time. The board shall elect a chairman and other necessary officers for two-year terms. A vacancy must be filled for the unexpired portion of the term only. The Governor may receive recommendations from any individual, group, or association for any vacancy on the board. The board must meet at the call of the chairman or a majority of the members of the board, but in any event it must meet at least once a year.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 1997 Act No. 19, Section 2; 2000 Act No. 313, Section 4; 2015 Act No. 64 (H.3772), Section 1, eff June 4, 2015; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2015 Act No. 64, Section 1, deleted the prior fourth to last sentence, relating to reappointment of members.  2019 Act No. 67, Section 1, inserted (1), and inserted the (2) identifier.
 The association shall file a financial statement with the department by March first of each year detailing its transactions, financial condition, operations, and affairs during the previous calendar year. In addition, the director may require the association to file quarterly financial statements with the department on the fifteenth of May, August, and November of each year. The statement shall contain such matters and information as are prescribed by the director or his designee and must be prepared in the format the director prescribes. The director or his designee may require the association to furnish additional information with respect to its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation, and experience of the association.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, rewrote the first sentence, inserted the second sentence, in the third sentence, substituted "must be prepared in the format the director prescribes" for "must be in the form he directs", and in the fourth sentence, deleted ", or at any reasonable time," following "or his designee may".
 The director or his designee shall conduct an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association. The director or his designee may accept an audit of the association performed by a qualified public accounting firm in lieu of conducting his own examination.  HISTORY: 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 830; 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.  Effect of Amendment  2019 Act No. 67, Section 1, in the first sentence, substituted "shall conduct" for "shall make", and added the third sentence.
 (A) No licensed health care provider, as defined in Section 38-79-110, who renders medical services voluntarily and without compensation or the expectation or promise of compensation and seeks no reimbursement from charitable and governmental sources is liable for any civil damages for any act or omission resulting from the rendering of the services unless the act or omission was the result of the licensed health care provider's gross negligence or wilful misconduct. The agreement to provide a voluntary, noncompensated service must be made in writing, which may include use of an electronic medical record device, before rendering service in the case of a nonemergency and may be evidenced by the provider's giving notice in writing, which may include use of an electronic medical record device, to the patient or to the person responsible for the patient's care and acting for the patient that the service being rendered is voluntary and without compensation.  (B) Any licensed health care provider who renders medical services voluntarily and without compensation or the expectation or promise of compensation and seeks no reimbursement from charitable and governmental sources may fulfill one hour of continuing education for each hour of volunteer medical services rendered, up to a maximum of twenty-five percent of the provider's required continuing education credits for the licensure period.  (C) For purposes of this section, a health care provider includes a dentist maintaining a restricted volunteer license pursuant to Section 40-15-177, a practitioner maintaining a special volunteer license pursuant to Section 40-47-34, and a chiropractor maintaining a special volunteer license pursuant to Section 40-9-85.  HISTORY: 1994 Act No. 461, Section 2; 2010 Act No. 153, Section 1, eff May 11, 2010; 2016 Act No. 189 (H.4999), Sections 4, 5, eff May 25, 2016.  Code Commissioner's Note  At the direction of the Code Commissioner, pursuant to the authority to codify permanent law, the provisions of Section 5 of 2016 Act No. 189 were codified as (B) of this Section, and former (B) was redesignated as (C).  Effect of Amendment  2016 Act No. 189, Sections 4, 5, in (A), added the paragraph identifier, and twice inserted "in writing, which may include use of an electronic medical record device,"; and added (B) and (C).
 (A) Effective on January 1, 2020, the Patients' Compensation Fund provided for in Article 5 of this chapter shall merge into the South Carolina Medical Malpractice Association as created by this article. The surviving entity is the Joint Underwriting Association and referred to herein as the South Carolina Medical Malpractice Association. The South Carolina Medical Malpractice Association shall assume all obligations and responsibilities of the Patients' Compensation Fund, while retaining all obligations and responsibilities of the Joint Underwriting Association. However, the accumulated deficits of the former Joint Underwriting Association and the Patients' Compensation Fund must be separately accounted for until such time as the director determines each of them is fully eliminated.  (B) On January 1, 2020, the Board of the Patients' Compensation Fund shall, with oversight of the Department of Insurance, exercise due diligence in providing for the orderly and expeditious winding down of the Patients' Compensation Fund. All outstanding affairs and existing contractual obligations of the Patients' Compensation Fund shall contemporaneously become the responsibility of the South Carolina Medical Malpractice Association on January 1, 2020. After January 1, 2020, the Patients' Compensation Fund shall cease to exist except as required by law for purposes of winding down its affairs.  (C) The Board of Directors of the South Carolina Medical Malpractice Association must:  (1) be appointed on or before January 1, 2020, and is authorized to enter into contracts for the management of the South Carolina Joint Underwriting Association in accordance with governing law;  (2) have the right to attend any regular or special meeting of the Board of Directors of the Joint Underwriting Association or the Board of Governors of the Patients' Compensation Fund, but shall have no vote at these meetings;  (3) replace the existing Board of the Joint Underwriting Association as provided for in Section 38-79-260;  (4) consist of eleven members all appointed by the Governor, as follows:  (a) four medical providers after consultation with the South Carolina Medical Association, the South Carolina Hospital Association, the South Carolina Nurses Association, and the South Carolina Dental Association;  (b) four representatives from the medical malpractice insurance industry representing member companies of the association after consultation with the three largest members;  (c) two consumer representatives;  (d) one independent insurance agent or broker not affiliated with one of the three medical malpractice insurance companies already represented on the board; and  (e) the Director of the Department of Insurance, who serves ex-officio and does not have any voting privileges.  (5) elect other necessary officers for two-year terms after the accumulated deficits of the South Carolina Joint Underwriting Association and the Patients' Compensation Fund are eliminated. The director or his designee shall serve as chairman of the board.  (D) Upon consultation with and consent of the director, the Board of the South Carolina Medical Malpractice Association:  (1) must select a person or firm for the administration and management of the South Carolina Joint Underwriting Association using a competitive bidding process;  (2) is responsible for the negotiation of the administrator's contract including, without limitation, compensation, fees, and the length of the contract; and  (3) shall have the authority to terminate or retain the administrator.  (E) Each member of the Board of the South Carolina Medical Malpractice Association shall serve a term of four years; however, any board member may be reappointed for up to two additional four-year terms. The professional associations listed and the insurance industry may nominate qualified individuals to the Governor for his consideration. The Governor also may receive nominations for appointments to the board from any other individual, group, or association. The South Carolina Medical Malpractice Association and director must publicize all board vacancies to the general public. A vacancy must be filled for the unexpired portion of the term only. The Board of the South Carolina Medical Malpractice Association must meet at the call of the chairman or a majority of the members of the board, but in any event it must meet at least once a year. Any board members of the Joint Underwriting Association or the Patients' Compensation Fund serving at the time of this enactment may be reappointed by the Governor to the Board of the South Carolina Joint Underwriting Association. The prior service of a board member on the Board of the Joint Underwriting Association or Patients' Compensation Fund does not count toward the term limits on members of the Board of the South Carolina Medical Malpractice Association.  (F) Each member of the Board of the South Carolina Medical Malpractice Association has a fiduciary relationship to the organization and must discharge his duties accordingly.  HISTORY: 2019 Act No. 67 (H.3760), Section 1, eff May 16, 2019.
 (A) A person who serves on the Board of the Joint Underwriting Association or the Board of Governors of the Patients' Compensation Fund is prohibited from being employed in any manner or compensated by the Joint Underwriting Association or the Patients' Compensation Fund, and this prohibition continues for one year after the person ceases to be a member of the board.  (B) No provision of this section may be construed to prohibit an insurance agent from selling insurance products from the association or from receiving commissions as a result of selling insurance products from the association.  HISTORY: 2005 Act No. 32, Section 6, eff July 1, 2005, for causes of action arising after that date.
 HISTORY: Former Section 38-79-400, titled Repeal of article, had the following history: 2019 Act No. 67 (H.3760), Section 2, eff May 16, 2019. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-410, titled "Licensed health care providers" defined, had the following history: Former 1976 Code Section 38-59-110 [1976 Act No. 674 Section 1; 1979 Act No. 136 Section 1] recodified as Section 38-79-410 by 1987 Act No. 155, Section 1; 1988 Act No. 432, Section 8. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-420, titled Creation of Patients' Compensation Fund; purpose, had the following history: Former 1976 Code Section 38-59-120 [1976 Act No. 674 Section 2] recodified as Section 38-79-420 by 1987 Act No. 155, Section 1; 1990 Act No. 584, Section 1; 2003 Act No. 73, Section 17, eff June 25, 2003; 2008 Act No. 348, Section 8, eff June 16, 2008. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-430, titled Creation of Board of Governors; members; terms; meetings; plan of operation for fund administration, had the following history: Former 1976 Code Section 38-59-130 [1976 Act No. 674 Section 3; 1977 Act No. 104 Section 3] recodified as Section 38-79-430 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 831; 1997 Act No. 19, Section 3; 2000 Act No. 313, Section 5; 2008 Act No. 348, Section 9, eff June 16, 2008. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-440, titled Participation in Fund, had the following history: Former 1976 Code Section 38-59-140 [1976 Act No. 674, Section 1; 1986 Act No. 443, Section 1] recodified as Section 38-79-440 by 1987 Act No. 155, Section 1. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-450, titled Membership fees and deficit assessments; responsibility of State, had the following history: Former 1976 Code Section 38-59-150 [1976 Act No. 674, Section 5; 1979 Act No. 55; 1986 Act No. 443, Section 2] recodified as Section 38-79-450 by 1987 Act No. 155, Section 1; 2000 Act No. 313, Section 6. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-460, titled Management of fund, had the following history: Former 1976 Code Section 38-59-160 [1976 Act No. 674, Section 6; 1986 Act No. 443, Section 3] recodified as Section 38-79-460 by 1987 Act No. 155, Section 1; 2005 Act No. 32, Section 8, eff July 1, 2005, for causes of action arising after that date. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-470, titled Method of withdrawing funds; audit of Fund; public inspection, had the following history: Former 1976 Code Section 38-59-170 [1976 Act No. 674, Section 7; 1986 Act No. 443, Section 4] recodified as Section 38-79-470 by 1987 Act No. 155, Section 1; 2005 Act No. 32, Section 9, eff July 1, 2005, for causes of action arising after that date; 2005 Act No. 164, Section 10, eff June 10, 2005. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-480, titled Actions for damages, had the following history: Former 1976 Code Section 38-59-180 [1976 Act No. 674, Section 8; 1986 Act No. 443, Sections 5, 6] recodified as Section 38-79-480 by 1987 Act No. 155, Section 1; 2000 Act No. 313, Section 2; 2008 Act No. 348, Section 10, eff June 16, 2008. Repealed as provided by former Section 38-79-400, eff January 1, 2020.  HISTORY: Former Section 38-79-490, titled Judicial review, had the following history: Former 1976 Code Section 38-59-190 [1978 Act No. 645, Section 2; 1986 Act No. 443, Section 7] recodified as Section 38-79-490 by 1987 Act No. 155, Section 1. Repealed as provided by former Section 38-79-400, eff January 1, 2020.
 There is no liability on the part of, and no cause of action of any nature may arise against, any insurer, its officers, its agents, or employees or the director, his designees, or his representatives for any action taken by them in performance of their powers and duties under this chapter.  HISTORY: Former 1976 Code Section 38-61-20 [1977 Act No. 120 Section 2] recodified as Section 38-81-20 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 832.
 The General Assembly declares that there exists the potential for a legal professional liability insurance crisis for attorneys in this State because of the high cost of liability insurance and a want of competition. These conditions could result in a situation in which liability insurance would not be available to attorneys in the State.  The public interest requires that a contingency program for providing legal professional liability insurance be enacted and that the Insurance Department of South Carolina (department) activate this program upon finding that an emergency exists because insurance is not available through normal channels or is not available on a reasonable basis because of lack of competition or otherwise.  HISTORY: 1988 Act No. 360, Section 1; 1993 Act No. 181, Section 832.
 As used in this article:  (1) "Association" means any joint underwriting association established pursuant to this article.  (2) "Legal professional liability insurance" means insurance protection against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of legal service to or representation of any person as the result of negligence or malpractice in rendering or failing to render professional service.  (3) "Net direct premiums" means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee less return premiums or the unused or unabsorbed portions of premium deposits.  HISTORY: 1988 Act No. 360, Section 2; 1993 Act No. 181, Section 832.
 (A) A joint underwriting association is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State.  (B) The purpose of the association is to provide legal professional liability insurance on a self-supporting basis to the fullest extent possible.  (C) The association is activated when the department finds and declares the existence of an emergency because of the unavailability of legal professional liability insurance or the unavailability of such insurance on a reasonable basis through normal channels.  HISTORY: 1988 Act No. 360, Section 3; 1993 Act No. 181, Section 832.
 The association has the power on behalf of its members to:  (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed five million dollars for all claimants under one policy in any one year;  (2) underwrite legal professional liability insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions;  (3) cede and assume reinsurance.  HISTORY: 1988 Act No. 360, Section 4; 1993 Act No. 181, Section 832.
 (A) Not less than thirty nor more than ninety days after the effective date of this article the director or his designee, after consultation with the members of the association, representatives of the public, the South Carolina Bar, and other affected individuals and organizations, shall promulgate a plan of operation consistent with this article. The plan of operation becomes effective and operative no later than thirty days after the declaration of an emergency by the department.  (B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient- provision of legal professional liability insurance and may contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of the members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association.  (C) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend.  (D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing.  HISTORY: 1988 Act No. 360, Section 5; 1993 Act No. 181, Section 832.
 Upon the activation of the plan of operation, any attorney licensed in this State is entitled to apply to the association for coverage. The application may be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant.  If the association determines that the applicant meets the underwriting standards of the association as set forth in the approved plan of operation and there is no unpaid, uncontested premium due from the applicant for any prior insurance of the same kind, the association, upon receipt of the premium, or a portion thereof as prescribed by the plan of operation, shall cause to be issued a policy of legal professional liability insurance for a term of one year.  The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this act and to those provisions of Chapter 73, Title 38, Code of Laws of South Carolina, 1976, which are not inconsistent with this article.  HISTORY: 1988 Act No. 360, Section 6; 1993 Act No. 181, Section 832.
 The director or his designee shall obtain complete statistical data in respect to legal professional liability losses and reparation costs as well as all other costs or expenses which underlie or are related to legal professional liability insurance. The department shall promulgate any statistical plan he considers necessary for the purpose of gathering data referable to loss and loss adjustment expense experience and other expense experience. When the statistical plan is promulgated all members of the association shall adopt and use it. The director or his designee also shall obtain statistical data in respect to the costs of compensating victims of legal professional liability. The director or his designee may require from any person obtaining insurance through the association loss, claim, or expense data. This information or data is confidential and the attorney-client privilege must be preserved.  HISTORY: 1988 Act No. 360, Section 7; 1993 Act No. 181, Section 832.
 In structuring rates for legal professional liability insurance and determining the profit or loss of the association in respect to such insurance, consideration must be given by the director or his designee to all investment income.  HISTORY: 1988 Act No. 360, Section 8; 1993 Act No. 181, Section 832.
 Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to legal professional liability insurance to be written by the association. If the director or his designee disapproves the initial filing, in whole or in part, the association shall amend the filing, in whole or in part, in accordance with the direction of the director or his designee. If the director or his designee is unable to approve the filing or amended filing, within the time specified, he shall promulgate the policy forms, classifications, rates, rating plans, and rules to be used by the association in making rates for and writing the insurance.  HISTORY: 1988 Act No. 360, Section 9; 1993 Act No. 181, Section 832.
 (A) The director or his designee shall specify whether policy forms and the rate structure must be on a "claims-made" or "occurrence" basis and coverage may be provided by the association only on the basis specified by the director or his designee. The director or his designee shall specify the claims-made basis only if the contract makes provision for residual occurrence coverage upon the retirement, death, disability, or removal from the State of the insured. Provision may be made for a premium charge allocable to any residual occurrence coverage and the premium charges for the residual coverage must be segregated and separately maintained for such purpose which may include the reinsurance of all or part of that portion of the risk.  (B) The policy may not contain any limitation in relation to the existing law in tort as provided by the statute of limitations of this State.  (C) The policy form whether on a claims-made or occurrence basis may not require as a condition precedent to settlement or compromise of any claim the consent or acquiescence of the insured. However, such settlement or compromise is not considered an admission of fault or wrongdoing by the insured.  (D) The premium rate charged for either or both claims-made or occurrence coverage must be at rates established on an actuarially sound basis, including consideration of trends in the frequency and severity of losses and must be calculated to be self-supporting.  HISTORY: 1988 Act No. 360, Section 10; 1993 Act No. 181, Section 832.
 The association may provide a rate increase or assessment subject to the approval of the director or his designee.  HISTORY: 1988 Act No. 360, Section 11; 1993 Act No. 181, Section 832.
 Any deficit sustained by the association in any year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures:  (1) an assessment upon the policyholders, which may not exceed one additional annual premium at the then current rate;  (2) a rate increase applicable prospectively.  HISTORY: 1988 Act No. 360, Section 12; 1993 Act No. 181, Section 832.
 After the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting.  If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-81-320, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided for in Section 38-81-340. Any such contribution must be reimbursed to the members following recoupment as provided in Section 38-81-320.  HISTORY: 1988 Act No. 360, Section 13; 1993 Act No. 181, Section 832.
 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 department. 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 director or his designee, 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 director or his designee 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 director or his designee 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.  HISTORY: 1988 Act No. 360, Section 14; 1989 Act No. 129, Section 2; 1993 Act No. 181, Section 832.
 Every member of the association is bound by the approved plan of operation of the association and the rules of the board of directors of the association.  HISTORY: 1988 Act No. 360, Section 15; 1993 Act No. 181, Section 832.
 (A) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the director or his designee has so found and certified to the board of directors.  (B) If a member insurer merges into or consolidates with another insurer authorized to transact insurance in this State or another insurer authorized to transact insurance in this State has reinsured the insurer's entire general liability business in this State, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association.  (C) Any unsatisfied net liability of any insolvent member of the association must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned and the association shall acquire and have all rights and remedies allowed by law in behalf of the remaining members against the estate or funds of the insolvent insurer for funds due the association.  HISTORY: 1988 Act No. 360, Section 16; 1993 Act No. 181, Section 832.
 The association is governed by a board of seven directors, one of whom is appointed by the Governor to represent the general public and three of whom are members of the South Carolina Bar appointed by the Governor. Three directors are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups or voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of such a group may serve as a director at any one time. The insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the board of directors. The board shall elect a chairman and other necessary officers.  HISTORY: 1988 Act No. 360, Section 17; 1993 Act No. 181, Section 832; 1998 Act No. 411, Section 8.
 Any applicant for insurance through the association, any person insured pursuant to this article, or his representative, or any insurer adversely affected, or claiming to be adversely affected, by any ruling, action, or decision by or on behalf of the association, may appeal to the director or his designee within thirty days after the ruling, action, or decision.  HISTORY: 1988 Act No. 360, Section 18; 1993 Act No. 181, Section 832.
 The association shall file in the office of the department annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain information prescribed by the director or his designee and must be in the form he directs.  The director or his designee, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.  HISTORY: 1988 Act No. 360, Section 19; 1993 Act No. 181, Section 832.
 The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association.  HISTORY: 1988 Act No. 360, Section 20; 1993 Act No. 181, Section 832.
 As used in this chapter:  (1) "Association" means any joint underwriting association established pursuant to this chapter.  (2) "Professional liability insurance" means insurance protection against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of service to or representation of any person as the result of negligence or malpractice in rendering or failing to render a professional service.  (3) "Net direct premiums" means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee less return premiums or the unused or unabsorbed portions of premium deposits.  HISTORY: 1987 Act No. 62, Section 2; 1993 Act No. 181, Section 833.
 The association may provide a rate increase or assessment subject to the approval of the director or his designee.  HISTORY: 1987 Act No. 62, Section 11; 1993 Act No. 181, Section 833.
 Any deficit sustained by the association in any year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures:  (1) an assessment upon the policyholders, which may not exceed one additional annual premium at the then current rate;  (2) a rate increase applicable prospectively.  HISTORY: 1987 Act No. 62, Section 12; 1993 Act No. 181, Section 833.
 After the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting.  If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-83-110, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided for in Section 38-83-130. Any such contribution must be reimbursed to the members following recoupment as provided in Section 38-83-110.  HISTORY: 1987 Act No. 62, Section 13; 1993 Act No. 181, Section 833.
 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 Department of Insurance. 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 director or his designee, 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 director or his designee 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 director or his designee 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.  HISTORY: 1987 Act No. 62, Section 14; 1989 Act No. 129, Section 3; 1993 Act No. 181, Section 833.
 Every member of the association is bound by the approved plan of operation of the association and the rules of the board of directors of the association.  HISTORY: 1987 Act No. 62, Section 15; 1993 Act No. 181, Section 833.
 (A) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the director or his designee has so found and certified to the board of directors.  (B) If a member insurer merges into or consolidates with another insurer authorized to transact insurance in this State or another insurer authorized to transact insurance in this State has reinsured the insurer's entire general liability business in this State, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association.  (C) Any unsatisfied net liability of any insolvent member of the association must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned and the association shall acquire and have all rights and remedies allowed by law in behalf of the remaining members against the estate or funds of the insolvent insurer for funds due the association.  HISTORY: 1987 Act No. 62, Section 16; 1993 Act No. 181, Section 833.
 Each joint underwriting association is governed by a board of seven directors, one of whom is appointed by the Governor to represent the general public and four of whom are appointed by the Governor and represent professionals covered under the association. Two directors are the Chairman of the Labor, Commerce and Industry Committee of the House of Representatives or his designee and the Chairman of the Banking and Insurance Committee of the Senate or his designee, both of whom shall serve ex officio. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of such a group may serve as a director at any one time. The Director of the Department of Insurance is chairman of the board of directors, ex officio, and he, or his designee, must preside at all meetings of the board but has no vote except in the case of a tie.  HISTORY: 1987 Act No. 62, Section 17; 1993 Act No. 181, Section 833.
 Any applicant for insurance through the association, any person insured pursuant to this chapter, or his representative, or any insurer adversely affected, or claiming to be adversely affected, by any ruling, action, or decision by or on behalf of the association, may appeal to the director or his designee within thirty days after the ruling, action, or decision.  HISTORY: 1987 Act No. 62, Section 18; 1993 Act No. 181, Section 833.
 The association shall file in the office of the Department of Insurance annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain information prescribed by the director or his designee and must be in the form he directs.  The director or his designee, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.  HISTORY: 1987 Act No. 62, Section 19; 1993 Act No. 181, Section 833.
 The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the Department of Insurance, the Governor, and the General Assembly. The expenses of the examination must be paid by the association.  HISTORY: 1987 Act No. 62, Section 20; 1993 Act No. 181, Section 833.  
 (A) A joint underwriting association is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State.  (B) The purpose of the association is to provide professional liability insurance on a self-supporting basis to the fullest extent possible.  (C) The association is activated when the department of Insurance finds and declares the existence of an emergency because of the unavailability of professional liability insurance or the unavailability of such insurance on a reasonable basis through normal channels.  HISTORY: 1987 Act No. 62, Section 3; 1993 Act No. 181, Section 833.
 The association has the power on behalf of its members to:  (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed five million dollars for all claimants under one policy in any one year;  (2) underwrite professional liability insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions;  (3) cede and assume reinsurance.  HISTORY: 1987 Act No. 62, Section 4; 1993 Act No. 181, Section 833.
 (A) Upon application by the members of a professional association seeking creation of a joint underwriting association, the Department of Insurance shall promulgate a plan of operation consistent with this chapter. The plan of operation is operative no later than thirty days after the declaration of an emergency by the Department of Insurance.  (B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of professional liability insurance and may contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of the members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association.  (C) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend but under no circumstances whatsoever shall any profit be paid over to or received by an insurer either in currency or any other benefit of any kind.  (D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing.  HISTORY: 1987 Act No. 62, Section 5; 1993 Act No. 181, Section 833.
 Upon the activation of the plan of operation, any professional licensed in this State is entitled to apply to the association for coverage. The application shall be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant.  If the association determines that the applicant meets the underwriting standards of the association as set forth in the approved plan of operation and there is no unpaid, uncontested premium due from the applicant for any prior insurance of the same kind, the association, upon receipt of the premium, or a portion thereof as prescribed by the plan of operation, shall cause to be issued a policy of professional liability insurance for a term of one year.  The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this chapter and to those provisions of Chapter 73, Title 38, Code of Laws of South Carolina, 1976, which are not inconsistent with this chapter.  HISTORY: 1987 Act No. 62, Section 6; 1993 Act No. 181, Section 833.
 The director or his designee shall obtain complete statistical data in respect to professional liability losses and reparation costs as well as all other costs or expenses which underlie or are related to professional liability insurance. The Department of Insurance shall promulgate any statistical plan he considers necessary for the purpose of gathering data referable to loss and loss adjustment expense experience and other expense experience. When the statistical plan is promulgated all members of the association shall adopt and use it. The director or his designee also shall obtain statistical data in respect to the costs of compensating victims of professional liability. The director or his designee may require from any person obtaining insurance through the association loss, claim, or expense data.  HISTORY: 1987 Act No. 62, Section 7; 1993 Act No. 181, Section 833.
 In structuring rates for professional liability insurance and determining the profit or loss of the association in respect to such insurance, consideration must be given by the director or his designee to all investment income so that investment income is a part of the rate-making and setting process.  HISTORY: 1987 Act No. 62, Section 8; 1993 Act No. 181, Section 833.
 Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to professional liability insurance to be written by the association. If the director or his designee disapproves the initial filing, in whole or in part, the association shall amend the filing, in whole or in part, in accordance with the direction of the director or his designee. If the director or his designee is unable to approve the filing or amended filing, within the time specified, he shall promulgate the policy forms, classifications, rates, rating plans, and rules to be used by the association in making rates for and writing the insurance.  HISTORY: 1987 Act No. 62, Section 9; 1993 Act No. 181, Section 833.
 (A) Policy forms and rate structure must be on an occurrence basis and coverage provided by the association only on that basis.  (B) The policy may not contain any limitation in relation to the existing law in tort as provided by the statute of limitations of this State.  (C) The policy form shall not require as a condition precedent to settlement or compromise of any claim the consent or acquiescence of the insured. However, such settlement or compromise is not considered an admission of fault or wrongdoing by the insured.  (D) The premium rate charged for coverage must be at rates established on an actuarially sound basis, including consideration of trends in the frequency and severity of losses and must be calculated to be self-supporting.  HISTORY: 1987 Act No. 62, Section 10; 1993 Act No. 181, Section 833.
 This chapter applies to:  (1) all consolidations, whether the old coverage is provided under an individual or group policy;  (2) all mortgage insurance offered, issued, or delivered in this State, by mail or otherwise, in connection with consolidations.  HISTORY: 1988 Act No. 382, Section 2.
 In this chapter, unless the context clearly indicates otherwise:  (1) "Consolidation" means any transaction in which a financial institution makes its premium collection services available to its mortgage debtors in connection with a particular insurer's offer of mortgage insurance, which offer is made to debtors who, immediately prior to the offer, had mortgage insurance and were paying premiums for that insurance with their monthly mortgage payments.  (2) "Financial institution" or "servicer" means any entity or organization that services mortgage loans by collecting and accounting for monthly mortgage payments.  (3) "Loan transfer" means a transaction in which the servicing of a block of mortgage loans is transferred from one servicer to another.  (4) "Loan transfer consolidation" means a consolidation involving debtors whose mortgage loans have been transferred from one servicer to another.  (5) "Mortgage" or "mortgage loan" means an indebtedness which is secured by real estate and which is not subject to the South Carolina Consumer Protection Code (Title 37 of the 1976 Code).  (6) "Mortgage insurance" means life, accidental death, or disability insurance, or any combination of these, designed to pay off all or a part of the mortgage loan in the event of the insured's death or disability.  (7) "New coverage" or "new plan" means the mortgage insurance coverage or mortgage insurance plan sponsored by the financial institution in connection with a consolidation.  (8) "Old coverage" or "old plan" means the mortgage insurance coverage or mortgage insurance plan the insured debtor had or participated in immediately prior to the consolidation.  HISTORY: 1988 Act No. 382, Section 2.
 (A) No insurer may participate in any consolidation, other than a loan transfer consolidation, unless it complies with the following requirements:  (1) The offer of new coverage must be made to the mortgage debtors not less than thirty days prior to the proposed effective date of the new coverage.  (2) In conjunction with the offer of new coverage, the new insurer shall disclose in writing to each debtor the following:  (a) that the insured debtor may have the right to continue or convert his old coverage by paying premiums directly to the old insurer;  (b) that the offer of new coverage is not conditioned upon either the termination or replacement of the old coverage;  (c) the name and address of the old and the new insurer;  (d) the effective date of the new coverage;  (e) that the financial institution is the primary beneficiary of the new coverage;  (f) whether premium rates under the new plan are guaranteed;  (g) material differences between the new plan and the old plan;  (h) that payment of the required premium constitutes acceptance of the new coverage.  (B) An insurer which fails to comply with item (1) of subsection (A) of this section shall notify the debtor, in writing, that he has the right to an unconditional refund of all premiums paid for the new coverage as long as he exercises that right, in writing, within thirty days from the notification.  (C) Disclosures required under this section may be made on behalf of the new insurer by the financial institution.  HISTORY: 1988 Act No. 382, Section 2.
 The following provisions apply to loan transfer consolidations:  (1) An offer of new coverage must be made as soon as reasonably possible after the loan transfer. If an offer of new coverage is not made within thirty days after the loan transfer, or at least thirty days prior to the proposed effective date of the new coverage, the insurer shall notify the debtor, in writing, that he has the right to an unconditional refund of all premiums paid for the new coverage as long as he exercises that right, in writing, within thirty days from the date of the notification.  (2) In conjunction with the offer of new coverage, the new insurer shall disclose in writing to each debtor the following:  (a) that the insured debtor may have the right to continue or convert his old coverage by paying premiums directly to the old insurer;  (b) that the offer of new coverage is not conditioned upon either the termination or replacement of the old coverage;  (c) the name and address of the new insurer;  (d) the effective date of the new coverage;  (e) that the financial institution is the primary beneficiary of the new coverage;  (f) whether premium rates under the new plan are guaranteed;  (g) a description of the benefits provided under the new plan;  (h) that payment of the required premium constitutes acceptance of the new coverage.  (3) Disclosures required under this section may be made on behalf of the new insurer by the new servicer.  HISTORY: 1988 Act No. 382, Section 2.
 No insurer may participate in any consolidation, including loan transfer consolidations, unless it complies with the following requirements:  (1) A group certificate must be delivered to each debtor insured under the new plan. The group certificate shall include the following information:  (a) the name or names of the single or joint insureds;  (b) identification of the insured mortgage;  (c) the amount of insurance under the new plan;  (d) the premium for the new coverage;  (e) the effective date of the new coverage;  (f) the beneficiary for the new coverage.  (2) A group certificate evidencing the new coverage may not include a contestability clause or, in the case of mortgage life insurance, a provision excluding suicide.  (3) The new coverage offered to the debtor must be the same type of coverage as the old coverage.  (4) Notwithstanding the provisions of Section 38-65-210, all group mortgage life insurance certificates shall include a conversion privilege permitting an insured debtor to convert, without evidence of insurability, to an individual policy of decreasing term insurance within thirty days of the date the insured debtor's group coverage is terminated for any reason other than the nonpayment of premiums. The initial amount of coverage under the individual policy must be an amount equal to the amount of coverage terminated under the group policy and must decrease over a term that corresponds with the scheduled term of the insured debtor's mortgage loan.  (5) Whenever the offer of coverage under the new plan is based on the same premium as charged under the old plan, all supplemental benefits provided by the old plan must be provided by the new plan.  HISTORY: 1988 Act No. 382, Section 2.
 If an insurer charges debtors the same premium for the new coverage that they were paying for the old coverage, and, as a result, insured debtors of a financial institution are charged different premium rates for the same coverage, the rate differences do not constitute unfair discrimination under Sections 38-55-50 and 38-57-120, so long as all the applicable requirements of this chapter are met.  HISTORY: 1988 Act No. 382, Section 2.
 No group policy or group certificate of mortgage insurance used in connection with a consolidation, nor any application, endorsement, or rider which becomes a part of any such group policy or certificate, may be issued or delivered in this State until a copy of the form has been filed with and approved by the director or his designee.  HISTORY: 1988 Act No. 382, Section 2; 1993 Act No. 181, Section 834.
 The department is authorized to promulgate regulations to implement this chapter.  HISTORY: 1988 Act No. 382, Section 2; 1993 Act No. 181, Section 835.  
 The purpose of this chapter is to regulate the formation and operation of risk retention groups and purchasing groups in this State formed pursuant to the provisions of the Federal Liability Risk Retention Act of 1986 to the extent permitted by that law.  HISTORY: 1988 Act No. 355, Section 1.
 Premium taxes and other taxes on premiums paid for coverage of risks resident or located in this State by a purchasing group or any members of the purchasing group are imposed and must be paid as follows:  (1) If the insurer is an admitted insurer, taxes are imposed on the insurer at the same rate and in the same manner and subject to the same procedures, interest, and penalties as that applicable to premium taxes and other taxes imposed on other admitted liability insurers relative to coverage of risks resident or located in this State.  (2) If the insurer is an approved nonadmitted surplus lines insurer, taxes are imposed on the licensed broker who effected coverage on risks resident or located in this State at the same rate and in the same manner and subject to the same procedures, interest, and penalties as that applicable to taxes imposed on other licensed brokers effecting coverage with approved nonadmitted surplus lines insurers on risks resident or located in this State.  HISTORY: 1988 Act No. 355, Section 1.
 (A) The director or his designee is authorized to use any power established under this title to enforce the insurance laws of this State not specifically preempted by the Liability Risk Retention Act of 1986, including, but without limitation, the administrative authority of the director or his designee to investigate, issue subpoenas, conduct depositions and hearings, issue orders, impose monetary penalties, and seek injunctive relief. With regard to any investigation, administrative proceedings, or litigation, the director or his designee may rely on the procedural laws of this State.  (B) Whenever the director or his designee determines that any person, risk retention group, purchasing group, or insurer of a purchasing group has violated, is violating, or is about to violate any provision of this chapter or any other insurance law of this State applicable to such person or entity, or has failed to comply with a lawful order of his, he may, in addition to any other lawful remedies or penalties, cause a complaint to be filed in the Court of Common Pleas for Richland County to enjoin and restrain such person, risk retention group, purchasing group, or insurer from engaging in such violation, or to compel compliance with such order of the director or his designee. The court has jurisdiction of the proceeding and has the power to enter a judgment and order for injunctive or other relief. In any action by the director or his designee under this subsection, service of process must be made upon the Secretary of State, who shall forward the order, pleadings, or other process to the person, risk retention group, purchasing group, or insurer in accordance with the procedures specified in Section 38-25-510. Nothing herein may be construed to limit or abridge the authority of the director or his designee to seek injunctive relief in any district court of the United States as provided in Section 38-87-130.  HISTORY: 1988 Act No. 355, Section 1; 1993 Act No. 181, Section 843.
 (A) Risk retention group. No person may act or aid in any manner in soliciting, negotiating, or procuring liability insurance in this State from a risk retention group unless such person is licensed as an insurance agent for the risk retention group in accordance with Chapter 43 of this title or is licensed as a broker in accordance with Chapter 45.  (B) Purchasing groups.  (1) No person may act or aid in any manner in soliciting, negotiating, or procuring liability insurance in this State for a purchasing group from an authorized insurer or a risk retention group chartered in a state unless such person is licensed as an insurance agent for the insurer or risk retention group in accordance with Chapter 43 of this title or is licensed as a broker in accordance with Chapter 45 of this title.  (2) No person may act or aid in any manner in soliciting, negotiating, or procuring liability insurance coverage in this State for any member of a purchasing group under a purchasing group's policy unless such person is licensed as an insurance agent for the insurer in accordance with Chapter 43 of this title or is licensed as a broker in accordance with Chapter 45 of this title.  (3) No person may act or aid in any manner in soliciting, negotiating, or procuring liability insurance from an approved nonadmitted surplus lines insurer on behalf of a purchasing group located in this State unless such person is licensed as a broker in accordance with Chapter 45 of this title.  (C) For purposes of acting as an agent or broker for a risk retention group or purchasing group pursuant to Subsections (A) and (B) of this section, the requirement of residence in this State does not apply.  (D) Every person licensed as an agent or broker as required in this section, on business placed with risk retention groups or written through a purchasing group, shall inform each prospective insured of the provisions of the notice required by Section 38-87-40(7) in the case of a risk retention group and Section 38-87-90(A) in the case of a purchasing group.  HISTORY: 1988 Act No. 355, Section 1.
 An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance or operating in any state, or in all states or in any territory or possession of the United States, upon a finding that such a group is in hazardous financial or financially impaired condition is enforceable in the courts of this State.  HISTORY: 1988 Act No. 355, Section 1.
 The department may promulgate regulations necessary to carry out the provisions of this chapter.  HISTORY: 1988 Act No. 355, Section 1; 1993 Act No. 181, Section 844.  
 As used in this chapter:  (1) "Commissioner" means the commissioner, director, or superintendent of insurance in a state. "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the South Carolina Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the Insurance Department.  (2) "Completed operations liability" means liability arising out of the installation, maintenance, or repair of any product at a site which is not owned or controlled by:  (a) any person who performs that work; or  (b) any person who hires an independent contractor to perform that work; but includes liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability;  (3) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, means:  (a) for a corporation, the state in which the purchasing group is incorporated; and  (b) for an unincorporated entity, the state of its principal place of business;  (4) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:  (a) to meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or  (b) to pay other obligations in the normal course of business;  (5) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this State;  (6) "Liability":  (a) means legal liability for damages (including costs of defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:  (i) any business (whether profit or nonprofit), trade, product, services (including professional services), premises, or operations; or  (ii) any activity of any state or local government, or any agency or political subdivision thereof; and  (b) does not include personal risk liability and an employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act (45 U.S.C. 51 et seq.);  (7) "Personal risk liability" means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in item (6);  (8) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group including, at a minimum:  (a) information sufficient to verify that its members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;  (b) for each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;  (c) historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available;  (d) pro forma financial statements and projections;  (e) appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;  (f) identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies, and reinsurance agreements;  (g) identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license, and a description of its status in each such state; and  (h) such other matters as may be prescribed by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state;  (9) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred;  (10) "Purchasing group" means any group which:  (a) has as one of its purposes the purchase of liability insurance on a group basis;  (b) purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in item (10)(c);  (c) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and  (d) is domiciled in any state;  (11) "Risk retention group" means any corporation or other limited liability association:  (a) whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group members;  (b) which is organized for the primary purpose of conducting the activity described under item (11)(a);  (c) which:  (i) is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or  (ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group must be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Liability Risk Retention Act of 1986);  (d) which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;  (e) which:  (i) has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or  (ii) has as its sole owner an organization which has as  (A) its members only persons who comprise the membership of the risk retention; and  (B) its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group;  (f) whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;  (g) whose activities do not include the provision of insurance other than:  (i) liability insurance for assuming and spreading all or any portion of the liability of its group members; and  (ii) reinsurance with respect to the liability of any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in item (f) of this section for membership in the risk retention group which provides such reinsurance; and  (h) the name of which includes the phrase "Risk Retention Group";  (12) "State" means any state of the United States or the District of Columbia.  HISTORY: 1988 Act No. 355, Section 1; 1993 Act No. 181, Sections 836-838.
