What must every insurer transacting business in South Carolina deposit with the director?

In South Carolina, every insurer transacting business is required to maintain a financial security deposit with the director of the Department of Insurance. This deposit is intended to ensure the financial stability of the insurer and protect policyholders in the event of insolvency. The law specifies that the deposit must consist of certificates of deposit from financial institutions that are considered safe and reputable.

Certificates of deposit provide a nominal interest income while ensuring liquidity and reassurance that the funds are safeguarded. By restricting the deposits to those from specific financial institutions, the regulation ensures that only reliable, federally insured entities are involved in safeguarding the insurers' financial stability. This requirement is designed to minimize risk and maintain the trust of consumers in the insurance marketplace.

While other financial instruments like cash equivalent securities or government bonds might seem viable, the specific mandate for certificates of deposit from approved financial institutions highlights the regulatory focus on ensuring a clear and manageable asset that can be monitored and controlled closely by the insurance department.