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					BIL:      601
TYP:      General Bill GB
INB:      Senate
IND:      20010419
PSP:      Thomas
SPO:      Thomas
DDN:      l:\council\bills\nbd\11552ac01.doc
CBN:      3974
RBY:      House
COM:      Labor, Commerce and Industry Committee 26 HLCI
LAD:      20010523
SUB:      Prescription drug discount card sellers report to Consumer Affairs;
          Insurance; property, captive, health, motor vehicle



HST:

Body      Date        Action Description                        Com     Leg Involved
______    ________    _______________________________________   _______ ____________
House     20010524    Introduced, read first time,              26 HLCI
                      referred to Committee
Senate    20010523    Amended, read third time,
                      sent to House
------    20010521    Scrivener's error corrected
------    20010517    Scrivener's error corrected
Senate    20010516    Read second time, notice of
                      general amendments
Senate    20010516    Committee amendment adopted
------    20010515    Scrivener's error corrected
Senate    20010514    Committee report: Favorable with          02 SBI
                      amendment
------    20010424    Companion Bill No. 3974
Senate    20010419    Introduced, read first time,              02 SBI
                      referred to Committee



Versions of This Bill


Revised   on   20010514
Revised   on   20010515
Revised   on   20010516
Revised   on   20010517
Revised   on   20010521
Revised   on   20010523
TXT:
 1   Indicates Matter Stricken
 2   Indicates New Matter
 3
 4   AS PASSED BY THE SENATE
 5   May 23, 2001
 6
 7                                                   S. 601
 8
 9                    Introduced by Senator Thomas
10
11 S. Printed 5/23/01--S.
12 Read the first time April 19, 2001.
13
14
15
16
17




     [601-1]
 1
 2
 3
 4
 5
 6
 7
 8
 9                       A BILL
10
11   TO AMEND SECTION 37-17-10, CODE OF LAWS OF SOUTH
12   CAROLINA, 1976, RELATING TO REGULATION OF
13   PERSONS WHO SELL PRESCRIPTION DRUG DISCOUNT
14   CARDS, SO AS TO PROVIDE THAT SUCH PERSONS MUST
15   REGISTER AND REPORT TO THE DEPARTMENT OF
16   CONSUMER AFFAIRS, RATHER THAN TO THE
17   DEPARTMENT OF INSURANCE; TO AMEND SECTION
18   38-5-80, AS AMENDED, RELATING TO REQUIREMENTS TO
19   OBTAIN A LICENSE TO CONDUCT INSURANCE BUSINESS
20   IN THIS STATE, SO AS TO CLARIFY WHAT BOOKS AND
21   RECORDS OF AN INSURER MUST BE MAINTAINED IN
22   THIS STATE; TO AMEND SECTION 38-31-20, AS
23   AMENDED, RELATING TO DEFINITIONS IN THE SOUTH
24   CAROLINA PROPERTY AND CASUALTY INSURANCE
25   GUARANTY ASSOCIATION ACT, SO AS TO INCLUDE NEW
26   DEFINITIONS    AND    REVISE   CERTAIN   EXISTING
27   DEFINITIONS; TO AMEND SECTION 38-31-60, RELATING
28   TO THE POWERS AND DUTIES OF THE SOUTH CAROLINA
29   PROPERTY AND CASUALTY GUARANTY ASSOCIATION,
30   SO AS TO PROVIDE THAT THE ASSOCIATION‟S
31   OBLIGATION TO AN INSURED CEASES WHEN TEN
32   MILLION DOLLARS HAS BEEN PAID TO OR ON BEHALF
33   OF THE INSURED AND TO ALLOW FOR ALLOCATION OF
34   PAYMENTS WHEN THERE IS MORE THAN ONE
35   CLAIMANT WITH A COVERED CLAIM; TO AMEND
36   SECTION 38-31-70, AS AMENDED, RELATING TO THE
37   PLAN OF OPERATION FOR THE ADMINISTRATION OF
38   THE GUARANTY ASSOCIATION, SO AS TO AUTHORIZE
39   REPORTING AND THE DELEGATION OF CERTAIN
40   AUTHORITY TO AN ASSOCIATION SIMILAR TO THE
41   GUARANTY ASSOCIATION; TO AMEND SECTION 38-31-90,
42   AS AMENDED, RELATING TO RIGHTS OF THE

     [601]                   1
 1   GUARANTY ASSOCIATION REGARDING CLAIMANTS
 2   PAID AND ASSETS OF INSOLVENT INSURERS, SO AS TO
 3   PROVIDE THAT THE ASSOCIATION HAS THE RIGHT TO
 4   RECOVER THE AMOUNT OF A CLAIM PAID FROM
 5   CERTAIN INSUREDS AND AFFILIATES OF AN INSOLVENT
 6   INSURER; TO AMEND SECTION 38-31-100, AS AMENDED,
 7   RELATING TO PROCEDURES REQUIRED TO BE
 8   FOLLOWED BY PERSONS ASSERTING CLAIMS AND TO
 9   LIMITATIONS ON CLAIMS, SO AS TO REVISE THESE
10   PROVISIONS; TO AMEND SECTION 38-39-90, AS
11   AMENDED,      RELATING   TO    CANCELLATION    OF
12   INSURANCE CONTRACTS BY PREMIUM SERVICE
13   COMPANIES AND THE CREDITING OF RETURN
14   PREMIUMS WHICH RESULT IN A SURPLUS, SO AS TO
15   ALLOW A REFUND OF SURPLUS TO AN AGENT OF AN
16   INSURED AND TO PROVIDE THAT NO REFUND IS
17   REQUIRED IF IT AMOUNTS TO LESS THAN FIVE
18   DOLLARS, RATHER THAN THREE DOLLARS; TO AMEND
19   SECTION 38-43-80, AS AMENDED, RELATING TO LICENSE
20   FEES FOR AGENTS OF INSURERS, SO AS TO PROVIDE
21   THAT FEES MUST BE PAID AS PRESCRIBED BY THE
22   DEPARTMENT, RATHER THAN PAID IN ADVANCE; TO
23   AMEND SECTION 38-55-30, AS AMENDED, RELATING TO
24   THE AMOUNT OF RISK THAT AN INSURER OR CAPTIVE
25   INSURER MAY EXPOSE ITSELF TO, SO AS TO PROVIDE
26   THAT THIS SECTION DOES NOT APPLY TO CAPTIVE
27   INSURERS; TO AMEND SECTION 38-71-1370, AS
28   AMENDED, RELATING TO THE APPLICATION OF GROUP
29   ACCIDENT AND HEALTH INSURANCE PROVISIONS TO
30   SMALL EMPLOYER INSURERS, SO AS TO EXCLUDE
31   COVERAGE TO LATE ENROLLEES FOR A PERIOD OF
32   TIME; TO AMEND SECTION 38-71-1980, RELATING TO
33   EXPEDITED EXTERNAL REVIEWS, SO AS TO CHANGE AN
34   INTERNAL CROSS REFERENCE; TO AMEND SECTION
35   38-87-40, AS AMENDED, RELATING TO REQUIREMENTS
36   FOR OUT-OF-STATE CHARTERED RISK RETENTION
37   GROUPS TO DO BUSINESS IN SOUTH CAROLINA, SO AS
38   TO PROVIDE THAT SUCH GROUP IS SUBJECT TO
39   TAXATION AS AN ADMITTED INSURER WOULD BE,
40   RATHER THAN AS A FOREIGN ADMITTED INSURER
41   WOULD BE; TO AMEND SECTION 38-90-60, RELATING TO
42   INCORPORATION OPTIONS AND REQUIREMENTS FOR
43   CAPTIVE INSURANCE COMPANIES, SO AS TO CHANGE A