 (A) A risk retention group, pursuant to the provisions of this title, must be chartered and licensed to write only liability insurance under this chapter and, except as provided elsewhere in this chapter, or Chapter 90 for a risk retention group licensed as a captive insurance company, shall comply with all of the laws, regulations, and requirements applicable to these insurers chartered and licensed in this State and with Section 38-87-40 to the extent these requirements are not a limitation on laws, regulations, or requirements of this State.  (B) Before it may offer insurance in any state, each risk retention group chartered in this State shall submit for approval to the director or his designee of this State a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten days of any such change. The group may not offer any additional kinds of liability insurance, in this State or in any other state, until a revision of such plan or study is approved by the director or his designee.  (C) At the time of filing its application for charter, the risk retention group shall provide to the director or his designee in summary form the following information: the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the director or his designee may forward such information to the National Association of Insurance Commissioners. Providing notification to the National Association of Insurance Commissioners is in addition to, and is not sufficient to satisfy, the requirements of Section 38-87-40 or any other provision of this chapter.  (D)(1) As used in this section:  (a) "Board" means the governing body of the risk retention group elected by the shareholders or members to establish policy, elect or appoint officers and committees, and make other governing decisions.  (b) "Director" means a natural person designated in the articles of the risk retention group or designated, elected, or appointed by any other manner, name, or title to act as a director.  (c) "Disclose" means to make information available through electronic or other means and to provide the information to members and insureds upon request.  (d) "Domestic regulator" means the Director of the South Carolina Department of Insurance or the director's designee.  (e) "Material relationship" means a relationship between a person with the risk retention group including, but not limited to:  (i) the receipt in any one twelve-month period of compensation or payment of any other item of value by the person, a member of his immediate family or a business with which he is affiliated from the risk retention group or a consultant or service provider to the risk retention group that is greater than or equal to five percent of the risk retention group's gross written premium for this twelve-month period or two percent of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in this twelve-month period. The person or his immediate family member is not independent until one year after the compensation from the risk retention group falls below the threshold;  (ii) a relationship with an auditor in which a director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one year after the end of the affiliation, employment or auditing relationship; or  (iii) a relationship with a related entity in which a director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one year after the end of the service or the employment relationship.  (f) "Service providers" means captive managers, auditors, accountants, actuaries, investment advisors, lawyers, managing general underwriters, or other parties responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims, or the preparation of financial statements. This term does not include lawyers who serve as defense counsel retained by the risk retention group to defend claims unless the amount of fees paid to these lawyers are greater than or equal to five percent of the risk retention group's gross written premium for the previous twelve-month period or two percent of its surplus, whichever is greater as measured at the end of any fiscal quarter falling in this twelve-month period.  (2)(a) The board of the risk retention group shall have a majority of independent directors. If the risk retention group is reciprocal, then the attorney-in-fact would be required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group's board and subscribers advisory committee under these standards. To the extent permissible under state law, service providers of a reciprocal risk retention group shall contract with the risk retention group and not the attorney-in-fact.  (b) A director does not qualify as independent unless the board affirmatively determines that he has no material relationship with the risk retention group. Each risk retention group annually shall disclose these determinations to its domestic regulator. For this purpose, a person who is a direct or indirect owner or a subscriber in the risk retention group, or is an officer, director, or employee of an owner and insured, unless some other position of the officer, director, or employee constitutes a material relationship, as contemplated by Section 3901(a)(4)(E)(ii) of the Liability Risk Retention Act, is considered to be independent.  (3)(a) The term of a material service provider contract with the risk retention group must not exceed five years. The contract, or its renewal, must require the approval of the majority of the risk retention group's independent directors. The risk retention group's board may terminate a service provider, contract, audit contract, or actuarial contract at any time for cause after providing adequate notice as defined in the contract. The service provider contract is considered material if the amount to be paid for the contract is greater than or equal to five percent of the risk retention group's annual gross written premium or two percent of its surplus, whichever is greater.  (b) A service provider contract meeting the definition of material relationship contained in this section may not be entered unless the risk retention group has notified the domestic regulator in writing of its intention to enter into the transaction at least thirty days prior and the domestic regulator has not disapproved it within the period.  (4) The risk retention group's board shall adopt and approve a written policy in the plan of operation that requires the board to:  (a) assure all owners and insureds of the risk retention group receive evidence of ownership interest;  (b) develop a set of governance standards applicable to the risk retention group;  (c) oversee the evaluation of the risk retention group's management including, but not limited to, the performance of the captive manager, managing general underwriter, or other party responsible for underwriting, determination of rates, collection of premiums, adjusting or settling claims, or the preparation of financial statements;  (d) review and approve the amount to be paid for all material service providers; and  (e) review and approve, at least annually, the:  (i) risk retention group's goals and objectives relevant to the compensation of officers and service providers;  (ii) officers and service providers, performance in light of those goals and objectives; and  (iii) continued engagement of the officers and material service providers.  (5) The board shall adopt and disclose governance standards by making the following information available through electronic or other means and providing this information to members and insureds upon request:  (a) the process by which the directors are elected by the owner and insureds;  (b) director qualification standards;  (c) director responsibilities;  (d) director access to management and, as necessary and appropriate, independent advisors;  (e) director compensation;  (f) director orientation and continuing education;  (g) the policies and procedures for management succession; and  (h) the policies and procedures for annual performance evaluation of the board.  (6) The board shall adopt and disclose a code of business conduct and ethics for directors, officers, and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers, including:  (a) conflicts of interest;  (b) matters covered under the corporate opportunities doctrine under the state of domicile;  (c) confidentiality;  (d) fair dealing;  (e) protection and proper use of risk retention group assets;  (f) compliance with all applicable laws, rules, and regulations; and  (g) requiring the reporting of any illegal or unethical behavior which affects the operation of the risk retention group.  (7) The audit provisions of S.C. Code of Regulations 69-70 related to audit committees apply to risk retention groups.  (8) The captive manager, president, or chief executive officer of the risk retention group promptly shall notify the domestic regulator in writing if he becomes aware of any material noncompliance with any of these governance standards.  (9) All existing risk retention groups must be in compliance with the governance standards contained in this section by January 1, 2018. New risk retention groups licensed after January 1, 2017, must be in compliance with the standards at the time of licensure.  HISTORY: 1988 Act No. 355, Section 1; 1993 Act No. 181, Section 839; 2004 Act No. 291, Section 14, eff July 29, 2004; 2016 Act No. 191 (S.978), Section 2, eff January 1, 2017.  Effect of Amendment  2016 Act No. 191, Section 2, added (D).
 Risk retention groups chartered and licensed in states other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows:  (1) Notice of Operations and Designation of director or his designee as Agent.  (a) Before offering insurance in this State, a risk retention group shall submit to the director or his designee:  (i) a statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, charter date, its principal place of business, and such other information, including information on its membership, as the director or his designee of this State may require to verify that the risk retention group is qualified under Section 38-87-20(11);  (ii) a copy of its plan of operations or feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed; however, the provision relating to the submission of a plan of operation or feasibility study does not apply with respect to any line or classification of liability insurance which:  (A) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986; and  (B) was offered before such date by any risk retention group which had been chartered and operating for not less than three years before such date.  (b) The risk retention group shall submit a copy of any material revision to its plan of operation or feasibility study required by Section 38-87-30(B) within thirty days of the date of approval of the revision by the commissioner of its chartering state, or within thirty days of filing if no approval is required.  (c) A statement of registration and a notice designating the commissioner as agent for the purpose of receiving service of legal documents or process must be submitted on such forms as the director or his designee may prescribe or approve.  (d) Annual license fees, equal to the license fees required of an admitted liability insurer licensed to transact business in this State, must be paid in this State.  (2) Financial Condition. Any risk retention group doing business in this State shall submit to the director or his designee:  (a) a copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which must be certified by an independent public accountant and shall contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a loss reserve specialist qualified under such criteria as the director or his designee may prescribe or approve;  (b) a copy of each examination of the risk retention group as certified by the commissioner of its chartering state or other public official conducting the examination;  (c) upon request by the director or his designee, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group;  (d) such information as may be required to verify its continuing qualification as a risk retention group under Section 38-87-20(11).  (3) Taxation.  (a) Each risk retention group is liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State and shall report to the director or his designee the net premiums written for risks resident or located within this State. Such risk retention group is subject to taxation, including any applicable fines and penalties related thereto, on the same basis as an admitted insurer.  (b) To the extent licensed agents or brokers are utilized pursuant to Section 38-87-120, they shall report to the department the premiums for direct business for risks resident or located within this State which such licensees have placed with or on behalf of a risk retention group not chartered in this State.  (c) To the extent that insurance agents or brokers are utilized pursuant to Section 38-87-120, such agent or broker shall keep a complete and separate record of all policies procured from each such risk retention group, which record must be open to examination by the director or his designee or his representative on demand. These records shall, for each policy and each kind of insurance provided thereunder, include the following:  (i) the limit of liability;  (ii) the time period covered;  (iii) the effective date;  (iv) the name of the risk retention group which issued the policy;  (v) the gross premium charged;  (vi) the amount of return premiums, if any;  (vii) such additional information as the director or his designee may require.  (4) Compliance with Claims Settlement Practices Laws. Every risk retention group, its agents, and its representatives shall comply with the claims settlement practices laws of this State, including, but not limited to, Section 38-57-70, Chapter 59 of Title 38, and such other provisions relative to claims settlement practices required by law.  (5) Deceptive, False, or Fraudulent Practices. Every risk retention group shall comply with the laws of this State regarding deceptive, false, or fraudulent acts or practices, including, but not limited to, Chapter 57 of this title and such other provisions relative to deceptive, false, or fraudulent practices required by law.  (6) Examination Regarding Financial Condition. A risk retention group shall submit to an examination by the director or his designee to determine its financial condition if the director or his designee of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty days after a request by the director or his designee of this State. The examination must be coordinated to avoid unjustified repetition and must be conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioners' Examiner's Handbook.  (7) Notice to Purchasers. Every application form for insurance from a risk retention group, and every policy (on its front and declaration pages) issued by a risk retention group, must contain in ten point type the following notice:  NOTICE  This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.  (8) Prohibited Acts Regarding Solicitation or Sale. The following acts by a risk retention group are prohibited:  (a) the solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in the group;  (b) the solicitation or sale of insurance by, or operation of, a risk retention group that is in hazardous financial condition or financially impaired.  (9) Prohibition on Ownership by an Insurance Company. No risk retention group is allowed to do business in this State if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies.  (10) Prohibited Coverage. The terms of any insurance policy issued by any risk retention group may not provide, or be construed to provide, coverage prohibited generally by statute of this State or declared unlawful by the Supreme Court of South Carolina.  (11) Delinquency Proceedings. A risk retention group not chartered in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment after an examination under Section 38-87-40(6).  (12) Penalties. A risk retention group that violates any provision of this chapter is subject to fines and any other penalties, including revocation of its right to do business in this State, applicable to licensed insurers generally.  (13) Operation Prior to Enactment of this Chapter. In addition to complying with the requirements of this section, any risk retention group operating in this State prior to enactment of this chapter shall comply within thirty days after the effective date of this chapter with the provisions of item (1)(a) of this section.  HISTORY: 1988 Act No. 355, Section 1; 1991 Act No. 13, Section 28; 1993 Act No. 181, Section 840; 2001 Act No. 82, Section 30, eff July 20, 2001; 2016 Act No. 191 (S.978), Section 3, eff January 1, 2017.  Effect of Amendment  2016 Act No. 191, Section 3, rewrote (1)(b).
 (A) No risk retention group is required or permitted to join or contribute financially to any insurance insolvency guaranty fund, or similar mechanism, in this State; nor may any risk retention group, or its insureds or claimants against its insureds, receive any benefit from any such fund for claims arising under the insurance policies issued by such risk retention group.  (B) When a purchasing group obtains insurance covering its members' risks from an approved surplus lines insurer not admitted in this State or a risk retention group, no such risks, wherever resident or located, may be covered by any insurance guaranty fund or similar mechanism in this State.  (C) When a purchasing group obtains insurance covering its members' risks from an authorized insurer, only risks resident or located in this State may be covered by the South Carolina Property and Casualty Insurance Guaranty Association created under Chapter 31 of this title.  (D) The director or his designee may require a risk retention group to participate in any mechanism established or authorized under the law of this State for the equitable apportionment among insurers of liability insurance losses and expenses incurred on policies written through such mechanism, and such risk retention group shall submit sufficient information to the department to enable him to apportion on a nondiscriminatory basis the risk retention group's proportionate share of such losses and expenses.  HISTORY: 1988 Act No. 355, Section 1; 1993 Act No. 181, Section 841.
 A purchasing group, including its insurer or insurers, is subject to all applicable laws of this State, except that a purchasing group, including its insurer or insurers, is exempt, in regard to liability insurance for the purchasing group, from any law that would:  (1) prohibit the establishment of a purchasing group;  (2) make it unlawful for an insurer to provide or offer to provide insurance on a basis providing, to a purchasing group or its members, advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages, or other matters;  (3) prohibit a purchasing group or its members from purchasing insurance on a group basis described in item (2) of this section;  (4) prohibit a purchasing group from obtaining insurance on a group basis because the group has not been in existence for a minimum period of time or because any member has not belonged to the group for a minimum period of time;  (5) require that a purchasing group must have a minimum number of members, common ownership or affiliation, or certain legal form;  (6) require that a certain percentage of a purchasing group must obtain insurance on a group basis;  (7) otherwise discriminate against a purchasing group or any of its members; or  (8) require that any insurance policy issued to a purchasing group or any of its members be countersigned by an insurance agent or broker residing in this State.  HISTORY: 1988 Act No. 355, Section 1.
 (A) A purchasing group prior to doing business in this State shall furnish notice to the department, on forms prescribed or approved by it, which shall:  (1) identify the state in which the group is domiciled;  (2) identify all other states in which the group intends to do business;  (3) specify the lines and classifications of liability insurance which the purchasing group intends to purchase;  (4) identify the insurance company from which the group intends to purchase its insurance and the domicile of such company;  (5) specify the method by which, and the person, if any, through whom insurance will be offered to its members whose risks are resident or located in this State;  (6) identify the principal place of business of the group;  (7) provide other information as may be required by the director or his designee to verify that the purchasing group is qualified under Section 38-87-20(10).  (B) A purchasing group shall notify, within ten days, the director or his designee of any changes in any of the items set forth in subsection (A) of this section.  (C) The purchasing group shall register with the department and designate the Director of the Department of Insurance as its agent solely for the purpose of receiving service of legal documents or process, except that such requirements do not apply in the case of a purchasing group which satisfies the director or his designee that it only purchases insurance that was authorized under the Federal Products Liability Risk Retention Act of 1981, and:  (1) that in any state of the United States (a) it was domiciled before April 1, 1986; and (b) it is domiciled on and after October 27, 1986;  (2) that (a) before October 27, 1986, it purchased insurance from an insurance carrier licensed in any state; and (b) since October 27, 1986, it purchased its insurance from an insurance carrier licensed in any state; or  (3) that it was a purchasing group under the requirements of the Product Liability Risk Retention Act of 1981 before October 27, 1986.  (D) Each purchasing group that is required to give notice pursuant to subsection (A) of this section also shall furnish such information as may be required by the director or his designee to:  (1) verify that the entity qualifies as a purchasing group;  (2) determine where the purchasing group is located;  (3) determine appropriate tax treatment.  HISTORY: 1988 Act No. 355, Section 1; 1993 Act No. 181, Section 842.
 (A) A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in the state in which the purchasing group is located unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of that state.  (B) A purchasing group which obtains liability insurance from an approved surplus lines insurer not admitted in this State or a risk retention group shall inform each of the members of the group which has a risk resident or located in this State that the risk is not protected by an insurance insolvency guaranty fund in this State and that the risk retention group or the insurer may not be subject to all insurance laws and regulations of this State.  (C) No purchasing group may purchase insurance providing for a deductible or self-insured retention applicable to the group as a whole. However, coverage may provide for a deductible or self-insured retention applicable to individual members.  (D) Purchases of insurance by purchasing groups are subject to the same standards regarding aggregate limits which are applicable to all purchases of group insurance.  HISTORY: 1988 Act No. 355, Section 1; 1991 Act No. 13, Section 29.
 As used in this chapter:  (1) "Association" means a joint underwriting association established pursuant to this subdivision.  (2) "Day care liability insurance" means insurance protection against the day care liability of the insured and against loss, damage, or expense incident to a claim arising out of day care service to a person as the result of negligence in rendering or failing to render day care service.  (3) "Net direct premiums" means gross direct premiums written on bodily injury liability insurance, other than automobile liability insurance, homeowners liability insurance, and farmowners liability insurance, including the liability component of multiple peril package policies, as computed by the director or his designee less return premiums or the unused or unabsorbed portions of premium deposits.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 15; 1993 Act No. 181, Section 845.
 The association may provide a rate increase or assessment subject to the approval director or his designee.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 24; 1993 Act No. 181, Section 845.
 A deficit sustained by the association in a year must be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or both of the following procedures:  (1) an assessment upon the policyholders, which may not exceed one additional annual premium at the then current rate;  (2) a rate increase applicable prospectively.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 25; 1993 Act No. 181, Section 845.
 After the initial year of operation, rates, rating plans, and rating rules, and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the director or his designee considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting. If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-89-110, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided in Section 38-89-130. A contribution must be reimbursed to the members following recoupment as provided in Section 38-89-110.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 26; 1993 Act No. 181, Section 845.
 All insurers which are members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premium 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 department of Insurance. No member may be obligated in any one year to reimburse the association because of its proportionate share in the deficit from operations of the association in that year in excess of one percent of its surplus to policyholders and the aggregate amount not so reimbursed must be reallocated among the remaining members in accordance with the method of determining participation prescribed in this subsection after excluding from the computation the total net direct premiums of all members not sharing in the excess deficit. If the deficit from operations allocated to all members of the association in a calendar year exceeds one percent of their respective surplus to policyholders, the amount of the deficit must be allocated to each member in accordance with the method of determining participation prescribed in this subsection.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 27; 1993 Act No. 181, Section 845.
 Every member of the association is bound by the approved plan of operation of the association and the rules of the board of directors of the association.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 28; 1993 Act No. 181, Section 845.
 (A) If the authority of an insurer to transact bodily injury liability insurance, other than automobile, homeowners, or farmowners, in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the director or his designee has so found and certified to the board of directors.  (B) If a member insurer merges into or consolidates with another insurer authorized to transact insurance in this State or another insurer authorized to transact insurance in this State has reinsured the insurer's entire general liability business in this State, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association.  (C) An unsatisfied net liability of an insolvent member of the association must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned and the association shall acquire and have all rights and remedies allowed by law in behalf of the remaining members against the estate or funds of the insolvent insurer for funds due the association.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 29; 1993 Act No. 181, Section 845.
 The association is governed by a board of seven directors, one of whom is appointed by the Governor, with the advice and consent of the Senate, to represent the general public and three of whom are day care owners or operators appointed by the Governor. Three directors are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of the group may serve as a director at any one time. The insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the board of directors. The board shall elect a chairman and other necessary officers.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 30; 1993 Act No. 181, Section 845; 1998 Act No. 411, Section 9.
 An applicant for insurance through the association, a person insured pursuant to this chapter, or his representative, or an insurer adversely affected, or claiming to be adversely affected, by a ruling, action, or decision by or on behalf of the association, may appeal to the director or his designee within thirty days after the ruling, action, or decision.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 31; 1993 Act No. 181, Section 845.
 The association shall file in the office of the Department of Insurance annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement must contain information prescribed by the director or his designee and must be in the form he directs.  The director or his designee, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 32; 1993 Act No. 181, Section 845.
 The director or his designee shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the department, the Governor, and the General Assembly. The expenses of the examination must be paid by the association.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 33; 1993 Act No. 181, Section 845.  
 (A) A joint underwriting association is created, consisting of all insurers authorized to write within this State, on a direct basis, bodily injury liability insurance, other than automobile bodily injury liability insurance, homeowners liability insurance, and farmowners liability insurance, including insurers covering such peril in multiple peril package policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State.  (B) The purpose of the association is to provide day care liability insurance on a self-supporting basis to the fullest extent possible.  (C) The association is activated when the Department of Insurance finds and declares the existence of an emergency because of the unavailability of day care liability insurance or the unavailability of such insurance on a reasonable basis through normal channels.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 16; 1993 Act No. 181, Section 845.
 The association has the power on behalf of its members to:  (1) issue, or cause to be issued, policies of insurance to applicants including incidental coverages such as, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed five million dollars for all claimants under one policy in any one year;  (2) underwrite day care liability insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions;  (3) cede and assume reinsurance.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 17; 1993 Act No. 181, Section 845.
 (A) Not less than thirty nor more than ninety days after the effective date of this subdivision the director or his designee, after consultation with representatives of the public, day care owners and operators, and other affected individuals and organizations, shall promulgate a plan of operation consistent with this chapter. The plan of operation becomes effective and operative no later than thirty days after the declaration of an emergency by the department.  (B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of day care liability insurance and may contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of the members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association.  (C) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend.  (D) Amendments to the plan of operation may be made by the directors of the association with the approval of the director or his designee or must be made at the direction of the director or his designee after proper notice and public hearing.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 18; 1993 Act No. 181, Section 845.
 Upon the activation of the plan of operation, a day care owner or operator licensed in this State is entitled to apply to the association for coverage. The application may be made on behalf of the applicant by a licensed agent or broker authorized in writing by the applicant.  If the association determines that the applicant meets the underwriting standards of the association as set forth in the approved plan of operation and there is no unpaid, uncontested premium due from the applicant for any prior insurance of the same kind, the association, upon receipt of the premium, or a portion of it as prescribed by the plan of operation, shall cause to be issued a policy of day care liability insurance for one year.  The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this chapter and to those provisions of Chapter 73, Title 38 of the 1976 Code which are not inconsistent with this subdivision.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 19; 1993 Act No. 181, Section 845.
 The director or his designee shall obtain complete statistical data in respect to day care liability losses and reparation costs as well as all other costs or expenses which underlie or are related to day care liability insurance. The Department of Insurance shall promulgate any statistical plan he considers necessary for the purpose of gathering data referable to loss and loss adjustment expense experience and other expense experience. When the statistical plan is promulgated all members of the association shall adopt and use it. The director or his designee also shall obtain statistical data in respect to the costs of compensating victims of day care liability. The director or his designee may require loss, claim, or expense data from any person obtaining insurance through the association. This information or data is confidential.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 20; 1993 Act No. 181, Section 845.
 In structuring rates for day care liability insurance and determining the profit or loss of the association in respect to the insurance, consideration must be given by the director or his designee to all investment income.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 21; 1993 Act No. 181, Section 845.
 Within a time that the director or his designee directs, the association shall submit, for the approval of the director or his designee, an initial filing, in proper form, of policy forms, classifications, rates, rating plans, and rating rules applicable to day care liability insurance to be written by the association. If the director or his designee disapproves the initial filing, in whole or in part, the association shall amend the filing, in whole or in part, in accordance with the direction of the director or his designee. If the director or his designee is unable to approve the filing or amended filing, within the time specified, he shall promulgate the policy forms, classifications, rates, rating plans, and rules to be used by the association in making rates for and writing the insurance.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 22; 1993 Act No. 181, Section 845.
 (A) The director or his designee shall specify whether policy forms and the rate structure must be on a "claims-made" or 'occurrence' basis, and coverage may be provided by the association only on the basis specified by the director or his designee. The director or his designee shall specify the claims-made basis only if the contract makes provision for residual occurrence coverage upon the retirement, death, disability, or removal from the State of the insured. Provision may be made for a premium charge allocable to any residual occurrence coverage, and the premium charges for the residual coverage must be segregated and separately maintained for such purpose which may include the reinsurance of all or part of that portion of the risk.  (B) The policy may not contain a limitation in relation to the existing law in tort as provided by the statute of limitations of this State.  (C) The policy form, whether on a claims-made or occurrence basis, may not require as a condition precedent to settlement or compromise of a claim the consent or acquiescence of the insured. However, the settlement or compromise is not considered an admission of fault or wrongdoing by the insured.  (D) The premium rate charged for either or both claims-made or occurrence coverage must be at rates established on an actuarially sound basis, including consideration of trends in the frequency and severity of losses and must be calculated to be self-supporting.  HISTORY: 1989 Act No. 189, Part II, Section 43 sub 23; 1993 Act No. 181, Section 845.
 (A)(1) Before licensing a stock insurer, the director or his designee 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:  If licensed to write Capital Surplus (a) life: $ 600,000 $ 600,000 (b) accident and health 600,000 600,000 (c) life, accident, and health 1,200,000 1,200,000 (d) property: 1,200,000 1,200,000 (e) casualty: 1,200,000 1,200,000 (f) surety: 1,200,000 1,200,000 (g) marine: 1,200,000 1,200,000 (h) title: 600,000 600,000 (i) multiple lines: 1,500,000 1,500,000   (2) The director or his designee 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 that qualify as admitted assets on the most recent statutory financial statement of the insurer filed with the department pursuant to Section 38-13-80.  (B) If the surplus of a stock insurer is less than twenty-five percent of the surplus initially required, as set forth in subsection (A), the insurer is considered delinquent, and the director or his designee may begin delinquency proceedings as provided by Chapter 27 of this title.  (C) If the capital of a stock insurer is impaired, the insurer is delinquent, and the director or his designee shall begin delinquency proceedings.  HISTORY: Former 1976 Code Section 38-9-10 [1947 (45) 322; 1952 Code Section 37-142; 1962 Code Section 37-142] recodified as Section 38-55-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-610 [1947 (45) 322; 1952 Code Section 37-181; 1957 (50) 402; 1962 Code Section 37-182; 1963 (53) 564; 1971 (57) 311] recodified as Section 38-9-10 by 1987 Act No. 155, Section 1; 1988 Act No. 317, Section 1; 1991 Act No. 13, Section 6; 1993 Act No. 181, Section 535; 2012 Act No. 137, Section 2, eff April 2, 2012.
 If a qualified insurer deposits with an officer or official body of another state for the protection of all its policyholders, or all its policyholders and creditors, acceptable securities not in default as to principal or interest and of a current market value of not less than one million dollars, and delivers to the director or his designee a certificate to that effect, authenticated by the appropriate state official holding the deposit, the insurer may be relieved of making the deposit required by Section 38-9-80. For the purpose of this section a 'qualified insurer' is a licensed stock insurer possessed of at least ten million dollars of capital and surplus or a licensed mutual, fraternal, or reciprocal insurer possessed of at least ten million dollars of surplus, according to its most recent annual statement filed with the director or his designee and, in the discretion of the director or his designee, may include eligible surplus lines insurers which meet these capital and surplus requirements. For the purpose of this section, "acceptable securities" means bonds of the United States or of a state of the United States, or of a municipality or county, upon which is pledged the full faith and credit of the appropriate political division, or bonds or notes secured by mortgages or deeds of trust on otherwise unencumbered real estate of a market value of not less than double the amount loaned, or other securities approved by the director or his designee.  HISTORY: 1969 (56) 212; 1971 (57) 2561; 1986 Act No. 429, Section 2] recodified as Section 38-9-100 by 1987 Act No. 155, Section 1; 1988 Act No. 314, Section 2; 1992 Act No. 280, Section 2; 1993 Act No. 181, Section 535.
 A domestic company, in order to comply with the laws of any other state or territory of the United States, may make a voluntary deposit with the director or his designee in excess of the amount required by Section 38-9-80. This excess deposit is subject to all other applicable provisions of the laws of this State relating to the deposits of insurers, except that the excess deposit must be for the protection of all the company's policy obligations, ratably and without preference, notwithstanding the provisions of Section 38-9-90. However, a domestic company making this voluntary deposit is relieved of making the deposit required by Section 38-9-80 if the company meets the definition of a qualified insurer as defined in Section 38-9-100 and if the voluntary deposit meets the requirements of Section 38-9-100.  HISTORY: Former 1976 Code Section 38-9-110 [1947 (45) 322; 1952 Code Section 37-149; 1962 Code Section 37-149] recodified as Section 38-55-70 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-710 [1962 Code Section 37-185.4; 1962 (52) 2148; 1974 (58) 2099] recodified as Section 38-9-110 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535.
 A depositing insurer may exchange for the deposited securities, or any of them, other securities eligible for deposit under Sections 38-9-80 to 38-9-140 if, in the opinion of the director or his designee, the aggregate value of the deposit will not be reduced below the amount required by law.  HISTORY: Former 1976 Code Section 38-9-120 [1918 (30) 763; 1919 (31) 133; Civ. C. '22 Section 5461; 1932 Code Section 9049; 1934 (38) 1493; 1942 Code Section 9049; 1952 Code Section 37-149.1; 1952 (47) 1893; 1955 (49) 152; 1962 Code Section 37-149.1; 1973 (58) 335] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-720 [1962 Code Section 37-185.5; 1962 (52) 2148] recodified as Section 38-9-120 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535.
 The director or his designee at the time of receiving any bonds or other securities deposited under Sections 38-9-80 to 38-9-140 shall give to the company authority to collect the interest thereon for its own use. This authority continues in force until the company fails to pay any of its liabilities for which the deposit is security. In case of that failure the party charged with payment of the interest must be notified that thereafter the interest is payable to the director or his designee to be applied, if necessary, to the payment of those liabilities.  HISTORY: Former 1976 Code Section 38-9-130 [1935 (39) 287; 1942 Code Section 9051-2; 1952 Code Section 37-149.2; 1962 Code Section 37-149.2; 1967 (55) 184] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-730 [1962 Code Section 37-185.6; 1962 (52) 2148] recodified as Section 38-9-130 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535.
 When the principal of any securities deposited under Sections 38-9-80 to 38-9-140 is paid to the director or his designee, he shall pay the money so received to the company. However, if the securities were required to be deposited under Section 38-9-80 the payment may not be made until the company deposits an equal amount of other securities of the character required for similar deposits. If the company fails to deliver to the director or his designee within thirty days after receiving notice of this requirement the securities necessary to maintain its required deposit, he may invest the money in other securities of the required character and hold the same as he held those which were paid.  HISTORY: Former 1976 Code Section 38-9-140 [1956 (49) 2028; 1962 Code Section 37-149.3; 1980 Act No. 477] recodified as Section 38-55-80 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-740 [1962 Code Section 37-185.7; 1962 (52) 2148] recodified as Section 38-9-140 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535.
 Upon request of a domestic insurer the director or his designee may return to the insurer the whole or any portion of the securities of the insurer held by him on deposit when he is satisfied that the securities asked to be returned are not subject to any liability and are not required to be held any longer by any provision of law or purpose of the original deposit.  These deposits made by a foreign insurer must be returned by the director or his designee upon the filing with the director or his designee by the trustee or other authorized representative of the insurer a written request and sworn affidavit stating (a) that the insurer has no contracts of insurance in force and no unsatisfied claims outstanding within this State or (b) that reinsurance of all outstanding contracts and acceptance of all unsatisfied claims within this State have been provided by an insurer or insurers authorized to transact the same kinds of business in this State, filing with the affidavit a certified copy of the reinsurance agreement. Release must be made upon the written order of the director or his designee when he is satisfied that the above requirements have been met. The director or his designee is considered the agent of the foreign insurer for acceptance of service of any legal process in any action or proceeding against the insurer for any claim that might arise before or after the return of its deposits. A person making a false affidavit as required in this section is guilty of a felony and, upon conviction, must be imprisoned not more than five years.  HISTORY: Former 1976 Code Section 38-9-150 [1947 (45) 322; 1952 Code Section 37-150; 1962 Code Section 37-150] recodified as Section 38-55-90 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-750 [1947 (45) 322; 1952 Code Section 37-186; 1960 (51) 1922; 1962 Code Section 37-186] recodified as Section 38-9-150 by 1987 Act No. 155, Section 1; 1993 Act No. 184, Section 65; 1993 Act No. 181, Section 535.
 An insurer which has made a deposit in this State, pursuant to this title, its trustees or resident managers in the United States, the director or his designee, or any creditor of the insurer may, at any time, bring an action in the Circuit Court for the County of Richland against the State and other parties properly joined to enforce, administer, or terminate the trust created by the deposit. The process in the action must be served on the officer of the State having the deposit, who must appear and answer in behalf of the State and perform any orders and judgments the court may make in the action.  HISTORY: Former 1976 Code Section 38-9-160 [1947 (45) 322; 1952 Code Section 37-151; 1962 Code Section 37-151] recodified as Section 38-55-100 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-760 [1947 (45) 322; 1952 Code Section 37-187; 1962 Code Section 37-187] recodified as Section 38-9-160 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535.
 (A) An insurer authorized to transact business in this State, except as to risks or policies for which reserves are required under subsections (B) and (C) and Section 38-9-180 except for real estate title insurance policies, and subject to specific provisions of this title, shall maintain reserves equal to the unearned portions of the gross premiums charged on unexpired or unterminated risks and policies. Credit for reinsurance is allowed a ceding insurer as a deduction from reserves required by this section only as provided in Section 38-9-200 or 38-9-210.  (B)(1) With reference to insurance against loss or damage to property except as provided in item (5) and with reference to all general casualty insurance and surety insurance every insurer shall maintain an unearned premium reserve on all policies in force.  (2) The director or his designee may require that these reserves are equal to the unearned portions of the gross premiums in force as computed on each respective risk from the policy's date of issue. If the director or his designee does not so require, the portions of the gross premium in force to be held as premium reserve must be computed according to the following table:  Term for Which  Policy was Written Reserved for  Unearned Premium 1 year or less 1/2 2 years 1st year 3/4 2nd year 1/4 3 years 1st year 5/6 2nd year 1/2 3rd year 1/6 4 years 1st year 7/8 2nd year 5/8 3rd year 3/8 4th year 1/8 5 years 1st year 9/10 2nd year 7/10 3rd year 1/2 4th year 3/10 5th year 1/10 Over 5 years pro rata.   (3) All of these reserves may be computed, at the option of the insurer, on a yearly or more frequent pro rata basis.  (4) After adopting a method for computing the reserve, an insurer may not change methods without the director's or his designee's approval.  (5) With reference to marine insurance, premiums on trip risks not terminated are considered unearned, and the director or his designee may require the insurer to carry a reserve equal to one hundred percent on trip risks written during the month ended as of the date of statement. For all accident and health policies the insurer shall maintain an active life reserve which places a sound value on its liabilities under these policies and which is not less than the reserve according to standards set forth in regulations issued by the director and not less, in the aggregate, than the pro rata gross unearned premium reserves for these policies.  HISTORY: Former 1976 Code Section 38-9-170 [1947 (45) 322; 1952 Code Section 37-152; 1962 Code Section 37-152] recodified as Section 38-55-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-770 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1952 Code Section 37-188; 1956 (49) 2022; 1958 (50) 1608; 1960 (51) 1554; 1962 Code Section 37-188; 1964 (53) 1835; 1969 (56) 210; 1975 (59) 182; 1978 Act No. 601; 1979 Act No. 18; 1982 Act No. 373] recodified as Section 38-9-170 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 9; 1993 Act No. 181, Section 535.
