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Indicates Matter Stricken
Indicates New Matter
Indicates Matter Stricken
Indicates New Matter
AMENDED
June 4, 2003
S. 549
Introduced by Senators Land, Martin, J. Verne Smith, Hawkins and McConnell
S. Printed 6/4/03--H.
Read the first time April 30, 2003.
TO AMEND SECTION 42-7-310, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE ESTABLISHMENT OF THE SECOND INJURY FUND, SO AS TO PROHIBIT REIMBURSEMENTS TO EMPLOYERS OR CARRIERS WHICH HAVE DEFAULTED ON THEIR CURRENT ASSESSMENTS UNTIL THE ASSESSMENTS ARE PAID IN FULL; TO AMEND SECTION 42-9-400, AS AMENDED, RELATING TO THE MANNER IN WHICH AN EMPLOYER OR INSURANCE CARRIER SHALL BE REIMBURSED FROM THE SECOND INJURY FUND WHEN DISABILITY RESULTS FROM PREEXISTING IMPAIRMENT AND SUBSEQUENT INJURY, SO AS TO FURTHER PROVIDE FOR WHAT AN EMPLOYER MUST ESTABLISH IN ORDER TO QUALIFY FOR REIMBURSEMENT; AND TO AMEND SECTION 42-9-410, RELATING TO REIMBURSEMENT FROM THE SECOND INJURY FUND FOR AN EMPLOYEE WHO BECOMES TOTALLY AND PERMANENTLY DISABLED IN A SUBSEQUENT INJURY, SO AS TO FURTHER PROVIDE FOR WHAT AN EMPLOYER MUST ESTABLISH IN ORDER TO RECEIVE THESE ADDITIONAL BENEFITS FROM THE SECOND INJURY FUND.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-1-20(40) of the 1976 Code, as last amended by Act 300 of 2002, is further amended to read:
"(40) 'Exempt commercial policies' means policies for large commercial insureds where the total combined premiums to be paid for these policies for one insured is greater than fifty thousand dollars annually and as may be further provided for in regulation or in bulletins issued by the director. Exempt commercial policies include all property and casualty coverages except for commercial property and insurance related to credit transactions written through financial institutions."
SECTION 2. Section 38-7-20 of the 1976 Code is amended to read:
"Section 38-7-20. (A) In addition to all license fees and taxes otherwise provided by law, there is levied upon each insurance company licensed by the director or his designee an insurance premium tax based upon total premiums, other than workers' compensation insurance premiums, and annuity considerations, collected written by the company in the State during each calendar year ending on the thirty-first day of December. For life insurance, the insurance premium tax levied herein is equal to three-fourths of one percent of the total premiums collected written. For all other types of insurance, the insurance premium tax levied herein in this section is equal to one and one-fourth percent of the total premiums collected written. In computing total premiums, return premiums on risks and dividends paid or credited to policyholders are excluded.
(B) The insurance premium taxes collected by the director or his designee pursuant to this section must be deposited by him in the general fund of the State."
SECTION 3. Section 38-21-170(A) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(A) Subject to Section 38-21-270, each registered insurer shall report to the department all dividends and other distributions to shareholders within five business days following the declaration thereof of it and at least ten fifteen days prior to before the payment thereof of it. The department shall promptly shall consider this report as information, and such these considerations shall must include the factors as set forth provided in Section 38-21-260. If an insurer's surplus as regards policyholders is determined by the department not to be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the department shall have the authority, within the ten-day fifteen-day period prior to before payment thereof of it, to limit the amount of such the dividends or distributions."
SECTION 4. Section 38-21-270(B) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(B)(1) For purposes of this section, an extraordinary dividend or distribution includes a dividend or distribution of cash or other property whose fair market value together with that of other dividends or distributions made within the preceding twelve months exceeds the lesser of:
(a) when paid from other than earned surplus exceeds the lesser of:
(a)(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement,; or
(b)(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement.;
(b) when paid from earned surplus exceeds the greater of:
(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement; or
(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement.
(2) It does not include pro rata distributions of a class of the insurer's own securities."
SECTION 5. Section 38-41-60(c) of the 1976 Code is amended to read:
"(c) Investment of plan funds is subject to the same restrictions which are applicable to insurers pursuant to Sections 38-11-40 and 38-11-50 38-12-10 through 38-12-320. All investments must be managed by a bank or other investment organization licensed to operate in South Carolina."
