Indicates Matter Stricken

Indicates New Matter

Committee Amendment Adopted

May 08, 2024

H. 4189

Introduced by Rep. Sandifer

S. Printed 05/08/24--S.

Read the first time April 2, 2024

________

A bill

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 38-90-10, RELATING TO DEFINITIONS, so as to include references to foreign captive insurance companies; BY AMENDING SECTION 38-90-20, RELATING TO LICENSING and fees, so as to amend meeting requirements, remove a certification fee and outline how to make proper payments to the department; BY AMENDING SECTION 38-90-40, RELATING TO CAPITALIZATION REQUIREMENTS, so as to give discretion to the director; BY AMENDING SECTION 38-90-60, RELATING TO INCORPORATION OPTIONS AND REQUIREMENTS, so as to include foreign captive insurance companies; BY AMENDING SECTION 38-90-70, RELATING TO REPORTS, so as to change a deadline and include references to foreign captive insurance companies; BY AMENDING SECTION 38-90-75, RELATING TO DISCOUNTING OF LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES, so as to allow a sponsored captive insurance company to file one actuarial opinion; BY AMENDING SECTION 38-90-80, RELATING TO INSPECTIONS AND EXAMINATIONS, so as to make the examination of some captive insurance companies optional and to include references to foreign captive insurance companies; BY AMENDING SECTION 38-90-140, RELATING TO TAX PAYMENTs, so as to amend rEQUIRED tax payments for a sponsored captive insurance company; BY AMENDING SECTION 38-90-165, RELATING TO DECLARATION OF INACTIVITY, so as to allow for the submission of a written approval; BY AMENDING SECTION 38-90-175, RELATING TO the CAPTIVE INSURANCE REGULATORY AND SUPERVISION FUND, so as to change the allowed transfer of collected taxes from twenty percent to forty percent; AND BY AMENDING 38-90-215, RELATING TO PROTECTED CELLS, SO AS TO REMOVE LICENSING REQUIREMENTS.

    Amend Title To Conform

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

SECTION 1.  Section 38-90-10(1), (6), and (21) of the S.C. Code is amended to read:

    (1) "Alien or foreign captive insurance company" means an insurance company or protected cell, or its equivalent, of an insurance company formed to write insurance business for its parents and affiliates and licensed pursuant to the laws of an alien or foreign jurisdiction which imposes statutory or regulatory standards in a form acceptable to the director on companies transacting the business of insurance in such jurisdiction, but may not include a corporation controlled by an alien adversary.

    (6) "Branch captive insurance company" means an alien or foreign captive insurance company licensed by the director to transact the business of insurance in this State through a business unit with a principal place of business in this State.

    (21) "Participant" means an entity as defined in Section 38-90-24038-90-255, and any affiliates of that entity, that are insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to the assets of a protected cell.

SECTION 2.  Section 38-90-10 of the S.C. Code is amended by adding:

    (34) "Alien adversary" means any alien government or nongovernment person determined by the United States Secretary of Commerce to have engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or the security and safety of United States citizens.

    (35) "Corporation controlled by an alien adversary" means a legal entity engaged in commerce that:

       (a) is wholly owned by an alien adversary;

       (b) has an alien adversary as a dominant shareholder, directly or indirectly;

       (c) is wholly owned by a citizen of an alien adversary; or

       (d) has one or a number of citizens of an alien adversary whose cumulative ownership is as a dominant shareholder.

    (36) "Dominant shareholder" means the single owner of ten percent or more of a legal entity engaged in commerce's stock, securities, or other indicia of ownership; or multiple owners of twenty percent or more of a legal entity engaged in commerce's stock, securities, or other indicia of ownership.

SECTION 3.  Section 38-90-20 of the S.C. Code is amended to read:

    Section 38-90-20.  (A) A captive insurance company, when permitted by its articles of incorporation, articles of organization, operating agreement, or charter, may apply to the director for a license to provide any and all insurance, except workers' compensation insurance written on a direct basis, authorized by this title; however:

       (1) a pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated business, risks assumed from a risk pool for the purpose of risk sharing, or a combination of them;

       (2) an association captive insurance company may not insure any risks other than those of the member organizations of its association and their affiliated companies;

       (3) an industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies;

       (4) a special purpose captive insurance company may provide insurance or reinsurance, or both, for risks as approved by the director;

       (5) a captive insurance company may not provide personal motor vehicle or homeowner's insurance coverage written on a direct basis;

       (6) a captive insurance company may not accept or cede reinsurance except as provided in Section 38-90-110.