 (A) This section is known as the "Standard Valuation Law".  (B) For the purposes of this section, the following definitions shall apply on or after the operative date of the valuation manual:  (1) "Accident and health insurance" means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual.  (2) "Appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subsection (D)(5).  (3) "Company" means an entity which:  (a) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and has at least one such policy in force or on claim; or  (b) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this State.  (4) "Deposit-type contract" means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual.  (5) "Life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.  (6) "NAIC" means the National Association of Insurance Commissioners.  (7) "Policyholder behavior" means any action a policyholder, contract holder or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.  (8) "Principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with subsection (O) as specified in the valuation manual.  (9) "Qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual.  (10) "Tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude.  (11) "Valuation manual" means the manual of valuation instructions adopted by the NAIC as specified in this section or as subsequently amended.  (C)(1) The director or his designee annually shall value, or cause to be valued, the reserve liabilities, referred to as reserves, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this State issued prior to the operative date of the valuation manual. However, for an alien insurer the valuation is limited to their United States business. In calculating the reserves he may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves required in this section of a foreign or an alien insurer, he may accept any valuation made, or caused to be made, by the insurance supervisory official of a state or another jurisdiction when the valuation complies with the minimum standard provided in this section.  (2) The provisions set forth in subsections (E) through (M) apply to all policies and contracts, as appropriate, subject to this section issued on or after March 24, 1960, and prior to the operative date of the valuation manual and the provisions set forth in subsections (N) and (O) must not apply to any such policies and contracts.  (3) The minimum standard for the valuation of policies and contracts issued prior to March 24, 1960, must be that provided by the laws in effect immediately prior to that date.  (4) The director or his designee annually shall value, or cause to be valued, the reserve liabilities, hereinafter called reserves, for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the director or his designee may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this section.  (5) The provisions set forth in subsections (M), (N), and (O) apply to all policies and contracts issued on or after the operative date of the valuation manual.  (D)(1) Every life insurance company doing business in this State annually shall submit to the director or his designee the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the director by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this State. The director by regulation shall define the specifics of this opinion and add other items necessary to its scope.  (2)(a) Every life insurance company, except as exempted by or pursuant to regulation, also annually must include in the opinion required in item (1) an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the director by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.  (b) The director may provide by regulation for a transition period for establishing higher reserves which the qualified actuary considers necessary in order to render the opinion required by this subsection.  (3) Each opinion required by item (2) is governed by the following provisions:  (a) A memorandum, in form and substance acceptable to the director or his designee as specified by regulation, must be prepared to support each actuarial opinion.  (b) If the insurance company fails to provide a supporting memorandum at the request of the director or his designee within a period specified by regulation or the director or his designee determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the director or his designee, the director or his designee may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare supporting memorandum required by the director or his designee.  (4) Every opinion is governed by the following provisions:  (a) The opinion must be submitted with the annual statement reflecting the valuation of reserve liabilities for each year ending after December 30, 1993.  (b) The opinion must apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the director or his designee as specified by regulation.  (c) The opinion must be based on standards adopted by the Actuarial Standards Board and on additional standards the director by regulation prescribes.  (d) For an opinion required to be submitted by a foreign or alien company, the director or his designee may accept the opinion filed by that company with the insurance supervisory official of another state if the director or his designee determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.  (e) For the purposes of this subsection, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in regulations.  (f) Except in cases of fraud or wilful misconduct, the qualified actuary must not be liable for damages to a person, other than the insurance company and the director or his designee, for an act, an error, an omission, a decision, or conduct with respect to the actuary's opinion.  (g) Disciplinary action by the director or his designee against the company or the qualified actuary must be defined in regulations by the director.  (h) A memorandum in support of the opinion and related material provided by the company to the director or his designee must be kept confidential by the director or his designee and must not be made public or subject to subpoena, other than for the purpose of defending an action seeking damages from a person by reason of action required by this subsection or by regulations promulgated under it. However, the memorandum or other material may be released by the director or his designee with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the director or his designee for preserving the confidentiality of the memorandum or other material. Once a portion of the confidential memorandum is cited by the company in its marketing, is cited before a governmental agency other than a state insurance department, or is released by the company to the news media all portions of the confidential memorandum are no longer confidential.  (5)(a) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the director annually shall submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope.  (b) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the director, except as exempted in the valuation manual, annually shall include in the opinion required by item (5)(a), an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.  (c) Each opinion required by this item must be governed by the following provisions:  (i) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the director or his designee, shall be prepared to support each actuarial opinion.  (ii) If the insurance company fails to provide a supporting memorandum at the request of the director or his designee within a period specified in the valuation manual or the director or his designee determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the director or his designee, the director or his designee may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the director or his designee.  (d) Every opinion must be governed by the following provisions:  (i) The opinion must be in form and substance as specified in the valuation manual and acceptable to the director or his designee.  (ii) The opinion must be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual.  (iii) The opinion applies to all policies and contracts subject to item (5)(b), plus other actuarial liabilities as may be specified in the valuation manual.  (iv) The opinion must be based on standards adopted by the Actuarial Standards Board or its successor, and on additional standards as prescribed in the valuation manual.  (v) In the case of an opinion required to be submitted by a foreign or alien company, the director or his designee may accept the opinion filed by that company with the insurance supervisory official of another State if the director or his designee determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.  (vi) Except in cases of fraud or wilful misconduct, the appointed actuary is not liable for damages to a person, other than the insurance company and the director, for an act, error, omission, decision or conduct with respect to the appointed actuary's opinion.  (vii) Disciplinary action by the director against the company or the appointed actuary must be defined in regulations by the director.  (E)(1) Except as otherwise provided in item (3) and subsection (F), the minimum standard for the valuation of policies and contracts issued before March 24, 1960, is that provided by the laws in effect immediately before that date except the minimum standards for the valuation of annuities and pure endowments purchased under group annuity and pure endowment contracts issued before the effective date is that provided for by the laws in effect immediately before that date but replacing the interest rates as specified in the laws by an interest rate of five percent a year.  (2) Except as otherwise provided in item (3) and subsection (F), the minimum standard for the valuation of policies and contracts issued after March 23, 1960, is the commissioner's reserve valuation methods defined in subsections (G), (H), and (K), five percent interest for group annuity and pure endowment contracts and three and one-half percent interest for all other policies and contracts, or for policies and contracts other than annuity and pure endowment contracts issued after May 25, 1975, four percent interest for policies issued before January 1, 1979, five and one-half percent interest for single premium life insurance policies, and four and one-half percent interest for all other policies issued after December 31, 1978, and the following tables:  (a) for ordinary policies of life insurance issued on the standard basis, excluding disability and accidental death benefits in the policies, the Commissioner's 1941 Standard Ordinary Mortality Table for the policies issued before the operative date stated in Section 38-63-650, the Commissioner's 1958 Standard Ordinary Mortality Table for the policies issued on or after the operative date of Section 38-63-590 of the Standard Nonforfeiture Law for Life Insurance, and before the operative date of Section 38-63-590 of the Standard Nonforfeiture Law for Life Insurance, if for any category of policies issued on female risks all modified net premiums and present values referred to in this section may be calculated according to an age not more than three years younger than the actual age of the insured; for policies issued before January 1, 1979, and not more than six years younger than the actual age of the insured or policies issued after December 31, 1978, and before the operative date of Section 38-63-600; and for policies issued on or after the operative date of Section 38-63-600 of the Standard Nonforfeiture Law for Life Insurance the Commissioner's 1980 Standard Ordinary Mortality Table, at the election of the company for one or more specified plans of life insurance, the Commissioner's 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors, or any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for the policies;  (b) for industrial life insurance policies issued on the standard basis, excluding disability and accidental death benefits in the policies, the 1941 Standard Industrial Mortality Table for policies issued before the operative date stated in Section 38-63-650; for all policies issued on or after operative date, the 1941 Standard Industrial Mortality Table or the Commissioner's 1961 Standard Industrial Mortality Table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for policies, according to which of these tables is used to calculate adjusted premiums and present values as specified in Section 38-63-580;  (c) for individual annuity and pure endowment contracts, excluding disability and accidental death benefits in the policies, the 1937 Standard Annuity Mortality Table or, at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or a modification of either of these tables approved by the director or his designee;  (d) for group annuity and pure endowment contracts, excluding disability and accidental death benefits in the policies, the Group Annuity Mortality Table for 1951, a modification of the table approved by the director or his designee or, at the option of the insurer, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts;  (e) for total and permanent disability benefits in or supplementary to ordinary policies or contracts, for policies or contracts issued after December 31, 1965, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit or tables of disablement rates and termination rates, adopted after 1980 by the National Association of Insurance Commissioners, approved by regulation promulgated by the director, for use in determining the minimum standard of valuation for the policies; for policies or contracts issued after December 31, 1960, and before January 1, 1966, either the tables or, at the option of the company, the Class (3) Disability Table (1926) and for policies issued before January 1, 1961, the Class (3) Disability Table (1926) or other table approved by the director or his designee. The table, for active lives, must be combined with a mortality table permitted for calculating the reserves for life insurance policies;  (f) for accidental death benefits in or supplementary to policies, for policies issued after December 31, 1965, the 1959 Accidental Death Benefits Table, or any accidental death benefits table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for the policies; for policies issued after December 31, 1960, and before January 1, 1966, either the table or, at the option of the company, the Inter-Company Double Indemnity Mortality Table; and for policies issued before January 1, 1961, the Inter-Company Double Indemnity Mortality Table, or other table approved by the director or his designee. The table must be combined with a mortality table permitted for calculating the reserves for life insurance policies;  (g) for extra benefits provided in life or endowment contracts or policies under which there is payable a series of coupons or guaranteed dividends or a series of constant or variable pure endowments maturing either during the term of the contract and the continuation of the life of the insured or maturing as a series after the death of the insured, the table or basis of reserves approved by the director or his designee;  (h) for group life insurance, life insurance issued on the substandard basis and other special benefits, the tables approved by the director or his designee;  (3) Except as provided in subsection (F), the minimum standard for the valuation for individual annuity and pure endowment contracts issued on or after the operative date of this item, as defined in this section, and for all annuities and pure endowments purchased on or after the operative date under group annuity and pure endowment contracts, is the commissioner's reserve valuation methods defined in subsections (G) and (H) and the following tables and interest rates:  (a) for individual annuity and pure endowment contracts issued before January 1, 1979, excluding disability and accidental death benefits in the contracts, the 1971 Individual Annuity Mortality Table, or a modification of this table approved by the director or his designee, and six percent interest for single premium immediate annuity contracts, and four percent interest for all other individual annuity and pure endowment contracts;  (b) for individual single premium immediate annuity contracts issued after December 31, 1978, excluding disability and accidental death benefits in the contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for the contracts, or a modification of these tables approved by the director or his designee, and seven and one-half percent interest;  (c) for individual annuity and pure endowment contracts issued after December 31, 1978, other than single premium immediate annuity contracts, excluding disability and accidental death benefits in the contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for the contracts, or a modification of these tables approved by the director or his designee, and five and one-half percent interest for single premium deferred annuity and pure endowment contracts and four and one-half percent interest for all other individual annuity and pure endowment contracts;  (d) for annuities and pure endowments purchased before January 1, 1979, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under the contracts, the 1971 Group Annuity Mortality Table, or a modification of this table approved by the director or his designee, and six percent interest;  (e) for annuities and pure endowments purchased after December 31, 1978, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under the contracts, the 1971 Group Annuity Mortality Table or a group annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for the annuities and pure endowments, or a modification of these tables approved by the director or his designee, and seven and one-half percent interest.  After May 26, 1975, an insurer may file with the director or his designee a written notice of its election to comply with this item after a specified date before January 1, 1979, which is the operative date of this item for the insurer. However, an insurer may elect a different effective date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer makes no election, the effective date of this item for the insurer is January 1, 1979.  (F)(1) The calendar year statutory valuation interest rates as defined in this subsection must be used in determining the minimum standard for the valuation of:  (a) life insurance policies issued in a particular calendar year, on or after the operative date of Section 38-63-600 of the Standard Nonforfeiture Law for Life Insurance;  (b) individual annuity and pure endowment contracts issued in a particular calendar year after December 31, 1982;  (c) annuities and pure endowments purchased in a particular calendar year after December 31, 1982, under group annuity and pure endowment contracts;  (d) the net increase, if any, in a particular calendar year after January 1, 1983, in amounts held under guaranteed interest contracts.  (2) The calendar year statutory valuation interest rates, I, must be determined as follows and the results rounded to the nearer one-quarter of one percent:  (a) for life insurance,  I = .03 + W (R(1) - .03) + W* (1/2 ) * (R(2) - .09);  (b) for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,  I = .03 + W (R - .03),  where R(1) is the lesser of R and .09, R(2) is the greater of R and .09, R is the reference interest rate defined in this subsection, and W is the weighting factor defined in this subsection;  (c) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in subitem (b), the formula for life insurance stated in subitem (a) applies to annuities and guaranteed interest contracts with guarantee durations in excess of ten years and the formula for single premium immediate annuities stated in subitem (b) applies to annuities and guaranteed interest contracts with guarantee duration of ten years or less;  (d) for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in subitem (b) applies;  (e) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in subitem (b) applies.  However, if the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent, the calendar year statutory valuation interest rate for the life insurance policies must be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year must be determined for 1980, using the reference interest rate defined for 1979, and must be determined for each subsequent calendar year regardless of when Section 38-63-600 of the Standard Nonforfeiture Law for Life Insurance becomes operative.  (3) The weighting factors referred to in the formulas stated in this subsection are given in the following tables:  (a) weighting Factors for Life Insurance:  Guarantee Duration Weighting Years 10 or Less: .50 More than 10, but not more than 20 .45 More than 20 .35   For life insurance, the guarantee duration is the maximum number of years the life insurance may remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy;  (b) weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options:  Weighting Factors .80   (c) weighting factors for other annuities and for guaranteed interest contracts, except as stated in subitem (b) of this item are as specified subsubitems (i), (ii), and (iii) according to the rules and definitions in subsubitems (iv), (v), and (vi):  (i) for annuities and guaranteed interest contracts valued on an issue year basis:  Guarantee Duration Weighting (Years) for Plan Type A B C 5 or less .80 .60 .50 More than five, but not more than 10: .75 .60 .50 More than 10, but not more than 20: .65 .50 .45 More than 20: .45 .35 .35   (ii) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in subsubitem (i) of this subitem increased by:  Plan Type A B C .15 .25 .05   (iii) for annuities and guaranteed interest contracts valued on an issue year basis other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than twelve months beyond the valuation date, the factors shown in subsubitem (i) of this subitem or derived in subsubitem (ii) increased by:  Plan Type A B C .05 .05 .05   (iv) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.  (d) Plan type as used in the above tables is defined as:  (i) Plan Type A:  At any time policyholder may withdraw funds only:  a. with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer;  b. without the adjustment but in installments over five years or more;  c. as an immediate life annuity; or  d. no withdrawal permitted;  (ii) Plan Type B:  Before expiration of the interest rate guarantee, policyholder may withdraw funds only:  a. with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer;  b. without the adjustment but in installments over five years or more; or  c. no withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without the adjustment in a single sum or installments over less than five years;  (iii) Plan Type C:  Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either:  a. without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or  b. subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.  An insurer may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this subsection an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.  (4) The Reference Interest Rate referred to in item (2) of this subsection is defined as:  (a) for life insurance, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;  (b) for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over twelve months, ending on June thirtieth of the calendar year of issue or year of purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;  (c) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in subitem (b) with guarantee duration in excess of ten years, the lesser of the average over thirty-six months and the average over twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;  (d) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in subitem (b), with guarantee duration of ten years or less, the average over twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;  (e) for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;  (f) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in subitem (b), the average over twelve months, ending on June thirtieth of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;  (5) If Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published by Moody's Investors Service, Inc., or if the National Association of Insurance Commissioners determines that Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulation promulgated by the director, may be substituted.  (G) Except as otherwise provided in subsections (H) and (K), reserves according to the commissioner's reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, are the excess, if any, of the present value, at the date of valuation, of future guaranteed benefits provided for by the policies, over the then present value of future modified net premiums. The modified net premiums for the policy are the uniform percentage of the respective contract premiums for the benefits that the present value, at the date of issue of the policy, of the modified net premiums is equal to the sum of the then present value of the benefits provided for by the policy and the excess of item (1) over item (2), as follows:  (1) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium may not exceed the net level annual premium on the nineteen year premium whole life plan for insurance of the same amount at an age one year higher than the age of issue of the policy.  (2) A net one year term premium for the benefits provided for in the first policy year. For a life insurance policy issued after December 31, 1985, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination of them in an amount greater than the excess premium, the reserve according to the director's or his designee's reserve valuation method as of a policy anniversary occurring on or before the assumed ending date defined in this section as the first policy anniversary on which the sum of an endowment benefit and cash surrender value then available is greater than the excess premium, except as otherwise provided in subsection (K), is the greater of the reserve as of the policy anniversary calculated as described in the preceding paragraph and the reserve as of the policy anniversary calculated as described in that paragraph, but with the value defined in item (1) being reduced by fifteen percent of the amount of the excess first year premium, all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, the policy being assumed to mature on the date as an endowment, and the cash surrender value provided on the date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in subsection (E)(1) and (F) shall be used.  Reserves according to the commissioner's reserve valuation method for: life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer including a partnership or sole proprietorship or by an employee organization, or both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as amended, disability and accidental death benefits in all policies and contracts, and all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, must be calculated by a method consistent with the principles of subsection (F), except extra premiums charged because of impairments or special hazards must be disregarded in the determination of modified net premiums.  (H) This subsection applies to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer including a partnership or sole proprietorship, or by an employee organization, or both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as amended. Reserves according to the commissioner's annuity reserve method for benefits under annuity or pure endowment contracts, excluding disability and accidental death benefits in the contracts, is the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end of each respective contract year, over the present value, at the date of valuation, of future valuation considerations derived from future gross considerations, required by the terms of the contract, that become payable before the end of the respective contract year. The future guaranteed benefits must be determined by using the mortality table, if any, and the interest rate, or rates, specified in the contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of the contracts to determine nonforfeiture values.  (I)(1) An insurer's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued after March 23, 1960, must not be less than the aggregate reserves calculated in accordance with the methods set forth in subsections (G), (H), (K), and (L) and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for the policies.  (2) The aggregate reserves for all policies, contracts, and benefits must not be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required by subsection (D).  (J) Reserves for policies and contracts issued before March 24, 1960, may be calculated, at the option of the insurer, according to the standards which produce greater aggregate reserves for all the policies and contracts than the minimum reserves required by the laws in effect immediately before the date. Reserves for a category of policies, contracts, or benefits established by the director or his designee, after March 23, 1960, may be calculated, at the option of the insurer, according to the standards which produce greater aggregate reserves for the category than those calculated according to the minimum standard provided in this section, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, must not be greater than the corresponding rate or rates of interest used in calculating nonforfeiture benefits. An insurer which adopts a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this section, with the approval of the director or his designee, may adopt a lower standard of valuation, but not lower than the minimum provided in this section. However, for purposes of this subsection, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by subsection (D) must not be deemed to be the adoption of a higher standard of valuation.  (K) If in a contract year the gross premium charged by a company on a policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the policy or contract is the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this subsection are those standards stated in subsections (E)(1) and (F). For a life insurance policy issued after December 31, 1985, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination of them in an amount greater than the excess premium, this subsection must be applied as if the method actually used in calculating the reserve for the policy were the method described in subsection (G), ignoring the second paragraph of subsection (G). The minimum reserve at each policy anniversary of the policy is the greater of the minimum reserve calculated in accordance with subsection (G), including the second paragraph of that subsection, and the minimum reserve calculated in accordance with this subsection.  (L) For a plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or for a plan of life insurance or annuity which is of a nature so that the minimum reserves cannot be determined by the methods described in subsections (G), (H), and (K), the reserves which are held under the plan must be:  (1) appropriate in relation to the benefits and the pattern of premiums for that plan;  (2) computed by a method which is consistent with the principles of this Standard Valuation Law, as determined by regulations promulgated by the director.  (M) For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subsection (C)(2).  (N)(1) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subsection (C)(2), except as provided under items (5) or (7).  (2) The operative date of the valuation manual is January first of the first calendar year following July first as of which all of the following have occurred:  (a) The valuation manual has been adopted by the NAIC by an affirmative vote of at least forty-two members, or three-fourths of the members voting, whichever is greater.  (b) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than seventy-five percent of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements.  (c) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least forty-two of the following fifty-five jurisdictions: the fifty states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.  (3) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January first following the date when the change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:  (a) at least three-fourths of the members of the NAIC voting, but not less than a majority of the total membership; and  (b) members of the NAIC representing jurisdictions totaling greater than seventy-five percent of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subitem (a): life, accident and health annual statements, health annual statements, or fraternal annual statements.  (4) The valuation manual must specify all of the following:  (a) minimum valuation standards for and definitions of the policies or contracts subject to subsection (C)(2). These minimum valuation standards must be:  (i) the commissioner's reserve valuation method for life insurance contracts, other than annuity contracts, subject to subsection (C)(2);  (ii) the commissioner's annuity reserve valuation method for annuity contracts subject to subsection (C)(2); and  (iii) minimum reserves for all other policies or contracts subject to subsection (C)(2);  (b) the policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in subsection (O)(1) and the minimum valuation standards consistent with those requirements;  (c) for policies and contracts subject to a principle-based valuation under subsection (O):  (i) requirements for the format of reports to the director under subsection (O)(2)(c) and which must include information necessary to determine if the valuation is appropriate and in compliance with this section;  (ii) assumptions must be prescribed for risks over which the company does not have significant control or influence;  (iii) procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of the procedures;  (d) for policies not subject to a principle-based valuation under subsection (O), the minimum valuation standard must either:  (i) be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or  (ii) develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring;  (e) other requirements, including, but not limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules and internal controls; and  (f) the data and form of the data required under subsection (O), with whom the data must be submitted, and may specify other requirements including data analyses and reporting of analyses.  (5) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the director or his designee, in compliance with this section, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the director by regulation.  (6) The director or his designee may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company's compliance with any requirement set forth in this section. The director or his designee may rely upon the opinion, regarding provisions contained within this section, of a qualified actuary engaged by the commissioner of another state, district, or territory of the United States. As used in this item, the term "engage" includes employment and contracting.  (7) The director or his designee may require a company to change any assumption or method that, in the opinion of the director or his designee, is necessary in order to comply with the requirements of the valuation manual or this section; and the company shall adjust the reserves as required by the director or his designee. The director or his designee may take other disciplinary action as permitted pursuant to Sections 38-2-10 and 38-5-120.  (O)(1) A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual:  (a) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For polices or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk.  (b) Incorporate assumptions, risk analysis methods and financial models, and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods.  (c) Incorporate assumptions that are prescribed in the valuation manual or for assumptions that are not prescribed, the assumptions must be established using the company's available experience, to the extent it is relevant and statistically credible; or to the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience.  (d) Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty, the larger the margin and resulting reserve.  (2) A company using a principle-based valuation for one or more policies or contracts subject to this section as specified in the valuation manual shall:  (a) establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual;  (b) provide to the director and the company's board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. These controls must be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification must be based on the controls in place as of the end of the preceding calendar year; and  (c) develop, and file with the director or his designee upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.  (3) A principle-based valuation may include a prescribed formulaic reserve component.  (P) A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual.  (Q)(1) For purposes of this subsection, "confidential information" means:  (a) a memorandum in support of an opinion submitted pursuant to subsection (D) and any other documents, materials, and other information, including, but not limited to, all working papers, and copies created, produced or obtained by, or disclosed to the director or any other person in connection with the memorandum;  (b) all documents, materials, and other information, including, but not limited to, all working papers, and copies, created, produced or obtained by, or disclosed to the director or any other person in the course of an examination made pursuant to subsection (N)(6); provided, however, that if an examination report or other material prepared in connection with an examination made under Section 38-13-20 is not held as private and confidential information under Section 38-13-10, et seq., an examination report or other material prepared in connection with an examination made under subsection (N)(6) is not "confidential information" to the same extent as if such examination report or other material had been prepared under Section 38-13-10, et seq.;  (c) any reports, documents, materials, and other information developed by a company in support of, or in connection with, an annual certification by the company pursuant to subsection (O)(2)(b) evaluating the effectiveness of the company's internal controls with respect to a principle-based valuation and any other documents, materials, and other information, including, but not limited to, all working papers, and copies, created, produced or obtained by, or disclosed to the director or any other person in connection with such reports, documents, materials, and other information;  (d) any principle-based valuation report developed under subsection (O)(2)(c) of this section and any other documents, materials, and other information, including, but not limited to, all working papers, and copies of them, created, produced or obtained by, or disclosed to the director or any other person in connection with the report; and  (e) any documents, materials, data and other information submitted by a company pursuant to subsection (P), collectively, "experience data", and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies created or produced in connection with the experience data, in each case that includes any potentially company-identifying or personally identifiable information, that is provided to or obtained by the director or his designee, together with any "experience data", "experience materials", and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies, created, produced, or obtained by, or disclosed to the director or any other person in connection with such experience materials.  (2)(a) Except as provided in this subsection, a company's confidential information is confidential by law and privileged, is not subject to disclosure pursuant to the Freedom of Information Act, and is not subject to subpoena or discovery or admissible in evidence in any private civil action; provided, however, that the director or his designee is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the director's or his designee's official duties.  (b) Neither the director nor any person who received confidential information while acting under the authority of the director is permitted or required to testify in any private civil action concerning any confidential information.  (c) In order to assist in the performance of the director's or his designee's duties, the director or his designee may share confidential information with other state, federal, and international regulatory agencies and with the NAIC and its affiliates and subsidiaries, and in the case of confidential information specified in item (1)(a) and (d) only, with the Actuarial Board for Counseling and Discipline, or its successor, upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings and with state, federal, and international law enforcement officials, provided that such recipient agrees, and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data and other information in the same manner and to the same extent as required for the director or his designee.  (d) The director or his designee may receive documents, materials, data and other information, including otherwise confidential and privileged documents, materials, data or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions and from the Actuarial Board for Counseling and Discipline or its successor and shall maintain as confidential or privileged any document, material, data or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.  (e) The director or his designee may enter into agreements governing sharing and use of information consistent with item (2).  (f) No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the director or his designee under this section or as a result of sharing as authorized in item (2)(c).  (g) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this item (2) must be available and enforced in any proceeding in, and in any court of, this State.  (h) As used in this subsection, "regulatory agency", "law enforcement agency" and the "NAIC" include, but are not limited to, their employees, agents, consultants and contractors.  (3) Notwithstanding item (2), any confidential information specified in item (1)(a) and (d):  (a) may be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under subsection (D) or principle-based valuation report developed under subsection (O)(2)(c) by reason of an action required by this section or by regulations promulgated under this section;  (b) may otherwise be released by the director with the written consent of the company; and  (c) once any portion of a memorandum in support of an opinion submitted under subsection (D) or a principle-based valuation report developed under subsection (O)(2)(c) is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the memorandum or report must no longer be confidential.  (R)(1) The director may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in this State from the requirements of subsection (N) provided:  (a) the director has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and  (b) the company computes reserves using assumptions and methods used prior to the operative date of the valuation manual in addition to any requirements established by the director and promulgated by regulation.  (2) For any company granted an exemption under this section, subsections (D) through (M) are applicable. With respect to any company applying this exemption, any reference to subsection (N) found in subsections (D) through (M) is not applicable.  (S) Reserved  HISTORY: Former 1976 Code Section 38-9-180 [1947 (45) 322; 1952 Code Section 37-153; 1962 Code Section 37-153] recodified as Section 38-55-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-770 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1952 Code Section 37-188; 1956 (49) 2022; 1958 (50) 1608; 1960 (51) 1554; 1962 Code Section 37-188; 1964 (53) 1835; 1969 (56) 210; 1975 (59) 182; 1978 Act No. 601; 1979 Act No. 18; 1982 Act No. 373] recodified as Section 38-9-180 by 1987 Act No. 155, Section 1; 1987 Act No. 155, Section 1; 1992 Act No. 281, Section 1; 1993 Act No. 181, Section 535; 2016 Act No. 148 (S.850), Section 1, eff April 21, 2016; 2022 Act No. 195 (H.4832), Section 3, eff May 16, 2022.  Effect of Amendment  2016 Act No. 148, Section 1, rewrote the section, adding (B), and (M) through (S); redesignating former (A) as (C), former (B) through (J) as (D) through (L), and former (K) as (A); and amended (C) though (L).  2022 Act No. 195, Section 3, reserved (S), which related to requirements for companies with less than three hundred million dollars of ordinary life premium.
 A company authorized to transact insurance in this State shall maintain reserves in an amount estimated in the aggregate as being sufficient to provide for the payment of all losses or claims arising by the date of an annual or other statement, whether reported or unreported, which are unpaid as of that date and for which the insurer may be liable and also reserves in an amount estimated to provide for the expenses of adjustment or settlement of these claims.  The reserves for unpaid losses and loss expenses under policies of personal injury liability insurance, employer's liability insurance, and workers' compensation insurance must be calculated in accordance with regulations the department prescribes. A company authorized to write these kinds of insurance shall file with its annual statement schedules of its experience in the form the director or designee requires.  Credit for reinsurance is allowed a ceding insurer as an asset or a deduction from reserves required by this section only as provided in Section 38-9-200 or 38-9-210.  HISTORY: Former 1976 Code Section 38-9-190 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-154; 1962 Code Section 37-154] recodified as Section 38-75-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-780 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1952 Code Section 37-189; 1956 (49) 2021; 1958 (50) 1608; 1962 Code Section 37-189; 1971 (57) 310] recodified as Section 38-9-190 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 10; 1993 Act No. 181, Section 535.
 (A)(1) Before licensing a mutual insurer, the director or his designee shall require the insurer to be possessed of surplus of not less than:  If licensed to write Surplus which must  be possessed at  time of licensing (a) life: $1,200,000 (b) accident and health: 1,200,000 (c) life, accident, and health: 2,400,000 (d) property: 2,400,000 (e) casualty: 2,400,000 (f) surety: 2,400,000 (g) marine: 2,400,000 (h) title: 1,200,000 (i) multiple lines: 3,000,000   (2) The director or his designee 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 that qualify as admitted assets on the most recent statutory financial statement of the insurer filed with the department pursuant to Section 38-13-80.  (B) If 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 director or his designee may begin delinquency proceedings as provided by Chapter 27 of this title.  (C) If 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 director or his designee shall begin delinquency proceedings.  HISTORY: Former 1976 Code Section 38-9-20 [1947 (45) 322; 1952 Code Section 37-141; 1962 Code Section 37-141] recodified as Section 38-61-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-620 [1947 (45) 322; 1952 Code Section 37-182; 1957 (50) 402; 1962 Code Section 37-182; 1963 (53) 564; 1971 (57) 311] recodified as Section 38-9-20 by 1987 Act No. 155, Section 1; 1988 Act No. 317, Section 2; 1991 Act No. 13, Section 7; 1993 Act No. 181, Section 535; 2012 Act No. 137, Section 3, eff April 2, 2012.
 (A) Credit for reinsurance must be allowed a domestic ceding insurer as an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subsection (B), (C), (D), (E), (F), (G), or (H) provided that the director or his designee may, pursuant to subsection (N), adopt by regulation additional specific requirements in relation to or setting forth the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements, or the circumstances pursuant to which a credit may be reduced or eliminated. Credit only may be allowed under subsection (B), (C), or (D) of this section as respects cessions of those kinds or classes of business which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. If meeting the requirements of subsection (D) or (E), the requirements of subsection (I) also must be met.  (B) Credit must be allowed when the reinsurance is ceded to an assuming insurer which is licensed to transact insurance or reinsurance in this State or approved as a reinsurer by the director or his designee provided by Section 38-5-60. It is not the intent of this provision to allow an insurer domiciled outside this State to take credit for reinsurance in its financial statements based on the domestic license, authorization, or accreditation.  (C) Credit must be allowed when the reinsurance is ceded to an assuming insurer which is accredited as a reinsurer in this State. An accredited reinsurer is one which:  (1) files with the director or his designee evidence of its submission to this state's jurisdiction;  (2) submits to this state's authority to examine its books and records;  (3) is licensed to transact insurance or reinsurance in at least one state or, for a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance, in at least one state;  (4) files annually with the director or designee a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and  (5) demonstrates to the satisfaction of the director that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet this requirement at the time of its application if it maintains a surplus as it regards policyholders of no less than twenty million dollars and its accreditation has not been denied by the director or his designee within ninety days after the submission of its application.  (D)(1) Credit must be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this statute and the assuming insurer or United States branch of an alien assuming insurer:  (a) maintains a surplus as regards policyholders in an amount not less than twenty million dollars; and  (b) submits to the authority of this State to examine its books and records.  (2) The requirement of item (1)(a) under this subsection, does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.  (E)(1) Credit must be allowed when the reinsurance is ceded to an assuming insurer which maintains a trust fund in a qualified United States financial institution, defined in Section 38-9-220(B), for the payment of the valid claims of its United States ceding insurers and their assigns and successors in interest. To enable the director to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the director or his designee information substantially the same as that required to be reported on the National Association of Insurance Commissioners annual statement form by licensed insurers. The assuming insurer shall submit to examination of its books and records by the director and bear the expense of examination.  (2)(a) Credit for reinsurance must not be granted under this subsection unless the form of the trust and any amendments to the trust have been approved by:  (i) the insurance commissioner of the state where the trust is domiciled; or  (ii) the insurance commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.  (b) The form of the trust and any trust amendments also must be filed with the commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument must provide that contested claims must be valid and enforceable upon the final order of a court of competent jurisdiction in the United States. The trust must vest legal title to assets in the trustees of the trust for the benefit of the assuming insurers' United States ceding insurers and their assigns and successors in interest. The trust and the assuming insurer are subject to examination as determined by the director or his designee.  (c) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February twenty-eighth of each year the trustees of the trust shall report to the director or his designee in writing setting forth the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust may not expire before the next following December thirty-first.  (3) The following requirements apply to the following categories of assuming insurers:  (a) The trust fund for a single assuming insurer consists of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers, and in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars. However, after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the commissioner with principal regulatory oversight may authorize a reduction in the required trusteed surplus, but only after finding that the new required surplus level is adequate for the protection of domestic ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development based on an assessment of the risk. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows and shall consider all material risk factors including, but not limited to, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than thirty percent of the assuming insurer's liabilities attributable to reinsurance by domestic ceding insurers covered by the trust.  (b)(i) In the case of a group including incorporated and individual unincorporated underwriters:  (A) for reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, the trust consists of a trusteed account in an amount not less than the respective underwriter's several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group;  (B) for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this section, the trust consists of a trusteed account in an amount not less than the respective underwriter's several insurance and reinsurance liabilities attributable to business written in the United States; and  (C) in addition to these trusts, the group shall maintain in trust a trusteed surplus of which one hundred million dollars is held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account; and  (ii) The incorporated members of the group must not be engaged in any business other than underwriting as a member of the group and are subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members.  (iii) The group, within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, shall provide to the director an annual certification by the group's domiciliary regulator of the solvency of each underwriter member or if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the group.  (c) In the case of a group of incorporated underwriters under common administration, the group shall:  (i) have continuously transacted an insurance business outside the United States for at least three years immediately before making application for accreditation;  (ii) maintain aggregate policyholders' surplus of at least ten billion dollars;  (iii) maintain a trust fund in an amount not less than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;  (iv) in addition, maintain a joint trusteed surplus of which one hundred million dollars must be held jointly for the benefit of United States domiciled ceding insurers of any member of the group as additional security for these liabilities; and  (v) within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, make available to the director an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.  (F)(1) Credit must be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the director or his designee as a reinsurer in this State and secures its obligations with the requirements of this subsection.  (2) In order to be eligible for certification, the assuming insurer must:  (a) be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the director pursuant to this section;  (b) maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the director or his designee pursuant to regulation;  (c) maintain financial strength ratings from two or more rating agencies deemed acceptable by the director or his designee pursuant to regulation;  (d) agree to submit to the jurisdiction of this State, appoint the director as its agent for service of process in this State, and agree to provide security for one hundred percent of the assuming insurer's liabilities attributable to reinsurance ceded by domestic ceding insurers if it resists enforcement of a final United States judgment;  (e) agree to meet applicable information filing requirements as determined by the director or his designee, both with respect to an initial application for certification and on an ongoing basis; and  (f) satisfy any other requirements for certification deemed relevant by the commissioner.  (3) An association, including incorporated and individual unincorporated underwriters, may be a certified reinsurer. In addition to satisfying other requirements of item (2) of this subsection, in order to be eligible for certification:  (a) the association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents, net of liabilities of the association and its members, which includes a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in an amount determined by the director to provide adequate protection;  (b) the incorporated members of the association may not be engaged in any business other than underwriting as a member of the association and are subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and  (c) within ninety days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the director an annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements prepared by independent public accountants, of each underwriter member of the association.  (4) The director or his designee shall create and publish a list of qualified jurisdictions under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the director and a certified reinsurer.  (a) In order to determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and the extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction must agree to share information and cooperate with the director with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as a qualified jurisdiction if the director has determined that the jurisdiction does not adequately and promptly enforce final United States judgment and arbitration awards. Additional factors may be considered in the discretion of the director.  (b) A list of qualified jurisdictions must be published through the National Association of Insurance Commissioners (NAIC) Committee Process. The director or his designee shall consider this list in determining qualified jurisdictions. If the director or his designee approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the director or his designee shall provide thoroughly documented justification in accordance with criteria to be developed under regulations.  (c) United States jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program must be recognized as qualified jurisdictions.  (d) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the director or his designee has the discretion to suspend the reinsurer's certification indefinitely, in lieu of revocation.  (5) The director or his designee shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the director or his designee pursuant to regulation. The director or his designee shall publish a list of all certified reinsurers and their ratings.  (6) A certified reinsurer shall secure obligations assumed from domestic ceding insurers under this subsection at a level consistent with its rating, as specified in regulations promulgated by the director or his designee.  (a) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the director or his designee and consistent with the provisions of this section, or in a multibeneficiary trust in accordance with subsection (E), except as otherwise provided in this subsection.  (b) If a certified reinsurer maintains a trust to fully secure its obligations subject to subsection (E), and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligation incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other domestic jurisdictions and for its obligations subject to subsection (E). It is a condition to the grant of certification under subsection (F) that the certified reinsurer shall bind itself, by the language of the trust and agreement with the commissioner with principal regulatory oversight of each trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other trust account.  (c) The minimum trusteed surplus requirements provided in subsection (E) are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that the trust shall maintain a minimum trusteed surplus of ten million dollars.  (d) If the security is insufficient, the director or his designee shall reduce the allowable credit by an amount proportionate to the deficiency and has the discretion to impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.  (e) A certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent of its obligations.  (i) As used in this subsection, the term "terminate" refers to revocation, suspension, voluntary surrender, and inactive status.  (ii) If the director or his designee continues to assign a higher rating as permitted by other provisions of this section, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.  (7) If an applicant for certification has been certified as a reinsurer in a NAIC-accredited jurisdiction, the director or his designee has the discretion to defer to that jurisdiction's certification and to defer to the rating assigned by that jurisdiction, and the assuming insurer must be considered to be a certified reinsurer in this State.  (8) A certified reinsurer that ceases to assume new business in this State may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection, and the director or his designee shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.  (G)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer meeting each of the conditions set forth below:  (a) The assuming insurer must have its head office or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction. A "reciprocal jurisdiction" is a jurisdiction that meets one of the following:  (i) a non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subsection, a "covered agreement" is an agreement entered into pursuant to Dodd Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. Sections 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this State or for allowing the ceding insurer to recognize credit for reinsurance;  (ii) a U.S. jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or  (iii) a qualified jurisdiction, as determined by the director pursuant to Section 38-9-200(F)(4), which is not otherwise described in subsubitem (a)(i) or (a)(ii) and which meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the director in regulation.  (b) The assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, minimum capital and surplus equivalents (net of liabilities), calculated according to the methodology applicable in its domiciliary jurisdiction, and a central fund containing a balance in amounts to be set forth in regulation.  (c) The assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, which will be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, a minimum solvency or capital ration in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and also is licensed.  (d) The assuming insurer must agree and provide adequate assurance to the director, in a form specified by the director pursuant to regulation, as follows:  (i) the assuming insurer must provide prompt written notice and explanation to the director if it falls below the minimum requirements set forth in subitems (b) or (c), or if any regulatory action is taken against it for serious noncompliance with applicable law;  (ii) the assuming insurer must consent in writing to the jurisdiction of the courts of this State and to the appointment of the director as agent for service of process. The director may require that consent for service of process be provided to the director and included in each reinsurance agreement. Nothing in this provision shall limit, or in any way alter, the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;  (iii) the assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained;  (iv) each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to one hundred percent (100%) of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; and  (v) the assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement which involves this state's ceding insurers, and agree to notify the ceding insurer and the director and to provide security in an amount equal to one hundred percent (100%) of the assuming insurer's liabilities to the ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of Section 38-9-200(F) and Section 38-9-210 and as specified by the director in regulation.  (e) The assuming insurer or its legal successor must provide, if required by the director, on behalf of itself and any legal predecessors, certain documentation to the director, as specified by the director in regulation.  (f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria set forth in regulation.  (g) The assuming insurer's supervisory authority must confirm to the director on an annual basis, as of the preceding December thirty-first or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in subitems (b) and (c).  (h) Nothing in this provision precludes an assuming insurer from providing the director with information on a voluntary basis.  (2) The director timely shall create and publish a list of reciprocal jurisdictions.  (a) A list of reciprocal jurisdictions is published through the NAIC Committee Process. The director's list shall include any reciprocal jurisdiction as defined under Section 38-9-200(G)(1)(a)(i) and (ii), and shall consider any other reciprocal jurisdiction included on the NAIC list. The director may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions in accordance with criteria to be developed under regulations issued by the director.  (b) The director may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, in accordance with a process set forth in regulations issued by the director, except that the director shall not remove from the list a reciprocal jurisdiction as defined under Section 38-9-200(G)(1)(a)(i) and (ii). Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer which has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to Section 38-9-200, et seq.  (3) The director shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this subsection and to which cessions shall be granted credit in accordance with this subsection. The director may add an assuming insurer to such list if an NAIC-accredited jurisdiction has added such assuming insurer to a list of such assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the director as required under item (1)(d) of this subsection and complies with any additional requirements that the director may impose by regulation, except to the extent that they conflict with an applicable covered agreement.  (4) If the director determines that an assuming insurer no longer meets one or more of the requirements under this subsection, the director may revoke or suspend the eligibility of the assuming insurer for recognition under this subsection in accordance with procedures set forth in regulation.  (a) While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with item (3).  (b) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of the revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the director and consistent with the provisions of Section 38-9-210.  (5) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.  (6) Nothing in this subsection shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by Sections 38-9-200, et seq. or other applicable law or regulation.  (7) Credit may be taken under this subsection only for reinsurance agreements entered into, amended, or renewed on or after the effective date of the statute adding this subsection, and only with respect to losses incurred and reserves reported on or after the later of: (i) the date on which the assuming insurer has met all eligibility requirements pursuant to Section 38-9-200(G)(1) herein, and (ii) the effective date of the new reinsurance agreement, amendment, or renewal.  (a) This item does not alter or impair a ceding insurer's right to take credit for reinsurance, to the extent that credit is not available under this subsection, as long as the reinsurance qualifies for credit under any other applicable provision of Section 38-9-200, et seq.  (b) Nothing in this subsection shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.  (c) Nothing in this subsection shall limit, or in any way alter, the capacity of parties to any reinsurance agreement to renegotiate the agreement.  (H) Credit must be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsection (B), (C), (D), (E), (F), or (G) but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction.  (I) If the assuming insurer is not licensed, certified, or accredited to transact insurance or reinsurance in this State, the credit permitted by subsections (D) and (E) may not be allowed unless the assuming insurer agrees in the reinsurance agreements:  (1) that when the assuming insurer fails to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of a court of competent jurisdiction in a state of the United States, comply with all requirements necessary to give the court jurisdiction, and abide by the final decision of the court or of an appellate court in an appeal; and  (2) to designate the director or his designee or a designated attorney as its true and lawful attorney upon whom may be served lawful process in an action, a suit, or a proceeding instituted by or on behalf of the ceding company.  (3) This subsection does not conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes if an obligation is created in the agreement.  (J) If the assuming insurer does not meet the requirements of subsection (B), (C), (D), or (G) the credit permitted by subsection (E) or (F) may not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:  (1) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by subsection (E)(3), or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight all of the assets of the trust fund.  (2) The assets must be distributed by and claims must be filed with and valued by the commissioner with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies.  (3) If the commissioner with regulatory oversight determines that the assets of the trust fund or any part of them are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets or part of them must be returned by the commissioner with regulatory oversight to the trustee for distribution in accordance with the trust agreement.  (4) The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this provision.  (K) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the director may suspend or revoke the reinsurer's accreditation or certification.  (1) The director must give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect until after the director's order on hearing, unless:  (a) the reinsurer waives its right to hearing;  (b) the director's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer; or  (c) the director finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the director's action.  (2) While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with Section 38-9-210. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (F)(6) or Section 38-9-210.  (L)(1) A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the commissioner within thirty days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds fifty percent of the domestic ceding insurer's last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.  (2) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the director within thirty days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than twenty percent of the ceding insurer's gross written premium in the proper calendar year, or after it has determined that the reinsurance ceding to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that exposure is safely managed by the domestic ceding insurer.  (M) The director may promulgate regulations to implement the provisions of this section and Section 38-9-210.  (N) The director is further authorized to adopt rules and regulations applicable to reinsurance relating to arrangements described in item (1):  (1) a regulation adopted pursuant to this subsection may apply only to reinsurance relating to:  (a) life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits;  (b) universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period;  (c) variable annuities with guaranteed death or living benefits;  (d) long-term care insurance policies; or  (e) any other life and health insurance and annuity products as to which the NAIC adopts model regulatory requirements with respect to credit for reinsurance.  (2) A regulation adopted pursuant to this subsection may apply to any treaty containing policies issued on or after January 1, 2015, or policies issued prior to January 1, 2015, if risks pertaining to such pre-2015 policies are ceded in connection with the treaty, in whole or in part, on or after January 1, 2015.  (3) A regulation adopted pursuant to this subsection may require the ceding insurer, in calculating the amounts or forms of security required to be held under regulations promulgated under this authority, to use the valuation manual adopted by the NAIC under Section 11(B)(1) of the NAIC Standard Valuation Law, including all amendments adopted by the NAIC and in effect on the date as of which the calculation is made, to the extent applicable.  (4) A regulation adopted pursuant to this subsection shall not apply to cessions to an assuming insurer that:  (a) meets the conditions set forth in Section 38-9-200(G); or  (b) is certified in this State; or  (c) maintains at least two hundred fifty million dollars in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, including all amendments thereto adopted by the NAIC, excluding the impact of any permitted or prescribed practices and licensed in at least:  (i) twenty-six states; or  (ii) ten states and licensed or accredited in a total of at least thirty-five states.  (5) The authority to adopt regulations pursuant to this subsection does not limit the director's general authority to adopt regulations pursuant to subsection (M).  (O) This act shall apply to all cessions after the effective date of this act under reinsurance agreements that have an inception, anniversary, or renewal date not less than six months after the effective date of this act.  HISTORY: 1991 Act No. 13, Section 1; 1993 Act No. 181, Section 535; 1994 Act No. 370, Section 1; 1998 Act No. 422, Section 2; 2001 Act No. 58, Section 17, eff May 29, 2001; 2018 Act No. 172 (H.4656), Section 1, eff May 3, 2018; 2020 Act No. 165 (S.881), Section 1, eff September 28, 2020.  Effect of Amendment  2018 Act No. 172, Section 1, rewrote the section.  2020 Act No. 165, Section 1, rewrote the section.
