Bill 1076

                    Current Status

Bill Number:               1076
Ratification Number:       328
Act Number                 317
Introducing Body:          Senate
Subject:                   Relating to the surplus requirements of
                           mutual insurers

(A317, R328, S1076)

AN ACT TO AMEND SECTION 38-9-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE CAPITAL AND SURPLUS REQUIREMENTS OF STOCK INSURERS, AND SECTION 38-9-20, RELATING TO THE SURPLUS REQUIREMENTS OF MUTUAL INSURERS, SO AS TO INCREASE THE AMOUNT OF THE REQUIREMENTS; AND TO AMEND SECTION 38-9-30, RELATING TO THE INSURERS SUBJECT TO THE REQUIREMENTS, AND SECTION 38-9-50, RELATING TO THE RESTRICTIONS ON INSURERS WHO FAIL TO MEET THE REQUIREMENTS, SO AS TO REVISE THE DATES UPON WHICH THE RESTRICTIONS AND REQUIREMENTS TAKE EFFECT.

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

Stock Insurer's Capital and Surplus Requirements Increased

SECTION 1. Section 38-9-10(a) of the 1976 Code is amended to read:

"(a) Before licensing a stock insurer, the Commissioner shall require the insurer to be possessed of capital which must be maintained at all times and surplus, twenty-five percent of which must be maintained at all times, in amounts not less than the following:

If Licensed to Write Capital Surplus

Life $300,000 $300,000

Accident and health 300,000 300,000

Life, accident and health 600,000 600,000

Property 600,000 600,000

Casualty 600,000 600,000

Surety 600,000 600,000

Marine 600,000 600,000

Title 300,000 300,000

Multiple lines 750,000 750,000."

Mutual Insurers' Surplus Requirements Increased

SECTION 2. Section 38-9-20(a) of the 1976 Code is amended to read:

"(a) Before licensing a mutual insurer, the Commissioner shall require the insurer to be possessed of surplus of not less than the following amounts:

Surplus which must

be possessed at

If licensed to write time of licensing

Life $600,000

Accident and health 600,000

Life, accident and health 1,200,000

Property 1,200,000

Casualty 1,200,000

Surety 1,200,000

Marine 1, 200,000

Title 600,000

Multiple lines 1,500,000."

Effective Date of Requirements Changed

SECTION 3. Section 38-9-30 of the 1976 Code is amended to read:

"Section 38-9-30. Sections 38-9-10 and 38-9-20 do not apply to an insurer that is licensed to do business in this State on July 1, 1988, if the insurer continues to remain licensed in this State and continues to maintain at least the following minimum capital and surplus amounts if a stock insurer, or minimum surplus if a mutual insurer:

(a) An insurer, if possessed of capital and surplus amounts on December 31, 1987, that were in compliance with the law at that time, but which are less than the minimums required to be maintained by Section 38-9- 10, must maintain not less than the amount of capital stated in its 1987 annual statement and, in addition, must maintain surplus of not less than twenty-five percent of that amount of capital. If at any time the surplus of the insurer is reduced to less than twenty-five percent of this minimum amount of required capital, the insurer is considered delinquent, and the Commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. If at any time the minimum capital required to be maintained by this section by the insurer becomes impaired to any extent, the insurer is delinquent, and the Commissioner shall begin delinquency proceedings. If at any time the capital is increased to an amount greater than the amount possessed on December 31, 1987, the amount of surplus that must be maintained after the increase is twenty-five percent of that greater amount of capital, and if this amount is not maintained, the Commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. This increased amount of capital must not be reduced to an amount less than the amount required by Section 38-9- 10, and if it becomes reduced or impaired to any extent, the insurer is delinquent, and the Commissioner shall begin delinquency proceedings.

(b) A mutual insurer, if possessed of surplus on December 31, 1987, that was in compliance with the law at that time but is less than the minimum required to be maintained by Section 38-9-20, shall maintain not less than the amount of surplus stated in its 1987 annual statement. If at any time the surplus of the insurer is reduced to less than eighty percent of the amount shown in its 1987 annual statement, the insurer is considered delinquent, and the Commissioner may begin delinquency proceedings as provided by Chapter 27 of this title. If at any time the surplus of the insurer is increased to an amount greater than the amount possessed on December 31, 1987, eighty percent of that greater amount of surplus, or the minimum amount required to be maintained by Section 38-9-20, whichever amount is the lesser, must be maintained after the increase, and if it is not maintained, the insurer is considered delinquent, and the Commissioner may begin delinquency proceedings as provided by Chapter 27 of this title."

Effective Date of Restrictions Changed

SECTION 4. Section 38-9-50 of the 1976 Code is amended to read:

"Section 38-9-50. 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."

Time Effective

SECTION 5. This act takes effect July 1, 1988.