Bill 3897

                    Current Status

Bill Number:                    3897
Type of Legislation:            General Bill GB
Introducing Body:               House
Introduced Date:                19970410
Primary Sponsor:                Kirsh 
All Sponsors:                   Kirsh 
Drafted Document Number:        BBM\9043JM.97
Companion Bill Number:          1215
Residing Body:                  Senate
Current Committee:              Banking and Insurance Committee 02
                                SBI
Date of Last Amendment:         19980319
Subject:                        Insurer's Rehabilitation and
                                Liquidation Act, reinsurance contract;
                                Insurance

Body    Date      Action Description                       Com     Leg Involved
______  ________  _______________________________________  _______ ____________

Senate  19980603  Recommitted to Committee                 02 SBI
Senate  19980603  Reconsidered vote whereby
                  read third time and enrolled
Senate  19980603  Recalled from Legislative Council
Senate  19980528  Read third time, enrolled for
                  ratification
Senate  19980527  Read second time
Senate  19980513  Recalled from Committee,                 02 SBI
                  placed on the Calendar
Senate  19980324  Introduced, read first time,             02 SBI
                  referred to Committee
House   19980320  Read third time, sent to Senate
House   19980319  Read second time, unanimous
                  consent for third reading on
                  Friday, 19980320
House   19980319  Amended
House   19980318  Committee report: Favorable with         26 HLCI
                  amendment
House   19970410  Introduced, read first time,             26 HLCI
                  referred to Committee

Indicates Matter Stricken
Indicates New Matter

RECALLED

May 13, 1998

H. 3897

S. Printed 5/13/98--S.

Read the first time March 24, 1998.

A BILL

TO AMEND SECTION 38-27-510, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO REHABILITATION AND LIQUIDATION OF INSURERS, FORMAL PROCEEDINGS, AND LIABILITY OF THE REINSURER, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT THE ORIGINAL INSURED OR POLICYHOLDER SHALL NOT HAVE ANY RIGHTS AGAINST THE REINSURER WHICH ARE NOT SPECIFICALLY SET FORTH IN THE REINSURANCE CONTRACT OR OTHER AGREEMENT BETWEEN THE REINSURER AND THE ORIGINAL INSURED OR POLICYHOLDER.

Amend Title To Conform

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

SECTION 1. Section 38-27-510 of the 1976 Code is amended to read:

"Section 38-27-510. The amount recoverable by the liquidator from reinsurers may not be reduced as a result of delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made directly to an insured or other creditor does not diminish the reinsurer's obligation to the insurer's estate except: when the reinsurance contract provided for direct coverage of a named insured and the payment was made in discharge of that obligation.

(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."

SECTION 2. This act takes effect upon approval by the Governor.