     [601]                   2
 1   CROSS REFERENCE; TO AMEND SECTION 38-90-140,
 2   RELATING TO TAX PAYMENTS BY CAPTIVE INSURANCE
 3   COMPANIES, SO AS TO PROVIDE THAT THESE TAXES
 4   MUST BE PAID TO THE DEPARTMENT OF INSURANCE
 5   RATHER THAN TO THE DIRECTOR OF THE
 6   DEPARTMENT; TO AMEND SECTION 38-90-180, RELATING
 7   TO THE APPLICATION OF CERTAIN PROVISIONS OF THE
 8   REHABILITATION AND LIQUIDATION ACT TO CAPTIVE
 9   INSURANCE COMPANIES, SO AS TO ALSO APPLY
10   CERTAIN PROVISIONS OF THE ADMINISTRATIVE
11   SUPERVISION OF INSURERS ACT TO THESE COMPANIES;
12   TO AMEND SECTION 56-10-240, AS AMENDED, RELATING
13   TO PROCEDURES THAT MOTOR VEHICLE INSUREDS AND
14   INSURERS MUST FOLLOW IF A MOTOR VEHICLE
15   SUBJECT        TO       FINANCIAL     RESPONSIBILITY
16   REQUIREMENTS BECOMES UNINSURED, SO AS TO
17   PROVIDE THAT NOTICE MUST BE GIVEN TO THE
18   DEPARTMENT OF INSURANCE IF THE LAPSE OR
19   TERMINATION OCCURRED WITHIN THREE MONTHS OF
20   THE ISSUANCE OF A NEW POLICY; AND TO AMEND
21   SECTION 56-10-280, AS AMENDED, RELATING TO THE
22   MINIMUM DURATION OF INSURANCE ISSUED TO MEET
23   MOTOR       VEHICLE       FINANCIAL   RESPONSIBILITY
24   REQUIREMENTS, SO AS TO PROVIDE THAT IF A CHECK
25   TENDERED BY THE INSURED IS RETURNED FOR
26   INSUFFICIENT      FUNDS,     THE   CANCELLATION    IS
27   EFFECTIVE AS OF THE POLICY INCEPTION OR RENEWAL
28   DATE.
29     Amend Title To Conform
30
31   Be it enacted by the General Assembly of the State of South
32   Carolina:
33
34   SECTION 1. Section 37-1-109(4) of the 1976 Code is amended to
35   read:
36
37     “(4) The administrator, as defined in Section 37-1-301, shall by
38   regulation announce publish a notice in the State Register:
39        (a) On or before April thirtieth of each year in which dollar
40   amounts are to change, the changes in dollar amounts required by
41   subsection (2); and
42        (b) Promptly after the changes occur, changes in the index
43   required by subsection (3) including, if applicable, the numerical

     [601]                           3
 1   equivalent of the Reference Base Index under a revised Reference
 2   Base Index and the designation or title of any index superseding
 3   the index.”
 4
 5   SECTION 2. Section 37-6-108(1) of the 1976 Code is amended to
 6   read:
 7
 8       “(1) After notice and hearing, the administrator may order a
 9   creditor or, a person acting in his behalf, or a person subject to this
10   title to cease and desist from engaging in violations of this title. A
11   respondent aggrieved by an order of the administrator may obtain
12   judicial review of the order and the administrator may obtain an
13   order of the court for enforcement of its order in the court of
14   common pleas. The proceeding for review or enforcement is
15   initiated by filing a petition in the court. Copies of the petition
16   shall must be served upon all parties of record.”
17
18   SECTION 3. Section 37-6-111(1) of the 1976 Code is amended to
19   read:
20
21      “(1) The administrator may bring a civil action to restrain a
22   person to whom this part title applies from engaging in a course of:
23        (a) making or enforcing unconscionable terms or provisions
24   of consumer credit transactions;
25        (b) fraudulent or unconscionable conduct in inducing
26   consumers to enter into consumer credit transactions;
27        (c) conduct of any of the types specified in paragraph item
28   (a) or (b) with respect to transactions that give rise to or that lead
29   persons to believe will give rise to consumer credit transactions; or
30        (d) fraudulent or unconscionable conduct in the collection of
31   debts arising from consumer credit transactions.”
32
33   SECTION 4. Section 37-6-113(1) of the 1976 Code is amended
34   to read:
35
36       “(1) After demand, the administrator may bring a civil action
37   against a creditor or a person subject to this title to recover actual
38   damages sustained and excess charges paid by one or more
39   consumers who have a right to recover explicitly granted by this
40   title. In a civil action under this subsection, penalties may not be
41   recovered by the administrator. The court shall order amounts
42   recovered under this subsection to be paid to each consumer or set
43   off against his obligation. A consumer‟s action, except a class

     [601]                              4
 1   action, takes precedence over a prior or subsequent action by the
 2   administrator with respect to the claim of that consumer. A
 3   consumer‟s class action takes precedence over a subsequent action
 4   by the administrator with respect to claims common to both
 5   actions, but the administrator may intervene. An administrator‟s
 6   action on behalf of a class of consumers takes precedence over a
 7   consumer‟s subsequent class action with respect to claims common
 8   to both actions. Whenever an action takes precedence over another
 9   action under this subsection, the latter action may be stayed to the
10   extent appropriate while the precedent action is pending and
11   dismissed if the precedent action is dismissed with prejudice or
12   results in a final judgment granting or denying the claim asserted
13   in the precedent action. A defense available to a creditor in a civil
14   action brought by a consumer is available to him in a civil action
15   brought under this subsection.”
16
17   SECTION 5. Section 37-6-113(2) of the 1976 Code, as amended
18   by Act 142 of 1991, is further amended to read:
19
20      “(2) The administrator may bring a civil action against a creditor
21   or, a person acting in his behalf, or a person subject to this title to
22   recover a civil penalty of no more than five thousand dollars for
23   repeatedly and intentionally violating this title. A civil penalty
24   pursuant to this subsection may not be imposed for a violation of
25   this title occurring more than two years before the action is
26   brought.”
27
28   SECTION 6. Section 37-17-10 of the 1976 Code, as added by Act
29   400 of 2000, is amended to read:
30
31      “Section 37-17-10. (A) It is unlawful for a person to sell,
32   market, promote, advertise, or distribute a card or other purchasing
33   mechanism or device which is not insurance that purports to offer
34   discounts or access to discounts from pharmacies for prescription
35   drug purchases unless:
36         (1) the person is registered with the Department of Insurance
37   Consumer Affairs for this express purpose;
38         (2) the card or other purchasing mechanism or device
39   expressly states in bold and prominent type, prominently placed,
40   that the discounts are not insurance;
41         (3) documentation is provided to the Department of
42   Insurance Consumer Affairs that the discounts are specifically
43   authorized and the person has a separate contract with each

     [601]                              5
 1   pharmacy or pharmacy chain listed in conjunction with the card or
 2   other purchasing mechanism or device; and
 3         (4) the discounts or access to discounts offered, or the range
 4   of discounts or access to the range of discounts offered, are not
 5   misleading, deceptive, or fraudulent.
 6      (B)(1) A person who sells, markets, promotes, advertises, or
 7   distributes a card or other purchasing mechanism or device which
 8   is not insurance that purports to offer discounts or access to
 9   discounts from pharmacies for prescription drug purchases in this
10   State shall designate a resident of this State as an agent for service
11   of process and register the agent with the Secretary of State.
12         (2) In the absence of proper registration under subsection
13   (B)(1), the Secretary of State is designated as an agent upon whom
14   process may be served. Service of any process on the Secretary of
15   State may be made by delivering to and leaving with the Secretary
16   of State, or with any person designated by him to receive such
17   service, duplicate copies of the process, notice, or demand. The
18   Secretary of State shall forward one of the copies by registered or
19   certified mail, return receipt requested, to the person required to
20   register under subsection (B)(1) at the last known physical address
21   to the party serving process. Refusal to sign the return receipt does
22   not affect the validity of the service. Service is effective under this
23   subsection as of the date shown on the return receipt or five days
24   after its deposit in the mail, whichever is earlier. The Secretary of
25   State may charge a fee of ten dollars for the service. This
26   subsection does not affect the right to serve process in any manner
27   otherwise provided by law.
28      (C)(1) A person who violates subsection (A) is guilty of a
29   misdemeanor and, upon conviction, must be imprisoned for not
30   more than six months or fined not more than one thousand dollars,
31   or both; for a second or subsequent violation a person must be
32   imprisoned for not more than two years or fined not more than five
33   thousand dollars, or both.
34         (2) Notwithstanding subsection (C)(1), a person who
35   violates this chapter is subject to all civil and administrative
36   remedies available in this title.
37      (D) This section does not apply to:
38         (1) a pharmacy holding a permit issued pursuant to Title 40,
39   Chapter 43;
40         (2) eye or vision care services or glasses or contact lenses
41   provided by an optometrist or ophthalmologist;
42         (3) an insured Any benefit or program offered in conjunction
43   with a health insurance plan administered by a health insurer,

