A sweeping new bill passed by the South Carolina General Assembly is set to bring the state’s regulation of insurance holding companies into alignment with the latest National Association of Insurance Commissioners (NAIC) accreditation requirements, effective January 1, 2026.
Senate Bill 220 amends key provisions in Chapter 21 of Title 38 of the South Carolina Code. The updates include clarified definitions of control, affiliate, and internationally active insurance groups, alongside new obligations around group capital calculations and liquidity stress testing.
"This bill effectively formalizes the existing standards at DOI and allows DOI to maintain their accreditation with the NAIC," the state Department of Insurance (DOI) noted in its April 30, 2025 fiscal report.
A core focus of the bill is enterprise risk regulation. It now mandates annual enterprise risk reports from ultimate controlling parties of insurer groups, along with group capital calculation reports and liquidity stress test results for scoped-in entities. These steps are seen as critical for evaluating systemic risk and financial resilience, especially in diversified or internationally active insurance groups — those writing in at least three countries with 10% or more of gross premiums outside the US, and $50 billion in total assets or $10 billion in gross written premiums (based on a three-year average).
Exemptions exist for certain mono-state, Federal Reserve-supervised, or foreign-regulated groups, but South Carolina’s director retains discretion to require filings if deemed necessary for prudential oversight or market stability.
The reforms also tighten requirements for inter-affiliate transactions, with thresholds such as 3% of admitted assets or 25% of surplus for material transactions triggering notice and review. Enhanced language clarifies the handling of insurer-owned data and records when services are outsourced to affiliates - a growing concern given expanded third-party data control.
Confidentiality provisions have been significantly reinforced, covering everything from group capital ratios to Liquidity Stress Test results, which must remain confidential and may not be disclosed, subpoenaed, or used in any private civil action. The law explicitly prohibits marketing or public comparison of these results unless to correct materially false public statements.
While the bill does not carry an immediate state expenditure impact, the Revenue and Fiscal Affairs Office flagged serious potential consequences of non-compliance. “The failure to conform... may potentially lead to the loss of domiciled insurers willing to participate in the state's insurance market,” the DOI warned, adding that a decline in premium tax revenue could be “substantial.”
The legislation takes effect immediately upon approval by the Governor.
