FIRST REGULAR SESSION
HOUSE BILL NO. 968
91ST GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE WARD.
Read 1st time March 13, 2001, and 1000 copies ordered printed.
TED WEDEL, Chief Clerk
AN ACT
To repeal sections 379.316, 379.321, 379.362, 379.425 and 379.888, RSMo 2000, and to enact in lieu thereof four new sections relating to insurance.
Section A. Sections 379.316, 379.321, 379.362, 379.425 and 379.888, RSMo 2000, are repealed and four new sections enacted in lieu thereof, to be known as sections 379.316, 379.321, 379.425 and 379.888, to read as follows:
379.316. 1. Section 379.017 and sections 379.316 to 379.361 apply to insurance companies incorporated pursuant to sections 379.035 to 379.355, section 379.080, sections 379.060 to 379.075, sections 379.085 to 379.095, sections 379.205 to 379.310, and to insurance companies of a similar type incorporated pursuant to the laws of any other state of the United States, and alien insurers licensed to do business in this state, which transact fire and allied lines, marine and inland marine insurance, to any and all combinations of the foregoing or parts thereof, and to the combination of fire insurance with other types of insurance within one policy form at a single premium, on risks or operations in this state, except:
(1) Reinsurance, other than joint reinsurance to the extent stated in section 379.331;
(2) Insurance of vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured pursuant to marine, as distinguished from inland marine, insurance policies;
(3) Insurance against loss or damage to aircraft;
(4) All forms of motor vehicle insurance; and
(5) All forms of life, accident and health, and workers' compensation insurance.
2. Inland marine insurance shall be deemed to include insurance now or hereafter defined by statute, or by interpretation thereof, or if not so defined or interpreted, by ruling of the director, or as established by general custom of the business, as inland marine insurance.
3. Commercial property and commercial casualty insurance policies [which meet the exemption requirements of section 379.362 shall be exempt from those insurance laws of this state which concern the regulation by the director of the department of insurance of the policy language, policy provisions or the format of such policies, or the regulation of the rates used to calculate the amount of premium charged] are subject to rate and form filing requirements as provided in section 379.321.
379.321. 1. Every insurer shall file with the director, except as to commercial property or commercial casualty insurance as provided in subsection 6 of this section and as to inland marine risks which by regulation or general custom of the business are not written according to manual rates or rating plans, every manual of classifications, rules, underwriting rules and rates, every rating plan and every modification of the foregoing which it uses and the policies and forms to which such rates are applied. Any insurer may satisfy its obligation to make any such filings by becoming a member of, or a subscriber to, a licensed rating organization which makes such filings and by authorizing the director to accept such filings on its behalf, provided that nothing contained in section 379.017 and sections 379.316 to 379.361 shall be construed as requiring any insurer to become a member of or a subscriber to any rating organization or as requiring any member or subscriber to authorize the director to accept such filings on its behalf. Filing with the director by such insurer or licensed rating organization within ten days after such manuals, rating plans or modifications thereof or policies or forms are effective shall be sufficient compliance with this section.
2. Except as to commercial property or commercial casualty insurance as provided in subsection 6 of this section [and as to contracts or policies for inland marine risks as to which filings are not required], no insurer shall make or issue a policy or contract except pursuant to filings which are in effect for that insurer or pursuant to section 379.017 and sections 379.316 to 379.361. Any rates, rating plans, rules, classifications or systems, in effect on August 13, 1972, shall be continued in effect until withdrawn by the insurer or rating organization which filed them.
3. Upon the written application of the insured, stating his or her reasons therefor, filed with the insurer, a rate in excess of that provided by a filing otherwise applicable may be used on any specific risk.
4. Every insurer which is a member of or a subscriber to a rating organization shall be deemed to have authorized the director to accept on its behalf all filings made by the rating organization which are within the scope of its membership or subscribership, provided:
(1) That any subscriber may withdraw or terminate such authorization, either generally or for individual filings, by written notice to the director and to the rating organization and may then make its own independent filings for any kinds of insurance, or subdivisions, or classes of risks, or parts or combinations of any of the foregoing, with respect to which it has withdrawn or terminated such authorization, or may request the rating organization, within its discretion, to make any such filing on an agency basis solely on behalf of the requesting subscriber; and
(2) That any member may proceed in the same manner as a subscriber unless the rating organization shall have adopted a rule, with the approval of the director:
(a) Requiring a member, before making an independent filing, first to request the rating organization to make such filing on its behalf and requiring the rating organization, within thirty days after receipt of such request, either:
a. To make such filing as a rating organization filing;
b. To make such filing on an agency basis solely on behalf of the requesting member; or
c. To decline the request of such member; and
(b) Excluding from membership any insurer which elects to make any filing wholly independently of the rating organization.
5. Any change in a filing made pursuant to this section during the first six months of the date such filing becomes effective shall be approved or disapproved by the director within ten days following the director's receipt of notice of such proposed change.