     [601]                              6
 1   health care service contractor, or health maintenance organization
 2   regulated under Title 38; or
 3        (4) an insured benefit administered by, or under contract
 4   with, the State of South Carolina.
 5      (E) For purposes of this section, „person‟ means an individual,
 6   corporation, partnership, or any other business entity, including,
 7   but not limited to, a health maintenance organization, an insurance
 8   company, or a third party payor. Representatives of corporations,
 9   partnerships, or other business entities must be registered before
10   they shall offer services under this section.
11      (F) The department may promulgate regulations as necessary to
12   assist in administering this chapter, including, but not limited to,
13   regulations concerning assessment of registration fees and
14   standards for corporate and individual representative registration.”
15
16   SECTION 7. Section 38-5-80(k) of the 1976 Code, as last
17   amended by Act 181 of 1993, is further amended to read:
18
19      “(k) The insurer‟s principal place of business and primary
20   executive, administrative, and home offices and all original books
21   and records of the insurer are located and maintained in this State.
22   The provisions of this subsection apply to domestic health
23   maintenance organizations. For purposes of this section, original
24   books and records mean corporate bylaws, charters, articles of
25   incorporation, and any other records deemed to constitute original
26   records by the director or his designee. Insurers desiring to move
27   business records or operations outside of the State shall apply to
28   the director or his designee for approval. Approvals or denials of
29   request to move records or operations fall within the discretion of
30   the director or his designee. The director may also rescind
31   approval of a request if in his discretion it is considered to be in the
32   best interest of the consumers and citizens of the State. Insurers
33   must comply with the records requirements of Section 38-5-190
34   and the requirements for domestic insurers set forth in this chapter.
35   The director or his designee shall outline via bulletin or order the
36   information required in such an application. Item (k) of this
37   section does not apply to any domestic insurer whose primary
38   executive, administrative, and home offices were located outside
39   this State on July 1, 1987. If subsequently the director or his
40   designee is of the opinion that a condition exists which would have
41   prohibited him from issuing the original certificate of authority or
42   license to the insurer, then that condition also constitutes a ground
43   for license revocation under Section 38-5-120.”

     [601]                              7
 1
 2   SECTION 8. Section 38-21-10(2) of the 1976 Code, as amended
 3   by Act 181 of 1993, is further amended to read:
 4
 5      “(2) The term „control‟ (including the terms „controlling‟,
 6   „controlled by‟, and „under common control with‟) means the
 7   possession, direct or indirect, of the power to direct or cause the
 8   direction of the management and policies of a person, whether
 9   through the ownership of voting securities, by contract other than a
10   commercial contract for goods or nonmanagement services, or
11   otherwise, unless the power is the result of an official position with
12   or corporate office held by the person. Control is presumed to
13   exist if any person, directly or indirectly, owns, controls, holds
14   with the power to vote, or holds proxies representing ten percent or
15   more of the voting securities of any other person. This
16   presumption may be rebutted by a showing made in the manner
17   provided by Section 38-21-220 that control does not exist in fact.
18   The director or his designee may determine, after furnishing all
19   persons in interest notice and opportunity to be heard and making
20   specific findings of fact to support his determination, that control
21   exists in fact, notwithstanding the absence of a presumption to that
22   effect.”
23
24   SECTION 9. Section 38-31-20 of the 1976 Code, as last amended
25   by Act 97 of 1995, is further amended to read:
26
27      “Section 38-31-20. As used in this chapter:
28      (1) „Account‟ means any one of the four accounts created by
29   Section 38-31-40.
30      (2) „Affiliate‟ means a person who directly or indirectly,
31   through one or more intermediaries, controls, is controlled by, or is
32   under common control with an insolvent insurer on December
33   thirty-first of the year next preceding the date the insurer becomes
34   an insolvent insurer.
35      (3) „Affiliate of the insolvent insurer‟ means a person who
36   directly or indirectly, through one or more intermediaries, controls,
37   is controlled by, or is under common control with an insolvent
38   insurer on December thirty-first of the year next preceding the date
39   the insurer becomes an insolvent insurer.
40      (4) „Association‟ means the South Carolina Property and
41   Casualty Insurance Guaranty Association created under Section
42   38-31-40.


     [601]                             8
 1      (5) „Association similar to the association‟ means any guaranty
 2   association, security fund, or other insolvency mechanism which
 3   affords protection similar to that of the association. The term also
 4   includes any property/casualty insolvency mechanism which
 5   obtains assessments or other contributions from insurers on a
 6   pre-insolvency basis.
 7      (4)(6) „Claimant‟ means any insured making a first party claim
 8   or any person instituting a liability claim. However, no person
 9   who is an affiliate of the insolvent insurer may be a claimant.
10      (5)(7) „Control‟ means the possession, direct or indirect, of the
11   power to direct or cause the direction of the management and
12   policies of a person, whether through the ownership of voting
13   securities, by contract other than a commercial contract for goods
14   or nonmanagement services, or otherwise, unless the power is the
15   result of an official position with or corporate office held by the
16   person. Control is presumed to exist if any person directly or
17   indirectly owns, controls, holds with the power to vote, or holds
18   proxies representing ten percent or more of the voting securities of
19   any other person. This presumption may be rebutted by a showing
20   that control does not exist in fact.
21      (6)(8) „Covered claim‟ means an unpaid claim, including one of
22   unearned premiums, which arises out of and is within the coverage
23   and is subject to the applicable limits of an insurance policy to
24   which this chapter applies issued by an insurer, if the insurer is an
25   insolvent insurer and (a) the claimant or insured is a resident of
26   this State at the time of the insured event, if for entities other than
27   an individual, the residence of a claimant or insured is the state in
28   which its principal place of business is located at the time of the
29   insured event or (b) the claim is for first-party benefits for damage
30   to property permanently located in this State. „Covered claim‟
31   does not include:
32        (a) any amount awarded as extra-contractual damages unless
33   awarded against the association;
34        (b) any amount sought as a return of premium under any
35   retrospective rating plan; or
36        (c) any amount due any reinsurer, insurer, insurance pool, or
37   underwriting association as subrogation recoveries, reinsurance
38   recoveries, contribution, indemnification, or otherwise. No such
39   claim for any amount due any reinsurer, insurer, insurance pool, or
40   underwriting association may be asserted against a claimant or a
41   person insured under a policy issued by an insolvent insurer other
42   than to the extent such a claim exceeds the association obligation
43   limitations set forth in Section 38-31-60;