SECTION 6. Section 38-43-10(B) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(B) This chapter does not apply to excess and surplus lines brokers licensed pursuant to Section 38-45-20 38-45-30 except as provided in Section 38-43-70."
SECTION 7. Section 38-43-40 of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"Section 38-43-40. A license issued by the director or his designee pursuant to Chapter 5 of this title gives to the insurer obtaining it the right to appoint any number of producers to take risks or transact any business of insurance in the State. However, the director or his designee must approve the appointment before the producer takes any risk or transacts any business. The notification to the director or his designee shall must give both the business address and residence addresses of the producer."
SECTION 8. Section 38-43-50(B) of the 1976 Code, as added by Act 323 of 2002, is amended to read:
"(B) Before an applicant can act as a producer for an authorized insurer he must be appointed by an official or authorized representative of the insurer for which the applicant proposes to act, who When appointing a producer, the insurer shall certify on a form prescribed by the director whether the applicant has been appointed a producer to represent it and that it has duly investigated the character and record of the applicant and has satisfied itself that he is trustworthy and qualified to act as its producer and intends to hold himself out in good faith as an insurance producer. An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed."
SECTION 9. Section 38-43-70(D) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(D) Notwithstanding any other provision of this section, a person licensed as a surplus lines broker in his home state shall receive a nonresident surplus lines broker license pursuant to subsection (A) of this section. Except as to subsection (A) of this section, nothing in this section otherwise amends or supersedes any provision of Section 38-45-20 38-45-30."
SECTION 10. Section 38-43-100(A) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(A) No Business may not be done by the applicant except following issuance of a producer's license, and the license may not be issued until the director or his designee has determined that the applicant is qualified as an insurance producer, generally, and is particularly qualified for the line of business in which the applicant proposes to engage. The department shall promulgate regulations setting forth qualifying standards of producers as to all lines of business and shall require the producer applicant to stand a written examination. For the purpose of interstate reciprocity, the department shall identify by bulletin which limited lines or limited lines credit insurance are approved in South Carolina and which are exempt from examination. The director or his designee may waive the examination with respect to applicants who have achieved the designations of Chartered Property and Casualty Underwriter (CPCU) or Chartered Life Underwriter (CLU). The director or his designee may also, at his discretion, waive the examination and issue temporary licenses for a period not to exceed ninety days, upon demonstrated need. A bank, finance company, or other company handling credit transactions operating in this State and utilizing one or more credit life or accident and health or credit property producers in a particular geographical area who are licensed without having taken the written examination is required to have readily available at least one credit life or accident and health or credit property producer to answer customers' questions concerning credit life, credit accident and health insurance, or credit property, or any combination of these."
SECTION 11. Section 38-43-105(E) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(E) This section applies to residents applying for a license to engage in the sale of insurance except those persons who have previously been licensed for a period of five years or more and those persons applying for a license in limited lines or limited lines credit insurance approved by the director or his designee in order to satisfy the reciprocity provisions outlined under this chapter. Each course sponsor is required to submit a nonrefundable filing fee established by the department."
SECTION 12. Section 38-43-106(E) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(E) This section also applies to nonresident producers unless otherwise provided herein in this section. However, any a nonresident producer who successfully satisfies continuing insurance education requirements of his resident home state and certifies this information to the continuing education administrator as specified in subsection (C) is deemed considered to have satisfied the requirements of this section regardless of the requirements of that other state."
SECTION 13. Section 38-45-20 of the 1976 Code is amended to read:
"Section 38-45-20. A resident may be licensed as an insurance broker by the director or his designee if the following requirements are met:
(1) licensure of the resident as an insurance agent producer and having at least one appointment for the same lines of insurance for which he proposes to apply as a broker of this State for at least two years;
(2) successful completion of classroom insurance courses approved by the director or his designee consisting of no less than twelve classroom hours, which must be in addition to the requirements for a producer license contained in Section 38-43-105. The course subjects must be related to broker or surplus lines activities as approved by the director or his designee;
(3) payment of a biennial license fee of two hundred dollars which is earned fully when received, not refundable;
(3)(4) filing of a bond with the department in a form approved by the Attorney General in favor of South Carolina of ten thousand dollars executed by a corporate surety licensed to transact surety insurance in this State and personally countersigned by a licensed resident agent of the surety. The bond must be conditioned to pay a person insured or seeking insurance through the broker who sustains loss as a result of:
(a) the broker's violation of or failure to comply with an insurance law or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him, cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance transaction. In lieu Instead of a bond, the broker may file with the department certificates of deposit of ten thousand dollars of building and loan associations or federal savings and loan associations located within the State in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount of insurance, or of banks located within the State in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount of insurance. An aggrieved person may institute an action in the county of his residence against the broker or his surety, or both, to recover on the bond or against the broker to recover from the certificates of deposit, and a copy of the summons and complaint in the action must be served on the director, who is not required to be made a party to the action;
(4)(5) payment to the department, within thirty days after March thirty-first, June thirtieth, September thirtieth, and December thirty-first each year, of a broker's premium tax of four percent upon premiums for policies of insurers not licensed in this State. Credit may be taken for tax on policies canceled flat within forty-five days of the effective policy date as long as the business was placed in good faith and the policy was canceled at the request of the insured."
