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Subcommittee advances SB619 to align insolvency law with NAIC model on funding agreements
Summary
Colonial Life told the subcommittee SB619 would add funding agreements to the priority scheme in South Carolina's insurer insolvency statute and place the state on par with other NAIC-adopting jurisdictions; the subcommittee voted to send the bill to the full committee.
The Banking and Insurance Subcommittee voted to refer SB619 to the full committee after testimony that the measure would update South Carolina's insolvency statute to treat funding agreements like other insurance products in rehabilitation and liquidation.
Jennifer Horn, representing Colonial Life, said the change would mirror language in the NAIC Receivership Model Act and help Colonial Life and other carriers access capital markets on more competitive terms. "Amending Senate Bill 619 will help us do just that," Horn said, describing funding agreements as a short-duration investment tool that can strengthen an insurer's financial position during economic downturns.
Members asked why the company was pursuing the change now; Horn replied funding agreements are a newer strategy for Colonial Life and that other national carriers have used the instrument for about 20 years. She said the company had discussed the bill with Director Wise at the Department of Insurance and with the South Carolina Life and Health Insurance Guarantee Association, and that those entities had no concerns.
After discussion, the subcommittee adopted a motion to refer SB619 to the full committee. The chair announced the bill will be considered by the full committee; the voice motion recorded assent with no opposed members announced.
The measure would amend the South Carolina Code (as cited in testimony) to add funding agreements to the class of claims considered in insurer rehabilitation and liquidation proceedings and to preserve existing limits on what is treated as a loss. The subcommittee's referral does not yet adopt specific text modifications beyond the scope described in testimony.
