The Municipal Association of South Carolina serves as the municipal agent to receive and distribute to South Carolina municipalities the municipal broker's premium tax collected by the South Carolina Department of Insurance.
After the passage of the federal Dodd-Frank Act and a provision within the Act known as the Non-Admitted and Reinsurance Reform Act of 2010, Governor Nikki Haley signed into law on June 29, 2012 legislation to conform state insurance law to federal law. The federal act states the "placement of non-admitted insurance is subject to the statutory and regulatory requirements solely of the insured's home state." Also, only the "home state" may require the payment of premium tax for non-admitted insurance.
The conforming state legislation includes the federal definition of "home state" and designates a single state tax rate of 6 percent for the broker's premium tax. The state law fully complies with the federal law while preserving the designation and collection of a 4 percent state tax and a 2 percent municipal broker's premium tax.
The South Carolina Department of Insurance is required to collect the broker's premium tax and distribute to the Municipal Association of South Carolina the municipal portion of the tax. As the municipal agent, the Association distributes the funds to the municipalities.