Risk retention groups chartered and licensed in states other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows:

(1) Notice of Operations and Designation of director or his designee as Agent.

(a) Before offering insurance in this State, a risk retention group shall submit to the director or his designee:

(i) a statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, charter date, its principal place of business, and such other information, including information on its membership, as the director or his designee of this State may require to verify that the risk retention group is qualified under Section 38-87-20(11);

(ii) a copy of its plan of operations or feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed; however, the provision relating to the submission of a plan of operation or feasibility study does not apply with respect to any line or classification of liability insurance which:

(A) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986; and

(B) was offered before such date by any risk retention group which had been chartered and operating for not less than three years before such date.

(b) The risk retention group shall submit a copy of any material revision to its plan of operation or feasibility study required by Section 38-87-30(B) within thirty days of the date of approval of the revision by the commissioner of its chartering state, or within thirty days of filing if no approval is required.

(c) A statement of registration and a notice designating the commissioner as agent for the purpose of receiving service of legal documents or process must be submitted on such forms as the director or his designee may prescribe or approve.

(d) Annual license fees, equal to the license fees required of an admitted liability insurer licensed to transact business in this State, must be paid in this State.

(2) Financial Condition. Any risk retention group doing business in this State shall submit to the director or his designee:

(a) a copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which must be certified by an independent public accountant and shall contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a loss reserve specialist qualified under such criteria as the director or his designee may prescribe or approve;

(b) a copy of each examination of the risk retention group as certified by the commissioner of its chartering state or other public official conducting the examination;

(c) upon request by the director or his designee, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group;

(d) such information as may be required to verify its continuing qualification as a risk retention group under Section 38-87-20(11).

(3) Taxation.

(a) Each risk retention group is liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State and shall report to the director or his designee the net premiums written for risks resident or located within this State. Such risk retention group is subject to taxation, including any applicable fines and penalties related thereto, on the same basis as an admitted insurer.

(b) To the extent licensed agents or brokers are utilized pursuant to Section 38-87-120, they shall report to the department the premiums for direct business for risks resident or located within this State which such licensees have placed with or on behalf of a risk retention group not chartered in this State.

(c) To the extent that insurance agents or brokers are utilized pursuant to Section 38-87-120, such agent or broker shall keep a complete and separate record of all policies procured from each such risk retention group, which record must be open to examination by the director or his designee or his representative on demand. These records shall, for each policy and each kind of insurance provided thereunder, include the following:

(i) the limit of liability;

(ii) the time period covered;

(iii) the effective date;

(iv) the name of the risk retention group which issued the policy;

(v) the gross premium charged;

(vi) the amount of return premiums, if any;

(vii) such additional information as the director or his designee may require.

(4) Compliance with Claims Settlement Practices Laws. Every risk retention group, its agents, and its representatives shall comply with the claims settlement practices laws of this State, including, but not limited to, Section 38-57-70, Chapter 59 of Title 38, and such other provisions relative to claims settlement practices required by law.

(5) Deceptive, False, or Fraudulent Practices. Every risk retention group shall comply with the laws of this State regarding deceptive, false, or fraudulent acts or practices, including, but not limited to, Chapter 57 of this title and such other provisions relative to deceptive, false, or fraudulent practices required by law.

(6) Examination Regarding Financial Condition. A risk retention group shall submit to an examination by the director or his designee to determine its financial condition if the director or his designee of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty days after a request by the director or his designee of this State. The examination must be coordinated to avoid unjustified repetition and must be conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioners' Examiner's Handbook.

(7) Notice to Purchasers. Every application form for insurance from a risk retention group, and every policy (on its front and declaration pages) issued by a risk retention group, must contain in ten point type the following notice:

NOTICE

This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.

(8) Prohibited Acts Regarding Solicitation or Sale. The following acts by a risk retention group are prohibited:

(a) the solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in the group;

(b) the solicitation or sale of insurance by, or operation of, a risk retention group that is in hazardous financial condition or financially impaired.

(9) Prohibition on Ownership by an Insurance Company. No risk retention group is allowed to do business in this State if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies.

(10) Prohibited Coverage. The terms of any insurance policy issued by any risk retention group may not provide, or be construed to provide, coverage prohibited generally by statute of this State or declared unlawful by the Supreme Court of South Carolina.

(11) Delinquency Proceedings. A risk retention group not chartered in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment after an examination under Section 38-87-40(6).

(12) Penalties. A risk retention group that violates any provision of this chapter is subject to fines and any other penalties, including revocation of its right to do business in this State, applicable to licensed insurers generally.

(13) Operation Prior to Enactment of this Chapter. In addition to complying with the requirements of this section, any risk retention group operating in this State prior to enactment of this chapter shall comply within thirty days after the effective date of this chapter with the provisions of item (1)(a) of this section.

HISTORY: 1988 Act No. 355, Section 1; 1991 Act No. 13, Section 28; 1993 Act No. 181, Section 840; 2001 Act No. 82, Section 30, eff July 20, 2001; 2016 Act No. 191 (S.978), Section 3, eff January 1, 2017.

Effect of Amendment

2016 Act No. 191, Section 3, rewrote (1)(b).