South Carolina Overhauls Insurer Group Oversight to Meet NAIC Accreditation Standards
South Carolina has introduced a major reform in its insurance regulation, passing legislation to overhaul insurer group oversight in order to align with NAIC (National Association of Insurance Commissioners) accreditation standards. The change comes through Senate Bill 220, signed into law by Governor Henry McMaster, and it represents a significant step in ensuring the stability and transparency of the insurance market in the state.
Why This Overhaul Matters
The NAIC sets national standards that help ensure insurance companies remain solvent and accountable. States that don’t meet these standards risk losing their accreditation which can drive insurers to relocate and cost states millions in premium tax revenue. South Carolina’s overhaul is a preventive and strategic move to maintain its NAIC accreditation and protect its role as a competitive regulatory state.
Key Changes Under Senate Bill 220
1. Group Capital Requirements
Insurance holding companies must now submit group capital calculations, helping regulators determine whether entire insurance groups (not just individual companies) are financially healthy.
2. Enterprise Risk Reporting
The law requires annual enterprise risk reports, giving regulators better insights into the risks that could affect an insurer’s financial condition due to affiliations or complex structures.
3. Oversight on Inter-Affiliate Transactions
New rules ensure that significant transactions between affiliated companies (above 3% of assets or 25% of surplus) are disclosed and monitored, preventing the misuse of capital within insurance groups.
4. Liquidity Stress Testing
Some insurers will also be required to undergo liquidity stress testing, simulating worst-case scenarios to assess financial resilience during economic downturns.
5. Stronger Confidentiality Protections
The law includes legal safeguards to keep sensitive financial data—such as group capital results and stress test outcomes confidential and shielded from public access or lawsuits.
Who Will Be Impacted?
This reform mainly targets:
- Internationally active insurance groups (operating in 3+ countries with $50B+ in assets or $10B+ in premiums)
- Holding companies of insurers domiciled in South Carolina
- Regulators, who will now have improved tools for oversight
The new law takes effect on January 1, 2026, giving insurers ample time to adjust their reporting and compliance strategies.
Final Takeaway
By overhauling its insurer group oversight to meet NAIC accreditation standards, South Carolina is reinforcing its commitment to strong regulation, financial transparency, and consumer protection. The new law not only protects policyholders but also secures the state’s reputation and economic interests in a competitive insurance market.