 An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of Section 38-9-200 must be allowed in an amount not exceeding the liabilities carried by the ceding insurer provided that the director, or his designee, may adopt by regulation pursuant to Section 38-9-200(N) specific additional requirements relating to or setting forth the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements, or the circumstances pursuant to which a credit may be reduced or eliminated.  The reduction must be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations, if the security is held in the United States subject to withdrawal solely by and under the exclusive control of the ceding insurer or, for a trust, held in a qualified United States financial institution, defined in Section 38-9-220(B). This security may be in the form of:  (1) cash;  (2) securities listed by the National Association of Insurance Commissioners Investment Analysis Office, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office and qualifying as admitted assets as defined in Section 38-13-80;  (3) clean, irrevocable, unconditional letters of credit issued or confirmed by a qualified United States financial institution defined in Section 38-9-220(A) no later than December thirty-first of the year for which filing is being made and in the possession of, or in trust for, the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; or  (4) other form of security acceptable to the director, or his designee.  HISTORY: 1991 Act No. 13, Section 1; 1993 Act No. 181, Section 535; 1998 Act No. 422, Section 3; 2012 Act No. 137, Section 4, eff April 2, 2012; 2018 Act No. 172 (H.4656), Section 2, eff May 3, 2018; 2020 Act No. 165 (S.881), Section 2, eff September 28, 2020; 2022 Act No. 195 (H.4832), Section 4, eff May 16, 2022.  Effect of Amendment  2018 Act No. 172, Section 2, amended the section, authorizing the director to adopt additional requirements for an asset or reduction from liability for reinsurance ceded by a domestic insurer and expanding the acceptable form of security for a liability reduction.  2020 Act No. 165, Section 2, in the first undesignated paragraph, substituted "Section 38-9-200(N)" for "Section 38-9-200(M)".  2022 Act No. 195, Section 4, in (2), substituted "National Association of Insurance Commissioners Investment Analysis Office" for "Securities Valuation Office of the National Association of Insurance Commissioners", and made nonsubstantive changes.
 (A) For purposes of Section 38-9-210, a "qualified United States financial institution" means an institution that:  (1) is organized or, for a United States office of a foreign banking organization, licensed under the laws of the United States or its state;  (2) is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies;  (3) has been determined by the director or designee or the Securities Valuation Office of the National Association of Insurance Commissioners to meet standards of financial condition and standing necessary and appropriate to regulate the quality of financial institutions whose letters of credit are acceptable to the director or designee.  (B) For purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, a "qualified United States financial institution" means an institution that is:  (1) organized or, for a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or its state and has been granted authority to operate with fiduciary powers;  (2) regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies.  HISTORY: 1991 Act No. 13, Section 1; 1993 Act No. 181, Section 535.
 (A) Each property and casualty insurance company doing business in this State, unless otherwise exempted by the director or his designee, shall submit annually the opinion of an actuary entitled "Statement of Actuarial Opinion". This opinion must be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions.  (B)(1) Each property and casualty insurance company domiciled in this State that is required to submit a statement of Actuarial Opinion shall submit annually an Actuarial Opinion Summary, written by the company's Appointed Actuary. This Actuarial Opinion Summary must be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and must be considered as a document supporting the Actuarial Opinion required in subsection (A).  (2) A company licensed but not domiciled in this State shall provide the Actuarial Opinion Summary upon request.  (C)(1) An Actuarial Report and underlying workpapers as required by the appropriate NAIC Property and Casualty Annual Statement Instructions must be prepared to support each Actuarial Opinion.  (2) If the insurance company fails to provide a supporting Actuarial Report or workpapers, or both, at the request of the director or his designee or the director or his designee determines that the supporting Actuarial Report or workpapers provided by the insurer is otherwise unacceptable to the director or his designee, the director or his designee may engage a qualified actuary at the expense of the insurer to review the opinion and the basis for the opinion and prepare the supporting Actuarial Report or workpapers, or both.  (D) The Appointed Actuary is not liable for damages to a person, other than the insurer and the director or his designee, for any act, error, omission, decision, or conduct with respect to the actuary's opinion, except in cases of fraud or wilful misconduct on the part of the Appointed Actuary.  HISTORY: 2009 Act No. 27, Section 1, eff June 2, 2009.
 (A) The Statement of Actuarial Opinion must be provided with the Annual Statement in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and must be treated as a public document.  (B)(1) Documents, materials, or other information in the possession or control of the department that are considered an Actuarial Report, workpapers, or Actuarial Opinion Summary provided in support of the opinion, and any other material provided by the company to the director or his designee in connection with the Actuarial Report, workpapers, or Actuarial Opinion Summary, are confidential by law and privileged, are exempt from disclosure under applicable law, are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action.  (2) This provision may not be construed to limit the director or his designee's authority to release the documents to the Actuarial Board for Counseling and Discipline so long as the material is required for the purpose of professional disciplinary proceedings and that the Actuarial Board for Counseling and Discipline establishes procedures satisfactory to the director or his designee for preserving the confidentiality of the documents, nor may this section be construed to limit the director or his designee's authority to use the documents, materials, or other information in furtherance of a regulatory or legal action brought as part of the director or his designee's official duties.  (C) Neither the director nor a person who received documents, materials, or other information while acting under the authority of the director is permitted or required to testify in a private civil action concerning confidential documents, materials, or information subject to subsection (B).  (D) In order to assist in the performance of the director's duties, the director may:  (1) share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subsection (B) with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information and has the legal authority to maintain confidentiality;  (2) receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and  (3) enter into agreements governing sharing and use of information consistent with subsections (B), (C), and (D).  (E) A waiver of an applicable privilege or a claim of confidentiality in the documents, materials, or information shall not occur as a result of disclosure to the director under this section or as a result of sharing as authorized in subsection (D).  HISTORY: 2009 Act No. 27, Section 1, eff June 2, 2009.
 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, 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:  (1) An insurer, if possessed of capital and surplus amounts on December 31, 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, shall maintain not less than the amount of capital stated in its 1990 annual statement and maintain surplus of not less than twenty-five percent of that amount of capital. If 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 director or his designee may begin delinquency proceedings as provided by Chapter 27 of this title. If the minimum capital required to be maintained by this section by the insurer becomes impaired, the insurer is delinquent, and the director or his designee shall begin delinquency proceedings. If the capital is increased to an amount greater than the amount possessed on December 31, 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 director or his designee 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, the insurer is delinquent, and the director or his designee shall begin delinquency proceedings.  (2) A mutual insurer, if possessed of surplus 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 Section 38-9-20, shall maintain not less than the amount of surplus stated in its 1990 annual statement. If the surplus of the insurer is reduced to less than eighty percent of the amount shown in its 1990 annual statement, the insurer is considered delinquent, and the director or his designee may begin delinquency proceedings as provided by Chapter 27 of this title. If the surplus of the insurer is increased to an amount greater than the amount possessed on December 31, 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 director or his designee 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 38-9-20, whichever is applicable.  HISTORY: Former 1976 Code Section 38-9-30 [1947 (45) 322; 1952 Code Section 37-143; 1962 Code Section 37-143] recodified as Section 38-55-20 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-630 [1947 (45) 322; 1948 (45) 1734; 1952 Code Section 37-183; 1962 Code Section 37-183; 1963 (53) 564; 1971 (57) 311] recodified as Section 38-9-30 by 1987 Act No. 155, Section 1; 1988 Act No. 317, Section 3; 1991 Act No. 13, Section 8; 1993 Act No. 181, Section 535.
 In this article, unless the context requires otherwise:  (1) "Adjusted RBC Report" means a risk based capital report which has been adjusted by the director in accordance with Section 38-9-320(F).  (2) "Capital and surplus" or "capital" except when used in the term "risk-based capital" or "adjusted capital", means net worth of a health maintenance organization as defined in Section 38-33-100 and, for all other licensees, means surplus to policyholders as defined in Section 38-1-20.  (3) "Corrective order" means an order issued by the director specifying corrective actions which the director has determined are required.  (4) "Domestic health organization" means any health organization domiciled in this State.  (5) "Domestic insurer" means an insurer domiciled in this State.  (6) "Domestic licensee" means and includes a domestic insurer and a domestic health organization.  (7) "Foreign health organization" means any health organization not domiciled in this State which is licensed in this State.  (8) "Foreign insurer" means an insurer which is licensed to transact business within this State, but which is not domiciled in this State.  (9) "Foreign licensee" means and includes a foreign insurer and a foreign health organization.  (10) "Health organization" means an insurer which is required to use the NAIC's Annual Statement Blank-Health pursuant to the NAIC Annual Statement Instructions-Health and to file it as prescribed by Section 38-13-80 or a health maintenance organization, as defined in Section 38-33-20, which is required to use the NAIC's Annual Statement Blank-Health pursuant to the NAIC Annual Statement Instructions-Health and to file it as prescribed by Section 38-33-90.  (11) "Licensee" means and includes a life and health insurer, a property and casualty insurer, and a health organization.  (12) "Life and health insurer" means an insurer licensed to transact life and health insurance in this State and any licensed property and casualty insurer writing only accident and health insurance.  (13) "NAIC" means the National Association of Insurance Commissioners.  (14) "Negative trend" means a negative trend over a period of time, as determined in accordance with the Trend Test Calculation included within the NAIC RBC Instructions.  (15) "Property and casualty insurer" means an insurer licensed to transact property and casualty insurance in this State. A "property and casualty insurer" does not include monoline mortgage guaranty insurers, financial guaranty insurers, or title insurers.  (16) "RBC" means risk-based capital.  (17) "RBC Instructions" means the risk-based capital report including RBC Instructions adopted and amended by the NAIC.  (18) "RBC Level" means a licensee's Company Action Level RBC, Regulatory Action Level RBC, Authorized Control Level RBC, or Mandatory Control Level RBC:  (a) "Company Action Level RBC" means the product of 2.0 and its Authorized Control Level RBC;  (b) "Regulatory Action Level RBC" means the Product of 1.5 and its Authorized Control Level RBC;  (c) "Authorized Control Level RBC" means the number determined by the RBC formula in accordance with the RBC Instructions; and  (d) "Mandatory Control Level RBC" means the product of .70 and the Authorized Control Level RBC.  (19) "RBC Plan" means a comprehensive financial plan filed by a licensee containing the elements specified within Section 38-9-330(B). If the director rejects the RBC Plan and it is revised by the licensee, with or without the director's recommendation, then that plan must be called the "Revised RBC Plan".  (20) "RBC Report" means the report required by Section 38-9-320.  (21) "Total Adjusted Capital" means the sum of a licensee's statutory capital and surplus and any other items provided in the RBC Instructions.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 1, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 1, rewrote the section, adding definitions for: "Capital and surplus" or "capital", "Domestic health organization", "Domestic licensee", "Foreign health organization", "Foreign licensee", "Health organization", "Licensee", "Negative trend", and "RBC".
 (A) Every domestic licensee must, on or before each March first filing date, prepare and submit to the director an RBC Report of its RBC Levels as of the end of the preceding calendar year. That RBC Report must be filed in a form and must contain such information required by the RBC Instructions. In addition, every domestic licensee must file its RBC Report:  (1) with the NAIC in accordance with the RBC Instructions; and  (2) with the chief insurance regulatory officer in a state in which the licensee is authorized to transact business, if that chief insurance regulatory officer has notified the licensee in writing. The licensee must file its RBC Report with that chief insurance regulatory officer no later than fifteen days from its receipt of notice to file or the March first filing date.  (B)(1) A life and health insurer's RBC must be determined in accordance with the formula detailed in the RBC Instructions. The formula must be determined in each case by applying the factors in the manner detailed in the RBC Instructions and must take into account, and may adjust for the covariance between:  (a) risk with respect to assets;  (b) risk of adverse insurance experience with respect to liabilities and obligations;  (c) interest rate risk with respect to the insurer's business; and  (d) all other business risks and other relevant risks in the RBC Instructions.  (2) Each risk must be determined in each case by applying the factors in the manner set forth in the RBC Instructions.  (C)(1) A property and casualty insurer's RBC must be determined by applying the factors in the manner detailed in the RBC Instructions and must be determined in accordance with the formula detailed in the RBC Instructions. The formula must take into account, and may adjust for the covariance between:  (a) asset risk;  (b) credit risk;  (c) underwriting risk; and  (d) all other business risks and other relevant risks in the RBC Instructions.  (2) Each risk must be determined in each case by applying the factors in the manner set forth in the RBC Instructions.  (D)(1) A health organization's RBC must be determined by applying the factors in the manner detailed in the RBC Instructions and must be determined in accordance with the formula detailed in the RBC Instructions. The formula must be taken into account, and may adjust for the covariance between:  (a) asset risk;  (b) credit risk;  (c) underwriting risk; and  (d) all other business risks and other relevant risks in the RBC Instructions.  (2) Each risk must be determined in each case by applying the factors in the manner set forth in the RBC Instructions.  (E) An excess of capital over the amount produced by the RBC requirements, formulas, schedules, and instructions contained in this article is desirable. Licensees should seek to maintain capital above the required RBC levels. Additional capital is used and is useful in securing a licensee against various risks inherent in or affecting the business of insurance and not accounted for, or which only may be partially measured, by the RBC requirements contained in this article.  (F) If a domestic licensee files an RBC Report which, in the judgment of the director, is inaccurate, then the director must adjust the RBC Report to correct the inaccuracy and must notify the domestic licensee in writing of the adjustment. The notice must include the reasons for the adjustment.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 2, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 2, substituted "licensee" for "insurer" throughout; rewrote subsection (C); added subsection (D); redesignated the remaining subsections accordingly; and made other nonsubstantive changes.
 (A) A "Company Action Level Event" includes any of the following events:  (1) filing of an RBC Report which indicates that Total Adjusted Capital is greater than, or equal to, Regulatory Action Level RBC, but is less than Company Action Level RBC;  (2) filing of an RBC Report which indicates that a life and health insurer has Total Adjusted Capital which is greater than, or equal to, its Company Action Level RBC, but is less than the product of its Authorized Control Level RBC and 3.0 and has a negative trend;  (3) filing of an RBC Report which indicates that a property and casualty insurer has Total Adjusted Capital which is greater than, or equal to, its Company Action Level RBC, but is less than the product of its Authorized Control Level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the NAIC Property and Casualty RBC instructions;  (4) filing of an RBC Report which indicates that a health organization has Total Adjusted Capital which is greater than, or equal to, its Company Action Level RBC, but less than the product of its Authorized Control Level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the NAIC Health RBC Instructions; or  (5) issuance of an Adjusted RBC Report that indicates the event in item (1), (2), (3), or (4), provided that the licensee does not challenge the Adjusted RBC Report pursuant to Section 38-9-370. If the licensee challenges an Adjusted RBC Report, then the Company Action Level Event occurs upon notification that an administrative law judge has rejected the challenge.  (B) In the event of a Company Action Level Event, the licensee must prepare and submit to the director an RBC Plan which must:  (1) identify the conditions which contributed to the Company Action Level Event;  (2) include proposals for corrective actions which will result in the elimination of the Company Action Level Event;  (3) provide projections of the licensee's financial results for the current year and for at least the four succeeding years if the licensee is a life and health insurer or a property and casualty insurer, or at least two succeeding years if the licensee is a health organization. The projections must consider both the absence of proposed corrective actions and the proposed corrective actions. The projections must include projections of statutory balance sheets, operating income, net income, capital and surplus, and RBC levels. The projections both for new and for renewal business may include separate projections for each major line of business and may separately identify each income, expense, and benefit component;  (4) identify key assumptions impacting upon the projections and detail the sensitivity of the projections to the assumptions; and  (5) identify the quality of, and any problems associated with, the licensee's business including, but not limited to, assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case.  (C) The RBC Plan must be submitted within forty-five days of the Company Action Level Event. If the licensee challenges an Adjusted RBC Report pursuant to Section 38-9-370, then the RBC Plan must be submitted within forty-five days after notification that an administrative law judge has rejected the challenge.  (D) Within sixty days after the submission of an RBC Plan, the director must notify the licensee stating whether the RBC Plan may be implemented or if the RBC Plan is unsatisfactory. If the director determines that the RBC Plan is unsatisfactory, then notification must set forth the reasons for that determination. The notification may set forth proposed revisions which will render the RBC Plan satisfactory. Upon receipt of notification, the licensee must prepare a Revised RBC Plan which may incorporate by reference any revisions proposed by the director. That Revised RBC Plan must be submitted to the director within forty-five days after the date of notification. If the licensee challenges the notification under Section 38-9-370, then the Revised RBC Plan must be submitted within forty-five days after notification that an administrative law judge has rejected the challenge.  (E) If the director notifies a licensee that its RBC Plan or its Revised RBC Plan is unsatisfactory, then the director, subject to the licensee's right to a public hearing pursuant to Section 38-9-370, may specify within the notification that it constitutes a Regulatory Action Level Event.  (F) Every domestic licensee that files an RBC Plan or Revised RBC Plan with the director must also file a copy of the RBC Plan or Revised RBC Plan with the chief insurance regulatory officer in any state in which that licensee is licensed to transact business if that state has RBC provisions substantially similar to Section 38-9-380, Section 38-9-390, and Section 38-9-400, and if that chief insurance regulatory officer has requested the filing in writing. The licensee must file a copy of the RBC Plan or Revised RBC Plan in that state no later than fifteen days after its receipt of the request to file or the date on which the RBC Plan or Revised RBC Plan is filed under Section 38-9-330(C) and (D).  HISTORY: 1996 Act No. 254, Section 2; 2009 Act No. 27, Section 3, eff June 2, 2009; 2014 Act No. 164 (S.908), Section 3, eff January 1, 2015; 2016 Act No. 191 (S.978), Section 1, eff January 1, 2017.  Effect of Amendment  2014 Act No. 164, Section 3, substituted "licensee" for "insurer" throughout; added subsection (A)(4); in subsection (A)(5), substituted "(3), or (4)" for "(3) of this subsection"; and rewrote subsection (B)(3).  2016 Act No. 191, Section 1, in (A)(2), substituted "3.0" for "2.5".
 (A) A "Regulatory Action Level Event" includes any one of the following events:  (1) filing of an RBC Report which indicates that Total Adjusted Capital is greater than, or equal to, Authorized Control Level RBC, but is less than Regulatory Action Level RBC;  (2) issuance of an Adjusted RBC Report that indicates the event in Section 38-9-340(A)(1), provided that the licensee does not challenge that Adjusted RBC Report pursuant to Section 38-9-370. If the licensee challenges an Adjusted RBC Report, then the Regulatory Action Level Event occurs upon notification that an administrative law judge has rejected the challenge;  (3) failure to file an RBC Report by the March first filing date, unless the licensee has filed an explanation for this failure that is satisfactory to the director and has cured the failure within ten days after the March first filing date;  (4) failure to timely submit an RBC Plan or Revised RBC Plan to the director;  (5) notification that the RBC Plan or Revised RBC Plan is, in the judgment of the director, unsatisfactory and that the notification constitutes a Regulatory Action Level Event, provided that the licensee does not challenge the determination under Section 38-9-370. If the licensee challenges a determination, then the Regulatory Action Level Event occurs upon notification that an administrative law judge has rejected the challenge;  (6) notification by the director that the licensee has failed to adhere to its RBC Plan or its Revised RBC Plan. However, notification must conclude that the failure has had substantial adverse effect upon the ability of the licensee to eliminate the Company Action Level Event in accordance with its RBC Plan or Revised RBC Plan, provided that the licensee has not challenged the determination pursuant to Section 38-9-370. If the licensee challenges a determination, then the Regulatory Action Level Event occurs upon notification that an administrative law judge has rejected the challenge.  (B) In the event of a Regulatory Action Level Event, the director must:  (1) require the licensee to prepare and submit an RBC Plan or a Revised RBC Plan;  (2) perform an examination or an analysis of the assets, liabilities, and operations of the licensee, including a review of the licensee's RBC Plan or its Revised RBC Plan; and  (3) issue a Corrective Order detailing corrective actions which the director determines are required.  (C) In determining corrective actions, the director may take into account factors which he considers relevant based upon his examination or analysis. Those factors may include, but must not be limited to, the results of any sensitivity tests undertaken pursuant to the RBC Instructions.  (D) The RBC Plan or Revised RBC Plan must be submitted within forty-five days after the occurrence of the Regulatory Action Level Event. If the licensee challenges an Adjusted RBC Report or a Revised RBC Plan pursuant to Section 38-9-370, then the RBC Plan or Revised RBC Plan must be submitted within forty-five days after notification that an administrative law judge has rejected the challenge.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 4, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 4, substituted "licensee" for "insurer" throughout; and made other nonsubstantive changes.
 (A) An "Authorized Control Level Event" includes any of the following events:  (1) filing of an RBC Report which indicates that a licensee's Total Adjusted Capital is greater than, or equal to, its Mandatory Control Level RBC, but is less than its Authorized Control Level RBC;  (2) issuance of an Adjusted RBC Report that indicates the event in Section 38-9-350(A)(1), provided that the licensee does not challenge that Adjusted RBC Report pursuant to Section 38-9-370. If the licensee challenges that Adjusted RBC Report, then the Authorized Control Level Event occurs upon notification that an administrative law judge has rejected the challenge; or  (3) the failure of a licensee to respond to a Corrective Order in a manner satisfactory to the director, provided the licensee has not challenged the Corrective Order pursuant to Section 38-9-370. If the licensee has challenged a Corrective Order and an administrative law judge has rejected the challenge or has modified the Corrective Order, then the Authorized Control Level Event occurs upon the failure of the licensee to respond to that Corrective Order in a manner satisfactory to the director.  (B) In the event of an Authorized Control Level Event, the director may take action pursuant to Section 38-9-340 or, if the director considers it to be in the best interests of the policyholders and creditors of the licensee and of the public, he may take action necessary to place the licensee under regulatory control pursuant to Section 38-26-10, et seq., or to Section 38-27-10, et seq. The Authorized Control Level Event is sufficient grounds for the director to take that action, and the director has the rights, powers, and duties detailed within those provisions of law. If the director takes action, then the licensee is entitled to the protections that are afforded under those provisions pertaining to summary proceedings.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 5, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 5, substituted "licensee" for "insurer" throughout; and made other nonsubstantive changes.
 (A) A "Mandatory Control Level Event" includes any one of the following events:  (1) filing of an RBC Report which indicates that the licensee's Total Adjusted Capital is less than its Mandatory Control Level RBC;  (2) notification of an Adjusted RBC Report pursuant to Section 38-9-360(A)(1), provided the licensee does not challenge that Adjusted RBC Report pursuant to Section 38-9-370. If the licensee challenges an Adjusted RBC Report notification, then the Mandatory Control Event Level occurs upon notification that an administrative law judge has rejected the challenge.  (B) In the event of a Mandatory Control Level Event:  (1) For a life and health insurer, the director must take action necessary to place the insurer under regulatory control pursuant to Section 38-26-10, et seq., or Section 38-27-10, et seq. The Mandatory Control Level Event is sufficient grounds for the director to take that action, and the director has the rights, powers, and duties detailed within those provisions of law. If the director takes action, then the insurer is entitled to the protections afforded under those provisions pertaining to summary proceedings. The director, in his discretion, may forego action for up to ninety days after the Mandatory Control Level Event if the director finds that there is a reasonable expectation that the Mandatory Control Level Event will be eliminated within that period.  (2) For a property and casualty insurer, the director must take action necessary to place the insurer under regulatory control pursuant to Section 38-26-10, et seq., or Section 38-27-10, et seq. If the insurer is not writing business and is running off its existing business, then the director may allow the insurer to continue its run-off under his supervision. The Mandatory Control Level Event is sufficient grounds for the director to take either action, and the director has the rights, powers, and duties detailed within those provisions. If the director takes action, then the insurer is entitled to the protections afforded under those provisions pertaining to summary proceedings. The director, in his discretion, may forego action for up to ninety days after the Mandatory Control Level Event if the director finds that there is a reasonable expectation that the Mandatory Control Level Event will be eliminated within that period.  (3) For a health organization, the director must take action necessary to place the health organization under regulatory control pursuant to Section 38-26-10, et seq., or Section 38-27-10, et seq. In that event, the Mandatory Control Level Event must be considered an indication of a hazardous financial condition which serves as sufficient grounds for the director to commence delinquency proceedings, and the receiver appointed in conjunction with the proceedings has the rights, powers, and duties with respect to the licensee as are set forth in Section 38-26-10, et seq., or Section 38-27-10, et seq., or an order of liquidation, rehabilitation, or conservation entered under it. If the director takes action, then the health organization is entitled to the protections afforded under those provisions pertaining to summary proceedings. The director, in his discretion, may forego action for up to ninety days after the Mandatory Control Level Event if the director finds that there is a reasonable expectation that the Mandatory Control Level Event will be eliminated within that period.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 6, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 6, substituted "licensee" for "insurer" throughout; in subsection (A)(2), inserted "Level" following "Control Event"; and added subsection (B)(3).
 The director may retain actuaries, investment experts, attorneys, and other consultants whom he considers necessary to enforce the provisions of this article. The fees, costs, and expenses of those actuaries, experts, attorneys, and other consultants must be borne by the affected licensee or other related or affiliated parties as required by the director.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 7, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 7, substituted "licensee" for "insurer".
 (A) A licensee has the right to a confidential hearing, on a record before the director, at which the licensee may challenge a determination or action by the director, upon notification to a licensee by the director:  (1) of an Adjusted RBC Report;  (2) that the licensee's RBC Plan or Revised RBC Plan is unsatisfactory, and that this notification constitutes a Regulatory Action Level Event with respect to the licensee;  (3) that the licensee has failed to adhere to its RBC Plan or Revised RBC Plan and that this failure has a substantial adverse effect on the ability of the licensee to eliminate the Company Action Level Event with respect to the licensee in accordance with its RBC Plan or Revised RBC Plan; or  (4) of a corrective order with respect to the licensee.  (B) The licensee shall notify the director of its request for a hearing within five days after the notification by the director pursuant to subsection (A). Upon receipt of the licensee's request for a hearing, the director shall set a date for the hearing, which must be no less than ten days nor more than thirty days after the date of the licensee's request.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 8, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 8, rewrote the section.
 (A) All RBC Reports and Adjusted RBC Reports, to the extent the information contained within them is not required to be set forth in a publicly available annual statement schedule; all RBC Plans, including the results or report of an examination or analysis of a licensee performed pursuant to this article; and a Corrective Order issued by the director, including information that will be damaging to a licensee if any of them are made available to the licensee's competitors, must be kept confidential, by law, must not be made public, and are not subject to subpoena. The director may use these reports, plans, and orders for enforcement actions either pursuant to this article or pursuant to another insurance law of this State.  (B) Neither the director nor a person who received documents, materials, or other information while acting under the authority of the director can be permitted or required to testify in a private civil action concerning confidential documents, materials, or information subject to subsection (A).  (C) The director may:  (1) share documents, materials, or other information, including the confidential and privileged documents, materials or information subject to subsection (A), with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information;  (2) receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and  (3) enter into agreements governing sharing and use of information consistent with this subsection.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 9, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 9, redesignated and rewrote the former section as subsection (A), and added subsection (B) and (C).
 (A) The comparison of a licensee's Total Adjusted Capital to any of its RBC Levels is a regulatory tool for corrective action. It is not intended as a means to rank licensees. Therefore, except as otherwise specifically required under the provisions of this article, the making, publishing, disseminating, circulating, or placing before the public, or, causing to be directly or indirectly made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio or television station, or in another way, an advertisement, announcement, or statement containing an assertion or representation with regard to the RBC Levels of a licensee or of a component derived in the calculations by a licensee or agent engaged in the business of insurance is considered misleading and is prohibited.  (B) If a materially false or inappropriate comparison of a licensee's Total Adjusted Capital to its RBC Levels or any RBC Level is published in any written publication and the licensee is able to demonstrate with substantial proof the falsity or the inappropriateness of the statement to the director, then the licensee may publish an announcement approved by the director in that written publication solely to rebut the materially false or inappropriate statement.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 10, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 10, substituted "licensee" for "insurer" throughout, and made other nonsubstantive changes.
 The director or his designee shall notify each licensed insurer that does not comply with Section 38-9-10 or 38-9-20 of the amounts of capital and surplus if a stock insurer, or the amount of surplus if a mutual insurer, the insurer shall maintain in order to continue to remain licensed in this State. A schedule of the amounts required must be maintained by each insurer. This schedule must be revised annually as to those insurers whose minimum capital and surplus requirements are increased periodically as required by Section 38-9-30.  HISTORY: Former 1976 Code Section 38-9-40 [1947 (45) 322; 1952 Code Section 37-144; 1962 Code Section 37-144] recodified as Sections 38-63-10, 38-65-10, and 38-69-10 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-640 [1962 Code Section 37-183.1; 1963 (53) 564] recodified as Section 38-9-40 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535; 1998 Act No. 411, Section 2.
 RBC Instructions, RBC Reports, Adjusted RBC Reports, RBC Plans, and Revised RBC Plans are intended only for use by the director in monitoring the solvency of licensees and in monitoring the need for corrective action. They must not be used for ratemaking, considered, or introduced as evidence in a ratemaking proceeding, or used to calculate or to derive an element of an appropriate premium level or rate of return for a line of insurance that a licensee, an affiliated licensee, or a subsidiary insurer underwrites.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 11, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 11, substituted "licensee" for "insurer" throughout; substituted "to derive an element" for "to derive any elements"; and made other nonsubstantive changes.
 This article is supplemental to all other laws of this State. It does not preclude or limit any other powers or duties of the director or his designee.  HISTORY: 1996 Act No. 254, Section 2.
 The director may promulgate regulations necessary for the implementation of this article.  HISTORY: 1996 Act No. 254, Section 2.
 The director may exempt from the application of this article:  (1) a domestic property and casualty insurer that:  (a) writes direct business only in this State;  (b) writes direct annual written premiums of two million dollars or less; and  (c) assumes no reinsurance in excess of five percent of its direct written premium; and  (2) a domestic health organization that:  (a) writes direct business only in this State;  (b) assumes no reinsurance in excess of five percent of direct premium written; and  (c) writes direct annual premiums of one million dollars or less.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 12, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 12, rewrote the section.
 (A) A foreign licensee, upon written request by the director, must submit an RBC Report as of the end of the preceding calendar year not later than the date that an RBC Report would be required to be filed by a domestic licensee under this article or fifteen days after that request is received by the foreign licensee. In addition, a foreign licensee, upon written request by the director, must promptly submit a copy of an RBC document that has been filed with the chief insurance regulatory officer of another state.  (B) In the event of a Company Action Level Event, Regulatory Action Level Event, or Authorized Control Level Event by a foreign licensee as determined under the RBC Laws in its state of domicile or, if no RBC Laws are in force in that state, as determined under the provisions of this article, if the chief insurance regulatory officer of the state of domicile of that foreign licensee fails to require the foreign licensee to file an RBC Plan in the manner specified under that state's RBC Laws or, if no RBC statute is in force in that state, under Section 38-9-330, then the director may require the foreign licensee to file an RBC Plan. The failure of the foreign licensee to file an RBC Plan with the director is grounds for the director to order the foreign licensee to cease and desist from writing new insurance business in this State.  (C) In the event of a Mandatory Control Level Event by a foreign licensee, if no domiciliary receiver has been appointed for the foreign licensee under the rehabilitation and liquidation laws of its state of domicile, then the director may petition the circuit court pursuant to Section 38-27-910, et seq., for the liquidation of its property in this State. The occurrence of the Mandatory Control Level Event must be considered grounds for the petition.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 13, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 13, substituted "licensee" for "insurer" throughout, and made other nonsubstantive changes.
 There is no liability on the part of, and no cause of action, shall arise against the director, his designee, the Department of Insurance, or its employees or representatives and agents for any action of any nature taken in the performance of their powers and duties under this article.  HISTORY: 1996 Act No. 254, Section 2.
 All notices by the director which may result in regulatory action under this article must be transmitted by registered or certified mail. Those notices are effective upon the licensee's receipt.  HISTORY: 1996 Act No. 254, Section 2; 2014 Act No. 164 (S.908), Section 14, eff January 1, 2015.  Effect of Amendment  2014 Act No. 164, Section 14, substituted "licensee's" for "insurer's".
 An insurer that fails to meet the minimum capital and surplus requirements of this chapter, but which continues to remain licensed by virtue of Section 38-9-30, shall confine its business to the kinds of insurance for which it was licensed on July 1, 1988. If the insurer desires to write additional kinds of insurance, it shall comply with the capital and surplus requirements of Section 38-9-10 or 38-9-20 as applicable.  HISTORY: Former 1976 Code Section 38-9-50 [1956 (49) 1814; 1962 Code Section 37-144.1] recodified as Section 38-63-20, Section 38-65-20, Section 38-69-20, Section 38-71-220 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-650 [1962 Code Section 37-183.2; 1963 (53) 564] recodified as Section 38-9-50 by 1987 Act No. 155, Section 1; 1988 Act No. 317, Section 4; 1993 Act No. 181, Section 535.
 Sections 38-9-30 to 38-9-50 may not be construed as a limitation of any authority conferred elsewhere by this title upon the director or his designee to deny or revoke or suspend a license of an insurer.  HISTORY: Former 1976 Code Section 38-9-60 [1947 (45) 322; 1952 Code Section 37-145; 1962 Code Section 37-145] recodified as Section 38-55-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-660 [1962 Code Section 37-183.3;1963 (53) 564] recodified as Section 38-9-60 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 53.
 The director or his designee in his official capacity shall take and hold, in trust, deposits made by domestic insurers for the purpose of complying with the laws of any other state to enable the insurer to do business in that state. The insurer making the deposit is entitled to the income and may with the consent of the director or his designee and when not forbidden by the law under which the deposit is made, change, in whole or in part, the securities which compose the deposit for other solvent securities of equal par value approved by the director or his designee.  HISTORY: Former 1976 Code Section 38-9-70 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-146; 1962 Code Section 37-146; 1980 Act No. 305, Section 1] recodified as Sections 38-63-210, 38-69-110, and 38-71-30 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-670 [1947 (45) 322; 1952 Code Section 37-1851962 Code Section 37-185] recodified as Section 38-9-70 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 535.
 (A) The director or his designee shall require every insurer transacting, or desiring to transact, business in this State to deposit with him certificates of deposit of building and loan associations chartered by South Carolina 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 covered by insurance, or of national banks located within the State or banks chartered by South Carolina in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount covered by insurance, or other securities which:  (1) qualify as legal investments under the laws of this State for public sinking funds;  (2) are not in default as to principal or interest;  (3) have a current market value of not less than ten thousand nor more than two hundred thousand dollars, as determined by the director or his designee pursuant to the standards promulgated by the department.  (B) The director or his designee shall prescribe the amount, within the limits of this section, of the securities required, and he subsequently may increase or decrease the amount required.  (C) Notwithstanding the limitations in this section as to the amount of deposits required, the director or his designee may require an insurer to deposit an amount of securities in excess of the limits based on his consideration of the following:  (1) adverse findings reported in financial condition and market conduct examination reports;  (2) the National Association of Insurance Commissioners Insurance Regulatory Information System and its related reports;  (3) the ratios of commission expense, general insurance expense, policy benefits, and reserve increases as to annual premium and net investment income which could lead to a significant adjustment to an insurer's capital and surplus;  (4) whether the insurer's asset portfolio when viewed in light of current economic conditions is not of sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature;  (5) whether an insurer had a significant operating loss in the last twelve months or a shorter time;  (6) whether an affiliate, subsidiary, or a reinsurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations;  (7) contingent liabilities, pledges, or guaranties which individually or collectively involve a total amount which in the opinion of the director or his designee may affect the solvency of the insurer;  (8) whether the management of an insurer, including officers, directors, or other persons who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation necessary to serve the insurer in that position;  (9) whether management has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;  (10) whether the insurer has grown so rapidly and to an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;  (11) whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems.  HISTORY: Former 1976 Code Section 38-9-80 [1947 (45) 322; 1949 (46) 600; 1952 Code Section 37-147; 1962 Code Section 37-147] recodified as Section 38-55-50 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-680 [1962 Code Section 37-185.1; 1962 (52) 2148; 1969 (56) 212; 1975 (58) 279; 1986 Act No. 429, Section 1] recodified as Section 38-9-80 by 1987 Act No. 155, Section 1; 1992 Act No. 280, Section 1; 1993 Act No. 181, Section 535; 2000 Act No. 259, Section 4.
