South Carolina Code of Regulations
Chapter 69 - DEPARTMENT OF INSURANCE
69-62.3 - Closeout and Termination of the SCAAIP
69-62.3. Closeout and Termination of the SCAAIP
The purpose of this regulation is to provide for the termination and orderly transfer of the business affairs and liabilities of the South Carolina Associated Auto Insurers Plan (SCAAIP) to the Associated Auto Insurers Plan of South Carolina.
B. Powers of the Advisory Board of the AAIP
Subject to the approval of the director or her designee, the Advisory Board of the AAIP shall develop policies and procedures for the orderly termination and wind-up of the affairs of the SCAAIP. The Advisory Board, on behalf of its members, is authorized to:
1) settle claims on policies issued by the SCAAIP.
2) establish procedures for the sharing among members of profit or loss on SCAAIP business and other costs, charges, expenses, liabilities, income, property and other assets of the SCAAIP. The assessments of members for their appropriate shares may be based on the member's premium volume or exposure units for business other than SCAAIP business or on a combination of such bases or on any other equitable basis.
3) reinsure SCAAIP business.
4) join, advise, assist, associate, cooperate and contract with its members and with such organizations, associations, insurers, governmental agencies, and others as may be necessary or proper to accomplish the transition of liabilities from the SCAAIP to the AAIP.
5) sue and be sued.
6) take any other action not specifically enumerated above or related thereto which is otherwise necessary or proper to accomplish the termination of the SCAAIP and the orderly transition and windup of its affairs.
C. Termination of the SCAAIP
Effective June 30, 2007, the SCAAIP shall terminate as a legal entity in South Carolina. Liability for any policy issued by the SCAAIP will be transferred to the AAIP of SC. The State of South Carolina shall have no liability or responsibility for any policy issued by the SCAAIP or AAIP of SC
D. Future SCAAIP Liabilities
Any future SCAAIP liability referenced above and a dollar amount equal to the case base reserves and IBNR shall be transferred to the AAIP of SC to be held in a termination fund. The AAIP will assume responsibility for the future settlement of any SCAAIP liability by utilization of these funds ("termination fund"). Should any future SCAAIP liability exceed the dollar amount available in the termination fund, the AAIP of SC may assess the AAIP membership in an amount to cover that liability and any future projected liability. This assessment will be handled in accordance with the procedure outlined in the AAIP of SC Plan of Operation and will be subject to the prior approval of Department of Insurance.
Any outstanding SCAAIP cash balance (prior membership assessments paid to cover SCAAIP underwriting results and its administrative expense) in excess of the termination fund will be reimbursed to the SCAAIP membership within 60 days of the issuance of the quarter ending June 30, 2007 SCAAIP Members Participation reports.
E. By February 28, 2014, the Advisory Board of the AAIP of SC will evaluate the outstanding liabilities of SCAAIP and determine how any remaining termination fund monies should be handled. The Advisory Board shall make a recommendation to the Director for approval. Should the Termination Fund remain in existence after 2014, the Advisory Board will evaluate the potential SCAAIP liability annually after that date until such time as the excess termination fund monies are fully distributed. The Advisory Board of the AAIP shall submit a filing requesting dissolution of the termination fund and the distribution of monies to the SCAAIP member companies to the Director of Insurance for prior approval once all liabilities of the SCAAIP have been settled.
HISTORY: Added by State Register Volume 31, Issue No. 4, eff April 27, 2007.