     [601]                              9
 1        (d) any first party claim by an insured whose net worth
 2   exceeds ten million dollars on December thirty-first of the year
 3   next preceding the date the insurer becomes an insolvent insurer;
 4   provided, that an insured‟s net worth on such date must be deemed
 5   to include the aggregate net worth of the insured and all of its
 6   subsidiaries as calculated on a consolidated basis;
 7        (e) any first party claims by an insured which is an affiliate
 8   of the insolvent insurer;
 9        (f) any fee or other amount relating to goods or services
10   sought by or on behalf of any attorney or other provider of goods
11   or services retained by the insolvent insurer or an insured prior to
12   the date it was determined to be insolvent;
13        (g) any fee or other amount sought by or on behalf of any
14   attorney or other provider of goods or services retained by any
15   insured or claimant in connection with the assertion or prosecution
16   of any claim, covered or otherwise, against the association; or
17        (h) any claims for interest.
18      (7)(9) „Insolvent insurer‟ means an insurer (a) licensed to
19   transact insurance in this State either at the time the policy was
20   issued or when the insured event occurred and (b) determined to be
21   insolvent by a court of competent jurisdiction in the insurer‟s state
22   of domicile or of this State and which the director or his designee
23   has found fails to meet its obligation to policyholders in this State.
24      (10) „Insured‟ means any named insured, any additional insured,
25   any vendor, lessor, or any other party identified as an insured
26   under the policy.
27      (8)(11) „Member insurer‟ means any person who (a) writes any
28   kind of insurance to which this chapter applies under Section
29   38-31-30, including the exchange of reciprocal or interinsurance
30   contracts, and (b) is licensed to transact insurance in this State. An
31   insurer shall cease to be a member insurer effective on the day
32   following the termination or expiration of its license to transact the
33   kinds of insurance to which this chapter applies; however, the
34   insurer shall remain liable as a member insurer for any and all
35   obligations, including obligations for assessments levied prior to
36   the termination or expiration of the insurer‟s license and
37   assessments levied after the termination or expiration, which relate
38   to any insurer which became an insolvent insurer prior to the
39   termination or expiration of such insurer‟s license.
40      (9)(12) „Net direct written premiums‟ means direct gross
41   premiums written in this State on insurance policies to which this
42   chapter applies, less return premiums on the policies and dividends


     [601]                             10
 1   paid or credited to policyholders on the direct business. It does not
 2   include premiums on contracts between insurers or reinsurers.
 3     (13) „Person‟ means an individual, corporation, partnership,
 4   association, voluntary organization, or governmental entity.”
 5
 6   SECTION 10. Section 38-31-60(a) of the 1976 Code, as last
 7   amended by Act 517 of 1994, is amended by adding at the end:
 8
 9      “(iv) Notwithstanding any other provisions of this chapter,
10   except in the case of a claim for benefits under worker‟s
11   compensation coverage, any obligation of the association to or on
12   behalf of an insured and its affiliates on all covered claims
13   combined shall cease when ten million dollars shall have been paid
14   in the aggregate by the association and any one or more
15   associations similar to the association of any other state or states,
16   to or on behalf of that insured, its affiliates, and additional insureds
17   on covered claims or allowed claims arising under the policy or
18   policies of any one insolvent insurer. If the association determines
19   that there may be more than one claimant having a covered claim
20   or allowed claim against the association, or any associations
21   similar to the association in other states, under the policy or
22   policies of any one insolvent insurer, the association may establish
23   a plan to allocate amounts payable by the association in such
24   manner as the association in its discretion considers equitable.”
25
26   SECTION 11. Section 38-31-70(3)(d) of the 1976 Code, as
27   amended by Act 181 of 1993, is further amended to read:
28
29      “(d) Establish procedures by which claims may be filed with the
30   association and establish acceptable forms of proof of covered
31   claims. Notice of claims to the receiver or liquidator of the
32   insolvent insurer is considered notice to the association or its agent
33   and a list of these claims must be periodically submitted to the
34   association or similar organization an association similar to the
35   association in another state by the receiver or liquidator.”
36
37   SECTION 12. Section 38-31-70(4) of the 1976 Code, as
38   amended by Act 181 of 1993, is further amended to read:
39
40     “(4) The plan of operation may provide that any or all powers
41   and duties of the association, except those under items (c) and (i)
42   of Section 38-31-60, are delegated to a corporation, an association
43   similar to the association, or other another organization which

     [601]                              11
 1   performs or will perform functions similar to those of this
 2   association, or its equivalent, in two or more states. This
 3   corporation, association, or organization must be reimbursed as a
 4   servicing facility would be reimbursed and must be paid for its
 5   performance of any other functions of the association. A
 6   delegation under this subsection (4) takes effect only with the
 7   approval of both the board of directors and the director or his
 8   designee and may be made only to a corporation, association, or
 9   organization which extends protection not substantially less
10   favorable and effective than that provided by this chapter.”
11
12   SECTION 13. Section 38-31-90 of the 1976 Code, as amended
13   by Act 181 of 1993, is further amended to read:
14
15      “Section 38-31-90. (1) Any A person recovering under this
16   chapter is considered to have assigned his rights under the policy
17   to the association to the extent of his recovery from the
18   association. Every insured or claimant seeking the protection of
19   this chapter shall cooperate with the association to the same extent
20   as he would have been required to cooperate with the insolvent
21   insurer. The association has no cause of action against the insured
22   of the insolvent insurer for any sums it has paid out except the
23   causes of action the insolvent insurer would have had if the sums
24   had been paid by the insolvent insurer and except as provided in
25   subsection (2). In the case of an insolvent insurer operating on a
26   plan with assessment liability, payments of claims of the
27   association do not operate to reduce the liability of insureds to the
28   receiver, liquidator, or statutory successor for unpaid assessments.
29      (2) The association has the right to recover from the following
30   persons the amount of any „covered claim‟ paid on behalf of such
31   person pursuant to this chapter;
32         (a) an insured whose net worth on December thirty-one of
33   the year immediately preceding the date the insurer becomes an
34   insolvent insurer exceeds twenty-five million dollars and whose
35   liability obligations to other persons are satisfied in whole or in
36   part by payments made under this chapter; and
37         (b) a person who is an affiliate of the insolvent insurer and
38   whose liability obligations to other persons are satisfied in whole
39   or in part by payments made under this chapter.
40      (3) The receiver, liquidator, or statutory successor of an
41   insolvent insurer is bound by settlements of covered claims by the
42   association or a similar organization an association similar to the
43   association in another state. The court having jurisdiction shall

     [601]                            12
 1   grant these claims priority equal to that to which the claimant
 2   would have been entitled in the absence of this chapter against the
 3   assets of the insolvent insurer. The expenses of the association or
 4   similar organization an association similar to the association in
 5   handling claims must be accorded the same priority as the
 6   liquidator‟s expenses.
 7      (3)(4) The association shall periodically file with the receiver
 8   or liquidator of the insolvent insurer statements of the covered
 9   claims paid by the association and estimates of anticipated claims
10   on the association which shall preserve the rights of the association
11   against the assets of the insolvent insurer.”
12
13   SECTION 14. Section 38-31-100 of the 1976 Code, as last
14   amended by Act 235 of 2000, is further amended to read:
15
16      “Section 38-31-100. (1) Any A person, having a claim against
17   an insurer under any provision in an insurance policy other than a
18   policy of an insolvent insurer which is also a covered claim, is
19   under an insurance policy, whether or not it is a policy issued by a
20   member insurer, and the claim under such other policy arises from
21   the same facts, injury, or loss that gave rise to the covered claim
22   against the association, is required to exhaust first exhaust his right
23   under that all coverage and limits provided by any such policy.
24   Any amount payable on a covered claim under this chapter must be
25   reduced by the amount of any recovery under that insurance policy
26   full limits of such other coverage as set forth on the declarations
27   page and the association shall receive a full credit for such limits,
28   or, where there are no applicable limits, the claim must be reduced
29   by the total recovery. Notwithstanding the foregoing, no person
30   may be required to exhaust all coverage and limits under the policy
31   of an insolvent insurer.
32         (a) A claim under a policy providing liability coverage to a
33   person who may be jointly and severally liable with or a joint
34   tortfeasor with the person covered under the policy of the insolvent
35   insurer that gives rise to the covered claim must be considered to
36   be a claim arising from the same facts, injury, or loss that gave rise
37   to the covered claim against the association. Any amount payable
38   on a covered claim under this chapter must be reduced by the full
39   and combined policy limits of all joint tortfeasers.
40         (b) To the extent that the association‟s obligation is reduced
41   by the application of this section, the liability of the person insured
42   by the insolvent insurer‟s policy for the claim must be reduced in
43   the same amount.