6. [Commercial property and commercial casualty insurance policies which meet the exemption requirements of section 379.362 shall adhere to the filing requirements of this section, provided however, that the filings for such policies shall be for informational purposes only. Therefore, all manuals of classifications, rules, underwriting rules, rates, rate plans and modifications, policy forms and other forms to which such rates are applied, shall be filed with the director for policies which meet the exemption requirements of section 379.362. Such filings shall be made with the director within thirty days after such materials are used by the insurer, but such policies and rates need not be reviewed or approved by the department of insurance as a condition of their use. Nothing in this subsection shall require the filing of individual policies or the rates related thereto where the original policy forms, manuals, rates and rules for the insurance plan or program to which such individual policies conform have already been filed with the director.] Commercial property and commercial casualty requirements differ as follows:
(1) All commercial property and commercial casualty insurance rates, rate plans, modifications, and manuals of classifications, where appropriate, shall be filed with the director for informational purposes only. Such rates are not to be reviewed or approved by the department of insurance as a condition of their use. Nothing in this subsection shall require the filing of individual rates where the original manuals, rates and rules for the insurance plan or program to which such individual policies conform have already been filed with the director;
(2) If an insurer will only renew a commercial casualty or commercial property insurance policy with an increase in premium or deductible of twenty-five percent or more, a "premium alteration requiring notification" notice must be mailed or delivered by the insurer at least sixty days prior to the expiration date of the policy. Such notice shall be directed to the agent of record and to the named insured at the address shown in the policy. If the insurer fails to meet this notice requirement, the insured shall have the option of continuing the policy for the remainder of the notice period plus an additional thirty days at the premium rate of the existing policy or contract. This provision does not apply if the insurer has offered to renew a policy without such an increase in premium or if the insured fails to pay a premium due or any advance premium required by the insurer for renewal. For purposes of this section, "premium alteration requiring notification" means an increase in premium of twenty-five percent or more or an increase in the deductible of twenty-five percent or more. For commercial multiperil policies, no "premium alteration requiring notification" shall be required unless the increase in premium or deductible for all of a policyholder's policies taken together amounts to a twenty-five percent annual increase in premium;
(3) Commercial property and commercial casualty policy forms shall be filed with the director as provided pursuant to subsection 1 of this section. However, if after review, it is determined that corrective action must be taken to modify the filed forms, the director shall impose such corrective action on a prospective basis. All policyholders with previously issued forms subject to such corrective action shall be deemed to have coverage enhancements retroactive to their inception date;
(4) For purposes of this section, "commercial casualty" means "commercial casualty insurance" as defined in section 379.882. For purposes of this section, "commercial property" means insurance, which is for business and professional interests, whether for profit, nonprofit or public in nature, on real property of every kind and cause, and against loss consequential upon the loss or damage, other than noncontractural legal liability for loss or damage, and does not include title insurance;
(5) Nothing in this subsection shall limit the director's authority over excessive, inadequate or unfairly discriminatory rates.
379.425. [1.] Sections 379.420 to 379.510 apply to casualty insurance, including fidelity, surety and guaranty bonds, and to all forms of motor vehicle insurance, on risks or operations in this state, except:
(1) Reinsurance, other than joint reinsurance to the extent stated in section 379.460 and subsection 2 of section 379.430;
(2) Insurance against workers' compensation liability;
(3) Accident and health insurance;
(4) Insurance against loss of or damage to aircraft, or against liability, other than employers' liability, arising out of the ownership, maintenance or use of aircraft.
[2. Commercial casualty insurance policies which meet the exemption requirements of section 379.362 shall be exempt from those insurance laws of this state which concern the regulation by the director of insurance of the policy language, policy provisions or the format of such policies, or regulation of the rates used to calculate the amount of premium charged.]
379.888. 1. As used in sections 379.888 to 379.893, the following terms mean:
(1) "'A' rated risk", any insurance coverage for which rates are individually determined based upon judgment because neither a rate service organization nor the insurer has yet established a manual rate based upon experience, except that if a rate service organization or the insurer acquires sufficient experience to establish, or if the insurer itself has, a manual rate for such coverage, then such coverage shall no longer be considered an "A" rated risk for each insurer;
(2) "Base rate", the rate designed to reflect the average aggregate experience of a particular market, prior to adjustment for individual risk characteristics resulting from application of any rating plan;
(3) "Classification", a grouping of insurance risks according to a classification system used by an insurer;
(4) "Classification system", a schedule of classifications and a rule or set of rules used by an insurer for determining the classification applicable to an insured;
(5) "Commercial casualty insurance", casualty insurance for business or nonprofit interests which is not for personal, family, or household purposes;
(6) "Director", the director of the department of insurance;
(7) "Rate", a monetary amount applied to the units of exposure basis assigned to a classification and used by an insurer to determine the premium for an insured;
(8) "Rating plan", a rule or set of rules used by an insurer to calculate premium for an insured, and the parameter values used in such calculation, after application of classification premium rates to units of exposure; and
(9) "Rating system", a collection of rating plans to be used by an insurer, rules for determining which rating plans are applicable to an insured, a classification system, and other rules used by an insurer for determining contractual consideration for insured.