SECTION 14. Section 38-45-30(5) of the 1976 Code is amended to read:
"(5) filing of a bond with the department in a form approved by the Attorney General in favor of South Carolina of ten thousand dollars executed by a corporate surety licensed to transact surety insurance in this State. The bond must be conditioned to pay a person insured or seeking insurance through the broker who sustains loss as a result of:
(a) the broker's violation of or failure to comply with an insurance law or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him, cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance transaction. In lieu of a bond, the broker may file with the department certificates of deposit of ten thousand dollars of building and loan associations or federal savings and loan associations located within the State in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount of insurance, or of banks located within the State in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount of insurance. An aggrieved person may institute an action in the county of his residence against the broker or his surety, or both, to recover damages on the bond or against the broker to recover from the certificates of deposit, and. A copy of the summons and complaint in the action must be served on the director, who is not required to be made a party to the action."
SECTION 15. Section 38-71-880(F) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(F) This section shall not apply to benefits for services furnished on or after December 31, 2002 2003."
SECTION 16. Section 38-77-870 of the 1976 Code is amended to read:
"Section 38-77-870. The provisions of this chapter relevant to the assignment of risks must be available to nonresidents who are unable to obtain a policy of motor vehicle liability, physical damage, and medical payments insurance with respect only to motor vehicles registered and used in the State. Provided, however, that assignment through the South Carolina Automobile Insurance Plan also must be available to personnel of the Armed Forces of the United States who are on active duty and who officially are stationed in this State if they possess a valid motor vehicle driver's license issued by another state or territory of the United States or by the District of Columbia, regardless of the state of registration of their motor vehicle, if their motor vehicle is garaged principally in this State."
SECTION 17. Section 38-79-420 of the 1976 Code is amended to read:
"Section 38-79-420. There is created the South Carolina Patients' Compensation Fund (fund) for the purpose of paying that portion of a medical malpractice or general liability claim, settlement, or judgment which is in excess of one two hundred thousand dollars for each incident or in excess of three six hundred thousand dollars in the aggregate for one year. The fund is liable only for payment of claims against licensed health care providers (providers) in compliance with the provisions of this article and includes reasonable and necessary expenses incurred in payment of claims and the fund's administrative expense."
SECTION 18. Section 56-9-20(11) of the 1976 Code, as last amended by Act 459 of 1996, is further amended to read:
"(11) 'Proof of financial responsibility': Proof of ability to respond to damages for liability, as provided in Section 38-77-150, or, on account of accidents occurring after the effective date of such this proof, arising out of the ownership, maintenance, or use of a motor vehicle in the amount of fifteen thousand dollars because of bodily injury to or death of one person in any one accident and, subject to such this limit for one person, in the amount of thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident and in the amount of five ten thousand dollars because of injury to or destruction of property of others in any one accident;"
SECTION 19. The first paragraph of Section 2 of Act 313 of 2002 is amended to read:
"Notwithstanding the interest rate provisions of Section 38-69-240(a) of the 1976 Code, for prospective sales of contracts entered into pursuant to Section 38-69-240 from this act's effective date through January 1, 2004 June 30, 2005, the following applies:"
SECTION 20. Section 38-71-40 of the 1976 Code is amended to read:
"Section 38-71-40. (A) The falsity of any statement related to insurability in the application for any individual policy covered by this chapter does not bar the right to recovery thereunder under it during the first two years from the issue date unless:
(1) the false statement was made with actual intent to deceive; or unless it
(2) the false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.