     [601]                             13
 1      (2) Any A person having a claim which may be recovered
 2   under more than one insurance guaranty association or its
 3   equivalent shall seek recovery first associations similar to the
 4   association must be required first to exhaust all coverage and limits
 5   in recovery from the association of the place of residence of the
 6   insured except that, if it is a first-party claim for damage to
 7   property with a permanent location, he shall seek recovery be
 8   required first to exhaust all coverage and limits in recovery from
 9   the association of the location of the property, and, if it is a
10   workers‟ compensation claim, he shall seek recovery be required
11   first to exhaust all coverage and limits in recovery from the
12   association of the residence of the claimant. Any recovery under
13   this chapter must be reduced by the amount payable on a covered
14   claim under this chapter must be reduced by the full amount of
15   recovery from any other insurance guaranty association or its
16   equivalent associations similar to the association, and the
17   association shall receive full credit for such recovery.
18      (3) Any A person having a claim or legal right of recovery
19   under any governmental insurance or guaranty program which is
20   also a covered claim is shall be required first to exhaust first his
21   right all coverage and limits in recovery under the program. Any
22   amount payable on a covered claim under this chapter must be
23   reduced by the full amount of any recovery under the
24   governmental insurance or guaranty program.
25      (4) No claim held by an insurer, reinsurer, insurance pool, or
26   underwriting association, based on an assignment or on rights of
27   subrogation, or otherwise, may be recovered from a claimant or
28   asserted in any legal action against a person insured under a policy
29   issued by an insolvent insurer or the association except to the
30   extent the amount of the claim exceeds the obligation of the
31   association under this chapter.
32      (5) Any A person who has liquidated by settlement or
33   judgment a claim against an insured under a policy issued by an
34   insolvent insurer, and the claim is a covered claim and is also a
35   claim within the coverage of any policy issued by a solvent
36   insurer, is must be required to exhaust first to exhaust his rights all
37   coverage and limits provided under the policy issued by the
38   solvent insurer before execution, levy, or any other proceedings are
39   begun to enforce any judgment obtained against or the settlement
40   with the insured of the insolvent insurer. Any amount payable on a
41   covered claim under this chapter, whether through settlement,
42   judgment, or otherwise, must be reduced by the full limits of such


     [601]                             14
 1   other coverage as set forth on the declarations page of the policy
 2   issued by the insolvent insurer.
 3      (6) A person having a claim against an insolvent insurer under
 4   any provision in an insurance policy is limited to ten million
 5   dollars aggregate payout from the association.
 6      (7) A person having a net worth of greater than twenty-five
 7   million dollars and having a claim against an insolvent insurer
 8   under any provision in an insurance policy may not make a claim
 9   against the association.”
10
11   SECTION 15. Section 38-33-80(A)(2) and (C) of the 1976
12   Code, as last amended by Act 181 of 1993, are further amended to
13   read:
14
15        “(2) No Evidence of coverage, or an amendment thereto to it,
16   may not be issued or delivered to any a person in this State until a
17   copy of the form of the evidence of coverage, or amendment
18   thereto to it, has been filed with and approved by the director or his
19   designee pursuant to Section 38-71-310(A) or 38-71-720(A).
20      (C) The director or his designee shall approve, within a
21   reasonable period, approve thirty days any form if the
22   requirements of subsection (A) are met and. The director or his
23   designee, in his discretion, may extend for up to an additional sixty
24   days the period within which he shall approve or disapprove the
25   form. The director or his designee shall approve, within a
26   reasonable period, any schedule of charges if the requirements of
27   subsection (B) are met. It is unlawful to issue a form or to use a
28   schedule of charges until approved. If the director or his designee
29   disapproves the filing, he shall notify the filer. The notice must
30   contain the reasons for disapproval, and the filer, upon request in
31   writing, is entitled to a public hearing thereon on it. If no action is
32   not taken to approve or disapprove any form or schedule of
33   charges within ninety thirty days of the filing of the forms or
34   charges form, if the period is not extended, or at the expiration of
35   the extended period, if any, the filing is deemed approved. If
36   action is not taken to approve or disapprove any schedule of
37   charges within ninety days of the filing of the charges, the filing is
38   deemed approved. An organization may not use a form or
39   schedule of charges deemed approved pursuant to the default
40   provision of this section until the organization has filed with the
41   director or his designee a written notice of its intent to use the form
42   or schedule of charges. The notice must be filed in the office of


     [601]                             15
 1   the director at least ten days before the organization uses the form
 2   or schedule of charges.”
 3
 4   SECTION 16. Section 38-39-90(f) of the 1976 Code, as last
 5   amended by Act 181 of 1993, is further amended to read:
 6
 7      “(f) If the crediting of return premiums to the account of the
 8   insured results in a surplus over the amount due from the insured,
 9   the premium service company shall hold the surplus in a fiduciary
10   capacity and promptly refund the excess to the insured or the agent
11   of record. No refund is required if it amounts to less than three five
12   dollars.”
13
14   SECTION 17. Section 38-43-80(B) of the 1976 Code, as
15   amended by Section 11H, Part II, Act 501 of 1992, is further
16   amended to read:
17
18      “(B) The fees must be paid in advance. License fees for local,
19   state, or special agents must be paid by the insurer for whom the
20   agent proposes to act or by which the proposed agent is vouched
21   for in the application for license. The department shall promulgate
22   regulations specifying the time and manner of payment of these
23   fees.”
24
25   SECTION 18. Section 38-55-30 of the 1976 Code, as amended
26   by Act 13 of 1991, is further amended to read:
27
28      “Section 38-55-30. Except as otherwise provided in this title, no
29   insurer or captive doing business in this State may expose itself to
30   a loss on one risk in an amount exceeding ten percent of its surplus
31   to policyholders. A risk or portion of it which has been reinsured
32   must be deducted in determining the limitation of risk prescribed
33   in this section. As used in this section, “captive” means an
34   insurance company owned by another organization whose
35   exclusive purpose is to insure risks of the parent organization and
36   affiliated companies, or for groups and associations, an insurance
37   organization owned by the insureds whose exclusive purpose is to
38   insure risks of member organizations or group members and their
39   affiliates, or both. This section does not apply to captive insurers.”
40
41   SECTION 19. The 1976 Code is amended by adding:
42