 The bonds or other securities required by Section 38-9-80 must be held as security for the payment of claims against the insurer arising out of its failure to meet obligations incurred in this State. Policyholders ratably and without preference and general creditors ratably, without preference, and subordinate to the claims of policyholders shall have a lien on the bonds or other securities for the amount of their claim.  HISTORY: Former 1976 Code Section 38-9-90 [1947 (45) 322; 1952 Code Section 37-148; 1962 Code Section 37-148] recodified as Section 38-55-60 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-690 [1962 Code Section 37-185.2;1962 (52) 2148] recodified as Section 38-9-90 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 53.
 HISTORY: Former Section, titled Management of assets of captive reinsurance company, had the following history: 2001 Act No. 58, Section 6, eff May 29, 2001. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 As used in this chapter, unless the context requires otherwise:  (1) "Alien captive insurance company" means an insurance company formed to write insurance business for its parents and affiliates and licensed pursuant to the laws of an alien jurisdiction which imposes statutory or regulatory standards in a form acceptable to the director on companies transacting the business of insurance in such jurisdiction.  (2) "Affiliate of" or "affiliated with" means a specific person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.  (3) "Association" means a legal association of individuals, corporations, limited liability companies, partnerships, political subdivisions, or associations:  (a) the member organizations of which collectively, or which does itself:  (i) own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer or organized as a limited liability company; or  (ii) have complete voting control over an association captive insurance company organized as a mutual insurer; or  (b) the member organizations of which collectively constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer.  (4) "Association captive insurance company" means a company that insures risks of the member organizations of the association and their affiliated companies.  (5) "Branch business" means any insurance business transacted by a branch captive insurance company in this State.  (6) "Branch captive insurance company" means an alien captive insurance company licensed by the director to transact the business of insurance in this State through a business unit with a principal place of business in this State.  (7) "Branch operations" means any business operations of a branch captive insurance company in this State.  (8) "Captive insurance company" means a pure captive insurance company, association captive insurance company, sponsored captive insurance company, special purpose captive insurance company, risk retention group, or industrial insured captive insurance company formed or licensed under this chapter. For purposes of this chapter, a branch captive insurance company must be a pure captive insurance company with respect to operations in this State, unless otherwise permitted by the director.  (9) "Consolidated GAAP net worth" means the consolidated owners' equity determined in accordance with GAAP for reporting to the United States Securities and Exchange Commission.  (10) "Control", including the terms "controlling," "controlled by", and "under common control with", means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by Section 38-21-220 that control does not exist in fact. The director may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support his determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.  (11) "Controlled unaffiliated business" means a person that:  (a) is not an affiliate of a parent company; and  (b) has an existing contractual relationship pursuant to which a parent or affiliated company exercises control of the risk management function of the person.  (12) "Director" means the Director of the South Carolina Department of Insurance or the director's designee.  (13) "Department" means the South Carolina Department of Insurance.  (14) "GAAP" means generally accepted accounting principles.  (15) "General account" means the assets and liabilities of a sponsored captive insurance company other than protected cell assets and protected cell liabilities.  (16) "Industrial insured" means an insured as defined in Section 38-25-150(8).  (17) "Industrial insured captive insurance company" means a company that insures risks of the industrial insureds that comprise the industrial insured group and their affiliated companies.  (18) "Industrial insured group" means a group that meets either of the following criteria:  (a) a group of industrial insureds that collectively:  (i) own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer or limited liability company; or  (ii) have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; or  (b) a risk retention group.  (19) "Member organization" means any individual, corporation, limited liability company, partnership, or association that belongs to an association.  (20) "Parent" means any corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent of the outstanding voting interests of a captive insurance company.  (21) "Participant" means an entity as defined in Section 38-90-240, and any affiliates of that entity, that are insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to the assets of a protected cell.  (22) "Participant contract" means a contract by which a sponsored captive insurance company insures the risks of a participant and limits the losses of the participant to the assets of a protected cell.  (23) "Person" means an individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or any similar entity or combination thereof.  (24) "Principal place of business" means the physical location in the State of South Carolina where the complete books and records of the captive company are available for examination by the director.  (25) "Protected cell" means an identified pool of assets and liabilities of a sponsored captive insurance company for one or more participants that is segregated and insulated from the remainder of the sponsored captive insurance company's assets and liabilities as set forth in this chapter. A protected cell may be unincorporated or incorporated.  (26) "Protected cell account" means a specifically identified bank or custodial account established by a sponsored captive insurance company for the purpose of segregating the protected cell assets of one protected cell from the protected cell assets of other protected cells and from the assets of the sponsored captive insurance company's general account.  (27) "Protected cell assets" means all assets, contract rights, and general intangibles, identified with and attributable to a specific protected cell of a sponsored captive insurance company.  (28) "Protected cell liabilities" means all liabilities and other obligations identified with and attributable to a specific protected cell of a sponsored captive insurance company.  (29) "Pure captive insurance company" means a company that insures risks of its parent, affiliated companies, controlled unaffiliated business, or a combination thereof or cedes or assumes business from a risk pool for the purpose of risk sharing.  (30) "Risk retention group" means a captive insurance company formed under the Liability Risk Retention Act of 1986, 15 U.S.C. Section 3901, et seq., as amended.  (31) "Special purpose captive insurance company" means a captive insurance company that is formed or licensed under this chapter that does not meet the definition of any other type of captive insurance company defined in this section.  (32) "Sponsor" means an entity that is approved by the director to provide all or part of the capital and surplus required by applicable law and to organize and operate a sponsored captive insurance company.  (33) "Sponsored captive insurance company" means a captive insurance company:  (a) in which the minimum capital and surplus required by applicable law is provided by one or more sponsors;  (b) that is formed or licensed under this chapter;  (c) that segregates liability through one or more protected cells; and  (d) that insures the risks of participants through participant contracts.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 8, eff May 29, 2001; 2002 Act No. 188, Section 2, eff March 12, 2002; 2002 Act No. 228, Sections 11.A, 11.B, eff May 1, 2002; 2003 Act No. 73, Section 24.A, eff June 25, 2003; 2004 Act No. 291, Sections 15, 16, eff July 29, 2004; 2014 Act No. 282 (S.909), Section 4, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 4, added paragraph (16), definition of "general account"; rewrote paragraph (24), definition of "protected cell"; added paragraph (25), definition of "protected cell account"; added paragraph (26), definition of "protected cell assets"; added paragraph (27), definition of "protected cell liabilities"; added paragraph (30), definition of "risk retention group"; in paragraph (32), definition of "sponsor", deleted reference to Section 38-90-220; in paragraph (33), definition of "sponsored captive insurance company", rewrote paragraphs (c) and (d); and redesignated the paragraphs accordingly.  2018 Act No. 251, Section 1, rewrote the section.
 (A) An association captive insurance company, an industrial insured captive insurance company, and a risk retention group shall comply with the investment requirements contained in this title. Notwithstanding any other provision of this title, the director may approve the use of alternative reliable methods of valuation and rating.  (B) A pure captive insurance company, a special purpose captive insurance company, other than a risk retention group formed as a special purpose captive insurance company, and a sponsored captive insurance company are not subject to any restrictions on allowable investments contained in this title; however, the director may request a written investment plan and may prohibit or limit an investment that threatens the solvency or liquidity of the company.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 10, eff May 29, 2001; 2002 Act No. 228, Section 14, eff May 1, 2002; 2006 Act No. 332, Section 17, eff June 1, 2006; 2014 Act No. 282 (S.909), Section 14, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 14, in subsection (A), substituted "An association captive insurance company, an industrial insured captive insurance company insuring the risks of an industrial insured group, and a captive insurance company formed as a risk retention group" for "An association captive insurance company and an industrial insured captive insurance company insuring the risks of an industrial insured group"; in subsection (B), inserted "other than a special purpose captive insurance company formed as a risk retention group,"; and in subsection (C), inserted "or a sponsored captive insurance company", and substituted "only by order of the director" for "only upon the prior written approval of the director".  2018 Act No. 251, Section 1, in (A), in the first sentence, deleted "insuring the risks of an industrial insured group, and a captive insurance company formed as a" following "an industrial insured captive insurance company"; in (B), deleted ", a captive reinsurance company" following "A pure captive insurance company" and substituted ""other than a risk retention group formed as a special purpose captive insurance company" for "other than a special purpose captive insurance company formed as a risk retention group"; and deleted (C), which related to a pure captive insurance company or a sponsored captive insurance company making loans to its parent company or affiliates.
 Upon approval by the director, only a pure captive insurance company, a special purpose captive insurance company, or a sponsored captive insurance company may make loans to its parent company or affiliates evidenced by a note in a form acceptable to and approved by the director. Loans of minimum capital or surplus funds or a combination thereof required by Section 38-90-40 are prohibited.  HISTORY: 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.
 (A) A captive insurance company may provide reinsurance, as authorized in this title, on risks ceded by any other insurer.  (B)(1) A captive insurance company may take credit for reserves on risks or portions of risks ceded to reinsurers complying with the provisions of Sections 38-9-200, 38-9-210, and 38-9-220.  (2) An industrial insured captive insurance company or a captive insurance company formed as a risk retention group may not take credit for reserves on risks or portions of risks ceded to a reinsurer if the reinsurer is not in compliance with Sections 38-9-200, 38-9-210, and 38-9-220.  (3) All other captive insurance companies may not take credit for reserves on risks or portions of risks ceded to a reinsurer if the reinsurer is not in compliance with Sections 38-9-200, 38-9-210, and 38-9-220, unless specific approval has been granted for this credit or the reinsurer by approval of the director, or the captive insurance company is participating in a risk pool for the purpose of risk sharing, as approved by the director.  HISTORY: 2000 Act No. 331, Section 1; 2007 Act No. 86, Section 1, eff June 14, 2007; 2014 Act No. 282 (S.909), Section 15, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 15, in subsection (B)(2), inserted "or a captive insurance company formed as a risk retention group".  2018 Act No. 251, Section 1, in (B)(3), substituted "approval of the director, or the captive insurance company is participating in a risk pool for the purpose of risk sharing, as approved by the director" for "order of the director" at the end.
 A captive insurance company may not be required to join a rating organization.  HISTORY: 2000 Act No. 331, Section 1; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, reenacted the section with no apparent changes.
 A captive insurance company, including a captive insurance company organized as a reciprocal insurer under this chapter, may not join or contribute financially to a plan, pool, association, or guaranty or insolvency fund in this State, and a captive insurance company, or its insured or its parent or any affiliated company or any member organization of its association, or in the case of a captive insurance company organized as a reciprocal insurer, a subscriber of the company, may not receive a benefit from a plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company. Subject to the approval of the director, participation by a captive insurance company, including a pure captive insurance company, in a pool for the purpose of risk sharing is not prohibited under this section.  HISTORY: 2000 Act No. 331, Section 1; 2009 Act No. 28, Section 10, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 16, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 16, inserted "by a captive insurance company, including a pure captive insurance company," in the second sentence, and added the third sentence.  2018 Act No. 251, Section 1, in the second sentence, substituted "approval of the director" for "prior written approval of the director or his designee" and deleted "commercial" following "for the purpose of", and deleted the third sentence, which related to the writing of third-party risk by a captive insurance company outside or a commercial risk sharing agreement.
 (A) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of four-tenths of one percent on the first twenty million dollars and three-tenths of one percent on each dollar after that, up to a maximum tax of one hundred thousand dollars. Taxes are based on the direct premiums written or contracted for on policies or contracts of insurance written by the captive insurance company during the year ending December thirty-first next preceding, after deducting from the direct premiums subject to the tax the amounts paid to policyholders as return premiums which must include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders.  (B) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of two hundred and twenty-five thousandths of one percent on the first twenty million dollars of assumed reinsurance premium, and one hundred fifty thousandths of one percent on the next twenty million dollars and fifty thousandths of one percent on the next twenty million dollars and twenty-five thousandths of one percent of each dollar of assumed reinsurance premium after that up to a maximum tax of one hundred thousand dollars. However, reinsurance tax does not apply to premiums for risks or portions of risks which are subject to taxation on a direct basis pursuant to subsection (A). A premium tax is not payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer or other funding mechanism under common ownership and control if the transaction is part of a plan to discontinue the operations related to the loss reserves and other liabilities being assumed of the other insurer or funding mechanism and if the intent of the parties to the transaction is to renew or maintain business with the captive insurance company.  (C)(1) If the aggregate taxes to be paid by a captive insurance company calculated under subsections (A) and (B) amount to less than five thousand dollars in any year, the captive insurance company shall pay a minimum tax of five thousand dollars for that year. However, in the calendar year in which a captive is first licensed, the minimum tax must be prorated on a quarterly basis.  (2) For captives licensed in the:  (a) first quarter, the prorated minimum tax is five thousand dollars;  (b) second quarter, the prorated minimum tax is three thousand seven hundred fifty dollars;  (c) third quarter, the prorated minimum tax is two thousand five hundred dollars; and  (d) fourth quarter, the prorated minimum tax is one thousand two hundred fifty dollars.  (3) In the calendar year in which a captive is first licensed, if the aggregate taxes to be paid by a captive insurance company calculated under subsections (A) and (B) amount to less than the minimum tax prorated on a quarterly basis, the captive insurance company shall pay the prorated minimum tax for that calendar year.  (4) If the aggregate taxes to be paid by a captive insurance company calculated under subsections (A) and (B) amount to more than one hundred thousand dollars in any year, the captive insurance company shall pay a maximum tax of one hundred thousand dollars for that year.  (D) A captive insurance company failing to make returns or to pay all taxes required by this section, is subject to the relevant sanctions of this title.  (E) Two or more captive insurance companies under common ownership and control must be taxed, as separate captive insurance companies.  (F) For the purposes of this section, "common ownership and control" means:  (1) in the case of stock corporations or limited liability companies, the direct or indirect ownership of eighty percent or more of the outstanding voting stock or membership interests of two or more corporations or limited liability companies by the same person or entity;  (2) in the case of nonprofit corporations, the direct or indirect ownership of eighty percent or more of the voting power of two or more nonprofit corporations by the same member or members; and  (3) in the case of mutual corporations, the direct or indirect ownership of eighty percent or more of the capitalization and the voting power of two or more corporations by the same member or members.  (G) In the case of a branch captive insurance company, the tax provided for in this section applies only to the branch business of the company.  (H) In the case of a sponsored captive insurance company, with respect to any:  (1) unincorporated protected cells, the aggregate taxes to be paid as calculated under subsections (A) and (B) must be calculated and paid on a consolidated basis;  (2) incorporated protected cells that are affiliates of the sponsor, the aggregate taxes to be paid as calculated under subsections (A) and (B) must be calculated and paid on a consolidated basis; and  (3) incorporated protected cells that are not affiliates of the sponsor, the aggregate taxes to be paid as calculated under subsections (A) and (B) shall apply to each incorporated protected cell.  (I) The tax provided for in this section constitutes all taxes collectible under the laws of this State from a captive insurance company, and no other occupation tax or other taxes may be levied or collected from a captive insurance company by the State or a county, city, or municipality within this State, except ad valorem taxes on real and personal property used in the production of income.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 82, Section 32, eff July 20, 2001; 2002 Act No. 188, Section 6, eff March 12, 2002; 2003 Act No. 73, Section 24.F, eff June 25, 2003; 2004 Act No. 291, Section 25, eff July 29, 2004; 2006 Act No. 332, Section 18, eff June 1, 2006; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, in (F)(3), substituted "capitalization" for "surplus" following "eighty percent or more"; and inserted (H) and redesignated (H) as (I).
 HISTORY: Former Section, titled Annual captive reinsurance tax, had the following history: 2001 Act No. 58, Section 5, eff May 29, 2001. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 The director may promulgate and, from time to time, amend rules and regulations and issue orders or written approvals relating to captive insurance companies as are necessary to enable the director to carry out the provisions of this chapter.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 11, eff May 29, 2001; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, inserted "or written approvals" following "and issue orders".
 (A) No provisions of this title or regulations, other than those contained in this chapter or contained in specific references contained in this chapter and regulations applicable to them, apply to captive insurance companies. The South Carolina Insurance Data Security Act set forth in Chapter 99, Title 38 applies to captive insurance companies unless the captive insurer qualifies for an exemption set forth in that chapter.  (B) The director may exempt, by rule, regulation, or written approval, special purpose captive insurance companies, other than a risk retention group formed as a special purpose captive insurance company, on a case by case basis, from provisions of this chapter that he determines to be inappropriate given the nature, scale, and complexity of the risks to be insured.  (C) The provisions of Sections 38-5-120(A)(5), 38-5-120(B), 38-5-120(D)(1), 38-5-120(D)(2), 38-9-225, 38-9-230, 38-21-10, 38-21-30, 38-21-60, 38-21-70, 38-21-80, 38-21-90, 38-21-95, 38-21-100, 38-21-110, 38-21-120, 38-21-130, 38-21-140, 38-21-150, 38-21-160, 38-21-170, 38-21-220, 38-21-225, 38-21-230, 38-21-250, 38-21-270, 38-21-280, 38-21-285, 38-21-290, 38-21-310, 38-21-320, 38-21-330, 38-21-360, 38-55-75 and Chapters 44, 46, and 99, Title 38 and applicable regulations apply in full to a risk retention group and, if a conflict occurs between those code sections and chapters referenced in this subsection and this chapter (Chapter 90, Title 38), then the code sections and chapters referenced in this subsection control.  (D) Except as provided elsewhere in this chapter, the provisions of Chapter 87, Title 38 apply to a risk retention group.  (E)(1) Except for Section 38-9-330(F) and Section 38-9-440, the provisions of Article 3 and Article 5, Chapter 9, Title 38 apply in full to a risk retention group, and if a conflict occurs between those provisions and this chapter, the provisions of this subsection control.  (2) The director may elect not to take regulatory action as otherwise required by Sections 38-9-330, 38-9-340, 38-9-350, and 38-9-360 if any of the following conditions exist:  (a) the director establishes that the risk retention group's members, sponsoring organizations, or both, are well-capitalized entities whose financial condition and support for the risk retention group is adequately documented. In making this determination, the director shall, at a minimum, require the filing of at least three years of historical, audited financial statements of the members, sponsor, or both, to assess the financial ability of the members', sponsor's, or both, support of the risk retention group. In addition, one year of projected financial information must be reviewed if available. The members, sponsor, or both, shall have:  (i) an investment grade rating from a nationally recognized statistical rating organization or A.M. Best rating of A- or better; or  (ii) equity equal to or greater than one hundred million dollars or equity equal to or greater than ten times the risk retention group's largest net retained per occurrence limit;  (b) each policyholder qualifies as an industrial insured in their state or this State, depending on which has the greater requirements, provided that if the policyholder's home state does not have an industrial insured exemption or equivalent, the policyholder must qualify under the industrial insured requirement of this State; or  (c) the risk retention group's certificate of authority date of issue was before January 1, 2011, and, based on a minimum five-year history of successful operations, is specifically exempted, in writing, from the requirements for mandatory risk-based capital action by the director.  HISTORY: 2000 Act No. 331, Section 1; 2002 Act No. 188, Section 7, eff March 12, 2002; 2010 Act No. 217, Section 12, eff June 7, 2010; 2013 Act No. 18, Section 1, eff January 1, 2014; 2014 Act No. 282 (S.909), Section 17, eff June 10, 2014; 2015 Act No. 2 (S.342), Section 17, eff March 9, 2015; 2016 Act No. 191 (S.978), Section 4, eff January 1, 2017; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018; 2019 Act No. 6 (S.360), Section 10, eff July 1, 2019.  Editor's Note  2014 Act No. 164, Section 15, effective January 1, 2015, provides as follows:  "SECTION 15. (A) Article 3, Chapter 9, Title 38, designated 'Risk Based Capital' is redesignated 'Risk-Based Capital'.  "(B) Sections 38-9-400, 38-9-410, 38-9-420, 38-9-430, 38-9-440, 38-9-450, and 38-9-460 of the 1976 Code, which are designated as Article 5, Chapter 9, Title 38, are redesignated as part of Article 3, Chapter 9, Title 38, and Article 5, Chapter 9, Title 38 is deleted."  Effect of Amendment  2014 Act No. 282, Section 17, in subsection (B), inserted "other than a special purpose captive insurance company formed as a risk retention group,"; in subsection (C), substituted "38-5-120(A)(5), 38-5-120(B), 38-5-120(D)(1), 38-5-120(D)(2)," for "38-5-120(A)(3), 38-5-120(C), 38-5-120(D),"; and in subsections (C), (D), (E)(1) substituted "a captive insurance company" for "an industrial insured a captive insurance company".  2015 Act No. 2, Section 17, in (C), inserted reference to the following sections: 38-21-80, 38-21-100, 38-21-110, 38-21-220, 38-21-225, 38-21-230, 38-21-285, and 38-21-290.  2016 Act No. 191, Section 4, in (D) added the second sentence.  2018 Act No. 251, Section 1, rewrote the section.  2019 Act No. 6, Section 10, in (A), added the second sentence, applying the South Carolina Insurance Data Security Act to captive insurance companies; and in (C), substituted "Chapters 44, 46, and 99" for "Chapters 44 and 46".
 (A) The director may declare inactive by order a captive insurance company other than a risk retention group or association captive if such captive insurance company has no outstanding insurance liabilities and agrees to cease providing insurance coverage.  (B) During the period the captive insurance company is inactive, the director may by written approval:  (1) reduce the minimum free and unimpaired paid-in capital or surplus, or combination thereof, to no less than twenty-five thousand dollars;  (2) modify the minimum premium tax applicable to the captive insurance company to an amount no less than two thousand dollars and the captive insurance company shall pay no other premium taxes; and  (3) exempt the captive insurance company from the requirement to file such reports as set forth in the order.  HISTORY: 2014 Act No. 282 (S.909), Section 1, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, in (A), substituted "outstanding insurance liabilities" for "outstanding liabilities"; and in (B), substituted "written approval" for "order" at the end, inserted (1) and redesignated (1) to (2) as (2) to (3).
 (A) There is created a fund to be known as the "Captive Insurance Regulatory and Supervision Fund" for the purpose of providing the financial means for the director to administer Chapter 87 and Chapter 90 of this title and for reasonable expenses incurred in promoting the captive insurance industry in the State. The transfer of twenty percent of the taxes collected by the department pursuant to Chapter 90 of this title, and all fees and assessments received by the department pursuant to the administration of this chapter must be credited to this fund. All fees received by the department from reinsurers who assume risk only from captive insurance companies, must be deposited into the Captive Insurance Regulatory and Supervision Fund. All fines and administrative penalties must be deposited directly into the general fund.  (B) All payments from the Captive Insurance Regulatory and Supervision Fund for the maintenance of staff and associated expenses including contractual services as necessary, shall be disbursed from the state treasury only upon warrants issued by the director, after receipt of proper documentation regarding services rendered and expenses incurred.  HISTORY: 2002 Act No. 188, Section 1, eff March 12, 2002; 2006 Act No. 332, Section 19, eff June 1, 2006; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, reenacted the section with no apparent changes.
 (A) Except as otherwise provided in this section, the terms and conditions set forth in Chapters 26 and 27 of this title pertaining to insurance reorganizations, receiverships, and injunctions apply in full to captive insurance companies formed or licensed under this chapter.  (B) In the case of a sponsored captive insurance company:  (1) the assets of the protected cell may not be used to pay expenses or claims other than those attributable to the protected cell; and  (2) its capital and surplus at all times must be available to pay expenses of or claims against the sponsored captive insurance company and may not be used to pay expenses or claims attributable to a protected cell.  (3) Notwithstanding another provision of law or regulation, upon an order of conservation, rehabilitation, or liquidation of a sponsored captive insurance company, the receiver shall deal with the sponsored captive insurance company's assets and liabilities, including protected cell assets and protected cell liabilities, pursuant to the requirements of this chapter.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 12, eff May 29, 2001; 2001 Act No. 82, Section 33, eff July 20, 2001; 2004 Act No. 291, Section 26, eff July 29, 2004; 2009 Act No. 28, Section 11, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 18, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 18, added subsection (B)(3).  2018 Act No. 251, Section 1, reenacted the section with no apparent changes.
 HISTORY: Former Section, titled Regulations establishing standards to ensure risk management control by parent company; temporary pending promulgation of regulations, had the following history: 2000 Act No. 331, Section 1. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 (A) A captive insurance company, when permitted by its articles of incorporation, articles of organization, operating agreement, or charter, may apply to the director for a license to provide any and all insurance, except workers' compensation insurance written on a direct basis, authorized by this title; however:  (1) a pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated business, risks assumed from a risk pool for the purpose of risk sharing, or a combination of them;  (2) an association captive insurance company may not insure any risks other than those of the member organizations of its association and their affiliated companies;  (3) an industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies;  (4) a special purpose captive insurance company may provide insurance or reinsurance, or both, for risks as approved by the director;  (5) a captive insurance company may not provide personal motor vehicle or homeowner's insurance coverage written on a direct basis;  (6) a captive insurance company may not accept or cede reinsurance except as provided in Section 38-90-110.  (B) To conduct insurance business in this State a captive insurance company shall:  (1) obtain from the director a license authorizing it to conduct insurance business in this State;  (2) beginning the year immediately following the issuance of its license, annually hold at least one board of director's meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting, or in the case of a limited liability company a meeting of the managing board, at which a majority of the directors are physically present in this State;  (3) maintain its principal place of business in this State, or in the case of a branch captive insurance company, maintain the principal place of business for its branch operations in this State; and  (4) appoint a resident registered agent to accept service of process and to otherwise act on its behalf in this State. In the case of a captive insurance company:  (a) formed as a corporation, a nonprofit corporation, or a limited liability company, whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the director must be an agent of the captive insurance company upon whom any process, notice, or demand may be served;  (b) formed as a reciprocal insurer, whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the director must be an agent of the captive insurance company upon whom any process, notice, or demand may be served.  (C)(1) Before receiving a license, a captive insurance company:  (a) formed as a corporation or a nonprofit corporation, shall file with the director a certified copy of its articles of incorporation and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the director;  (b) formed as a limited liability company, shall file with the director a certified copy of its articles of organization and operating agreement, a statement under oath by its managers showing its financial condition, and any other statements or documents required by the director;  (c) formed as a reciprocal shall:  (i) file with the director a certified copy of the power of attorney of its attorney-in-fact, a certified copy of its subscribers' agreement, a statement under oath of its attorney-in-fact showing its financial condition, and any other statements or documents required by the director; and  (ii) submit to the director for approval a description of the coverages, deductibles, coverage limits, and rates and any other information the director may reasonably require. If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the director for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the director. The reciprocal captive insurance company shall inform the director of any material change in rates within thirty days of the adoption of the change.  (2) In addition to the information required by item (1), an applicant captive insurance company shall file with the director evidence of:  (a) the amount and liquidity of its assets relative to the risks to be assumed;  (b) the adequacy of the expertise, experience, and character of the person or persons who will manage it;  (c) the overall soundness of its plan of operation;  (d) the adequacy of the loss prevention programs of its parent, member organizations, or industrial insureds as applicable; and  (e) such other factors considered relevant by the director in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.  (3) In addition to the information required by items (1) and (2) an applicant sponsored captive insurance company shall file with the director:  (a) a business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the director, and how it will report the experience to the director;  (b) all contracts or sample contracts between the sponsored captive insurance company and any participants; and  (c) a statement that expenses will be allocated to each protected cell in an equitable manner.  (4) Information submitted pursuant to this section is confidential as provided in Section 38-90-35 except that information is discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a specific finding by the court that:  (a) the captive is a necessary party to the action and not joined only for the purposes of evading the confidentiality provisions of this chapter;  (b) the information sought is relevant, material to, and necessary for the prosecution or defense of the claim asserted in litigation; and  (c) the information sought is not available through another source.  (D)(1) A captive insurance company shall pay to the department a nonrefundable fee of two hundred dollars for processing its application for license. In addition, the director may retain legal, financial, and examination services from outside the department to examine and investigate the application, the reasonable cost of which may be charged against the applicant in an amount that is determined to be appropriate by the director given the nature, scale, and complexity of the application being investigated.  (2) Section 38-13-60 applies to examinations, investigations, and processing conducted pursuant to the authority of this section.  (3) In addition, a captive insurance company shall pay a license fee for the year of registration of three hundred dollars and an annual renewal fee of five hundred dollars.  (4) The department may charge a fifteen-dollar fee for any document requiring certification of authenticity or the signature of the director.  (E) If the director is satisfied that the documents and statements filed by the captive insurance company comply with the provisions of this chapter, the director may grant a license authorizing the company to do insurance business in this State until March first at which time the license may be renewed.  (F) A foreign or alien captive insurance company, upon approval of the director, may become a domestic captive insurance company by complying with all of the requirements of law relative to the organization and licensing of a domestic captive insurance company of the same or equivalent type in this State and by filing with the Secretary of State its articles of association, charter, or other organizational document, together with appropriate amendments to them adopted in accordance with the laws of this State bringing those articles of association, charter, or other organizational document into compliance with the laws of this State. After this is accomplished, the captive insurance company is entitled to the necessary or appropriate certificates and licenses to continue transacting business in this State and is subject to the authority and jurisdiction of this State. In connection with this redomestication, the director may waive any requirements for public hearings. It is not necessary for a company redomesticating into this State to merge, consolidate, transfer assets, or otherwise engage in any other reorganization, other than as specified in this section.  HISTORY: 2000 Act No. 331, Section 1; 2002 Act No. 188, Section 3, eff March 12, 2002; 2002 Act No. 228, Section 12, eff May 1, 2002; 2003 Act No. 73, Section 24.B, eff June 25, 2003; 2004 Act No. 221, Section 38, eff April 29, 2004; 2004 Act No. 291, Sections 17, 18, eff July 29, 2004; 2009 Act No. 28, Section 1, eff June 2, 2009; 2009 Act No. 28, Section 2, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 5, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 5, in subsection (F), inserted "along with a certificate of general good issued by the director" at the end of the first sentence.  2018 Act No. 251, Section 1, in (A), in (1), inserted "risks assumed from a risk pool for the purpose of risk sharing," following "controlled unaffiliated business,", and rewrote (4); in (B), in (2), inserted "beginning the year immediately following the issuance of its license, annually" at the beginning, and substituted "at which a majority of the directors are physically present" for "each year" following "meeting of the managing board,"; in (C)(3), deleted (b), which related to a statement acknowledging that all financial records of the sponsored captive insurance company must be made available for inspection or examination, and redesignated (c) to (d) as (b) to (c); in (D), in (1), in the second sentence, substituted "in an amount" for "or the director may use internal resources to examine and investigate the application for a fee of two thousand four hundred dollars or such other amount" following "charged against the applicant" and ", scale, and complexity" for "or his designee", and in (4), deleted "or his designee" following "director"; and in (F), in the first sentence, deleted "or his designee" following "upon approval of the director".
 (A) An association captive insurance company or industrial insured group formed as a stock or mutual corporation, or a limited liability company may be converted to or merged with and into a reciprocal insurer in accordance with a plan and the provisions of this section.  (B) A plan for this conversion or merger:  (1) must be fair and equitable to the:  (a) shareholders, in the case of a stock insurer;  (b) members, in the case of a limited liability company; or  (c) policyholders, in the case of a mutual insurer; and  (2) must provide for the purchase of the shares of any nonconsenting shareholder of a stock insurer, of the member interest of any nonconsenting member of a limited liability company, of the policyholder interest of any nonconsenting policyholder of a mutual insurer in substantially the same manner and subject to the same rights and conditions as are accorded a dissenting shareholder, dissenting member, or a dissenting policyholder pursuant to the provisions of Chapter 13 or Chapter 44, Title 33. Provided, however, that the merger of a limited liability company requires the consent of all members unless this requirement has been waived in an operating agreement signed by all of the members of the limited liability company.  (C) In the case of a conversion authorized pursuant to the provisions of subsection (A):  (1) the conversion must be accomplished under a reasonable plan and procedure as may be approved by the director; however, the director may not approve the plan of conversion unless the plan:  (a) satisfies the provisions of subsection (B);  (b) provides for a hearing, of which notice has been given to the insurer, its directors, officers, and stockholders, in the case of a stock insurer; members and managers, in the case of a limited liability company; or policyholders, in the case of a mutual insurer, all of whom have the right to appear at the hearing, except that the director may waive or modify the requirements for the hearing; however, if a notice of hearing is required, but no hearing is requested, the director may cancel the hearing;  (c) provides for the conversion of existing stockholder, member, or policyholder interests into subscriber interests in the resulting reciprocal insurer, proportionate to stockholder, member, or policyholder interests in the stock or mutual insurer or limited liability company; and  (d) is approved:  (i) in the case of a stock insurer or limited liability company, by a majority of the shares or interests entitled to vote represented in person or by proxy at a duly called regular or special meeting at which a quorum is present;  (ii) in the case of a mutual insurer, by a majority of the voting interests of policyholders represented in person or by proxy at a duly called regular or special meeting at which a quorum is present;  (2) the director shall approve the plan of conversion if the director finds that the conversion will promote the general good of the State in conformity with those standards provided in Section 38-90-60;  (3) if the director approves the plan, the director shall amend the converting insurer's certificate of authority to reflect conversion to a reciprocal insurer and issue the amended certificate of authority to the company's attorney-in-fact;  (4) upon issuance of an amended certificate of authority of a reciprocal insurer by the director, the conversion is effective; and  (5) upon the effectiveness of the conversion, the corporate existence of the converting insurer shall cease and the resulting reciprocal insurer shall notify the Secretary of State of the conversion.  (D) A merger authorized pursuant to the provisions of subsection (A) must be accomplished substantially in accordance with the procedures provided in this title except that, only for purposes of the merger:  (1) the plan or merger must satisfy subsection (B);  (2) the subscribers' advisory committee of a reciprocal insurer must be equivalent to the board of directors of a stock or mutual insurance company or the managers of a limited liability company;  (3) the subscribers of a reciprocal insurer must be the equivalent of the policyholders of a mutual insurance company;  (4) if a subscribers' advisory committee does not have a president or secretary, the officers of the committee having substantially equivalent duties are considered the president and secretary of the committee;  (5) the director shall approve the articles of merger if the director finds that the merger will promote the general good of the State in conformity with those standards provided in Section 38-90-60. If the director approves the articles of merger, the director shall endorse his or her approval on the articles and the surviving insurer shall present the name to the Secretary of State at the Secretary of State's office;  (6) notwithstanding Section 38-90-40, the director may permit the formation, without surplus, capitalization, or a combination thereof, of a captive insurance company organized as a reciprocal insurer, into which an existing captive insurance company may be merged for the purpose of facilitating a transaction provided for in this section; however, there may be no more than one authorized insurance company surviving the merger;  (7) an alien insurer may be a party to a merger authorized pursuant to the provisions of subsection (A) if the requirements for the merger between a domestic and a foreign insurer pursuant to the provisions of Chapter 21 apply to a merger between a domestic and an alien insurer provided by this subsection. The alien insurer must be treated as a foreign insurer pursuant to the provisions of Chapter 21 and other jurisdictions must be the equivalent of a state for purposes of Chapter 21.  (E) A conversion or merger pursuant to the provisions of this section has all the effects set forth in Chapter 21, to the extent these effects are not inconsistent with this chapter.  HISTORY: 2000 Act No. 331, Section 1; 2003 Act No. 73, Section 24.G, eff June 25, 2003; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, in (C)(2), substituted "Section 38-90-60" for "Section 38-90-60(2)"; and in (D), in (5), "Section 38-90-60" for "Section 38-90-60(D)(2)", and in (6), inserted "capitalization, or a combination thereof," following "without surplus,".
 (A) One or more sponsors may form a sponsored captive insurance company under this chapter.  (B) A sponsored captive insurance company formed or licensed under this chapter may establish and maintain one or more protected cells to insure risks of one or more participants, subject to the following conditions:  (1) the shareholders of a sponsored captive insurance company must be limited to its participants and sponsors;  (2) each protected cell must be accounted for separately on the books and records of the sponsored captive insurance company to reflect the participants of the protected cell, the financial condition and results of operations of the protected cell, net income or loss, dividends or other distributions to participants, and other factors may be provided in the participant contract or required by the director;  (3) the assets of a protected cell must not be chargeable with liabilities arising out of any other insurance business the sponsored captive insurance company may conduct;  (4) no sale, exchange, or other transfer of assets may be made by the sponsored captive insurance company between or among any of its protected cells without the consent of the protected cells;  (5) no sale, exchange, transfer of assets, dividend, or distribution may be made from a protected cell to a sponsor or participant without the director's approval and in no event may the approval be given if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell;  (6) a sponsored captive insurance company annually shall file with the director financial reports the director requires, which shall include, but are not limited to, accounting statements detailing the financial experience of each protected cell;  (7) a sponsored captive insurance company shall notify the director in writing within ten business days of a protected cell that is insolvent or otherwise unable to meet its claim or expense obligations;  (8) no participant contract shall take effect without the director's approval, and the addition of each new protected cell and withdrawal of any participant of any existing protected cell constitutes a change in the business plan requiring the director's approval.  (C) The name of a sponsored captive insurance company shall include the words "Sponsored Captive" or the abbreviation "SC". Any captive insurance company or protected cell formed prior to July 31, 2013, may not be required to change its name to comply with the provisions of this subsection.  (D) A sponsored captive insurance company may establish one or more protected cells with the prior approval of the director of a plan of operation or amendments submitted by the sponsored captive insurance company with respect to each protected cell. Upon the approval of the director of the plan of operation, which shall include, but is not limited to, the specific business objectives and investment guidelines of the protected cell, the sponsored captive insurance company, in accordance with the approved plan of operation, may attribute to the protected cell insurance obligations with respect to its insurance business and assets to fund the obligations. The sponsored captive insurance company shall transfer all assets attributable to a protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of that protected cell. Protected cell assets must be held in the protected cell accounts for the purpose of satisfying the obligations of that protected cell.  (E) All attributions of assets and liabilities between a protected cell and the general account must be in accordance with the plan of operation approved by the director. No other attribution of assets or liabilities may be made by a sponsored captive insurance company between the sponsored captive insurance company's general account and its protected cells.  (F) A sponsored captive insurance company shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the sponsored captive insurance company and the protected cell assets and protected cell liabilities attributable to the protected cells. The directors of a sponsored captive insurance company shall keep protected cell assets and protected cell liabilities:  (1) separate and separately identifiable from the assets and liabilities of the sponsored captive insurance company's general account; and  (2) attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.  (G) When establishing a protected cell, the sponsored captive insurance company shall attribute to the protected cell assets with a value at least equal to the reserves and other insurance liabilities attributed to that protected cell.  HISTORY: 2000 Act No. 331, Section 1; 2014 Act No. 282 (S.909), Section 19, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 19, in subsection (B)(2), inserted "participants of the protected cell, the"; and added subsections (C) through (G).  2018 Act No. 251, Section 1, in (B)(8), substituted "director's approval" for "director's prior written approval" in two places; in (D), in the first and second sentences, substituted "prior approval of the director" for "prior written approval of the director"; in (F), deleted the undesignated paragraph following (2), which related to the remedy of tracing.