(B) If either criteria provided in item (1) or (2) of subsection (A) is met, the insured is barred from recovery under the policy, and the policy is void. It is not necessary for both provisions in items (1) and (2) of subsection (A) of subsection (A) to be met in order for the right of recovery to be barred. This section does not repeal, supercede, or preempt any other provisions of Title 38 related to the falsity of statements in an application."
SECTION 21. Section 38-75-460 of the 1976 Code is amended to read:
"Section 38-75-460. The director or his designee may, by written order, temporarily may expand the area in which the association must shall provide essential property insurance. The area may not be expanded further inland than east of the west bank of the intracoastal waterway and may not be expanded to cover the area for more than twelve months. The director or his designee shall find and declare the existence of an emergency because of the unavailability of coastal property insurance or other unavailability of coastal property insurance on a reasonable basis through normal channels. The order must include the surveys of the market conducted in order to make the determination. The director or his designee may expand the area in which the association shall provide essential property insurance to the whole area or just part of the area. The director may expand the area by construction type or age of construction. The area may not be expanded further than the seacoast territory as defined in Section 38-75-310(7) and may not be expanded to cover the area for more than twenty-four months. If the director or his designee issues an order that expands the area in which the association provides essential property insurance, he shall notify the General Assembly of that order and he shall recommend, through the Director of the Department of Insurance, to the General Assembly any appropriate statutory changes in the law concerning the definition of 'coastal area' which he believes needs to be enacted."
SECTION 22. Section 42-7-310(d)(2) of the 1976 Code, as last amended by Act 364 of 2000, is further amended to read:
"(2) equitable assessments upon each carrier which, as used in this section, includes all insurance carriers, self-insurers, and the State Accident Fund. Each carrier shall make payments to the fund in an amount equal to that proportion of one hundred seventy-five percent of the total disbursement made from the fund during the preceding fiscal year less the amount of net assets in the fund as of June thirtieth of the preceding fiscal year which the normalized premium of each carrier bore to the normalized premium of all carriers during the preceding calendar year. Each insurance carrier, self-insurer, and the State Accident Fund shall make payment based upon workers' compensation normalized premiums during the preceding calendar year. The charge to each insurance carrier is a charge based upon normalized premiums. An employer who has ceased to be a self-insurer shall continue to be liable for any assessments into the fund on account of any benefits paid by him during such calendar year. Any assessment levied or established in accordance with this section constitutes a personal debt of every employer or insurance carrier so assessed and is due and payable to the Second Injury Fund when payment is called for by the fund. In the event of failure to pay any assessment upon the date determined by the fund, the employer or insurance carrier may immediately be assessed a penalty in an amount not exceeding ten percent of the unpaid assessment. If the employer or insurance carrier fails to pay the assessment and penalty within thirty days, they shall be barred from any recovery from the fund on all claims without exception until the assessment and penalty are paid in full. the The director may file a complaint for collection against the employer or insurance carrier in a court of competent jurisdiction for the assessment, penalty, and interest at the legal rate, and the employer/carrier is responsible for attorney's fees and costs. The penalty and interest under this subsection are payable to the Second Injury Fund. At the time of the filing of the complaint, the fund shall also notify the South Carolina Department of Insurance and the South Carolina Workers' Compensation Commission, and these government agencies shall take the appropriate legal and administrative action immediately."
SECTION 23. Section 42-9-400(c) of the 1976 Code is amended to read:
"(c) In order to qualify under this section for reimbursement from the Second Injury Fund, the employer must establish when claim is made for reimbursement thereunder, that the employer had knowledge of the permanent physical impairment at the time that the employee was hired, or at the time the employee was retained in employment after the employer acquired such knowledge. Provided, however, However, the employer may qualify for reimbursement hereunder upon proof that he did not have prior knowledge of the employee's preexisting physical impairment because the existence of such the condition was concealed by the employee or was unknown to the employee."
SECTION 24. Section 42-9-410(d) of the 1976 Code is amended to read:
"(d) In order to receive additional benefits from the Second Injury Fund as permitted by Sections 42-9-150 and 42-9-170, the employer shall establish that he had notice knowledge of the employee's preexisting permanent physical impairment prior to the time of the subsequent injury by accident, unless the employer can establish that the employee had no knowledge of such preexisting impairment he did not have prior knowledge of the employee's preexisting physical impairment because the existence of the condition was concealed by the employee."
SECTION 25. This act takes effect upon approval by the Governor, except SECTION 13 takes effect January 31, 2004.
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