     [601]                             16
 1     “Section 38-55-75. The Department of Insurance may receive
 2   and shall maintain as confidential any documents or information
 3   furnished to the department by the National Association of
 4   Insurance Commissioners or insurance departments of other states
 5   which is classified as confidential by that association or state. The
 6   Department of Insurance may share documents or information,
 7   including confidential documents or information, with the National
 8   Association of Insurance Commissioners or insurance departments
 9   of other states if the association or other state agrees to maintain
10   the same level of confidentiality as is provided under South
11   Carolina law. Documents or information received or exchanged
12   pursuant to this section are not subject to subpoena or subpoena
13   duces tecum in any civil, criminal, or administrative proceeding.”
14
15   SECTION 20. Section 38-61-20 of the 1976 Code, as last
16   amended by Act 312 of 2000, is further amended to read:
17
18      “Section 38-61-20. (A) It is unlawful for an insurer doing
19   business in this State to issue or sell in this State any a policy,
20   contract, or certificate until it has been filed with and approved by
21   the director or his designee. The director or his designee may
22   disapprove the form if it:
23         (1) does not meet the requirements of law,;
24         (2) contains any provisions which are unfair, deceptive,
25   ambiguous, misleading, or unfairly discriminatory,; or
26         (3) is going to be solicited by means of advertising,
27   communication, or dissemination of information which is
28   deceptive or misleading.
29      However, this subsection does not apply to surety contracts or
30   fidelity bonds, except as required in Section 38-15-10, or to
31   insurance contracts, riders, or endorsements prepared to meet
32   special, unusual, peculiar, or extraordinary conditions applying to
33   an individual risk or exempt commercial policies.
34      (B) Within thirty days after the filing of a form requiring
35   approval, the director or his designee shall notify the organization
36   filing the form of the approval or disapproval of the form, and the
37   reason if the form is disapproved. The director or his designee, in
38   his discretion, may extend for up to an additional sixty days the
39   period within which he shall approve or disapprove the form. A
40   form received, but neither approved nor disapproved by the
41   director or his designee, is deemed approved at the expiration of
42   the thirty days if the period is not extended, or at the expiration of
43   the extended period, if any. An organization may not use a form

     [601]                             17
 1   deemed approved pursuant to the default provision of this section
 2   until the organization has filed with the director or his designee a
 3   written notice of its intent to use the form. The notice must be
 4   filed in the office of the director at least ten days before the
 5   organization uses the form.
 6      (C) At any time after having given written approval, and after
 7   an opportunity for a hearing for which at least thirty days‟ written
 8   notice has been given, the director or his designee may withdraw
 9   approval if he finds that the forms form:
10         (1) do does not meet the requirements of law,;
11         (2) contain any contains provisions which are unfair,
12   deceptive, ambiguous, misleading, or unfairly discriminatory,; or
13         (3) are being is solicited by means of advertising,
14   communication, or dissemination of information which is
15   deceptive or misleading.
16      (C)(D) The director or his designee may exempt from the
17   requirements of subsection (A) as long as he considers proper any
18   type of insurance policy, contract, or certificate to which in his
19   opinion subsection (A) practically must not be applied, or the filing
20   and approval of which, in his opinion, is not necessary for the
21   protection of the public. However, every each insurer at least
22   annually shall list the types and form numbers of all policies it
23   issues or sells in this State which the director or his designee has
24   exempted from being filed and approved, and an officer of the
25   insurer shall certify that all of these policies comply fully with the
26   laws of this State. If a policy, contract, or certificate is certified to
27   be in compliance with the laws of this State and the director or his
28   designee finds it violates a law of this State, he may disqualify that
29   insurer from certifying policies, contracts, or certificates allowed
30   under this subsection.
31      (D)(E) Nothing in this chapter precludes the issuance of a life
32   insurance contract that includes an optional accident, health, or
33   accident and health insurance rider. However, the optional
34   accident, health, or accident and health insurance rider must be
35   filed with and approved by the director or his designee pursuant to
36   Section 38-71-310, 38-71-720, or 38-71-740, as appropriate, and
37   comply with all applicable sections of Chapter 71 of this title and,
38   in addition, in the case of long term care insurance, Chapter 72 of
39   this title.”
40
41   SECTION 21. Section 38-61-40 of the 1976 Code, as last
42   amended by Act 181 of 1993, is further amended to read:
43

     [601]                              18
 1     “Section 38-61-40. All insurers licensed to transact insurance
 2   business in this State shall comply with the standards prescribed by
 3   regulation of the department. The director or his designee is
 4   empowered to recall withdraw approval or certification on all
 5   existing policies of commonly purchased insurance that do not
 6   comply with Section 38-61-30.”
 7
 8   SECTION 22. Section 38-65-60(3) of the 1976 Code, as last
 9   amended by Act 181 of 1993, is further amended to read:
10
11      “(3) Upon request of the director or his designee, copies of
12   policies and certificates under a policy of group life insurance
13   issued outside this State and covering residents of this State must
14   be made available on an informational basis only. However,
15   mass-marketed life insurance policies and certificates shall must
16   have prior approval of the director or his designee pursuant to
17   Section 38-61-20 before they can be offered for sale to residents of
18   this State.”
19
20   SECTION 23. Section 38-71-310(A) and (F) of the 1976 Code,
21   as last amended by Act 411 of 1998, are further amended to read:
22
23      “(A) No A policy or certificate of accident, health, or accident
24   and health insurance may not be issued or delivered in this State,
25   nor may any application, endorsement, or rider which becomes a
26   part of the policy be used, until a copy of its form has been filed
27   with and approved by the director or his designee, except as
28   exempted by regulation of the department the director or his
29   designee as permitted by Section 38-61-20. The director or his
30   designee may disapprove the form if the form:
31        (1) does not meet the requirements of law,;
32        (2) contains any provisions which are unfair, deceptive,
33   ambiguous, misleading, or unfairly discriminatory,; or
34        (3) is going to be solicited by means of advertising,
35   communication, or dissemination of information which is
36   deceptive or misleading.
37      The director or his designee shall notify in writing, as soon as is
38   practicable, the insurer which that has filed the form of his
39   approval or disapproval. In the event of disapproval If the form is
40   disapproved, the notice must contain the reasons for disapproval,
41   and the insurer is entitled to a public hearing thereon on that
42   decision. If no action has been is not taken to approve or
43   disapprove a policy or certificate, application, endorsement, or

     [601]                             19
 1   rider after the documents have document has been filed for ninety
 2   thirty days, they are it is deemed to be approved. The director or
 3   his designee, in his discretion, may extend for up to an additional
 4   sixty days the period for approval or disapproval of the form. An
 5   organization may not use a form deemed approved pursuant to the
 6   default provision of this section until the organization has filed
 7   with the director or his designee a written notice of its intent to use
 8   the form. The notice must be filed in the office of the director at
 9   least ten days before the organization uses the form.
10      (F) Nothing in this chapter precludes the issuance of an
11   individual accident, health, or accident and health insurance policy
12   that includes an optional life insurance rider. However, the
13   optional life insurance rider must be filed with and approved by the
14   director or his designee pursuant to Section 38-61-20 and comply
15   with all applicable sections of Chapter 63 and, in addition, in the
16   case of a life insurance rider with accelerated long term care
17   benefits, Chapter 72 of this title.”
18
19   SECTION 24. Section 38-71-720 of the 1976 Code, as last
20   amended by Act 411 of 1998, is further amended to read:
21
22      “Section 38-71-720. (A) A policy or contract of group
23   accident, group health, or group accident and health insurance may
24   not be issued or delivered in this State, nor may any application,
25   endorsement, or rider which becomes a part of the policy be used,
26   until a copy of the form has been filed with and approved by the
27   director or his designee except as exempted by regulation of the
28   department the director or his designee as permitted by Section
29   38-61-20. The director or his designee may disapprove the form if
30   the form:
31        (1) does not meet the requirements of law;
32        (2) contains provisions which are unfair, deceptive,
33   ambiguous, misleading, or unfairly discriminatory; or
34        (3) is going to be solicited by means of advertising,
35   communication, or dissemination of information which is
36   deceptive or misleading.
37      However, If no action has been is not taken to approve or
38   disapprove a policy, contract, certificate, application, endorsement,
39   or rider after the documents have document has been filed for
40   ninety thirty days, the it may be issued and delivered until or
41   unless subsequently disapproved by the director or his designee is
42   deemed to be approved. This time period may be extended thirty
43   days if the director or his designee gives written notice to the filer