 (A) A protected cell may be either unincorporated or incorporated.  (B) With regard to unincorporated protected cells:  (1) The unincorporated protected cell shall have its own distinct name or designation, which shall include the words "Protected Cell" or the abbreviation "PC". Any captive insurance company or protected cell formed prior to the effective date of this section may not be required to change its name to comply with the provisions of this paragraph.  (2) An unincorporated protected cell must meet the free and unimpaired paid-in capital and surplus requirements applicable to a special purpose captive insurance company and either:  (a) establish loss and loss expense reserves for business written through the unincorporated protected cell; or  (b) the business written through the unincorporated protected cell must be:  (i) fronted by an insurance company licensed pursuant to the laws of:  (A) any state; or  (B) any jurisdiction if the insurance company is a wholly owned subsidiary of an insurance company licensed pursuant to the laws of any state;  (ii) reinsured by a reinsurer authorized or approved by this State; or  (iii) secured by a trust fund in the United States for the benefit of policyholders and claimants funded by an irrevocable letter of credit or other asset acceptable to the director. The amount of security provided by the trust fund may not be less than the reserves associated with those liabilities, including reserves for losses, allocated loss adjustment expenses, incurred but unreported losses, and unearned premiums for business written through the participant's protected cell. The director may require the sponsored captive to increase the funding of a trust established pursuant to this item. If the form of security in the trust is a letter of credit, the letter of credit must be established, issued, or confirmed by a bank chartered in this State, a member of the federal reserve system, or a bank chartered by another state if that state-chartered bank is acceptable to the director. A trust and trust instrument maintained pursuant to this item must be in a form and upon terms approved by the director.  (3) The creation of an unincorporated protected cell does not create, with respect to that protected cell, a legal person separate from the sponsored captive insurance company. Amounts attributed to a protected cell, including assets transferred to a protected cell account, are owned by the sponsored captive insurance company of which the protected cell is a part, and the sponsored captive insurance company may not be, or may not hold itself out to be, a trustee with respect to those protected cell assets of that protected cell account. Notwithstanding the provisions of this subsection, the sponsored captive insurance company may allow for a security interest to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell and otherwise allowed under applicable law.  (4) This subsection may not be construed to prohibit the sponsored captive insurance company from:  (a) entering into contracts of insurance on behalf of the protected cell; or  (b) contracting with or arranging for third-party managers or advisors to manage the protected cell to manage the assets of a protected cell, if all remuneration, expenses, and other compensation of the third-party manager or advisor is payable from the protected cell assets of that protected cell and not from the protected cell assets of other protected cells or the assets of the sponsored captive insurance company's general account.  (C) Incorporated protected cells shall be subject to all of the following:  (1) An incorporated protected cell may be organized and operated in any form of business organization set forth in Section 38-90-60(A).  (2) Except as specifically set forth in this chapter, each incorporated protected cell of a sponsored captive insurance company shall be licensed and treated as a special purpose captive insurance company.  (3) A participant in an incorporated protected cell need not be a shareholder of the protected cell or of the sponsored captive insurance company or any affiliate thereof.  (D) The name of an incorporated protected cell must include the words "Incorporated Cell" or the abbreviation "IC".  (E) Any captive insurance company or protected cell formed prior to July 31, 2013, shall not be required to change its name to comply with the provisions of subsection (D).  HISTORY: 2014 Act No. 282 (S.909), Section 2, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, in (B)(2), substituted "free and unimpaired paid-in capital and surplus requirements" for "paid-in capital and free surplus requirements", and made a nonsubstantive change.
 (A) The sponsored captive insurance company shall attribute all insurance obligations, assets, and liabilities relating to a participant's risks to the participant's protected cell.  (B) The protected cell assets of a protected cell may not be charged with liabilities arising out of any other business the sponsored captive insurance company may conduct. All contracts or other documentation reflecting protected cell liabilities shall clearly indicate that only the protected cell assets are available for the satisfaction of those protected cell liabilities. Under no circumstances may a protected cell be authorized to issue insurance or reinsurance contracts directly to policyholders or reinsureds or have any obligation to the policyholders or reinsureds of the sponsored captive insurance company's general account.  (C) The income, gains and losses, realized or unrealized, from protected cell assets and protected cell liabilities must be credited to or charged against the protected cell without regard to other income, gains or losses of the sponsored captive insurance company, including income, gains or losses of other protected cells. Investments must be handled pursuant to Section 38-90-100(B).  (D) In all sponsored captive insurance company transactions, the contracts or other documentation effecting the transaction shall contain provisions identifying the protected cell to which the transaction will be attributed. In addition, the contracts or other documentation must clearly disclose that the assets of that protected cell, and only those assets are available to pay the obligations of that protected cell. Notwithstanding the provisions of this subsection and subject to the provisions of this chapter and any other applicable law or regulation, the failure to include such language in the contracts or other documentation may not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this chapter.  (E) Assets attributed to a protected cell must be valued at their market value on the date of valuation or if there is no readily available market, as provided in the contract or the rules or other written documentation applicable to the protected cell.  (F) At the cessation of business of a protected cell in accordance with the plan approved by the director, the sponsored captive insurance company voluntarily shall close out the protected cell account.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 13, eff May 29, 2001; 2014 Act No. 282 (S.909), Section 20, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 20, rewrote the section.  2018 Act No. 251, Section 1, reenacted the section with no apparent changes.
 (A) The following may be participants in a sponsored captive insurance company formed or licensed pursuant to this chapter:  (1) an association, corporation, limited liability company, partnership, trust, or other business entity; and  (2) a sponsor.  (B) A participant does not need to be a shareholder of the sponsored captive insurance company or an affiliate of the company.  (C) A participant shall insure only its own risks through a sponsored captive insurance company unless otherwise approved by the director.  (D) A risk retention group may not be a sponsor or participant in a sponsored captive insurance company.  HISTORY: 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.
 (A) Protected cell assets are only available to the creditors of the sponsored captive insurance company that are creditors with respect to that protected cell and are therefore entitled, in conformity with this chapter, to have recourse to the protected cell assets attributable to that protected cell. Protected cell assets are absolutely protected from the creditors of the sponsored captive insurance company that are not creditors with respect to that protected cell and who, therefore, are not entitled to have recourse to the protected cell assets attributable to that protected cell. Creditors with respect to a protected cell are not entitled to have recourse against the protected cell assets of other protected cells or the assets or the sponsored captive insurance company's general account. Protected cell assets only are available to creditors of a sponsored captive insurance company after all protected cell liabilities have been extinguished or otherwise provided for in accordance with the plan of operation relating to that protected cell.  (B) When an obligation of a sponsored captive insurance company to a person arises from a transaction, or is otherwise imposed, with respect to a protected cell:  (1) that obligation of the sponsored captive insurance company extends only to the protected cell assets attributable to that protected cell, and the person, with respect to that obligation, is entitled to have recourse only to the protected cell assets attributable to that protected cell; and  (2) that obligation of the sponsored captive insurance company does not extend to the protected cell assets of any other protected cell or the assets of the sponsored captive insurance company's general account, and that person, with respect to that obligation, is not entitled to have recourse to the protected cell assets of any other protected cell or the assets of the sponsored captive insurance company's general account.  (C) When an obligation of a sponsored captive insurance company relates solely to the general account, the obligation of the sponsored captive insurance company extends only to the sponsored captive insurance company, and that person, with respect to that obligation, is entitled to have recourse only to the assets of the sponsored captive insurance company's general account.  (D) The establishment of one or more protected cells alone does not constitute, and may not be deemed to be, a fraudulent conveyance, an intent by the sponsored captive insurance company to defraud creditors, or the carrying out of business by the sponsored captive insurance company for any other fraudulent purpose.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 14, eff May 29, 2001; 2014 Act No. 282 (S.909), Section 21, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 21, rewrote the section.  2018 Act No. 251, Section 1, reenacted the section with no apparent changes.
 Editor's Note  Former Section 38-90-235 was titled Terms and conditions for a protected cell insurance companies apply to sponsored captive insurance companies; exception and was derived from 2001 Act No. 58, Section 7, eff May 29, 2001.
 HISTORY: Former Section, titled Eligibility of licensed captive insurance companies for certificate of authority to act as insurer, had the following history: 2000 Act No. 331, Section 1; 2014 Act No. 282 (S.909), Section 22, eff June 10, 2014. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 HISTORY: Former Section, titled Captive reinsurance companies, had the following history: 2001 Act No. 58, Section 1, eff May 29, 2001; 2004 Act No. 291, Section 19, eff July 29, 2004. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 A licensed captive insurance company that meets the necessary requirements of this title imposed upon an insurer must be considered for issuance of a certificate of authority to act as an insurer in this State.  HISTORY: 2014 Act No. 282 (S.909), Section 3, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, reenacted the section with no apparent changes.
 A captive insurance company may not adopt a name that is the same as, deceptively similar to, or likely to be confused with or mistaken for any other existing business name registered in this State.  HISTORY: 2000 Act No. 331, Section 1; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, reenacted the section with no apparent change.
 (A) Information submitted pursuant to the provisions of this chapter is confidential and may not be made public by the director or an agent or employee of the director without the written consent of the company, except that information may be discoverable by a party in a civil action or contested case to which the submitting captive insurance company is a party, upon a showing by the party seeking to discover the information that:  (1) the information sought is relevant to and necessary for the furtherance of the action or case and the information sought is unavailable from other nonconfidential sources; or  (2) a subpoena applicable to the information is issued by a judicial or administrative law officer of competent jurisdiction has been submitted to the director.  (B) The director may disclose the information to the public officer having jurisdiction over the regulation of insurance in another state if:  (1) the public official agrees in writing to maintain the confidentiality of the information; and  (2) the laws of the state in which the public official serves require the information to be confidential.  HISTORY: 2004 Act No. 291, Section 13, eff July 29, 2004; 2014 Act No. 282 (S.909), Section 6, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 6, rewrote the section.  2018 Act No. 251, Section 1, reenacted the section with no apparent change.
 (A)(1) The director may not issue a license to a captive insurance company unless the company possesses and maintains free and unimpaired paid-in capital, surplus, or unrestricted net assets for a nonprofit corporation, or a combination thereof of:  (a) in the case of a pure captive insurance company, not less than two hundred and fifty thousand dollars;  (b) in the case of an association captive insurance company incorporated as a stock insurer, mutual insurer, or organized as a limited liability company, not less than seven hundred and fifty thousand dollars;  (c) in the case of an industrial insured captive insurance company or risk retention group, not less than five hundred thousand dollars;  (d) in the case of a sponsored captive insurance company, not less than two hundred fifty thousand dollars;  (e) in the case of a special purpose captive insurance company that is not a risk retention group, an amount determined by the director after giving due consideration to the company's business plan, feasibility study, and pro formas, including the nature, scale, and complexity of the risks to be insured.  (2) The director may prescribe additional capital and surplus requirements based upon the type, volume, and nature of insurance business to be transacted.  (3) The free and unimpaired paid-in capital, surplus, or combination thereof required by this section must be in the form of cash, securities approved by the director, a clean irrevocable letter of credit issued by a bank approved by the director, or other form approved by the director.  (B) For purposes of subsection (A), the director may issue a license expressly conditioned upon the captive insurance company providing to the director satisfactory evidence of possession of the minimum required free and unimpaired paid-in capital, surplus, or combination thereof. Until this evidence is provided, the captive insurance company may not issue any policy, assume any liability, or otherwise provide coverage. The director summarily may revoke the conditional license without legal recourse by the company if satisfactory evidence of the required capital, surplus, or combination thereof is not provided within a maximum period of time, not to exceed one year, to be established by the director at the time the conditional license is issued.  (C) In the case of a branch captive insurance company, as security for the payment of liabilities attributable to branch operations, the director shall require that a trust account, funded by an irrevocable letter of credit or other acceptable asset, be established and maintained in the United States for the benefit of United States policyholders and United States ceding insurers under insurance policies issued or reinsurance contracts issued or assumed, by the branch captive insurance company through its branch operations. The amount of the security may be no less than the reserves on these insurance policies or reinsurance contracts, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses and unearned premiums with regard to business written through branch operations; however, the director may permit a branch captive insurance company that is required to post security for loss reserves on branch business by its reinsurer or front company to reduce the funds in the trust account required by this section by the same amount so long as the security remains posted with the reinsurer or front company. If the form of security selected is a letter of credit, the letter of credit must be established by, or issued or confirmed by, a bank chartered in this State or a member bank of the Federal Reserve System.  (D) A captive insurance company may not pay a dividend out of, or other distribution with respect to, capital or surplus, in excess of the limitations set forth in Section 38-21-250 through Section 38-21-270, without the approval of the director. Approval of an ongoing plan for the payment of dividends or other distributions must be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the director.  (E) An irrevocable letter of credit, which is issued by a financial institution other than a bank chartered by this State or a member bank of the Federal Reserve System, must be in a form as prescribed by the director.  HISTORY: 2000 Act No. 331, Section 1; 2002 Act No. 188, Section 4, eff March 12, 2002; 2003 Act No. 73, Section 24.C, eff June 25, 2003; 2004 Act No. 291, Section 20, eff July 29, 2004; 2006 Act No. 332, Section 15, eff June 1, 2006; 2009 Act No. 28, Section 3, eff June 2, 2009; 2010 Act No. 217, Section 7, eff June 7, 2010; 2014 Act No. 282 (S.909), Section 7, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 7, in subsection (A)(1)(c), inserted "or in the case of a captive insurance company formed as a risk retention group,"; in subsection (A)(1)(e), inserted "that is not a special purpose captive insurance company formed as a risk retention group,"; rewrote subsection (A)(2); rewrote subsection (B); in subsection (D), inserted "Notwithstanding the provision of this section,"; and made other nonsubstantive changes.  2018 Act No. 251, Section 1, rewrote the section.
 This article provides for the creation of Special Purpose Financial Captives (SPFCs) exclusively to facilitate the securitization of one or more risks, as a means of accessing alternative sources of capital and achieving the benefits of securitization. SPFCs are created for the limited purpose of entering into a SPFC contract and insurance securitization transactions and into related agreements to facilitate the accomplishment and execution of those transactions. The creation of SPFCs is intended to achieve greater efficiencies in structuring and executing insurance securitizations, to diversify and broaden insurers' access to sources of capital, to facilitate access for many insurers to insurance securitization and capital markets financing technology, and to further the economic development and expand the interest of the State of South Carolina through its captive insurance program.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 For purposes of this article:  (1) "Administrative Law Court" means that agency and court of record created pursuant to the provisions of Section 1-23-500.  (2) "Affiliated company" means a company in the same corporate system as a parent, by virtue of common ownership, control, operation, or management.  (3) "Contested case" means a proceeding in which the legal rights, duties, obligations, or privileges of a party are required by law to be determined by the Administrative Law Court after an opportunity for hearing.  (4) "Control" including the terms "controlling", " controlled by", and "under common control with" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control must be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist. Notwithstanding other provisions of this item, for purposes of this article, the fact that a SPFC exclusively provides reinsurance to a ceding insurer under a SPFC contract is not by itself sufficient grounds for a finding that the SPFC and ceding insurer are under common control.  (5) "Counterparty" means a SPFC's parent or affiliated company, as ceding insurer to the SPFC contract, or subject to the prior approval of the director, a nonaffiliated company.  (6) "Director" means the Director of the South Carolina Department of Insurance or the director's designee.  (7) "Department" means the South Carolina Department of Insurance.  (8) "Fair value" means:  (a) as to cash, the amount of it; and  (b) as to an asset other than cash:  (i) the amount at which that asset could be bought or sold in a current transaction between arms-length, willing parties;  (ii) the quoted mid-market price for the asset in active markets must be used if available; and  (iii) if quoted mid-market prices are not available, a value determined using the best information available considering values of similar assets and other valuation methods, such as present value of future cash flows, historical value of the same or similar assets, or comparison to values of other asset classes, the value of which have been historically related to the subject asset.  (9) "Insolvency" or "insolvent" means that the SPFC or one or more of its protected cells is unable to pay its obligations when they are due, unless those obligations are the subject of a bona fide dispute, or the director previously has established by order other criteria for determining the solvency of the SPFC or one or more of its protected cells. In which case the SPFC is insolvent if it fails to meet that criteria.  (10) "Insurance securitization" means a package of related risk transfer instruments, capital market offerings, and facilitating administrative agreements by which proceeds are obtained by a SPFC directly or indirectly through the issuance of securities, which complies with applicable securities law, and which proceeds are held in trust pursuant to the provisions of this article to secure the obligations of the SPFC under one or more SPFC contracts with a counterparty, where investment risk to the holders of these securities is contingent upon the obligations of the SPFC to the counterparty under the SPFC contract in accordance with the transaction terms.  (11) "Management" means the board of directors, managing board, or other individual or individuals vested with overall responsibility for the management of the affairs of the SPFC, including the election and appointment of officers or other of those agents to act on behalf of the SPFC.  (12) "Organizational document" means the SPFC's Articles of Incorporation, Articles of Organization, Bylaws, Operating Agreement, or other foundational documents that establish the SPFC as a legal entity or prescribes its existence.  (13) "Parent" means any corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent of the outstanding voting securities of a SPFC.  (14) "Permitted investments" means those investments that meet the qualifications pursuant to Section 38-90-530.  (15) "Protected cell" means a separate account established and maintained by a SPFC for one SPFC contract and the accompanying insurance securitization with a counterparty as further provided for in Chapter 10 of this title.  (16) "Qualified United States financial institution" means, for purposes of meeting the requirements of a trustee as specified in Section 38-90-530, a financial institution that is eligible to act as a fiduciary of a trust, and is:  (a) organized or, in the case of a United States branch or agency office of a foreign banking organization, is licensed under the laws of the United States or any state of the United States; and  (b) regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies.  (17) "Securities" means those different types of debt obligations, equity, surplus certificates, surplus notes, funding agreements, derivatives, and other legal forms of financial instruments.  (18) "Securities Commissioner" means the Attorney General of the State of South Carolina as provided in Title 35.  (19) "SPFC" or "Special Purpose Financial Captive" means a captive insurance company which has received a certificate of authority from the director for the limited purposes provided for in this article.  (20) "SPFC contract" means a contract between the SPFC and the counterparty pursuant to which the SPFC agrees to provide insurance or reinsurance protection to the counterparty for risks associated with the counterparty's insurance or reinsurance business.  (21) "SPFC securities" means the securities issued by a SPFC.  (22) "Surplus note" means an unsecured subordinated debt obligation deemed to be a surplus certificate as described in Section 38-13-110(4) and otherwise possessing characteristics consistent with paragraph 3 of the Statement of Statutory Accounting Principals No. 41, as amended, National Association of Insurance Commissioners (NAIC).  (23) "Third party" means a person unrelated to an SPFC or its counterparty, or both, that has been aggrieved by a decision of a director regarding that SPFC or its activities.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 20, eff June 1, 2006.
 (A) No provisions of Title 38, other than those specifically referenced in this article and regulations applicable to them, apply to a SPFC, and those provisions apply only as modified by this article. If a conflict occurs between a provision of Title 38 and a provision of this article, the latter controls.  (B) Sections 38-3-110 through 38-3-240, 38-5-130, 38-55-510 through 38-55-590, 38-57-200, and 38-90-175 apply to SPFCs.  (C) The director, by rule, regulation, or order, may exempt a SPFC or their protected cells, on a case-by-case basis, from provisions of this article that he determines to be inappropriate given the nature of the risks to be insured.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 21, eff June 1, 2006; 2010 Act No. 217, Section 13, eff June 7, 2010.
 (A) A SPFC, when permitted by its organizational documents, may apply to the director for a license to transact insurance or reinsurance business as authorized by this article. A SPFC only may insure or reinsure the risks of its counterparty. Notwithstanding another provision of this article, a SPFC may purchase reinsurance to cede the risks assumed under the SPFC contract as approved by the director.  (B) To transact business in this State a SPFC shall:  (1) obtain from the director a license authorizing it to conduct insurance or reinsurance business, or both, in this State;  (2) hold at least one management meeting each year in this State;  (3) maintain its principal place of business in this State;  (4) appoint a resident registered agent to accept service of process and to otherwise act on its behalf in this State. If the registered agent, with reasonable diligence, is not found at the registered office of the SPFC, the director must be an agent of the SPFC upon whom any process, notice, or demand may be served;  (5) provide such documentation of the insurance securitization as requested by the director immediately upon closing of the transaction, including:  (a) an opinion of legal counsel with respect to compliance with this article and any other applicable laws as of the effective date of the transaction; and  (b) a statement under oath of its president and secretary showing its financial condition; and  (6) provide a complete set of the documentation of the insurance securitization to the director shortly following closing of the transaction.  (C) A complete SPFC application must include the following:  (1) a certified copy of its organizational documents; and  (2) evidence of:  (a) the amount and liquidity of its assets relative to the risks to be assumed;  (b) the adequacy of the expertise, experience, and character of the person or persons who manages it;  (c) the overall soundness of its plan of operation;  (d) other factors considered relevant by the director in ascertaining whether the proposed SPFC is able to meet its policy obligations; and  (e) the applicant SPFC's financial condition, including the source and form of the minimum capitalization to be contributed to the SPFC.  (3) A plan of operation, consisting of a description of or statement of intent with respect to the contemplated insurance securitization, the SPFC contract, and related transactions, which must include:  (a) draft documentation or, at the discretion of the director, a written summary of all material agreements that are entered into to effectuate the SPFC contract and, before effecting such, the insurance securitization, to include the names of the counterparty, the nature of the risks being assumed, the proposed use of protected cells, if any, and the maximum amounts, purpose, and nature and the interrelationships of the various transactions required to effectuate the insurance securitization;  (b) the source and form of additional capitalization to be contributed to the SPFC;  (c) the proposed investment strategy of the SPFC;  (d) a description of the underwriting, reporting, and claims payment methods by which losses covered by the SPFC contract are reported, accounted for, and settled; and  (e) a pro forma balance sheet and income statement illustrating various stress case scenarios for the performance of SPFC under the SPFC contract.  (4) Biographical affidavits in NAIC format of all of the prospective SPFC's officers and directors, providing their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Chapter 21 of this title, together with other biographical information as the director may request.  (5) An affidavit from the applicant SPFC verifying:  (a) the applicant SPFC meets the provisions of this article;  (b) the applicant SPFC operates only pursuant to the provisions in this article;  (c) the applicant SPFC's investment strategy reflects and takes into account the liquidity of assets and the reasonable preservation, administration, and asset management of such assets relative to the risks associated with the SPFC contract and the insurance securitization transaction;  (d) the securities proposed to be issued are valid legal obligations that are either properly registered with the Securities Commissioner or constitute an exempt security or form part of an exempt transaction pursuant to Section 35-1-310 or 35-1-320; and  (e) unless otherwise exempted by the director, the trust agreement, the trusts holding assets that secure the obligations of the SPFC under the SPFC contract, and the SPFC contract with the counterparty in connection with the contemplated insurance securitization are structured pursuant to the provisions in this article.  (6) Any other statements or documents required by the director to evaluate and complete the licensing of the SPFC.  (D) In addition to the information required by subsection (C), and to the provisions of Section 38-90-480, if a protected cell is used, an applicant SPFC shall file with the director:  (1) a business plan demonstrating how the applicant accounts for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the director, and how it reports the experience to the director;  (2) a statement acknowledging that all financial records of the SPFC, including records pertaining to any protected cells, must be made available for inspection or examination by the director;  (3) all contracts or sample contracts between the SPFC and any counterparty, related to each protected cell; and  (4) a description of the expenses allocated to each protected cell.  (E) Information submitted pursuant to this subsection is confidential and is subject to Section 38-90-610.  (F) Section 38-13-60 applies to examinations, investigations, and processing conducted pursuant to the authority of this article.  (G) To transact insurance or reinsurance business in this State, a SPFC shall pay to the department:  (1) a nonrefundable fee of two hundred dollars for processing its application for license. In addition, the director may retain legal, financial, and examination services from outside the department to examine and investigate the application, the reasonable cost of which may be charged against the applicant. The director also may use internal resources to examine and investigate the application based upon an hourly rate for the services performed or the usual and customary fee charged by the financial services industry for similar work subject to a minimum fee of twelve thousand dollars, six thousand dollars of which is payable upon filing of the application and the remainder upon licensure;  (2) a license fee for the year of registration of three hundred dollars and an annual renewal fee of five hundred dollars;  (3) an annual review fee of twenty-four hundred dollars or, if higher, the actual cost as determined by the director; and  (4) premium taxes as required by this article.  (H) The director may grant a license authorizing the SPFC to transact insurance or reinsurance business as a SPFC in this State until March first, at which time the license may be renewed, upon finding that the:  (1) proposed plan of operation provides a reasonable and expected successful operation;  (2) terms of the SPFC contract and related transactions comply with this article;  (3) proposed plan of operation is not hazardous to any counterparty;  (4) commissioner of the state of domicile of each counterparty has notified the director in writing or otherwise provided assurance satisfactory to the director that it has approved or nondisapproved the transaction; and  (5) the certificate of authority authorizing the SPFC to transact business is limited only to the insurance or reinsurance activities that the SPFC is allowed to conduct pursuant to this article.  (I) In evaluating the expectation of a successful operation, the director shall consider, among other factors, whether the proposed SPFC, and its management are of known good character and reasonably believed not to be affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations, with a person known to have been involved in the improper manipulation of assets, accounts, or reinsurance.  (J) A foreign or alien corporation or limited liability company, upon approval of the director, may become a domestic SPFC by complying with all of the provisions of this article and by filing with the Secretary of State its organizational documents, together with appropriate amendments to it, as may be adopted pursuant to the provisions of this article to bring these organizational documents into compliance with this article. After this is accomplished, the foreign or alien corporation or limited liability company is entitled to the necessary or appropriate certificates or licenses to transact business as a SPFC in this State and is subject to the authority and jurisdiction of this State. In connection with this redomestication, the director may waive any requirements for public hearings. It is not necessary for a corporation or limited liability company redomesticating into this State to merge, consolidate, transfer assets, or otherwise engage in another reorganization, other than as specified in this section.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2005 Act No. 110, Section 5, eff January 1, 2006; 2006 Act No. 332, Section 22, eff June 1, 2006; 2009 Act No. 28, Section 12, eff June 2, 2009.
 HISTORY: Former Section, titled Minimum capitalization or reserves, had the following history: 2001 Act No. 58, Section 2, eff May 29, 2001; 2010 Act No. 217, Section 8, eff June 7, 2010. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 (A) A SPFC may be established as a stock corporation, limited liability company, mutual, partnership, or other form of organization approved by the director.  (B) The SPFC's organizational documents must limit the SPFC's authority to transact the business of insurance or reinsurance to those activities the SPFC conducts to accomplish its purpose as expressed in this article.  (C) The SPFC may not adopt a name that is the same as, deceptively similar to, or likely to be confused with or mistaken for another existing business name registered in this State.  (D) The organizational documents and the required organization fees must be transmitted to the Secretary of State, who shall record the relevant organizational documents.  (E) At least one of the members of the management of the SPFC must be a resident of this State.  (F) A SPFC formed pursuant to the provisions of this article has the privileges of and is subject to the provisions of the 1976 Code, applicable to its formation, as well as the applicable provisions contained in this article. If a conflict occurs between a provision of the applicable law and a provision of this article, the latter controls. Nothing contained in this provision with respect to a SPFC shall abrogate, limit, or rescind in any way the authority of the Securities Commissioner pursuant to the provisions of Title 35.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 23, eff June 1, 2006; 2009 Act No. 28, Section 13, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 23, eff June 10, 2014.  Effect of Amendment  2014 Act No. 282, Section 23, deleted former subsections (D) and (E), relating to SPFC incorporators and a certification to be sent to the Secretary of State; redesignated the subsections accordingly; and in subsection (D), substituted "documents" for "documents, the certificate issued pursuant to subsection (E),".
 (A) A SPFC initially shall possess and after that maintain minimum capitalization of not less than two hundred and fifty thousand dollars. All of the minimum initial capitalization must be in cash. All other funds of the SPFC in excess of its minimum initial capitalization must be in the form of cash, cash equivalent, or securities invested as provided in Section 38-90-530 and approved by the director.  (B) Additional capitalization for the SPFC must be determined, if so required, by the director after giving due consideration to the SPFC's business plan, feasibility study, pro formas, and the nature of the risks being insured or reinsured, which may be prescribed in formulas approved by the director.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) A SPFC may insure only the risks of a counterparty.  (B) A SPFC may not issue a contract for assumption of risk or indemnification of loss other than a SPFC contract. However, the SPFC may cede risks assumed through a SPFC contract to third party reinsurers through the purchase of reinsurance or retrocession protection on terms approved by the director.  (C) A SPFC may enter into contracts and conduct other commercial activities related or incidental to and necessary to fulfill the purposes of the SPFC contract, insurance securitization, and this article. Those activities may include, but are not limited to: entering into SPFC contracts; issuing securities of the SPFC in accordance with applicable securities law; complying with the terms of these contracts or securities; entering into trust, swap, tax, administration, reimbursement, or fiscal agent transactions; or complying with trust indenture, reinsurance, or retrocession, and other agreements necessary or incidental to effectuate an insurance securitization in compliance with this article or the plan of operation approved by the director.  (D)(1) A SPFC may discount its reserves at discount rates as approved by the director.  (2) A SPFC shall file annually an actuarial opinion on reserves provided by an approved independent actuary.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) This section and Section 38-90-485 provide a basis for the creation and use of protected cells by a SPFC as a means of accessing alternative sources of capital, lowering formation and administrative expenses, and generally making insurance securitizations more efficient. If a conflict occurs between a provision of Chapter 10, Title 38 or Article 1, Chapter 90, Title 38 and either this section or Section 38-90-485, this section and Section 38-90-485 control.  (B) A SPFC may establish and maintain one or more protected cells with prior written approval of the director and subject to compliance with the applicable provisions of this article and the following conditions:  (1) a protected cell must be established only for the purpose of insuring or reinsuring risks of one or more SPFC contracts with a counterparty with the intent of facilitating an insurance securitization;  (2) each protected cell must be accounted for separately on the books and records of the SPFC to reflect the financial condition and results of operations of the protected cell, net income or loss, dividends, or other distributions to the counterparty for the SPFC contract with each cell, and other factors as may be provided in the SPFC contract, insurance securitization transaction documents, plan of operation, or business plan, or as required by the director;  (3) amounts attributed to a protected cell under this chapter, including assets transferred to a protected cell account, are owned by the SPFC, and the SPFC may not be, or may not hold itself out to be, a trustee with respect to those protected cell assets of that protected cell account;  (4) all attributions of assets and liabilities between a protected cell and the general account must be in accordance with the plan of operation approved by the director. No other attribution of assets or liabilities may be made by a SPFC between the SPFC's general account and its protected cell or cells. The SPFC shall attribute all insurance obligations, assets, and liabilities relating to a SPFC contract and the related insurance securitization transaction, including any securities issued by the SPFC as part of the insurance securitization, to a particular protected cell. The rights, benefits, obligations, and liabilities of any securities attributable to that protected cell and the performance under a SPFC contract and the related securitization transaction and any tax benefits, losses, refunds, or credits allocated, or any of them, at any point in time pursuant to a tax allocation agreement between the SPFC and the SPFC's counterparty, parent, or company or group company, or any of them, in common control with them, as the case may be, including any payments made by or due to be made to the SPFC pursuant to the terms of the agreement, must reflect the insurance obligations, assets, and liabilities relating to the SPFC contract and the insurance securitization transaction that are attributed to a particular protected cell;  (5) the assets of a protected cell must not be chargeable with liabilities arising out of a SPFC contract related to or associated with another protected cell. However, one or more SPFC contracts may be attributed to a protected cell so long as those SPFC contracts are intended to be, and ultimately are, part of a single securitization transaction;  (6) a sale, an exchange, or another transfer of assets may not be made by the SPFC between or among any of its protected cells without the consent of the director, counterparty, and each protected cell;  (7) except as otherwise contemplated in the SPFC contract or related insurance securitization transaction documents, or both, a sale, an exchange, a transfer of assets, a dividend, or a distribution may not be made from a protected cell to a counterparty or parent without the director's approval and may not be approved if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell; and  (8) a SPFC may pay interest or repay principal, or both, and make distributions or repayments in respect of any securities attributed to a particular protected cell from assets or cash flows relating to or emerging from the SPFC contract and the insurance securitization transactions that are attributable to that particular protected cell in accordance with the provisions of this article or as otherwise approved by the director.  (C) A SPFC contract with or attributable to a protected cell does not take effect without the director's prior written approval, and the addition of each new protected cell constitutes a change in the business plan requiring the director's prior written approval. The director may retain legal, financial, and examination services from outside the department to examine and investigate the application for a protected cell, the reasonable cost of which may be charged against the applicant, or the director may use internal resources to examine and investigate the application the reasonable cost of which may be charged against the applicant up to a maximum of twelve thousand dollars, or both.  (D) A SPFC utilizing protected cells initially shall possess minimum capitalization separate and apart from the capitalization of its protected cell or cells in an amount determined by the director after giving due consideration of the SPFC's business plan, feasibility study, and pro formas, including the nature of the risks to be insured or reinsured. For purposes of determining the capitalization of each protected cell, a SPFC initially shall capitalize and after that time maintain capitalization in each protected cell in the amount and manner required for a SPFC in Section 38-90-460.  (E) The establishment of one or more protected cells alone does not constitute, and may not be deemed to be, a fraudulent conveyance, an intent by the SPFC to defraud creditors, or the carrying out of business by the SPFC for any other fraudulent purpose.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 24, eff June 1, 2006.
 (A)(1) The creation of a protected cell does not create, with respect to that protected cell, a legal person separate from the SPFC.  (2) Notwithstanding the provision of item (1), a protected cell must have its own distinct name or designation that includes the words "protected cell". The SPFC shall transfer all assets attributable to the protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of that protected cell.  (3) Although it is not a separate legal person, the property of a SPFC in a protected cell is subject to orders of a court by name as it would have been if the protected cell were a separate legal person.  (4) The property of a SPFC in a protected cell must be served in its own name with process in all civil actions or proceedings involving or relating to the activities of that protected cell or a breach by the SPFC of a duty to the protected cell or to a counterparty to a transaction linked or attributed to it by serving the SPFC in the manner described in Section 15-9-270.  (5) A protected cell exists only at the pleasure of the SPFC. At the cessation of business of a protected cell in accordance with the plan approved by the director, the SPFC voluntarily shall close out the protected cell account.  (B) Nothing in this section may be construed to prohibit a SPFC from contracting with, or arranging for, an investment advisor, commodity trading advisor, or other third party to manage the assets of a protected cell, if all remuneration, expenses, and other compensation of the third party advisor or manager are payable from the assets of that protected cell and not from the assets of other protected cells or the assets of the SPFC's general account, unless approved by the director.  (C) Creditors with respect to a protected cell are not entitled to have recourse against the protected cell assets of other protected cells or the assets of the SPFC's general account. If an obligation of a SPFC relates only to the general account, the obligation of the SPFC extends only to that creditor, with respect to that obligation, and is entitled to have recourse only to the assets of the SPFC's general account.  (D) The assets of the protected cell may not be used to pay expenses or claims other than those attributable to the protected cell. Protected cell assets are available only to the SPFC contract counterparty and other creditors of the SPFC that are creditors only with respect to that protected cell and, accordingly, are entitled, in conformity with this article, to have recourse to the protected cell assets attributable to that protected cell and absolutely are protected from the creditors of the SPFC that are not creditors with respect to that protected cell and who, accordingly, are not entitled to have recourse to the protected cell assets attributable to that protected cell. If an obligation of a SPFC to a person or counterparty arises from a SPFC contract or related insurance securitization transaction, or is otherwise incurred, with respect to a protected cell:  (1) that obligation of the SPFC extends only to the protected cell assets attributable to that protected cell, and the person or counterparty, with respect to that obligation, is entitled to have recourse only to the protected cell assets attributable to that protected cell; and  (2) that obligation of the SPFC does not extend to the protected cell assets of another protected cell or the assets of the SPFC's general account, and that person, with respect to that obligation, is not entitled to have recourse to the protected cell assets of another protected cell or the assets of the SPFC's general account. The SPFC's capitalization held separate and apart from the capitalization of its protected cell or cells as required by Section 38-90-480(D) must be available at all times to pay expenses of or claims against the SPFC and may not be used to pay expenses or claims attributable to any protected cell.  (E) Notwithstanding another provision of law, a SPFC may allow for a security interest in accordance with applicable law to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell or to facilitate the insurance securitization, including, without limitation, the issuance of the SPFC contract, to the extent those protected cell assets are not required at all times to support the risk, but without otherwise affecting the discharge of liabilities under the SPFC contract, or as otherwise approved by the director.  (F) A SPFC shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the SPFC and the protected cell assets and protected cell liabilities to each protected cell. The directors of a SPFC shall keep protected cell assets and protected cell liabilities:  (1) separate and separately identifiable from the assets and liabilities of the SPFC's general account; and  (2) attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.  (G) All contracts or other documentation reflecting protected cell liabilities clearly must indicate that only the protected cell assets are available for the satisfaction of those protected cell liabilities. In all SPFC insurance securitizations involving a protected cell, the contracts or other documentation effecting the transaction must contain provisions identifying the protected cell to which the transaction is attributed. In addition, the contracts or other documentation clearly must disclose that the assets of that protected cell, and only those assets, are available to pay the obligations of that protected cell. Notwithstanding the provisions of this subsection and subject to the provisions of this article and another applicable law or regulation, the failure to include this language in the contracts or other documentation may not be used as the sole basis by creditors, insureds or reinsureds, insurers or reinsurers, or other claimants to circumvent the provisions of this section.  (H) A SPFC with protected cells annually shall file with the department accounting statements and financial reports required by this article which, among other things, must:  (1) detail the financial experience of each protected cell and the SPFC separately; and  (2) provide the combined financial experience of the SPFC and all protected cells.  (I) A SPFC with protected cells shall notify the director in writing within ten business days of a protected cell becoming insolvent.  HISTORY: 2006 Act No. 332, Section 1, eff June 1, 2006.