2. [Every filing of commercial casualty insurance premium rates, rating plans or rating systems by an insurer or rating organization shall be submitted to the director for review prior to becoming effective if it produces an increase or decrease exceeding twenty-five percent annually from changes in any:
(1) Base rates;
(2) Rating basis;
(3) Rating plans;
(4) Manual rules;
(5) Territorial definitions; or
(6) Combination of such rating system components of subdivisions (1) to (5) of this subsection.
3.] Nothing in this section applies to premium increases or decreases from:
(1) Change in hazard of the insured's operation;
(2) Change in magnitude of the exposure basis for the insured, including, without limitation, changes in payroll or sales;
(3) "A" rated risks[; or
(4) Commercial casualty insurance that is exempt pursuant to section 379.362].
[4.] 3. Any renewal notice of a commercial casualty insurance policy as defined in section 379.882 for any Missouri risk or portion thereof which would have the effect of increasing the premium charged to the insured due to a change in any scheduled rating factor applied to the policy during the previous policy period shall contain or be accompanied by a notice to the insured informing the insured that any inquiry by the insured concerning the change may be directed to the agent of record or directly to the insurer. When any insured makes a request for information pursuant to this subsection, the insurer, directly or through the insurer's agent, shall inform the insured in writing in terms sufficiently clear and specific of the basis for any reduction in a scheduled rating credit or increase in a scheduled rating debit which is applied to the policy. Evidence supporting the basis for any scheduled rating credit or debit shall be retained by the insurer for the policy term plus two calendar years pursuant to section 374.205, RSMo. The department of insurance shall notify commercial casualty insurers of the requirements of this section by bulletin.
4. Any renewal involving a "premium alteration requiring notification" as defined in subsection 6 of section 379.321, shall be handled pursuant to the requirements of this subsection.
[379.362. 1. Commercial property insurance and commercial casualty insurance policies shall be exempt from those provisions of sections 379.316 to 379.361, sections 379.420 to 379.510 and section 379.888 which concern regulation by the department of policy language, policy provisions or the format of such policies, or the rates associated with such policies, for any policy for which the policyholder certifies in writing, on a certification form approved by the department, that the policyholder understands that the policy's language or the policy's rating is unregulated by the department and that the requirements of either subdivision (1) or subdivision (2) below are met:
(1) The policyholder has utilized the services of the independent insurance adviser. For purposes of this section, the term "independent insurance adviser" means a person who is qualified through education, training or experience to assess the purchaser's insurance needs and analyze the policy with or on behalf of the policyholder. Such an insurance adviser may be an employee of the policyholder or a person retained by the purchaser, provided that the independent insurance adviser shall not also be an employee of the insurer. Such an independent insurance adviser shall only be compensated for services related to the insurance transaction in question by the policyholder; or
(2) The policyholder's commercial operations meet any two of the following criteria:
(a) One hundred or more employees;
(b) A net worth of over twenty-five million dollars;
(c) Net revenues or sales of over fifty million dollars;
(d) Paid aggregate annual commercial insurance premiums of over fifty thousand dollars, excluding workers' compensation and employer's liability insurance;
(e) Is a not-for-profit or public entity with an annual budget or assets of at least twenty-five million dollars; or
(f) Is a municipality with a population of over fifty thousand inhabitants.
2. An insurer writing a commercial property or commercial casualty insurance policy pursuant to subsection 1 of this section shall retain a copy of the policyholder's written certification as part of the insurer's policy records of the transaction.
3. Nothing contained in subsection 1 of this section shall be construed as exempting commercial property or commercial casualty policies which meet the requirements of subsection 1 of this section from any regulatory authority of the director of the department of insurance other than that authority related to the oversight of the policy language, policy provisions or the format of policies, or of the rates used to calculate the amount of premium charged. In particular, nothing contained in subsection 1 of this section shall limit the director's authority over excessive, inadequate or unfairly discriminatory rates.
4. The director may, by rule, require insurers providing coverage pursuant to subsection 1 of this section to retain information in such insurer's files identifying the policies providing such coverage, and to report to the department aggregate data regarding the types of such coverage written and the amounts charged for such coverage.
5. Notwithstanding the provisions of section 384.017, RSMo, commercial property or commercial casualty insurance
meeting the requirements of subsection 1 of this section may be procured through a surplus lines licensee from an eligible
surplus lines insurer even though the same type of coverage or quality of service is obtainable in the market from admitted
insurers.]
Missouri House of
Representatives