     [601]                             20
 1   that he needs additional time to review the filing. The director or
 2   his designee, in his discretion, may extend for up to an additional
 3   sixty days the time period for approval or disapproval of the form.
 4   An organization may not use a form deemed approved pursuant to
 5   the default provision of this section until the organization has filed
 6   with the director or his designee a written notice of its intent to use
 7   the form. The notice must be filed in the office of the director at
 8   least ten days before the organization uses the form. The director
 9   or his designee, as soon as is practicable, shall notify in writing the
10   insurer which has filed the form of his approval or disapproval. If
11   the form is disapproved, the notice must contain the reasons for
12   disapproval and the insurer is entitled to a public hearing on it that
13   decision. At any time after having given written approval, the
14   director or his designee, after a public hearing of which at least
15   thirty days‟ written notice has been given, may withdraw approval
16   if he finds that the forms form:
17         (1) do does not meet the requirements of law;
18         (2) contain contains provisions which are unfair, deceptive,
19   ambiguous, misleading, or unfairly discriminatory; or
20         (3) are being is solicited by means of advertising,
21   communication, or dissemination of information which is
22   deceptive or misleading.
23      The withdrawal of approval must be effected by written notice
24   to the insurer and the insurer is entitled to a public hearing on it
25   that decision. Any action or decision of the director or his designee
26   to withdraw approval may be appealed to the Administrative Law
27   Judge Division in accordance with Section 38-3-210.
28      (B) Nothing in this chapter precludes the issuance of a policy or
29   contract of group accident, group health, or group accident and
30   health insurance that includes an optional life insurance rider.
31   However, the optional life insurance rider must be filed with and
32   approved by the director or his designee pursuant to Section
33   38-61-20 and comply with all applicable sections of Chapter 65
34   and, in addition, in the case of a life insurance rider with
35   accelerated long term care benefits, Chapter 72 of this title.”
36
37   SECTION 25. Section 38-71-750(3) of the 1976 Code, as last
38   amended by Act 181 of 1993, is further amended to read:
39
40     “(3) Upon request of the director or his designee, copies of
41   policies and certificates under a policy of group accident, group
42   health, or group accident and health insurance issued outside this
43   State and covering residents of this State must be made available

     [601]                             21
 1   on an informational basis only. However, mass-marketed accident,
 2   health, or accident and health insurance policies and certificates
 3   shall must receive prior approval of the director or his designee
 4   pursuant to Section 38-71-720 before they can be offered for sale
 5   to residents of this State.”
 6
 7   SECTION 26. Section 38-71-1370 of the 1976 Code, as
 8   amended by Act 5 of 1997, is further amended to read:
 9
10      “Section 38-71-1370. „(A) Except to the extent inconsistent with
11   specific provisions of this article, all provisions of Article 5, are
12   applicable to any insurance plans required to be offered by small
13   employer insurers.
14      (B) Late enrollees may be excluded from coverage for the
15   greater of eighteen months or an eighteen-month preexisting
16   condition exclusion; however, if both a period of exclusion from
17   coverage and a preexisting condition exclusion are applicable to a
18   late enrollee, the combined period may not exceed eighteen
19   months.”
20
21   SECTION 27. Section 38-71-1980(F)(3) and (4) of the 1976
22   Code, as added by Act 380 of 2000, is amended to read:
23
24     “(3) If the notice provided pursuant to subsection (H)(1) (F)(1)
25   was not in writing, within two days after the date of providing that
26   notice, the independent review organization shall:
27        (a) provide written confirmation of the decision to the
28   covered person or his authorized representative and the health
29   carrier; and
30        (b) include the information set forth in Section
31   38-71-1970(H)(3).
32     (4) As expeditiously as reasonably possible after receipt of the
33   notice of a decision pursuant to subsection (H)(1) (F)(1) reversing
34   the adverse determination or final adverse determination, the
35   health carrier shall approve the covered benefit that was the subject
36   of the adverse determination or final adverse determination,
37   subject to applicable contract exclusions, limitations, or other
38   provisions.”
39
40   SECTION 28. Section 38-73-1300 of the 1976 Code, as last
41   amended by Act 181 of 1993, is further amended to read:
42


     [601]                            22
 1      “Section 38-73-1300. Any A member of or subscriber to a rating
 2   organization to whom the provisions of Article 3 of this chapter are
 3   applicable may make written application to the director or his
 4   designee for permission to file a deviation modification from the
 5   class rates loss costs, schedules, rating plans, or rules respecting
 6   any kind of insurance or class of risk within a kind of insurance or
 7   any combination thereof of them. The application shall must
 8   specify the basis for the modification. A copy of the application
 9   must be sent simultaneously to the rating organization.”
10
11   SECTION 29. Section 38-73-1310 of the 1976 Code, as last
12   amended by Act 181 of 1993, is further amended to read:
13
14      “Section 38-73-1310. Any A member of or subscriber to a rating
15   organization to whom the provisions of Article 5 of this chapter are
16   applicable may make written application to the department for
17   permission to file a uniform percentage decrease or increase to be
18   applied to the premiums produced by the rating system so filed for
19   a kind of insurance or for a class of insurance which is found by
20   the director or his designee to be a proper rating unit for the
21   application of such uniform percentage decrease or increase or for
22   a subdivision of a kind of insurance (a) comprised of a group of
23   manual classifications which is treated as a separate unit for
24   rate-making purposes or (b) for which separate expense provisions
25   are included in the filings of the rating organization. The
26   application shall must specify the basis for the modification and
27   must be accompanied by the data upon which the applicant relies.
28   A copy of the application and data must be sent simultaneously to
29   the rating organization.”
30
31   SECTION 30. Section 38-87-40(3)(a) of the 1976 Code, as
32   amended by Act 181 of 1993, is further amended to read:
33
34      “(a) Each risk retention group is liable for the payment of
35   premium taxes and taxes on premiums of direct business for risks
36   resident or located within this State and shall report to the director
37   or his designee the net premiums written for risks resident or
38   located within this State. Such risk retention group is subject to
39   taxation, including any applicable fines and penalties related
40   thereto, on the same basis as a foreign an admitted insurer.”
41
42   SECTION 31. Section 38-90-60(E) of the 1976 Code, as added
43   by Act 331 of 2000, is amended to read:

     [601]                             23
 1
 2     “(E) The articles of incorporation, the certificate issued pursuant
 3   to subsection (D), and the organization fees required by Section
 4   38-90-20(D) 33-1-220 must be transmitted to the Secretary of
 5   State, who shall record both the articles of incorporation and the
 6   certificate.”
 7
 8   SECTION 32. Section 38-90-140(A) and (B) of the 1976 Code,
 9   as added by Act 331 of 2000, is amended to read:
10
11      “(A) A captive insurance company shall pay to the director
12   department by March 1 of each year, a tax at the rate of four-tenths
13   of one percent on the first twenty million dollars and three-tenths
14   of one percent on the next twenty million dollars and two-tenths of
15   one percent on the next twenty million dollars and seventy-five
16   thousandths of one percent on each dollar thereafter on the direct
17   premiums collected or contracted for on policies or contracts of
18   insurance written by the captive insurance company during the
19   year ending December 31 next preceding, after deducting from the
20   direct premiums subject to the tax the amounts paid to
21   policyholders as return premiums which shall include dividends on
22   unabsorbed premiums or premium deposits returned or credited to
23   policyholders.
24      (B) A captive insurance company shall pay to the director
25   department by March 1 of each year, a tax at the rate of two
26   hundred and twenty-five thousandths of one percent on the first
27   twenty million dollars of assumed reinsurance premium, and one
28   hundred fifty thousandths of one percent on the next twenty
29   million dollars and fifty thousandths of one percent on the next
30   twenty million dollars and twenty-five thousandths of one percent
31   of each dollar thereafter. However, no reinsurance tax applies to
32   premiums for risks or portions of risks which are subject to
33   taxation on a direct basis pursuant to subsection (A). A premium
34   tax is not payable in connection with the receipt of assets in
35   exchange for the assumption of loss reserves and other liabilities of
36   another insurer under common ownership and control if the
37   transaction is part of a plan to discontinue the operations of the
38   other insurer and if the intent of the parties to the transaction is to
39   renew or maintain business with the captive insurance company.”
40
41   SECTION 33. Section 38-90-180(A) of the 1976 Code, as added
42   by Act 331 of 2000, is amended to read:
43