 (A) A SPFC may issue securities, including surplus notes and other forms of financial instruments, subject to and in accordance with applicable law, its approved plan of operation, and its organizational documents.  (B) A SPFC, in connection with the issuance of securities, may enter into and perform all of its obligations under any required contracts to facilitate the issuance of these securities.  (C) Subject to the approval of the director, a SPFC may lawfully:  (1) account for the proceeds of surplus notes as surplus and not as debt for purposes of statutory accounting;  (2) submit for prior approval of the director periodic written requests for payments of interest on and repayments of principal of surplus notes.  (D) Surplus notes issued by a SPFC constitutes surplus or contribution notes of the type described at Section 38-27-610(9).  (E) The director, without otherwise prejudicing the director's authority, may approve formulas for an ongoing plan of interest payments or principal repayments, or both, to provide guidance in connection with his ongoing reviews of requests to approve the payments on and principal repayments of the surplus notes.  (F) The obligation to repay principal or interest, or both, on the securities issued by the SPFC must reflect the risk associated with the obligations of the SPFC to the counterparty under the SPFC contract.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 HISTORY: Former Section, titled Free surplus requirements; restriction on payment of dividends, had the following history: 2000 Act No. 331, Section 1; 2002 Act No. 188, Section 5, eff March 12, 2002; 2003 Act No. 73, Section 24.D, eff June 25, 2003; 2004 Act No. 291, Section 21, eff July 29, 2004; 2006 Act No. 332, Section 16, eff June 1, 2006; 2010 Act No. 217, Section 9, eff June 7, 2010; 2014 Act No. 282 (S.909), Section 8, eff June 10, 2014. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 A SPFC may enter into swap agreements, or other forms of asset management agreements, including guaranteed investment contracts, or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing asset, credit, or interest rate risk of the investments in the trust to ensure that the investments are sufficient to assure payment or repayment of the securities, and related interest or principal payments, issued pursuant to a SPFC insurance securitization transaction or the obligations of the SPFC under the SPFC contract.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) A SPFC, at any given time, may enter into and effectuate a SPFC contract with a counterparty, provided that the SPFC contract obligates the SPFC to indemnify the counterparty for losses and that contingent obligations of the SPFC under the SPFC contract are securitized through a SPFC insurance securitization and are funded and secured with assets held in trust for the benefit of the counterparty pursuant to the provisions of this article pursuant to agreements contemplated by this article and invested in a manner that meet the criteria as provided in Section 38-90-530.  (B) A SPFC may enter into agreements with affiliated companies and third parties and conduct business necessary to fulfill its obligations and administrative duties incidental to the insurance securitization and the SPFC contract. The agreements may include management and administrative services agreements and other allocation and cost sharing agreements, or swap and asset management agreements, or both, or agreements for other contemplated types of transactions provided in Section 38-90-500.  (C) A SPFC contract must contain provisions that:  (1) require the SPFC to enter into a trust agreement specifying what recoverables or reserves, or both, the agreement is to cover and to establish a trust account for the benefit of the counterparty;  (2) stipulate that assets deposited in the trust account must be valued according to their current fair value and must consist only of permitted investments;  (3) require the SPFC, before depositing assets with the trustee, to execute assignments, endorsements in blank, or to transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the counterparty, or the trustee upon the direction of the counterparty, may negotiate whenever necessary the assets without consent or signature from the SPFC or another entity;  (4) require that all settlements of account between the counterparty and the SPFC be made in cash or its equivalent; and  (5) stipulate that the SPFC and the counterparty agree that the assets in the trust account, established pursuant to the provisions of the SPFC contract, may be withdrawn by the counterparty at any time, notwithstanding any other provisions in the SPFC contract, and must be utilized and applied by the counterparty or any successor by operation of law of the counterparty, including, subject to the provisions of Section 38-90-600, but without further limitation, any liquidator, rehabilitator, receiver, or conservator of the counterparty, without diminution because of insolvency on the part of the counterparty or the SPFC, only for the following purposes:  (a) to transfer all of the assets into one or more trust accounts for the benefit of the counterparty pursuant to and in accordance with the terms of the SPFC contract and in compliance with the provisions of this article; and  (b) to pay any other incurred and paid amounts that the counterparty claims are due pursuant to and under the terms of the SPFC contract and in compliance with this article.  (D)(1) The SPFC contract may contain provisions that give the SPFC the right to seek approval from the counterparty to withdraw from the trust all or part of the assets, or income from them, contained in the trust and to transfer the assets to the SPFC, provided that:  (a) at the time of the withdrawal, the SPFC shall replace the withdrawn assets, excluding any income withdrawn, with other qualified assets having a fair value equal to the fair value of the assets withdrawn and that meet the provisions of Section 38-90-530; and  (b) after the withdrawals and transfer, the fair value of the assets in trust securing the obligations of the SPFC under the SPFC contract is no less than an amount needed to satisfy the funded requirement of the SPFC contract.  (2) The counterparty must be the sole judge as to the application of these provisions but may not unreasonably nor arbitrarily withhold its approval.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 Securities issued by a SPFC pursuant to an insurance securitization may not be considered to be insurance or reinsurance contracts. An investor in these securities or a holder of these securities, by sole means of this investment or holding, may not be considered to be transacting the business of insurance in this State. The underwriter's placement or selling agents and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors involved in an insurance securitization pursuant to this article may not be considered to be insurance producers or brokers or conducting business as an insurance or reinsurance company or agency, brokerage, intermediary, advisory, or consulting business only by virtue of their activities in connection with them.  HISTORY: 2006 Act No. 332, Section 2, eff June 1, 2006.
 In fulfilling its function, the SPFC shall adhere to the following requirements and, to the extent of its powers, shall ensure that contracts obligating other parties to perform certain functions incident to its operations are substantively and materially consistent with the following requirements and guidelines:  (1) The assets of a SPFC must be preserved and administered by or on behalf of the SPFC to satisfy the liabilities and obligations of the SPFC incident to the insurance securitization and other related agreements.  (2) Assets held by a SPFC in trust must be valued at their fair value.  (3) The proceeds from the sale of securities pursuant to the insurance securitization must be deposited with the trustee to the extent required to secure its obligations under the SPFC contract as provided by this article and must be held or invested by the trustee pursuant to the provisions of Section 38-90-530 and the asset management agreement, if any, filed with the department.  (4) Assets of the SPFC, other than those held in trust for the counterparty, and income on trust assets received by the SPFC may be used to pay interest or other consideration on any securities or outstanding debt or other obligation of the SPFC, and nothing in this article may be construed or interpreted to prevent a SPFC from entering into a swap agreement or other asset management transaction that has the effect of hedging or guaranteeing the fixed or floating interest rate returns paid on the assets in trust or required for the securities issued by the SPFC generated from or other consideration or payment flows in the transaction.  (5) In the SPFC insurance securitization, the contracts or other relating documentation must contain provisions identifying the SPFC.  (6) Unless otherwise approved by the director, a SPFC may not:  (a) issue or otherwise administer primary insurance policies;  (b) enter into a SPFC contract with a person that is not licensed or otherwise authorized to transact the business of insurance or reinsurance in at least its state or country of domicile;  (c) assume or retain exposure to insurance or reinsurance losses for its own account that is not funded by proceeds from a SPFC securitization that meets the provisions of this article. However, the SPFC may wholly or partially reinsure or retrocede the risks assumed to a third party reinsurer on terms approved by the director.  (7) A SPFC may not:  (a) have any direct obligation to the policyholders or reinsureds of the counterparty;  (b) lend or otherwise invest, or place in custody, trust, or under management any of its assets with, or to borrow money or receive a loan from, other than by issuance of the securities pursuant to an insurance securitization, or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) Assets of the SPFC held in trust to secure obligations under the SPFC contract must at all times be held in:  (1) cash and cash equivalents;  (2) securities listed by the securities Valuation Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; or  (3) another form of security acceptable to the director.  (B) Assets of the SPFC that are pledged to secure obligations of the SPFC to a counterparty under a SPFC contract must be held in trust and administered by a qualified United States financial institution. The qualified United States financial institution does not control, is not controlled by, or is not under common control with, the SPFC or the counterparty.  (C) The agreement governing this trust must create one or more trust accounts into which all pledged assets must be deposited and held until distributed in accordance with the trust agreement. The pledged assets must be held by the trustee at one of the trustee's offices or branch offices in the United States and may be held in certificated or electronic form.  (D) The provisions for withdrawal by the counterparty of assets from the trust must be clean and unconditional, subject only to the following requirements:  (1) the counterparty has the right to withdraw assets from the trust account at any time, without notice to the SPFC, subject only to written notice to the trustee from the counterparty that funds in the amount requested are due and payable by the SPFC, pursuant to the terms of the SPFC contract.  (2) a statement or document does not need to be presented in order to withdraw assets, except the counterparty may be required to acknowledge receipt of withdrawn assets;  (3) the trust agreement must indicate that it is not subject to any conditions or qualifications outside of the trust agreement;  (4) the trust agreement must not contain references to any other agreements or documents.  (E) The trust agreement must be established for the sole use and benefit of the counterparty at least to the full extent of the obligations of the SPFC to the counterparty under the SPFC contract. If there is more than one counterparty, or more than one SPFC contract with the same counterparty, a separate trust agreement must be entered into with the counterparty and a separate trust account must be maintained for each SPFC contract with the counterparty, unless otherwise approved by the director.  (F) The trust agreement must provide for the trustee to:  (1) receive assets and hold all assets in a safe place;  (2) determine that all assets are in a form that the counterparty or the trustee, upon direction by the counterparty, may negotiate, whenever necessary, the assets, without consent or signature from the SPFC or another person or entity;  (3) furnish to the SPFC, the director, and the counterparty a statement of all assets in the trust account reported at fair value upon its inception and at intervals no less frequent than the end of each calendar quarter;  (4) notify the SPFC and the counterparty, within ten days, of any deposits to or withdrawals from the trust account;  (5) upon written demand of the counterparty, immediately take the necessary steps to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the counterparty and deliver physical custody of the assets to the counterparty; and  (6) allow no substitutions or withdrawals of assets from the trust account, except pursuant to the trust agreement or SPFC contract, or as otherwise permitted by the counterparty.  (G) The trust agreement must provide that at least thirty days, but not more than forty-five days, before termination of the trust account, written notification of termination must be delivered by the trustee to the counterparty with a copy of the notice provided to the director.  (H) In addition to the requirements for the trust as provided in this article, the trust agreement may be made subject to and governed by the laws of any state. The state must be disclosed in the plan of operation filed with and approved by the director.  (I) The trust agreement must prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.  (J) The trust agreement must provide that the trustee must be liable for its own negligence, wilful misconduct, or lack of good faith.  (K)(1) Notwithstanding the provisions of subsection (D)(3) and (4), or of Section 38-90-755(C)(5), when a trust agreement is established in conjunction with a SPFC contract, then the trust agreement or SPFC contract, or both, may provide that the counterparty shall undertake to use and apply any amounts drawn upon the trust account, without diminution because of the insolvency of the counterparty or the SPFC, only for one or more of the following purposes:  (a) to pay or reimburse the counterparty for payment of the SPFC's share of premiums to be returned to owners of counterparty's policies covered under the SPFC contract on account of cancellations of the policies under the counterparties policies;  (b) to pay or reimburse the counterparty for payment of the SPFC's share of surrenders, benefits, losses, or other benefits covered and payable pursuant to the provisions of the SPFC contract;  (c) to fund an account with the counterparty in an amount to secure the credit or reduction from liability for reinsurance coverage provided under the SPFC contract; or  (d) to pay any other amounts the counterparty claims are legally and properly due under the SPFC contract.  (2) Any assets deposited into an account of the counterparty pursuant to subitem (c) of item (1) or withdrawn by the counterparty pursuant to subitem (d) of item (1) and any interest or other earnings on them, must be held by the counterparty in trust and separate and apart from any general assets of the counterparty, for the sole purpose of funding the payments and reimbursements of the SPFC contract described in subitems (a) through (d) of item (1).  (3) The counterparty shall return to the SPFC amounts withdrawn under subitems (a) through (d) of item (1) in excess of actual amounts required under subitems (a) through (c) of item (1), and in excess of the amounts subsequently determined to be due under subitem (d) of item (1), plus interest at a rate not in excess of the prime rate for the amounts held pursuant to subitem (c) of item (1) unless a higher rate of interest has been awarded by a panel of arbitration, and any net costs or expenses, including attorneys' fees, awarded by a panel of arbitration.  (4) If the counterparty has received notification of termination of the trust account, and where the SPFC's entire obligations secured under the specific SPFC contract remain unliquidated and undischarged ten days before the termination date, to withdraw amounts equal to the obligations and deposit the amounts in a separate account, in the name of the counterparty, in a qualified United States financial institution, separate and apart from the counterparty's general assets, to the extent the obligations or liabilities have not been funded by the SPFC, in trust only for those uses and purposes specified in subitem (a) of item (1) as may remain executory after the withdrawal and for any period after the termination date until discharged.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) A SPFC may not declare or pay dividends in any form to its owners other than in accordance with the insurance securitization transaction agreements, and in no extent shall the dividends decrease the capital of the SPFC below two hundred fifty thousand dollars, and, after giving effect to the dividends, the assets of the SPFC, including assets held in trust pursuant to the terms of the insurance securitization, must be sufficient to satisfy the director that it can meet its obligations. Approval by the director of an ongoing plan for the payment of dividends or other distribution by a SPFC must be conditioned upon the retention, at the time of each payment, of capital or surplus equal to or in excess of amounts specified by, or determined in accordance with formulas approved for the SPFC by the director.  (B) The dividends may be declared by the management of the SPFC if the dividends do not violate the provisions of this article or jeopardize the fulfillment of the obligations of the SPFC or the trustee pursuant to the SPFC insurance securitization agreements, the SPFC contract, or any related transaction and other provisions of this article.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 HISTORY: Former Section, titled Incorporation requirements, had the following history: 2001 Act No. 58, Section 3, eff May 29, 2001; 2009 Act No. 28, Section 4, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 9, eff June 10, 2014. Reserved by 2018 Act No. 251, Section 1, eff May 18, 2018.
 (A) Any material change of the SPFC's plan of operation pursuant to the provisions of Section 38-90-440(E)(5), whether or not through a SPFC protected cell, shall require prior approval of the director, provided however:  (1) if initially approved in the plan of operation, securities subsequently issued to continue the securitization activities of the SPFC either during or after expiration, redemption, or satisfaction, of all of these, of part or all of the securities issued pursuant to initial insurance securitization transactions may not be considered a material change; or  (2) a change and substitution in a counterparty to a swap transaction for an existing insurance securitization as allowed pursuant to the provisions of this article may not be considered a material change if the replacement swap counterparty carries a similar or higher rating to its predecessor with two or more nationally recognized rating agencies, or both.  (B) No later than five months after the fiscal year end of the SPFC, the SPFC shall file with the director an audit by a certified public accounting firm of the financial statements of the SPFC and the trust accounts.  (C) Each SPFC shall file by March first, a statement of operations, using either generally accepted accounting principles or, if approved or required by the director, statutory accounting principles with useful or necessary modifications or adaptations required or approved or accepted by the director for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the director. The statement of operations must include a statement of income, a balance sheet, and may include a detailed listing of invested assets, including identification of assets held in trust to secure the obligations of the SPFC under the SPFC contract. The SPFC also may include with the filing risk based capital calculations and other adjusted capital calculations to assist the director with evaluating the levels of the surplus of the SPFC for the year ending on December thirty-first of the previous year. The statements must be prepared on forms required by the director. In addition the director may require the filing of performance assessments of the SPFC contract.  (D) A SPFC shall maintain its records in this State and shall make its records available for examination by the director at any time. The SPFC shall keep its books and records in such manner that its financial condition, affairs, and operations can be ascertained and so that the director may readily verify its financial statements and determine its compliance with this article.  (E) All original books, records, documents, accounts, and vouchers must be preserved and kept available in this State for the purpose of examination and until authority to destroy or otherwise dispose of the records is secured from the director. The original records, however, may be kept and maintained outside this State if, according to a plan adopted by the management of the SPFC and approved by the director, it maintains suitable records instead of it. The books or records may be photographed, reproduced on film, or stored and reproduced electronically.  (F) Nothing contained in this section with respect to a SPFC shall abrogate, limit, or rescind in any way the authority of the Securities Commissioner pursuant to the provisions of Title 35.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 25, eff June 1, 2006.
 (A) At least once every five years, and whenever the director determines it to be prudent, the director or his designee shall visit each SPFC and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations, and whether it has complied with this article. The expenses and charges of the examination must be paid to the State by the company or companies examined, and the department shall issue its warrants for the proper charges incurred in all examinations.  (B) All examination reports, preliminary examination reports or results, working papers, recorded information, documents, and copies of documents produced by, obtained by, or disclosed to the director or any other person in the course of an examination made pursuant to the provisions of this section are confidential and are not subject to subpoena and may not be made public by the director or an employee or agent of the director without the written consent of the company, except to the extent provided in this subsection. Nothing in this subsection prevents the director from using this information in furtherance of the director's regulatory authority as provided by the provisions of this title. The director may grant access to this information to public officers having jurisdiction over the regulation of insurance in another state or country, or to law enforcement officers of this State, including the Securities Commissioner, or another state or agency of the federal government at any time, if the officers receiving the information agree in writing to hold it in a manner consistent with this section.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2009 Act No. 28, Section 14, eff June 2, 2009.
 (A) At the cessation of business of a SPFC following termination or cancellation of a SPFC contract and the redemption of any related securities issued in connection with them, the authority granted by the director expires or, in the case of retiring and surviving protected cells, be modified, and the SPFC is no longer authorized to conduct activities unless and until a new or modified license is issued pursuant to a new filing pursuant to the provisions of Section 38-90-440 or as agreed by the director.  (B) The director may suspend or revoke the license of a SPFC in this State for:  (1) insolvency;  (2) failure to meet the provisions of Section 38-90-460, 38-90-480(D), or 38-90-580;  (3) use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public, the holders of the securities, or policyholders of the SPFC; or  (4) failure to otherwise comply in any material respect with applicable laws of this State.  (C) If the director finds, upon examination or other evidence, that a SPFC has committed any of the acts specified in subsection (B), the director may impose the penalties provided in Section 38-2-10 if the director considers it in the best interest of the public, the holders of the securities, and the policyholders of the SPFC.  (D) Unless the grounds for suspension or revocation relate only to the financial condition or soundness of the SPFC or to a deficiency in its assets, the director shall notify the SPFC not less than thirty days before revoking its authority to do business in this State and specify in the notice the particulars of the alleged violation of the law or its organizational documents or grounds for revocation and a proper opportunity must be offered the SPFC to be heard before the Administrative Law Court.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 26, eff June 1, 2006.
 (A) A SPFC shall pay to the department by March first of each year, a tax at the rate of four-tenths of one percent on the first twenty million dollars and three-tenths of one percent on each dollar after that, subject to a minimum annual tax of five thousand dollars and a maximum annual tax of one hundred thousand dollars. Taxes are based upon the direct premiums written or contracted for on policies or contracts of insurance, other than reinsurance policies or contracts written by the SPFC, during the year ending December thirty-first next preceding, after deducting from the direct premiums subject to the tax the amounts paid to insureds as returned premiums which must include dividends on unabsorbed premiums or premium deposits returned or credited to insureds.  (B) A SPFC shall pay to the department by March first of each year, a tax at the rate of two hundred and twenty-five thousandths of one percent on the first twenty million dollars of assumed reinsurance premium, and one hundred fifty thousandths of one percent on the next twenty million dollars, and fifty thousandths of one percent on the next twenty million dollars, and twenty-five thousandths of one percent of each dollar after that, subject to a minimum annual tax of five thousand dollars and a maximum annual tax of one hundred thousand dollars. However, no reinsurance tax applies to premiums for risks or portions of risks which are subject to taxation on a direct basis, pursuant to subsection (A). A premium tax is not payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if the transaction is part of a plan to discontinue the operations of the other insurer and if the intent of the parties to the transaction is to renew or maintain business with the SPFC.  (C) Each protected cell of the SPFC must be taxed as if it is a separate and distinct SPFC.  (D) The tax provided in this section is the only tax collectible pursuant to the laws of this State from a SPFC and no other tax or occupation tax, nor any other taxes may be levied or collected from a SPFC by the State or a county, city, or municipality within this State, except ad valorem taxes on real and personal property used in the production of income.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 A SPFC contract meeting the provisions of this article must be granted credit for reinsurance treatment or otherwise qualifies as an asset or a reduction from liability for reinsurance ceded by a domestic insurer to a SPFC as an assuming insurer pursuant to the provisions of Section 38-9-210 for the benefit of the counterparty, provided and only to the extent:  (1) of the fair value of the assets held in trust for, or irrevocable letters of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System or as approved by the director, for the benefit of the counterparty under the SPFC contract;  (2) the assets are held in trust pursuant to the provisions of this article;  (3) the assets are administered in the manner and pursuant to arrangements as provided in this article; and  (4) the assets are held or invested in one or more of the forms allowed in Section 38-90-530.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) A captive insurance company may be:  (1) incorporated as a stock insurer;  (2) incorporated as a nonprofit corporation;  (3) organized as a limited liability company;  (4) incorporated as a mutual insurer without capital stock, the governing body of which is elected by the members of the insurer; or  (5) organized as a reciprocal insurer pursuant to Chapter 17.  (B) No captive insurance company shall do any business in this State unless it first obtains from the director a certificate of authority authorizing it to do business in this State. In determining whether to issue a certificate of authority to a captive insurance company, the director may consider:  (1) the character, reputation, financial responsibility, insurance experience, and business qualifications of the incorporators, officers, and directors or managers;  (2) the nature, scale, and complexity of the risks to be insured; and  (3) other aspects the director considers advisable.  (C) In the case of a captive insurance company licensed as a branch captive insurance company, the alien captive insurance company must register to do business in this State after the certificate of authority has been issued.  (D) The articles of incorporation, articles of organization, or the application of a branch captive insurance company to qualify to do business in South Carolina, and the organization fees required by Section 33-1-220, 33-31-122, or 33-44-1204, as applicable, must be transmitted to the Secretary of State, who shall record the articles of incorporation, articles of organization, or application to qualify to do business in South Carolina.  (E) A captive insurance company formed as a corporation, a nonprofit corporation, or a limited liability company, pursuant to the provisions of this chapter has the privileges and is subject to the provisions of the general corporation law, including the South Carolina Nonprofit Corporation Act of 1994 for nonprofit corporations and the South Carolina Uniform Limited Liability Company Act of 1996 for limited liability companies, as applicable, as well as the applicable provisions contained in this chapter. If a conflict occurs between a provision of the general corporation law, including the South Carolina Nonprofit Corporation Act of 1994 for nonprofit corporations and the South Carolina Uniform Limited Liability Company Act of 1996 for limited liability companies, as applicable, and a provision of this chapter, the latter controls.  (F) A captive insurance company formed as a reciprocal insurer pursuant to the provisions of this chapter has the privileges and is subject to Chapter 17 in addition to the applicable provisions of this chapter. If a conflict occurs between the provisions of Chapter 17 and the provisions of this chapter, the latter controls. To the extent a reciprocal insurer is made subject to other provisions of this title pursuant to Chapter 17, the provisions are not applicable unless they are expressly made applicable to a captive insurance company pursuant to the provisions of this chapter.  (G) A captive insurance company formed as a mutual insurer pursuant to the provisions of this chapter has the privileges and is subject to the provisions of Chapter 19 in addition to the applicable provisions of this chapter. If a conflict occurs between the provisions of Chapter 19 and this chapter, the latter controls. To the extent a mutual insurer is made subject to other provisions of this title, those provisions are not applicable unless they are expressly made applicable to a captive insurance company pursuant to this chapter.  (H) In the case of a captive insurance company formed as a corporation, a mutual insurer, or a nonprofit corporation, at least one of the members of the board of directors of a captive insurance company incorporated in this State must be a resident of this State.  (I) In the case of a captive insurance company formed as a limited liability company, at least one of the managers of the captive insurance company must be a resident of this State.  (J) In the case of a captive insurance company formed as a reciprocal insurer, at least one of the members of the subscribers' advisory committee must be a resident of this State.  (K) The articles of incorporation or bylaws of a captive insurance company may authorize a quorum of a board of directors to consist of no fewer than one-third of the fixed or prescribed number of directors as provided for in Section 33-8-240(b). In the case of a limited liability company, the articles of organization or operating agreement of a captive insurance company may authorize a quorum to consist of no fewer than one-third of the managers required by the articles of organization or the operating agreement.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 82, Section 31, eff July 20, 2001; 2003 Act No. 73, Section 24.E, eff June 25, 2003; 2004 Act No. 221, Section 39, eff April 29, 2004; 2004 Act No. 291, Section 22, eff July 29, 2004; 2009 Act No. 28, Section 5, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 10, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 10, rewrote the section.  2018 Act No. 251, Section 2, in (B), inserted (2), redesignated (2) as (3), and made a nonsubstantive change; in (E), deleted the third and fourth sentences, which related to the application of certain provisions of this title to determining the procedures to be followed by a captive insurance company in carrying out any of the transactions described in those provisions, with exceptions; in (F), in the third sentence, substituted "unless they are expressly made applicable" for "to a reciprocal insurer formed pursuant to the provisions of this chapter unless the provisions are expressly made applicable" following "the provisions are not applicable"; and inserted (G) and redesignated (G) to (J) as (H) to (K).
 (A) Except as otherwise modified in this section, the terms and conditions set forth in Chapters 26 and 27 of this title pertaining to administrative supervision of insurers and the rehabilitation, receiverships, and liquidation of insurers apply in full to SPFCs or each of the SPFC's protected cells, independently, or both, without causing or otherwise effecting a conservation, rehabilitation, receivership, or liquidation of the SPFC or another protected cell.  (B) Notwithstanding the provisions of Chapters 26 and 27, Title 38, and without causing or otherwise affecting the conservation or rehabilitation of an otherwise solvent protected cell of an SPFC and subject to the provisions of subsection (G)(5) of this section, the director may apply by petition to the circuit court for an order authorizing the director to conserve, rehabilitate, or liquidate a SPFC domiciled in this State on one or more of the following grounds:  (1) there has been embezzlement, wrongful sequestration, dissipation, or diversion of the assets of the SPFC intended to be used to pay amounts owed to the counterparty or the holders of SPFC securities; or  (2) the SPFC is insolvent and the holders of a majority in outstanding principal amount of each class of SPFC securities request or consent to conservation, rehabilitation, or liquidation pursuant to the provisions of this article.  (C) Notwithstanding the provisions of Chapters 26 and 27, Title 38, the director may apply by petition to the circuit court for an order authorizing the director to conserve, rehabilitate, or liquidate one or more of a SPFC's protected cells, independently, without causing or otherwise effecting a conservation, rehabilitation, receivership, or liquidation of the SPFC generally or another of its protected cells, on one or more of the following grounds:  (1) there has been embezzlement, wrongful sequestration, dissipation, or diversion of the assets of the SPFC attributable to the affected protected cell or cells intended to be used to pay amounts owed to the counterparty or the holders of SPFC securities of the affected protected cell or cells; or  (2) the affected protected cell is insolvent and the holders of a majority in outstanding principal amount of each class of SPFC securities attributable to that particular protected cell request or consent to conservation, rehabilitation, or liquidation pursuant to the provisions of this article.  (D) The court may not grant relief provided by subsection (B)(1) or subsection (C)(1) unless, after notice and a hearing, the director, who shall have the burden of proof, establishes by clear and convincing evidence that relief must be granted. The court's order may be made in respect of one or more protected cells by name, rather than the SPFC generally.  (E) Notwithstanding another provision in this title, regulations promulgated under this title, or another applicable law or regulation, upon any order of conservation, rehabilitation, or liquidation of a SPFC, or one or more of the SPFC's protected cells, the receiver shall manage the assets and liabilities of the SPFC pursuant to the provisions of this article. The receiver shall ensure that the assets linked to one protected cell are not applied to the liabilities linked to another protected cell or to the SPFC generally, unless an asset or liability is linked to more than one protected cell, in which case the receiver shall deal with the asset or liability in accordance with the terms of any relevant governing instrument or contract.  (F) With respect to amounts recoverable under a SPFC contract, the amount recoverable by the receiver must not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the counterparty, notwithstanding another provision in the contracts or other documentation governing the SPFC insurance securitization.  (G) Notwithstanding the provisions of Chapters 26 and 27 of this title or other laws of this State:  (1) an application or petition, or a temporary restraining order or injunction issued pursuant to the provisions of Chapters 26 and 27 of this title, with respect to a counterparty does not prohibit the transaction of a business by a SPFC, including any payment by a SPFC made pursuant to a SPFC security, or any action or proceeding against a SPFC or its assets;  (2) the commencement of a summary proceeding or other interim proceeding commenced before a formal delinquency proceeding with respect to a SPFC, and any order issued by the court does not prohibit the payment by a SPFC made pursuant to a SPFC security or SPFC contract or the SPFC from taking any action required to make the payment;  (3) a receiver of a counterparty may not void a nonfraudulent transfer by a counterparty to a SPFC of money or other property made pursuant to a SPFC contract;  (4) a receiver of a SPFC may not void a nonfraudulent transfer by the SPFC of money or other property made to a counterparty pursuant to a SPFC contract or made to or for the benefit of any holder of a SPFC security on account of the SPFC security; and  (5) the director may not seek to have a SPFC with protected cells declared insolvent as long as at least one of the SPFC's protected cells remains solvent, and in the case of such an insolvency, the receiver shall handle SPFC's assets in compliance with subsection (E) and other laws of this State.  (H) Subsection (G) does not prohibit the director from taking any action permitted under Chapter 26 or 27 with respect only to the conservation or rehabilitation of a SPFC with protected cell or cells, provided the director would have had sufficient grounds to seek to declare the SPFC insolvent; subject to and without otherwise affecting the provisions of subsection (G)(5). In this case, with respect to the solvent protected cell or cells, the director may not prohibit payments made by the SPFC pursuant to the SPFC security, SPFC contract, or otherwise made under the insurance securitization transaction that are attributable to these protected cell or cells or prohibit the SPFC from taking any action required to make these payments.  (I) With the exception of the fulfillment of the obligations under a SPFC contract, and notwithstanding another provision of this article or other laws of this State, the assets of a SPFC, including assets held in trust, must not be consolidated with or included in the estate of a counterparty in any delinquency proceeding against the counterparty pursuant to the provisions of this article for any purpose including, without limitation, distribution to creditors of the counterparty.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 27, eff June 1, 2006.
 Information submitted pursuant to the provisions of this article is confidential and may not be made public by the director or an agent or employee of the director without the prior written consent of the SPFC, except that:  (1) information submitted pursuant to the provisions of this article is discoverable by a party in a civil action or contested case to which the submitting SPFC is a party, upon a specific finding by the court that:  (a) the SPFC is a necessary party to the action and not joined only for the purposes of evading the confidentiality provisions of this article;  (b) the party seeking the information demonstrates by a clear and convincing standard that the information sought is relevant, material to, and necessary for the prosecution or defense of the claim asserted in the action; and  (c) the information sought is unavailable from other nonconfidential sources.  (2) The director may disclose the information to the public officer having jurisdiction over the regulation of insurance in another state if:  (a) the public official agrees in writing to maintain the confidentiality of the information; and  (b) the laws of the state in which the public official serves require the information to be confidential.  (3) The director may disclose the information to the securities commissioner if he:  (a) agrees in writing to maintain the confidentiality of the information; and  (b) is authorized under applicable securities law to request the information or the director is obligated to disclose the information.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) A contested case brought by a third party based on a decision of the director pursuant to this article is governed by applicable law of the State of South Carolina except that, the third party shall:  (1) prove its case by a clear and convincing evidence standard;  (2) demonstrate irreparable harm to the SPFC or its counterparty, or both;  (3) show that there is no other adequate remedy at law; and  (4) post a bond of sufficient surety to protect the interests of the holders of the SPFC securities and policyholders but it may not be less than fifteen percent of the total amount of the securitized transaction.  (B) If a director reverses, amends, or modifies a license previously issued to a SPFC or an order made in connection with a license previously issued to a SPFC, the action must comply with the standards and criteria provided in subsection (A), unless the action in reversing, amending, or modifying the license is in conformance with the provisions of Section 38-90-570(B).  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004; 2006 Act No. 332, Section 28, eff June 1, 2006.
 The director may promulgate regulations necessary to effectuate the purposes of this article. Regulations promulgated pursuant to this section do not affect a SPFC insurance securitization in effect at the time of the promulgation.  HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
 (A) A captive insurance company may not be required to make an annual report except as provided in this chapter. The director has the authority to waive or grant an extension to the requirements of this section.  (B)(1) A captive insurance company shall submit annually to the director a report of its financial condition, verified by oath of two of its executive officers. The report must be submitted no later than March first for risk retention groups and no later than July first for all other captive insurance companies.  (2) A captive insurance company, other than a risk retention group, may make a written application to file the annual report on a fiscal year end that is consistent with the parent company's fiscal year end. If an alternative date is granted, the:  (a) income statement and premium schedule of the annual report must be filed before March first of each year for each calendar year-end, verified by oath of two of its executive officers; and  (b) entire annual report must be filed no more than sixty days after the fiscal year end, except as otherwise approved by the director.  (C) In addition to the annual report, a branch captive insurance company shall file with the director a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath of two of its executive officers. The reports and statements of the alien captive insurance company must be submitted within sixty days after the fiscal year end of the alien captive insurance company except as otherwise approved by the director. If the director finds that the reports and statements filed by the alien captive insurance company in its domiciliary jurisdiction provides adequate information concerning the financial condition of the alien captive insurance company to satisfy the laws of this State, the director may waive the requirement for completion of the Captive Annual Report for business written in the alien jurisdiction.  (D) Except as provided in Section 38-90-40, a captive insurance company shall report using generally accepted accounting principles, unless the director approves the use of statutory accounting principles, with useful or necessary modifications or adaptations required or approved or accepted by the director for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the director. Except as otherwise provided, an association captive insurance company, an industrial insured group, and a risk retention group shall file its report in the form and manner required by Section 38-13-80, and each industrial insured group and each risk retention group shall comply with the requirements provided for in Section 38-13-85. The director by regulation shall prescribe the forms in which pure captive insurance companies and industrial insured captive insurance companies shall report. Information submitted pursuant to this section is confidential as provided in Section 38-90-35, except for reports submitted by a risk retention group.  HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 9, eff May 29, 2001; 2002 Act No. 228, Section 13, eff May 1, 2002; 2004 Act No. 291, Section 23, eff July 29, 2004; 2009 Act No. 28, Section 6, eff June 2, 2009; 2010 Act No. 217, Section 10, eff June 7, 2010; 2014 Act No. 282 (S.909), Section 11, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 11, in subsection (B), substituted "insurance company, an industrial insured group, and a captive insurance company formed as a risk retention group" for "insurance company and an industrial insured group" in the third sentence; inserted "and each captive insurance company formed as a risk retention group" in the fourth sentence; and made other nonsubstantive changes.  2018 Act No. 251, Section 1, rewrote the section.
 (A) A captive insurance company shall file annually an actuarial opinion on loss and loss adjustment expense reserves provided by an independent actuary. The actuary may not be an employee of the captive company or its affiliates.  (B) A captive insurance company may discount its loss and loss adjustment expense reserves with prior written approval by the director.  (C) The director may disallow the discounting of loss and loss adjustment expense reserves if a captive insurance company violates a provision of this title.  HISTORY: 2001 Act No. 58, Section 4, eff May 29, 2000; 2009 Act No. 28, Section 7, eff June 2, 2009; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2018 Act No. 251, Section 1, redesignated former (A) as (B) and former (B) as (A), and in (B), deleted "or his designee" from the end.
 (A)(1) At least once every five years, and whenever the director determines it to be prudent, the director personally, or by a competent person appointed by the director, shall thoroughly inspect and examine each risk retention group or industrial insured insurance company to ascertain its financial condition, its ability to fulfill its obligations, and whether it has complied with this chapter. The director, at his discretion, may physically visit the risk retention group or industrial insured insurance company. The expenses and charges of the examination must be paid to the State by the company or companies examined and the department shall issue its warrants for the proper charges incurred in all examinations.  (2) A captive insurance company that is not a risk retention group or industrial insured captive insurance company must be examined three years following the date of licensure and at the discretion of the director thereafter.  (B) All examination reports, preliminary examination reports or results, working papers, recorded information, documents and copies of documents produced by, obtained by, or disclosed to the director or any other person in the course of an examination made under this section are confidential and are not subject to subpoena and may not be made public by the director or an employee or agent of the director without the prior written consent of the company, except to the extent provided in this subsection.  (1) Nothing in this subsection prevents the director from using this information in furtherance of the director's regulatory authority under this title.  (2) The director may grant access to this information to public officers having jurisdiction over the regulation of insurance in any other state or country, or to law enforcement officers of this State or any other state or country or agency of the federal government at any time, so long as the officers receiving the information agree in writing to hold it in a manner consistent with this section.  (3) The confidentiality provisions of this subsection do not extend to final reports produced by the director in inspecting or examining a risk retention group. In addition, nothing contained in this subsection limits the authority of the director to use and, if appropriate, make public a preliminary examination report, examiner or insurer work papers or other documents, or other information discovered or developed during the course of an examination in the furtherance of a legal or regulatory action which the director considers appropriate.  (C) This section applies to all business written by a captive insurance company; however, the examination for a branch captive insurance company must be of branch business and branch operations only, as long as the alien captive insurance company provides annually to the director, a certificate of compliance, or its equivalent, issued by or filed with the licensing authority of the jurisdiction in which the alien captive insurance company is formed and demonstrates to the director's satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of that jurisdiction.  (D) To the extent that the provisions of Chapter 13 do not contradict the provisions of this section, Chapter 13 applies to captive insurance companies licensed under this chapter.  HISTORY: 2000 Act No. 331, Section 1; 2004 Act No. 291, Section 24, eff January 29, 2004; 2009 Act No. 28, Section 8, eff June 2, 2009; 2010 Act No. 217, Section 11, eff June 7, 2010; 2014 Act No. 282 (S.909), Section 12, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 12, in subsection (A), deleted "for pure captive insurance companies and for special purpose captive insurance companies" from the end of the second sentence.  2018 Act No. 251, Section 1, rewrote the section.
 HISTORY: Former Section, titled Citation of article, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Definitions, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Exemptions; powers and duties, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Capitalization requirements, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Surplus requirements, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Discretion of director as to form of company, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Exemption from provisions deemed inappropriate, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Confidentiality of reports, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Notice included with application form for insurance, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 HISTORY: Former Section, titled Requirements for issuance of license, had the following history: 2007 Act No. 78, Section 16, eff June 11, 2007, applicable to taxable years beginning after December 31, 2006. Repealed by 2018 Act No. 251, Section 2, eff May 18, 2018.
 (A) The license of a captive insurance company to conduct an insurance business in this State may be suspended or revoked by the director for:  (1) insolvency or impairment of capital or surplus;  (2) failure to meet the requirements of Section 38-90-40;  (3) refusal or failure to submit an annual report, as required by Section 38-90-70, or any other report or statement required by law or by lawful order of the director;  (4) failure to comply with its own charter, bylaws, or other organizational document;  (5) failure to submit to examination or any legal obligation relative to an examination, as required by Section 38-90-80;  (6) refusal or failure to pay the cost of examination as required by Section 38-90-80;  (7) use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders; or  (8) failure otherwise to comply with laws of this State.  (B) If the director finds, upon examination, hearing, or other evidence, that a captive insurance company has committed any of the acts specified in subsection (A) of this section, the director may suspend or revoke such license if the director considers it in the best interest of the public and the policy holders of the captive insurance company, notwithstanding any other provision of this title.  (C) In lieu of suspending or revoking the license of a captive insurance company, the director may impose fines as provided for in Section 38-2-10.  HISTORY: 2000 Act No. 331, Section 1; 2009 Act No. 28, Section 9, eff June 2, 2009; 2014 Act No. 282 (S.909), Section 13, eff June 10, 2014; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.  Effect of Amendment  2014 Act No. 282, Section 13, in subsection (C), substituted "In lieu of" for "Instead of".  2018 Act No. 251, Section 1, in (A)(2), deleted "or 38-90-50" following "Section 38-90-40".
 As used in this chapter:  (1) "Family member" means, with respect to an individual:  (a) a dependent of the individual; and  (b) any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of the individual or his dependent.  (2)(a) "Genetic information" means, with respect to an individual, the:  (i) individual's genetic tests;  (ii) genetic tests of the individual's family members; and  (iii) manifestation of a disease or disorder in family members of the individual.  (b) The term includes, with respect to an individual, a request for, or receipt of, genetic services or participation in clinical research which includes genetic services by the individual or a family member of the individual.  (c) A reference to genetic information concerning an individual or family member of an individual includes:  (i) with respect to an individual or family member of an individual who is a pregnant woman, genetic information on any fetus carried by the pregnant woman; or  (ii) with respect to an individual or family member of an individual utilizing an assisted reproductive technology, genetic information of an embryo legally held by the individual or family member.  (d) The term does not include information about the sex or age of an individual.  (3) "Genetic services" means:  (a) a genetic test;  (b) genetic counseling, including obtaining, interpreting, or assessing genetic information; or  (c) genetic education.  (4)(a) "Genetic test" means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations or chromosomal changes.  (b) The term does not include:  (i) an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or  (ii) an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that reasonably could be detected by a health care professional with appropriate training and expertise in the field of medicine involved.  (5) "Health insurance coverage" or "coverage" means as defined in Sections 38-71-670(6) and 38-71-840(14).  (6) "Health insurance issuer" or "issuer" means an entity that provides health insurance coverage in this State as defined in Sections 38-71-670(7) and 38-71-840(16).  (7) "Individual" means an insured, individual enrollee, covered dependent, participant, covered person, beneficiary, eligible employee, dependent of an eligible employee, or applicant for coverage.  (8) "Secretary" means the Secretary of the United States Department of Health and Human Services.  (9) "Underwriting purposes" means:  (a) rules for, or determination of, eligibility including enrollment and continued eligibility for benefits under the policy or coverage;  (b) the computation of premium or contribution amounts under the policy or coverage;  (c) the application of any preexisting condition exclusion under the policy or coverage; and  (d) other activities related to the creation, renewal, or replacement of a policy or contract of health insurance coverage.  HISTORY: 1998 Act No. 369, Section 1; 2010 Act No. 217, Section 14, eff June 7, 2010.
