State Fiscal Accountability Authority
The Insurance Reserve Fund is a Division of the South Carolina State Fiscal Accountability Authority, and reports to the five member board through the Office of the Executive Director. The State Fiscal Accountability Authority is authorized and required to provide insurance to governmental entities by a number of statutes. Those statutes are:
The Insurance Reserve Fund functions as a governmental insurance operation with the mission to provide insurance specifically designed to meet the needs of governmental entities at the lowest possible cost. The Insurance Reserve Fund operates like an insurance company, by issuing policies, collecting premiums (based in consultation with actuaries), and by paying claims from the accumulated premiums in accordance with the terms and conditions of the insurance policies it has issued. The Insurance Reserve Fund uses Towers Watson, as its consulting actuaries in determining rates, IBNR reserves, adequacy of loss reserves, and adequacy of policyholders equity in making management recommendations to the State Fiscal Accountability Authority regarding the financial management of the Fund. The Insurance Reserve Fund is a revenue agency and does not receive any appropriation from the general fund.
The Insurance Reserve Fund prepares a National Association of Insurance Commissioners (NAIC) Annual Statement with the South Carolina Department of Insurance, as required by law, reflecting the annual financial status of its insurance operation. Also, the Insurance Reserve Fund is audited by the South Carolina Department of Insurance every three years, or more often as needed, pursuant to Section 38-13-190 of the South Carolina Code of Laws. As a Division of the State Fiscal Accountability Authority, the Insurance Reserve Fund also is audited annually by an independent CPA firm.
All premiums received by the Insurance Reserve Fund are deposited with the Office of the State Treasurer where the funds are maintained as the Insurance Reserve Fund Trust Account. By statutory requirement, these funds are to be used to pay claims and operating expenses of the Insurance Reserve Fund. The Office of the State Treasurer is responsible for investing these funds.
The Insurance Reserve Fund uses no agents, brokers, or advertising, and does not actively solicit accounts. The lack of a profit motive and the lack of acquisition expenses such as agents’ commissions, along with the use of the investment income in rate determination allows the Insurance Reserve Fund to maintain the lowest possible rate structure. Not all governmental entities elect to purchase their insurance through the Insurance Reserve Fund. The South Carolina Tort Claims Act allows political subdivisions of the State access to other mechanisms to meet their insurance needs at their discretion. Some entities participate in other self-insurance pools, some purchase commercial insurance, and some elect to self-insure their insurance exposures.
The Insurance Reserve Fund offers the following lines of insurance:
The Insurance Reserve Fund currently insures over $39.8 billion in property values, state and local governmental entities which employ over 167,000 employees, over 37,000 vehicles, 5,900 state school buses and 11 hospitals with over 2,400 governmentally employed physicians and dentists.
Because South Carolina has significant hurricane and earthquake exposures, all Insurance Reserve Fund property insurance policies include coverage for wind, flood, and earthquake. All Insurance Reserve Fund liability policies are designed to meet the needs of governmental entities and to comply with applicable statutes.
The South Carolina Insurance Reserve Fund also provides risk management services such as driver improvement training, real property appraisals, boiler and machinery inspections, and property engineering inspections for its various insureds.
The Insurance Reserve Fund Mission is to provide Property and Liability Insurance products that meet the needs of its governmental customers in a secure and financially responsible manner at the least possible cost.