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 1      “(A) Except as otherwise provided in this section, the terms and
 2   conditions set forth in Chapter Chapters 26 and 27 pertaining to
 3   insurance reorganizations, receiverships, and injunctions apply in
 4   full to captive insurance companies formed or licensed under this
 5   chapter.”
 6
 7   SECTION 34. Section 56-10-240(A) of the 1976 Code, as
 8   amended by Act 459 of 1996, is further amended to read:
 9
10      “(A) If, during the period for which it is licensed, a motor
11   vehicle is or becomes an uninsured motor vehicle, then the vehicle
12   owner immediately shall obtain insurance on the vehicle or within
13   five days after the effective date of cancellation or expiration of his
14   liability insurance policy surrender the motor vehicle license plates
15   and registration certificates issued for the motor vehicle. If an
16   automobile liability insurance premium is not paid within five
17   working days after the last day to pay an automobile liability
18   insurance the premium, whether it is the premium due date or a
19   grace period that is granted customarily or contractually, a motor
20   vehicle is an uninsured motor vehicle, and the insurer shall give
21   written notice, or notice by magnetic or electronic media in a
22   manner considered satisfactory to the department, within ten days
23   after the five-day period ends, in addition to that notice previously
24   given in accordance with law, by delivery under United States Post
25   Office bulk certified mail, return receipt requested, to the
26   department of the cancellation or refusal to renew under the
27   following circumstances:
28         (1) if the lapse or termination of such insurance or security
29   occurs within three months of issuance, provided that this
30   subsection only applies to new policies, and not renewal or
31   replacement policies; or
32         (2) the lapse or termination occurs after three months for a
33   resident who fails one or more of the objective standards
34   prescribed in Section 38-73-455.”
35
36   SECTION 35. Section 56-10-280 of the 1976 Code, as amended
37   by Act 181 of 1993, is further amended to read:
38
39      “Section 56-10-280. (A) Contracts or policies of insurance
40   issued to meet the financial responsibility requirements prescribed
41   in this chapter must be issued for not less than six months. A
42   contract or policy of insurance remains in effect at least sixty days
43   notwithstanding a power of attorney which may purport to give the

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 1   attorney-in-fact the right to effect cancellation on behalf of the
 2   insured. However, a contract or policy may be canceled within the
 3   first sixty days only under one or more of the following
 4   circumstances:
 5         (1) a check or bank draft tendered by the insured for
 6   payment of premium to an agent, an insurance company, or a
 7   premium finance company is returned unpaid for insufficient funds
 8   or other reason by the insured‟s financial institution. If the check
 9   or draft is an initial payment made by an applicant for insurance or
10   a payment made by an insured to renew a policy, the cancellation
11   is effective as of the policy inception or renewal date.
12         (2) the insured produces satisfactory proof from the
13   department that he has sold or otherwise disposed of the insured
14   vehicle or surrendered its tags and registration.
15         (3) the insured has secured another policy that meets the
16   financial responsibility requirements prescribed in this chapter.
17      (B) This section does not prohibit refunds to the insured for
18   cancellations after sixty days resulting from causes other than
19   nonpayment of premium. Where an insurance company or
20   premium finance company cancels a contract or policy pursuant to
21   this section for nonpayment of premium under the circumstances
22   in subsection (A) which occurs within the first sixty days, the
23   insurance company, premium finance company, or agent may
24   charge and collect a fifteen-dollar penalty in addition to that
25   otherwise provided by law, and the penalty charge is not a
26   premium charge.”
27
28   SECTION 36. The 1976 Code is amended by adding:
29
30      “Section 56-1-315 A violation of Section 56-1-460, driving
31   under suspension, must be dismissed by the Department of Public
32   Safety when:
33      (1) a person has been charged with driving under suspension
34   while his driver‟s license is suspended because of an out-of-state
35   motor vehicle violation; and
36      (2) the person obtains a resolution to the out-of-state motor
37   vehicle violation that is considered satisfactory by the Department
38   of Public Safety.”
39
40   SECTION 37. Section 38-11-40(i) of the 1976 Code, as
41   amended by Act 181 of 1993, is further amended by adding at the
42   end:


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 1      “(4) If a life insurer, in obligations, or in commercial paper or
 2   bankers‟ acceptances, or similar evidences of indebtedness
 3   customarily issued at a discount from principal value, issued,
 4   assumed, or guaranteed by any business entity created or existing
 5   under the laws of the United States, or any state, which are not in
 6   default as to principal or interest; provided, that either the
 7   obligation is or the issuing, assuming or guaranteeing business
 8   entity‟s or business entities‟ long-term obligations are rated one of
 9   the four highest grades by any of the nationally recognized
10   statistical rating organizations recognized by the NAIC-SVO or
11   one or two by the NAIC-SVO.
12      As used in this subitem, „business entity‟ means a sole
13   proprietorship, corporation, limited liability company, association,
14   general or limited partnership, joint stock company, joint venture,
15   mutual fund, bank, trust, real estate investment trust, joint tenancy,
16   or other similar form of business organization, whether organized
17   for-profit or not-for-profit.
18      As used in this subitem, „obligation‟ means a bond, note,
19   debenture, trust certificate including an equipment trust certificate,
20   production payment, negotiable bank certificate of deposit,
21   bankers‟ acceptance, asset-backed security, credit tenant loan, loan
22   secured by financing a net lease or net leases, and other evidence
23   of indebtedness for the payment of money (or participations,
24   certificates or other evidences of an interest in any of the
25   foregoing), whether constituting a general obligation of the issuer
26   or payable only out of certain revenues or certain funds pledged or
27   otherwise dedicated for payment.”
28
29   SECTION 38. Section 38-11-40 of the 1976 Code, as amended
30   by Act 181 of 1993 is further amended by adding at the end:
31
32      “(t) If a life insurer, foreign investments, other than Canadian
33   investments, of substantially the same types as those that an insurer
34   is permitted to acquire under this chapter.”
35
36   SECTION 39. Section 38-11-50(A)(4) of the 1976 Code, as last
37   amended by Act 181 of 1993, is further amended to read:
38
39      “(4) Investments in Section 38-11-40(i)(1), (2), and(3) in the
40   aggregate may not exceed sixty-six and two-thirds percent of the
41   insurer‟s policyholder obligations, nor may.             However,
42   investments in Section 38-11-40(i)(4) may exceed sixty-six and
43   two-thirds percent of the insurer‟s policyholder obligations. Not

     [601]                             27
 1   more than ten percent of the insurer‟s policyholder obligations
 2   may be invested in one investment under Section 38-11-40(i).”
 3
 4   SECTION 40. Section 38-11-50(A) of the 1976 Code, as last
 5   amended by Act 181 of 1993, is further amended by adding item
 6   (12) to read:
 7
 8      “(12) Investments authorized pursuant to Section 38-11-40(t)
 9   may not exceed twenty percent of the insurer‟s policyholder
10   obligations, and the aggregate amount of such investments in a
11   single foreign jurisdiction may not exceed ten percent of its
12   policyholder obligations as to a foreign jurisdiction that has a
13   sovereign debt rating of SVO1, or an equivalent rating by a
14   nationally recognized statistical rating organization recognized by
15   the SVO, or three percent of its policyholder obligations as to any
16   other foreign jurisdiction.”
17
18   SECTION 41. Section 38-73-1320 of the 1976 Code is repealed.
19
20   SECTION 42. This act takes effect upon approval by the
21   Governor.
22                         ----XX----




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