§ 38-13-420 — Exceptions to reporting requirements; material nonrenewals, cancellations, or revisions of ceded reinsurance agreements defined; information to be disclosed; report to be on nonconsolidated basis; exceptions.

South Carolina § 38-13-420

• Jurisdiction: South Carolina
• Title 38: INSURANCE
• Ch. 13: EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS

Text

(A) Nonrenewals, cancellations, or revisions of ceded reinsurance agreements may not be reported pursuant to Section 38-13-400 if the nonrenewals, cancellations, or revisions are not material. For purposes of this section and Sections 38-13-400 and 38-13-410, a material nonrenewal, cancellation, or revision is one that affects, for property and casualty business, including accident and health business when written as such, more than fifty percent of an insurer's or health maintenance organization's ceded written premium, or, for life, annuity, and accident and health business, more than fifty percent of the total reserve credit taken for business ceded, on an annualized basis as indicated in the insurer's or health maintenance organization's most recently filed annual statement. However, a filing is not required if the insurer's or health maintenance organization's ceded written premium or the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent of direct plus assumed written premium or ten percent of the statutory reserve requirement before any cession, respectively. (B) Subject to the criteria outlined in subsection (A) of this section, a report must be filed without regard to which party has initiated the nonrenewal, cancellation, or revision of ceded reinsurance whenever one or more of the following conditions exist: (1) the entire cession has been canceled, nonrenewed, or revised and ceded indemnity and loss adjustment expense reserves after any nonrenewal, cancellation, or revision represent less than fifty percent of the comparable reserves that would have been ceded had the nonrenewal, cancellation, or revision not occurred; (2) an authorized or accredited reinsurer has been replaced on an existing cession by an unauthorized reinsurer; or (3) collateral requirements previously established for unauthorized reinsurers have been reduced; e.g., the requirement to collateralize incurred but not reported (IBNR) claim reserves has been waived with respect to one or more unauthorized reinsurers newly participating in an existing cession. Subject to the materiality criteria outlined in subsection (A) of this section, for purposes of items (2) and (3), a report must be filed if the result of the revision affects more than ten percent of the cession. (C)(1) The following information must be disclosed in any report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements: (a) effective date of the nonrenewal, cancellation, or revision; (b) the description of the transaction with an identification of the initiator of the transaction; (c) purpose of, or reason for, the transaction; and (d) if applicable, the identity of the replacement reinsurers. (2) An insurer and a health maintenance organization are required to report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer or health maintenance organization is part of a consolidated group of insurers or health maintenance organizations which utilizes a pooling arrangement or one hundred percent reinsurance agreement that affects the solvency and integrity of the insurer's or health maintenance organization's reserves and the insurer or health maintenance organization ceded substantially all of its direct and assumed business to the pool. An insurer or a health maintenance organization is considered to have ceded substantially all of its direct and assumed business to a pool if the insurer or health maintenance organization has less than one million dollars total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer's or health maintenance organization's capital and surplus.

Legislative History

HISTORY: 1994 Act No. 372, SECTION 1; 2006 Act No. 332, SECTION 5, eff June 1, 2006. ARTICLE 7 Examinations, Investigations, and Reports of the Department of Employment and Workforce