2012 South Carolina Code of Laws
Title 38 - Insurance
Chapter 13 - EXAMINATIONS, INVESTIGATIONS, RECORDS, AND REPORTS
Section 38-13-20 - Examination warrant; conduct of examination; access to books, records, accounts, etc.; refusal to submit to examination; subpoenas, examination under oath; failure to obey subpoena; retaining professionals and specialists as examiners; director's or designee's authority.

(A) Upon determining that an examination must be conducted, the director or his designee shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe South Carolina laws and regulations and those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners. The director also may employ other guidelines or procedures he considers appropriate.

(B) Every person or insurer and his or its officers, directors, and agents from whom information is sought shall provide to the examiners appointed under subsection (A) timely, convenient, and free access at all reasonable hours at his or its offices to all books, records, accounts, papers, documents, and all computer or other recordings relating to the property, assets, business, and affairs of the person or insurer being examined. If the director or his designee considers it necessary to the conduct of the examination, he may require that the person or insurer or his or its agents or affiliated or subsidiary corporations or partnerships furnish the original books and records. The officers, directors, employees, and agents of the insurer or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a person or an insurer by his or its officers, directors, employees, or agents to submit to examination or to comply with a reasonable written request of the examiners is grounds for suspension or revocation of the person's or insurer's certificate of authority to engage in the business of insurance in this State. The director or his designee may make the suspension or revocation and the reasons for it public. Proceedings for revocation must be conducted pursuant to Section 38-5-140.

(C) The director or his examiners may issue subpoenas, administer oaths, and examine under oath a person as to matters pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the director or his designee may petition a court of competent jurisdiction, and upon proper showing the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court.

(D) When making an examination under Section 38-13-10, the director or his designee may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners. The cost of the retainment must be borne by the insurer which is the subject of the examination together with the expenses of the director or his designee and the expenses and compensation of the director's assistants. If a domestic insurer has less than one million dollars total capital and surplus as of December 31, 1993, and thereafter, then it must not be assessed the actual examination costs but shall instead pay in accordance with the examination fee schedule in effect as of July 1, 1993. If an insurer determines that its examination fees have not been assessed as provided in this section or that the fees assessed are unreasonable in relation to the examination performed, the insurer may appeal the assessments to the administrative law judge division. Examination fees must be retained by the department and are considered "other funds".

(E) Nothing contained in Section 38-13-10 limits the authority of the director or his designee to:

(1) terminate or suspend an examination to pursue other legal or regulatory action pursuant to the insurance laws of this State. Findings of fact and conclusions made pursuant to an examination are prima facie evidence in a legal or regulatory action;

(2) use and, if appropriate, make public a final or preliminary examination report, examiner or insurer work papers or other documents, or other information discovered or developed during the course of an examination in the furtherance of a legal or regulatory action which the director or his designee, in his sole discretion, considers appropriate.

HISTORY: Former 1976 Code Section 38-13-20 [1947 (45) 322; 1952 Code Section 37-602; 1962 Code Section 37-602] has no comparable provisions in 1987 Act No. 155; Former 1976 Code Section 38-5-1230 [1947 (45) 322; 1952 Code Section 37-282; 1960 (51) 1646; 1962 Code Section 37-282] recodified as Section 38-13-20 by 1987 Act No. 155, Section 1; 1990 Act No. 363, Section 1; 1992 Act No. 394, Section 1; 1993 Act No. 181, Section 537; 1994 Act No 497, Section 16.