 This chapter applies to health insurance coverage offered in connection with an individual health plan, a group health plan, or a health benefit plan that is delivered, issued for delivery, or renewed in this State. Producers, agencies, and insurance support organizations are subject to the provisions of this chapter to the extent of their participation in the issue, reissue, or renewal of a policy or contract of health insurance coverage.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.  Editor's Note  Prior laws: 1998 Act No. 369, 1; 1976 Code Section 38-93-50.
 (A) A health insurance issuer when issuing, renewing, or reissuing a policy or contract of health insurance coverage, on the basis of any genetic information obtained concerning an individual or a family member of the individual or on the individual's request for genetic services, with respect to the policy or contract, may not:  (1) terminate, restrict, limit, or otherwise apply conditions to coverage of an individual or restrict the sale to an individual;  (2) cancel or refuse to renew the coverage of an individual;  (3) exclude an individual from coverage or establish rules for eligibility, including continued eligibility, of an individual to enroll for coverage;  (4) impose a waiting period before commencement of coverage of an individual;  (5) impose a preexisting condition exclusion;  (6) require inclusion of a rider that excludes coverage for certain benefits or services; or  (7) adjust premium or contribution amounts or establish a differential in premium rates for coverage.  (B)(1) In the case of group health insurance coverage, a health insurance issuer is prohibited from adjusting premium or contribution amounts for the group covered under a policy or contract of group health insurance coverage on the basis of genetic information.  (2) Nothing in item (1) may be construed to limit the ability of an issuer offering group health insurance coverage to increase the premium for an employer based on the manifestation of a disease or disorder in an individual who is enrolled in the policy or contract of coverage. In this case, the manifestation of a disease or disorder in one individual may not be used as genetic information about other group members and to further increase the premium for the employer.  (C) In addition, discrimination must not be made in the fees or commissions of a producer or agency for an enrollment, application, or the renewal of coverage of an individual or group on the basis of an individual's genetic information.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.  Editor's Note  Prior laws:1998 Act No. 369, Section 1; 1976 Code Section 38-93-20.
 (A) All genetic information obtained before or after the effective date of this chapter must be confidential and must not be disclosed to a third party in a manner that allows identification of the individual tested without first obtaining the written informed consent of that individual or a person legally authorized to consent on behalf of the individual, except that genetic information may be disclosed without consent:  (1) as necessary for the purpose of a criminal or death investigation, a criminal or judicial proceeding, an inquest, or a child fatality review, or for purposes of the State DNA Database established by Section 23-3-610;  (2) to determine the paternity of a person pursuant to Section 63-17-30;  (3) pursuant to an order of a court of competent jurisdiction specifically ordering disclosure of the genetic information;  (4) where genetic information concerning a deceased individual will assist in medical diagnosis of blood relatives of the decedent;  (5) to a law enforcement or other authorized agency for the purpose of identifying a person or a dead body; or  (6) as specifically authorized or required by a state or federal statute.  (B) A health insurance issuer may not require an individual to consent to the disclosure of genetic information to the issuer as a condition for obtaining health insurance coverage.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.  Editor's Note  Prior laws:1998 Act No. 369, Section 1; 1976 Code Section 38-93-30.
 It is unlawful to perform a genetic test on an individual without first obtaining specific informed consent to the test from the individual, or a person legally authorized to consent on behalf of the individual, unless the test is performed:  (1) by or for a law enforcement agency in a criminal investigation or for the State DNA Database as provided in Sections 23-3-620 through 23-3-640;  (2) for purposes of identifying a person or a dead body;  (3) to establish paternity as provided by Section 63-17-30;  (4) pursuant to a statute or court order specifically requiring that the test be performed; or  (5) for diagnosis or treatment of the individual if performed by a clinical laboratory that has received a specimen referral from the individual's treating physician or another clinical laboratory. Nothing in this item may be construed so as to waive the requirement that the treating physician obtain specific informed consent in accordance with the provisions of this section.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.  Editor's Note  Prior laws:1998 Act No. 369, Section 1; 1976 Code Section 38-93-40.
 (A) A health insurance issuer may not request or require an individual or a family member of an individual to undergo a genetic test. However, nothing in this subsection may be construed so as to limit the authority of a health care professional who is providing health care services to an individual to request that the individual undergo a genetic test.  (B) Notwithstanding subsection (A), a health insurance issuer may request, but not require, that an individual or a family member of the individual undergo a genetic test if each of the following conditions is met:  (1) the request is made pursuant to research that complies with Part 46 of Title 45, Code of Federal Regulations, or equivalent federal regulations and any applicable state law or regulations for the protection of human subjects in research;  (2) the issuer clearly indicates to each individual, or a person legally authorized to consent on behalf of the individual, to whom the request is made that:  (i) compliance with the request is voluntary; and  (ii) noncompliance will have no effect on enrollment or coverage status or premium or contribution amounts;  (3) no genetic information collected or acquired under this chapter may be used for underwriting purposes;  (4) the issuer notifies the Secretary in writing that the issuer is conducting activities pursuant to the exception provided in this subsection, including a description of the activities conducted; and  (5) the issuer complies with other conditions as the secretary may require by regulation for activities conducted under this subsection.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.
 (A)(1) A health insurance issuer may not request, require, or purchase genetic information for underwriting purposes.  (2) An issuer may not request, require, or purchase genetic information with respect to an individual before the individual's enrollment under the policy or contract of health insurance coverage.  (B) If an issuer obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning an individual, the request, requirement, or purchase may not be considered a violation of subsection (A)(2) if the request, requirement, or purchase is not a violation of subsection (A)(1).  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.
 Nothing in this chapter may be construed so as to preclude a health insurance issuer from:  (1) establishing rules for eligibility for an individual to purchase or enroll for individual coverage based on the manifestation of a disease or disorder in that individual or in a family member of the individual where the family member is covered under the policy or contract of individual health insurance coverage that covers the individual;  (2) adjusting premium or contribution amounts for an individual on the basis of a manifestation of a disease or disorder in that individual or in a family member of the individual where the family member is covered under the policy or contract of health insurance coverage that covers the individual. In this case, the manifestation of a disease or disorder in one individual must not be used as genetic information about other individuals covered under the policy or contract of health insurance coverage issued to the individual and to further increase premiums or contribution amounts;  (3) imposing a preexisting condition exclusion as otherwise permitted by law for an individual with respect to coverage under the policy or contract of health insurance coverage on the basis of a manifestation of a disease or disorder in that individual; or  (4) obtaining and using the results of a genetic test in making a determination regarding payment (as that term is defined for purposes of applying the regulations promulgated by the secretary under Part C of Title XI of the Social Security Act and Section 264 of HIPAA, as may be revised) consistent with the provisions of this chapter. However, the issuer may request only the minimum amount of information necessary to make a determination.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.
 (A) A violation of this chapter, including a single instance of a prohibited practice, is an unfair trade practice pursuant to Chapter 57, Title 38 and is subject to the penalties as provided for in Chapter 57 and in Section 38-2-10. The director or his designee at any time may examine an issuer, producer, agency, or insurance support organization to enforce this chapter. The expense of examination must be paid by the issuer, producer, agency, or insurance support organization. If an issuer, producer, agency, or insurance support organization determines that the fees assessed are unreasonable in relation to the examination performed, the issuer, producer, agency, or insurance support organization may appeal the assessments to the Administrative Law Court. Examination fees must be retained by the department and are considered "other" funds.  (B) In addition, a violation of this chapter is an unfair trade practice as defined in Section 39-5-20 and is subject to the provisions of Sections 39-5-110 to 39-5-160.  (C) The penalties and enforcement provisions of subsections (A) and (B) are in addition to penalties and enforcement provisions of federal law, including those set forth in the Genetic Information Nondiscrimination Act of 2008, Public Law 110-233.  (D) An individual who is injured by a person's violation of this chapter may recover in a court of competent jurisdiction the following remedies:  (1) equitable relief, which may include a retroactive order, directing the person to provide health insurance appropriate to the injured individual under the same terms and conditions as would have applied had the violation not occurred; and  (2) an amount equal to any actual damages suffered by the individual as a result of the violation.  (E) The prevailing party in an action under this section may recover costs and reasonable attorney's fees.  HISTORY: 2010 Act No. 217, Section 14, eff June 7, 2010.  Editor's Note  Prior laws: 1998 Act No. 369, Section 1; 1976 Code Section 38-93-60.  
 HISTORY: Former 38-95-10, titled Short title, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-20, titled Definitions, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-30, titled Interstate Insurance Product Regulation Commission established; venue, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-40, titled Powers of Commission, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-50, titled Organization; management committee; bylaws; legislative monitoring committee; immunity, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-60, titled Meetings and actions of commission, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-70, titled Rulemaking authority; procedures; opting out of uniform standard; stay of uniform standard; judicial review, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-80, titled Records and information of commission; public inspection and copying; confidentiality or nondisclosure; enforcement, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-90, titled Dispute resolution, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-100, titled Product filing and approval, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-110, titled Appeal to review panel; withdrawal or modification of approval, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-120, titled Funding; filing fees; budget; exemption from taxation; pledge of credit of compacting state; accounts; claim by compacting state to or ownership of commission property or funds, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-130, titled Eligibility and procedure for becoming compacting state; effective date and amendment of compact, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-140, titled Withdrawal from compact; default; dissolution, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  HISTORY: Former 38-95-150, titled Intent to join with other states to establish compact; representative of state designated, had the following history: 2008 Act No. 339, Section 2, eff January 1, 2009; Reenacted by 2016 Act No. 161 (H.4662), Section 1, eff June 1, 2014. Repealed by 2022 Act No. 195, Section 16, eff May 16, 2022.  
 This chapter may be cited as the "Portable Electronics Insurance Act".  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 For the purposes of this section:  (1) "Customer" means a person who purchases portable electronics or related services.  (2) "Enrolled customer" means a customer who elects coverage under a portable electronics insurance policy issued to a vendor of portable electronics.  (3) "Location" means any physical location in this State or any website, call center site, or similar location directed to residents of this State.  (4) "Portable electronics" means electronic devices that are portable in nature, their accessories, and services related to the use of the device.  (5) "Portable electronics insurance" means insurance covering the repair or replacement of portable electronics. This insurance may provide coverage for portable electronics against loss, theft, and inoperability due to mechanical failure, malfunction, damage, and other similar loss. Portable electronics insurance does not include:  (a) a service contract governed by Section 38-78-20(12);  (b) an insurance policy covering the obligation of a seller or manufacturer under a warranty; and  (c) a homeowner's, renter's, private passenger automobile, commercial multiperil, or similar policies.  (6) "Portable electronics transaction" means:  (a) the sale or lease of portable electronics by a vendor to a customer; and  (b) the sale of a service related to the use of portable electronics by a vendor to a customer.  (7) "Supervising entity" means a business entity licensed as a property and casualty insurer or insurance producer with a property and casualty line of authority.  (8) "Vendor" means a person directly or indirectly engaged in the business of portable electronics transactions.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 (A) A vendor must hold a portable electronics insurance license to sell or offer coverage under a policy of portable electronics insurance.  (B) A portable electronics insurance license issued under this section authorizes any employee or authorized representative of the vendor to sell or offer coverage under a policy of portable electronics insurance to a customer at each location at which the vendor engages in portable electronics transactions. Both an employee and an authorized representative of a vendor must have completed the training required by Section 38-97-50.  (C) The supervising entity shall maintain a registry of vendor locations which are authorized to sell or solicit portable electronics insurance coverage in this State. Upon request by the director or his designee and with ten days' notice to the supervising entity, the registry must be open to inspection and examination by the director or his designee during regular business hours of the supervising entity.  (D) Notwithstanding another provision of law, a license issued pursuant to this section authorizes the licensee and its employees or authorized representatives to engage in those activities that are permitted in this section.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 (A) A vendor of portable electronics insurance must make certain brochures or other written materials available to its customers in a location where the vendor sells this insurance. The brochures or written materials must:  (1) disclose that portable electronics insurance may provide a duplication of coverage already provided by a homeowner's policy, renter's insurance policy, or other source of insurance coverage of the customer;  (2) state that the enrollment in a portable electronics insurance program is not required for the customer to purchase or lease portable electronics or services from the vendor; and  (3) summarize the material terms of the insurance coverage, including:  (a) the identity of the insurer;  (b) the identity of the supervising entity;  (c) the amount of any applicable deductible and how this deductible must be paid;  (d) benefits of the coverage;  (e) key terms and conditions of coverage such as whether portable electronics may be repaired or replaced with similar make and model reconditioned or nonoriginal manufacturer parts or equipment;  (f) a summary of the process for filing a claim under the policy, including a description of how to return portable electronics and the maximum fee applicable if an enrolled customer fails to comply with an equipment return requirement; and  (g) a statement that an enrolled customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and the person who pays the premium must receive a refund of any applicable unearned premium.  (B) Portable electronics insurance may be offered on a month-to-month or other periodic basis as a group or master commercial inland marine policy issued to a vendor of portable electronics for its enrolled customers.  (C) Eligibility and underwriting standards for customers electing to enroll in coverage must be established for each portable electronics insurance program.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 (A) The employees and authorized representatives of a vendor may sell or offer portable electronics insurance to customers and may not be subject to licensure as an insurance producer under this title if:  (1) the vendor obtains a portable electronics insurance license to authorize its employees or authorized representatives to sell or offer portable electronics insurance pursuant to this section;  (2) the employee or authorized representative of a vendor of public electronics does not advertise, represent, or otherwise hold himself out as a nonportable electronics insurance licensed insurance producer; and  (3) the insurer issuing the portable electronics insurance either directly supervises or appoints a supervising entity to supervise the administration of the program, including development of a training program for employees and authorized representatives of the vendor. An outline of the training materials required by this section must be maintained by the supervising entity and provided to the department upon request. The training may be provided in electronic form. However, if conducted in an electronic form, the supervising entity shall implement a supplemental education program regarding the portable electronics insurance product that is conducted and overseen by licensed employees of the supervising entity. Training required by this item must:  (a) be delivered to employees and authorized representatives of a vendor who are directly engaged in the activity of selling or offering portable electronics insurance; and  (b) include basic instruction to each employee and authorized representative about the portable electronics insurance offered and the disclosures required under Section 38-97-40.  (B) The charges for portable electronics insurance coverage may be billed and collected by a vendor of portable electronics. A charge to the enrolled customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics or related services must be separately itemized on the enrolled customer's bill. If the portable electronics insurance coverage is included with the purchase or lease of portable electronics or related services, the vendor shall clearly and conspicuously disclose to the enrolled customer that the portable electronics insurance coverage is included with the purchase of the portable electronics or related services. Vendors billing and collecting these charges must not be required to maintain such funds in a segregated account if the vendor is authorized by the insurer to hold these funds in an alternative manner and remits these amounts to the supervising entity within sixty days following receipt of these amounts. Funds received by a vendor from an enrolled customer for the sale of portable electronics must be considered funds held in trust by the vendor in a fiduciary capacity for the benefit of the insurer. A vendor may receive compensation for billing and collection services provided by it.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 (A) A vendor of portable electronics, its employee, or its authorized representative who violates a provision of this chapter may after proper notice and an opportunity for a hearing be subject by the department to:  (1) administrative penalties as provided in Section 38-2-10. However, administrative penalties shall not exceed thirty thousand dollars in the aggregate for violations of a similar nature; and  (2) other penalties the department considers necessary and reasonable to effectuate the purposes of this chapter, including:  (a) suspending the privilege of transacting portable electronics insurance pursuant to this chapter at specific locations where a violation has occurred;  (b) suspending or revoking the ability of an individual employee or authorized representative to act under the license; and  (c) suspending or revoking the license of the vendor.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 (A) Notwithstanding another provision of law, an insurer may terminate coverage or otherwise change the terms and conditions of a policy of portable electronics insurance only as provided in the policy between the insurer and the policyholder and enrolled customers and only upon providing the policyholder and enrolled customers with at least thirty days' notice.  (B) If an insurer changes these terms and conditions, the insurer shall provide:  (1) the vendor with a revised policy or endorsement; and  (2) each enrolled customer with a revised certificate, endorsement, updated brochure, or other evidence indicating a change in the terms and conditions has occurred and a summary of material changes made.  (C) Notwithstanding subsection (A) of this section, an insurer may:  (1) terminate a customer's enrollment under a portable electronics insurance policy upon fifteen days' notice to the policy holder and enrolled customers for discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim under the coverage; and  (2) immediately terminate a customer's enrollment under a portable electronics insurance policy:  (a) for nonpayment of premium;  (b) if the enrolled customer ceases to have an active service with the vendor of portable electronics; or  (c) if an enrolled customer exhausts the individual aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sends notice of termination to the enrolled customer within thirty days after the exhaustion of this limit. If this notice is not timely sent, enrollment must continue regardless of the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.  (D) When a portable electronics insurance policy is terminated by a policyholder, the policyholder shall mail or deliver written notice to each enrolled customer advising the enrolled customer of the termination of the policy and the effective date of termination. This written notice must be mailed or delivered to the enrolled customer at least thirty days before termination.  (E) Whenever notice or correspondence with respect to a policy of portable electronics insurance is required pursuant to this section or is otherwise required by law, this notice or correspondence must be in writing. Notwithstanding any other provision of law, notices and correspondence may be sent either by mail or by electronic means as set forth in this section. If the notice or correspondence is mailed, it must be sent to the vendor of portable electronics at the vendor's mailing address specified for such purpose and to its affected enrolled customers' last known mailing addresses on file with the insurer. The insurer or vendor of portable electronics, as the case may be, shall maintain proof of mailing in a form authorized or accepted by the United States Postal Service or other commercial mail delivery service. If the notice or correspondence is sent by electronic means, it must be sent to the vendor of portable electronics at the vendor's electronic mail address specified for such purpose and to its affected enrolled customers' last known electronic mail address as provided by each enrolled customer to the insurer or vendor of portable electronics, as the case may be. For purposes of this subsection, an enrolled customer's provision of an electronic mail address to the insurer or vendor of portable electronics, as the case may be, must be considered consent to receive notices and correspondence by electronic means. An insurer or vendor of portable electronics shall maintain proof that the notice or correspondence was sent.  (F) Notice or correspondence required by this section or otherwise required by law may be sent on behalf of an insurer or vendor by the supervising entity appointed by the insurer.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 (A) A sworn application for a license under this chapter must be made to and filed with the department on forms prescribed by the department.  (B) An application required under subsection (A) must provide the:  (1) location of the home office of the applicant; and  (2) name, residential address, and other information required by the department for:  (a) an employee or officer of the vendor who is designated by the applicant as the person responsible for the compliance of the vendor with the requirements of this chapter; and  (b) all of its officers, directors, and shareholders of record having a beneficial ownership of ten percent or more of any class of securities registered under federal securities law, but only if the vendor derives more than fifty percent of its revenue from the sale of portable electronics insurance.  (3) Any changes to information provided to the department under this section, must be provided to the department within thirty days of that change being made.  (C) Any vendor engaging in portable electronics insurance transactions on or before the effective date of this act must apply for licensure within ninety days after the application being made available by the department. Any applicant commencing operations after the effective date of this act must obtain a license prior to offering portable electronics insurance.  (D) A licensee must renew a license issued pursuant to this chapter biennially before August first of every odd-numbered year. If a license is not renewed as required by this section, the license must be canceled. A licensee may reinstate the same license within six months after the compliance deadline by paying the renewal fee and a reinstatement fee equal to the renewal fee.  (E)(1) A vendor of portable electronics insurance licensed under this chapter shall pay to the department a fee of one thousand dollars for an initial portable electronics insurance license and five hundred dollars for a renewal.  (2) The department shall retain any fee or surcharge imposed by this section to use for the administration of Title 38.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.
 The director of the department:  (1) may, by order, require policy forms, rates, and rules concerning portable electronics insurance be filed with, and approved by, the director or his designee before use if considered necessary for the protection of the public, notwithstanding another provision of law; and  (2) may promulgate regulations necessary to implement the provisions of this chapter.  HISTORY: 2012 Act No. 172, Section 1, eff January 1, 2013.  
 As used in this chapter:  (1) "Authorized individual" means an individual known to and screened by the licensee and determined to be necessary and appropriate to have access to nonpublic information held by the licensee and its information systems.  (2) "Consumer" means an individual including, but not limited to, an applicant, policyholder, insured, beneficiary, claimant, and certificate holder who is a resident of this State and whose nonpublic information is in a licensee's possession, custody, or control.  (3) "Cybersecurity event" means an event resulting in unauthorized access to or the disruption or misuse of an information system or information stored on an information system. The term "cybersecurity event" does not include the unauthorized acquisition of encrypted nonpublic information if the encryption, process or key is not also acquired, released or used without authorization. The term "cybersecurity event" also does not include an event with regard to which the licensee has determined that the nonpublic information accessed by an unauthorized person has not been used or released and has been returned or destroyed.  (4) "Department" means the Department of Insurance.  (5) "Director" means the Director of the Department of Insurance or his designee.  (6) "Encrypted" means the transformation of data into a form which results in a low probability of assigning meaning without the use of a protective process or key.  (7) "Information security program" means the administrative, technical, and physical safeguards that a licensee uses to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle nonpublic information.  (8) "Information system" means a discrete set of electronic information resources organized for the collection, processing, maintenance, use, sharing, dissemination or disposition of electronic information, as well as any specialized system such as industrial or process controls systems, telephone switching and private branch exchange systems, and environmental control systems.  (9) "Licensee" means a person licensed, authorized to operate, or registered, or required to be licensed, authorized, or registered pursuant to the insurance laws of this State but does not include a purchasing group or a risk retention group chartered and licensed in a state other than this State or a licensee that is acting as an assuming insurer that is domiciled in another state or jurisdiction.  (10) "Multifactor authentication" means authentication through verification of at least two of the following authentication factors:  (a) knowledge factors, such as a password; or  (b) possession factors, such as a token or text message on a mobile phone; or  (c) inherence factors, such as a biometric characteristic.  (11) "Nonpublic information" means information that is not publicly available information and is:  (a) business-related information of a licensee the tampering with which, or unauthorized disclosure, access, or use of which, would cause a material adverse impact to the business, operations, or security of the licensee;  (b) any information concerning a consumer which because of name, number, personal mark, or other identifier can be used to identify such consumer, in combination with any one or more of the following data elements:  (i) social security number;  (ii) driver's license number or nondriver identification card number;  (iii) account number, credit or debit card number;  (iv) security code, access code, or password that would permit access to a consumer's financial account; or  (v) biometric records;  (c) any information or data, except age or gender, in any form or medium created by or derived from a health care provider or a consumer and that relates to:  (i) the past, present, or future physical, mental or behavioral health or condition of a consumer or a member of the consumer's family;  (ii) the provision of health care to a consumer; or  (iii) payment for the provision of health care to a consumer.  (12) "Person" means any individual or any nongovernmental entity including, but not limited to, a nongovernmental partnership, corporation, branch, agency, or association.  (13) "Publicly available information" means information that a licensee has a reasonable basis to believe is lawfully made available to the general public from federal, state, or local governmental records, widely distributed media, or disclosures to the general public that are required to be made by federal, state, or local law. For the purposes of this item, a licensee has a reasonable basis to believe information is lawfully made available to the general public if the licensee has taken steps to determine:  (a) that the information is of the type that is available to the general public; and  (b) whether a consumer can direct that the information not be made available to the general public and, if so, that the consumer has not done so.  (14) "Risk assessment" means the risk assessment that each licensee is required to conduct under this chapter.  (15) "State" means the State of South Carolina.  (16) "Third-party service provider" means a person not otherwise defined as a licensee that contracts with a licensee to maintain, process, store or otherwise is permitted access to nonpublic information through its provision of services to the licensee.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."
 Nothing in this chapter creates any duty or liability for a provider of communication services for the transmission of voice, data, or other information over its network.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."  
 (A) Commensurate with the size and complexity of the licensee, the nature and scope of the licensee's activities, including its use of third-party service providers, and the sensitivity of the nonpublic information used by the licensee or in the licensee's possession, custody, or control, each licensee shall develop, implement, and maintain a comprehensive written information security program based on the licensee's risk assessment and that contains administrative, technical, and physical safeguards for the protection of nonpublic information and the licensee's information system.  (B) A licensee's information security program must be designed to:  (1) protect the security and confidentiality of nonpublic information and the security of the information system;  (2) protect against threats or hazards to the security or integrity of nonpublic information and the information system;  (3) protect against unauthorized access to or use of nonpublic information, and minimize the likelihood of harm to a consumer; and  (4) define and periodically reevaluate a schedule for retention of nonpublic information and a mechanism for its destruction when no longer needed.  (C) The licensee shall:  (1) designate one or more employees, an affiliate, or an outside vendor designated to act on behalf of the licensee as responsible for the information security program;  (2) identify reasonably foreseeable internal or external threats that could result in the unauthorized access to or transmission, disclosure, misuse, alteration, or destruction of nonpublic information including the security of information systems and nonpublic information that are accessible to or held by third-party service providers;  (3) assess the likelihood and potential damage of these threats, considering the sensitivity of the nonpublic information;  (4) assess the sufficiency of policies, procedures, information systems, and other safeguards in place to manage these threats, taking into consideration threats in each relevant area of the licensee's operations, including:  (a) employee training and management;  (b) information systems, including network and software design, and information classification, governance, processing, storage, transmission, and disposal; and  (c) detecting, preventing, and responding to attacks, intrusions, or other systems failures; and  (5) implement information safeguards to manage the threats identified in its ongoing assessment, and at least annually assess the effectiveness of the safeguards' key controls, systems, and procedures.  (D) Based on its risk assessment, the licensee shall:  (1) design its information security program to mitigate the identified risks, commensurate with the size and complexity of the licensee's activities, including its use of third-party service providers, and the sensitivity of the nonpublic information used by the licensee or in the licensee's possession, custody, or control;  (2) determine the appropriateness of and implement the following security measures:  (a) placing access controls on information systems, including controls to authenticate and permit access only to authorized individuals to protect against the unauthorized acquisition of nonpublic information;  (b) identifying and managing the data, personnel, devices, systems, and facilities that enable the organization to achieve business purposes in accordance with their relative importance to business objectives and the organization's risk strategy;  (c) restricting access at physical locations containing nonpublic information to authorized individuals;  (d) protecting by encryption or other appropriate means, all nonpublic information while being transmitted over an external network and all nonpublic information stored on a laptop computer or other portable computing or storage device or media;  (e) adopting secure development practices for in-house developed applications used by the licensee and procedures for evaluating, assessing, and testing the security of externally developed applications used by the licensee;  (f) modifying the information system in accordance with the licensee's information security program;  (g) utilizing effective controls, which may include multifactor authentication procedures for an individual accessing nonpublic information;  (h) regularly testing and monitoring systems and procedures to detect actual and attempted attacks on, or intrusions into, information systems;  (i) including audit trails within the information security program designed to detect and respond to cybersecurity events and designed to reconstruct material financial transactions sufficient to support normal operations and obligations of the licensee;  (j) implementing measures to protect against destruction, loss, or damage of nonpublic information due to environmental hazards such as fire and water damage or other catastrophes or technological failures; and  (k) developing, implementing, and maintaining procedures for the secure disposal of nonpublic information in any format;  (3) include cybersecurity risks in the licensee's enterprise risk management process;  (4) stay informed regarding emerging threats or vulnerabilities and use reasonable security measures when sharing information relative to the character of the sharing and the type of information shared;  (5) provide its personnel with cybersecurity awareness training that is updated as necessary to reflect risks identified by the licensee in the risk assessment.  (E)(1) If the licensee has a board of directors, the board or an appropriate committee of the board shall, at a minimum:  (a) require the licensee's executive management or its delegates to develop, implement, and maintain the licensee's information security program; and  (b) require the licensee's executive management or its delegates to report in writing at least annually:  (i) the overall status of the information security program and the licensee's compliance with this chapter; and  (ii) material matters related to the information security program addressing issues such as risk assessment, risk management and control decisions, third-party service provider arrangements, testing results, cybersecurity events or violations and management's responses, and recommendations for changes in the information security program.  (2) If the executive management of a licensee delegates any of its responsibilities under this chapter, it shall oversee the development, implementation, and maintenance of the licensee's information security program prepared by the delegates and receive a report from the delegates which must comply with the requirements of the report to the board of directors.  (F) A licensee shall:  (1) exercise due diligence in selecting its third-party service provider; and  (2) require a third-party service provider to implement appropriate administrative, technical, and physical measures to protect and secure the information systems and nonpublic information that are accessible to, or held by, the third-party service provider.  (G) The licensee shall monitor, evaluate and adjust the information security program consistent with any relevant changes in technology, the sensitivity of its nonpublic information, internal or external threats to information, and the licensee's own changing business arrangements including, but not limited to, mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to information systems.  (H)(1) As part of its information security program, a licensee must establish a written incident response plan designed to promptly respond to, and recover from, a cybersecurity event that compromises the confidentiality, integrity, or availability of nonpublic information in its possession, the licensee's information systems, or the continuing functionality of any aspect of the licensee's business or operations.  (2) An incident response plan required in item (1) must address:  (a) the internal process for responding to a cybersecurity event;  (b) the goals of the incident response plan;  (c) the definition of clear roles, responsibilities and levels of decision-making authority;  (d) external and internal communications and information sharing;  (e) identification of requirements for the remediation of any identified weaknesses in information systems and associated controls;  (f) documentation and reporting regarding cybersecurity events and related incident response activities; and  (g) the evaluation and revision as necessary of the incident response plan following a cybersecurity event.  (I) Annually, each insurer domiciled in this State shall submit to the director, a written statement by February fifteenth, certifying that the insurer is in compliance with the requirements set forth in this section. Each insurer shall maintain for examination by the department all records, schedules, and data supporting this certificate for a period of five years. To the extent an insurer has identified areas, systems, or processes that require material improvement, updating or redesign, the insurer shall document the identification and the remedial efforts planned and underway to address such areas, systems, or processes. Such documentation must be available for inspection by the director.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 to 2, and 4, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."  "SECTION 4. Licensees have until July 1, 2019, to implement Section 38-99-20 of this act and until July 1, 2020, to implement Section 38-99-20(F) of this act."
 (A) If a licensee learns that a cybersecurity event has occurred or may have occurred, the licensee, an outside vendor, or service provider designated to act on behalf of the licensee must conduct a prompt investigation of the event.  (B) During the investigation, the licensee, outside vendor, or service provider designated to act on behalf of the licensee shall, at a minimum:  (1) determine whether a cybersecurity event occurred;  (2) assess the nature and scope of the cybersecurity event;  (3) identify nonpublic information that may have been involved in the cybersecurity event; and  (4) perform or oversee reasonable measures to restore the security of the information systems compromised in the cybersecurity event in order to prevent further unauthorized acquisition, release, or use of nonpublic information in the licensee's possession, custody, or control.  (C) If the licensee learns that a cybersecurity event has occurred or may have occurred in a system maintained by a third-party service provider, the licensee shall complete an investigation pursuant to the requirements of this section or confirm and document that the third-party service provider has completed an investigation pursuant to the requirements of this section.  (D) The licensee shall maintain records concerning all cybersecurity events for a period of at least five years from the date of the cybersecurity event and produce those records upon demand of the director.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."
 (A) A licensee shall notify the director no later than seventy-two hours after determining that a cybersecurity event has occurred when either of the following criteria are met:  (1) South Carolina is the licensee's state of domicile in the case of an insurer, or the licensee's home state in the case of a producer; or  (2) the licensee reasonably believes that the nonpublic information involved is of no less than two hundred and fifty consumers residing in this State, and the cybersecurity event:  (a) impacts the licensee of which notice is required to be provided to any governmental body, self-regulatory agency, or any other supervisory body pursuant to state or federal law; or  (b) has a reasonable likelihood of materially harming a consumer residing in this State or a material part of the normal operations of the licensee.  (B) The licensee shall provide as much of the following information as possible. The licensee shall provide the information in electronic form as directed by the director. The licensee shall have a continuing obligation to update and supplement initial and subsequent notifications to the director concerning the cybersecurity event. The information sent to the director must include:  (1) the date of the cybersecurity event;  (2) a description of how the information was exposed, lost, stolen, or breached, including the specific roles and responsibilities of third-party service providers, if any;  (3) how the cybersecurity event was discovered;  (4) whether any lost, stolen, or breached information has been recovered and if so, how this was done;  (5) the identity of the source of the cybersecurity event;  (6) whether the licensee has filed a police report or has notified any regulatory, governmental or law enforcement agencies and, if so, when such notification was provided;  (7) a description of the specific types of information acquired without authorization, which means particular data elements including, for example, types of medical information, types of financial information, or types of information allowing identification of the consumer;  (8) the period during which the information system was compromised by the cybersecurity event;  (9) the number of total consumers in this State affected by the cybersecurity event, in which case the licensee shall provide the best estimate in the initial report to the director and update this estimate with each subsequent report to the director pursuant to this section;  (10) the results of any internal review identifying a lapse in either automated controls or internal procedures, or confirming that all automated controls or internal procedures were followed;  (11) a description of efforts being undertaken to remediate the situation which permitted the cybersecurity event to occur;  (12) a copy of the licensee's privacy policy and a statement outlining the steps the licensee will take to investigate and notify consumers affected by the cybersecurity event; and  (13) the name of a contact person who is both familiar with the cybersecurity event and authorized to act on behalf of the licensee.  (C) A licensee shall comply with the notice requirements of Section 39-1-90, and other applicable law and provide a copy of the notice sent to consumers to the director when a licensee is required to notify the director.  (D)(1) In the case of a cybersecurity event in a system maintained by a third-party service provider of which the licensee has become aware, the licensee shall treat such event as it would under subsection (A).  (2) The computation of the licensee's deadlines shall begin on the day after the third-party service provider notifies the licensee of the cybersecurity event or the licensee otherwise has actual knowledge of the cybersecurity event, whichever is sooner.  (3) Nothing in this chapter shall prevent or abrogate an agreement between a licensee and another licensee, a third-party service provider or any other party to fulfill any of the investigation requirements or notice requirements imposed under this chapter.  (E)(1)(a) In the case of a cybersecurity event involving nonpublic information used by the licensee who is acting as an assuming insurer or in the possession, custody, or control of a licensee who is acting as an assuming insurer and that does not have a direct contractual relationship with the affected consumers, the assuming insurer shall notify its affected ceding insurers and the director of its state of domicile within seventy-two hours of making the determination that a cybersecurity event has occurred.  (b) A ceding insurer that has a direct contractual relationship with affected consumers shall fulfill the consumer notification requirements imposed under Section 39-1-90, and other notification requirements relating to a cybersecurity event imposed under this chapter.  (2)(a) In the case of a cybersecurity event involving nonpublic information that is in the possession, custody, or control of a third-party service provider of a licensee who is an assuming insurer, the assuming insurer shall notify its affected ceding insurers and the director of its state of domicile within seventy-two hours after receiving notice from its third-party service provider that a cybersecurity event has occurred.  (b) A ceding insurer that has a direct contractual relationship with affected consumers shall fulfill the consumer notification requirements of Section 39-1-90, and other notification requirements relating to a cybersecurity event imposed under this chapter.  (F) In the case of a cybersecurity event involving nonpublic information that is in the possession, custody, or control of a licensee that is an insurer or its third-party service provider and for which a consumer accessed the insurer's services through an independent insurance producer, the insurer shall notify the producers of record of all affected consumers as soon as practicable as directed by the director. The insurer is excused from this obligation for those instances in which it does not have the current producer of record information for an individual consumer.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."
 (A) The director has the power and authority to examine and investigate into the affairs of a licensee to determine whether the licensee is engaged in conduct in violation of this chapter. This power is in addition to the powers which the director has under this title. An investigation or examination must be conducted pursuant to Section 38-13-10, et seq.  (B) When the director has reason to believe that a licensee is engaged in conduct in this State which violates the provisions of this chapter, the director may take necessary and appropriate action to enforce the provisions of this chapter.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."
 (A) Documents, materials, or other information in the control or possession of the department that are furnished by a licensee or an employee or agent acting on behalf of a licensee, or obtained by the director in an investigation or examination are confidential by law and privileged, are not subject to disclosure under the Freedom of Information Act, and are not subject to subpoena or discovery in a private or civil action; and are not admissible as evidence in a private or civil action. However, the director is authorized to use the documents, materials, or other information in the furtherance of a regulatory or legal action brought as a part of the director's duties.  (B) The director or a person who received documents, materials, or other information while acting under the authority of the director may not be permitted or required to testify in a private civil action concerning confidential documents, materials, or information.  (C) To assist in the performance of his duties, the director may:  (1) share documents, materials, or other information, including confidential and privileged documents, materials, or information, with other state, federal, and international regulatory agencies the National Association of Insurance Commissioners, its affiliates or subsidiaries, and state, federal, and international law enforcement authorities, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials, or other information;  (2) receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information;  (3) share documents, materials, or other information with a third-party consultant or vendor, provided the consultant agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information; and  (4) enter into an agreement governing the sharing and use of information consistent with this subsection.  (D) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information may occur from disclosure to the director under this section or sharing as authorized under this chapter.  (E) Nothing in this chapter prohibits the director from releasing final, adjudicated actions that are open to public inspection to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."
 (A) The following licensees are exempt from the provisions of Section 38-99-20:  (1) a licensee with fewer than ten employees, including any independent contractors;  (2) an employee, agent, representative, or designee of a licensee, who is also a licensee, is exempt from the provisions of Section 38-99-20 and need not develop its own information security program to the extent that the employee, agent, representative, or designee is covered by the information security program of the other licensee; and  (3) a licensee subject to the Health Insurance Portability and Accountability Act, Pub.L. 104-191, 110 Stat. 1936, that has established and maintains an information security program pursuant to such statutes, rules, regulations, procedures, or guidelines established thereunder, will be considered to meet the requirements of Section 38-99-20, provided that the licensee is compliant with, and submits a written statement certifying its compliance with, the provisions of Section 38-99-20.  (B) In the event that a licensee ceases to qualify for an exception, such licensee shall have one hundred and eighty days to comply with this chapter.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019; 2019 Act No. 6 (S.360), Section 11, eff July 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."  Effect of Amendment  2019 Act No. 6, Section 11, in (A), substituted "Section 38-99-20" for "this chapter", in (2), substituted "Section 38-99-20" for "this chapter", in (3), substituted "Section 38-99-20" for "this chapter" in two places, and made nonsubstantive changes.
 A licensee who violates a provision of this chapter is subject to penalties as provided in Section 38-2-10.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."
 The director is authorized to promulgate regulations necessary for the administration of this chapter.  HISTORY: 2018 Act No. 171 (H.4655), Section 3, eff January 1, 2019.  Editor's Note  2018 Act No. 171, Sections 1 and 2, provide as follows:  "SECTION 1. The purpose and intent of this act is to establish standards for data security and standards for the investigation of and notification to the director of a cybersecurity event applicable to licensees. This act may not be construed to create or imply a private cause of action for a violation of its provisions nor may it be construed to curtail a private cause of action which would otherwise exist in the absence of this act.  "SECTION 2. This act is known and may be cited as the 'South Carolina Insurance Data Security Act'."