SCS HB 1568 -- INSURANCE

This bill revises the law governing long-term care insurance,
reinsurance, investments that insurance companies may make, and
annuities.

In its provisions regarding the Long-term Care Insurance Act, the
bill:

(1)  Clarifies that the term "long-term care insurance" includes
any insurance policy that meets the requirements of a "qualified
long-term care insurance contract," as defined in Section 7702B
of the Internal Revenue Code, and requires the issuer of a long-
term care contract to state clearly in its enrollment materials
whether the contract is intended to be tax-qualified;

(2)  Requires the issuer to deliver the certificate of insurance
to the applicant no later than 30 days after the date of
approval;

(3)  Requires that the summary for a long-term care policy state
whether a long-term care inflation protection option is available
under the policy;

(4)  Requires issuers to provide a written explanation for a
denial of coverage within 60 days of receiving a written request
for an explanation from the applicant.  The issuer must provide
all information directly related to the denial;

(5)  Allows insurers to rescind long-term care contracts upon a
showing of misrepresentation.  The degree of misrepresentation
that must be proven will vary, depending on the length of time
the policy has been in effect;

(6)  Prohibits long-term care contracts from being "field issued"
based on medical or health status;

(7)  Prohibits an insurer from recovering benefits paid to the
policy holder when the issuer rescinds the policy;

(8)  Requires insurers to offer a policy that includes a
nonforfeiture benefit.  If that benefit is declined, the issuer
must then offer a contingent benefit upon lapse that will be
available for a specified period of time following a substantial
increase in premium rates;

(9)  Requires the Department of Insurance to promulgate rules
creating the standards for nonforfeiture benefits, contingent
benefits upon lapse, the length of time these benefits must run,
and the extent to which premiums may be increased; and

(10)  Requires the department to promulgate rules regarding
marketing practices, agent testing, penalties, and reporting
practices for long-term care insurance.

In its provision regarding reinsurance, the bill:

(1)  Allows a reduction of a reinsurer's obligation to the
insurer's estate when the reinsurance contract specifically
provides for payment to a named insured or when another insurer
directly assumes the ceding insurer's policy with the consent of
the insured.  Any payments made at the direction of the guaranty
association discharges the reinsurer of all further liability to
any other parties;

(2)  Revises the method in which reinsurance is allowed to be
counted as an asset or deduction from liability; and

(3)  Exempts from the vexatious refusal to pay statute any
lawsuits arising out of a contract of reinsurance made by a
ceding insurer against an assuming insurer.

In its provision regarding investments, the bill:

(1)  Limits insurance companies' investments in real estate.  The
value of the real estate purchased cannot exceed 20% of the
insurance company's capital and surplus as shown by its last
annual statement;

(2)  Allows business entities affiliated with insurers to be
qualified managers of investment pools; and

(3)  Allows insurance companies to invest in a Missouri tax
credit certificate or a partnership interest in such a
certificate if it may be used as a credit against their gross
premium tax.

The bill also modifies the law with respect to annuity contracts.
For contracts issued before July 1, 2004, the interest rate used
in determining minimum forfeiture amounts will be 1.5% per annum.

Missouri House of Representatives
Last Updated October 11, 2002 at 9:01 am