ENTITLED, An Act  to establish an insurance examination fund and prescribe certain requirements for insurers subject to examination.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
     Section  1.  That chapter 58-3 be amended by adding thereto a NEW SECTION to read as follows:

     Any insurer subject to chapter 58-3 shall pay to the Division of Insurance an annual examination assessment fee of three hundred dollars by March first, beginning in 1998. There shall be established within the state treasury the insurance examination fund, into which shall be deposited the proceeds from the examination assessment fees. The director may increase the annual examination assessment fee or levy an additional examination assessment fee of up to one hundred fifty dollars if the insurance examination fund falls below fifty thousand dollars.
     Section  2.  That chapter 58-3 be amended by adding thereto a NEW SECTION to read as follows:

     All money in the insurance examination fund is continuously appropriated for the purposes specified in this Act. All costs of examinations, including travel expenses, living expense allowances, and per diem as compensation of examiners shall be paid from the fund. The fund shall also pay the costs of consultants, attorneys, actuaries, accountants, and other experts as shall be determined at the director's discretion to be reasonably necessary to assist in the conduct of the examination or analyses of the financial affairs of insurance companies. Any person so retained shall be under the direction and control of the director and shall act in a purely advisory capacity.
     Section  3.  That chapter 58-3 be amended by adding thereto a NEW SECTION to read as follows:

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     The director may require persons who are not employees of the division who have been retained by the director to conduct or participate in examinations to bill and receive payments directly from the insurance company being examined. An insurer paying the costs of its examination pursuant to §  58-3-15 may receive reimbursements from the insurance examination fund upon completion of the examination.
     Section  4.  That § 58-3-11 be amended to read as follows:
     58-3-11.   The report shall be comprised only of facts appearing from the books, papers, records, or documents of the person being examined, or ascertained from the statements of individuals concerning its affairs and the examiner's conclusions and recommendations based on procedures and guidelines adopted by the National Association of Insurance Commissioners or state statutes or rules. The director shall adopt the procedures and guidelines and their effective date by rule promulgated pursuant to chapter 1-26.
     Section  5.  Each insurer's claim files for policies or certificates are subject to examination pursuant to chapter 58-3 by the director of insurance. To aid in such examination:

             (1)    The insurer shall maintain claim data that is accessible and retrievable for examination. An insurer shall be able to provide the claim number, line of coverage, date of loss, and date of payment of the claim, date of denial, or date closed without payment. This data shall be available for all open and closed files for the current year and the two preceding years;

             (2)    Detailed documentation shall be contained in each claim file in order to permit reconstruction of the insurer's activities relative to each claim;

             (3)    Each relevant document within the claim file shall be noted as to date received, date processed, or date mailed. Dated correspondence is sufficient to document the date mailed for the purposes of this subdivision;

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             (4)    For those insurers that do not maintain hard copy files, claim files shall be accessible from a computer, microfilm, Cathode Ray Tube (CRT), micrographics, or other similar electronic means and be capable of duplication to hard copy; and

             (5)    Claim information obtained in a telephone conversation or personal interview with any source which is used in the claim determination shall be documented in the claim file.
     Section  6.  The provisions of this Act do not apply to farm mutual insurers subject to chapter 58-35.

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An Act to establish an insurance examination fund and prescribe certain requirements for insurers subject to examination.

========================= I certify that the attached Act originated in the HOUSE as Bill No. 1049

____________________________
Chief Clerk

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____________________________
Speaker of the House

Attest:

____________________________
Chief Clerk

____________________________
President of the Senate

Attest:

____________________________
Secretary of the Senate

House Bill No. 1049
File No. ____
Chapter No. ______     =========================
Received at this Executive Office this ____ day of _____________ ,

19___ at _____ M.

By _________________________
for the Governor

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The attached Act is hereby approved this ________ day of ______________ , A.D., 19___

____________________________
Governor

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STATE OF SOUTH DAKOTA,

ss.

Office of the Secretary of State

Filed ____________ , 19___
at _________ o'clock __ M.

____________________________
Secretary of State

By _________________________
Asst. Secretary of State