SCS SB 1235 -- INSURER LIQUIDATION

SPONSOR:  Loudon (Luetkemeyer)

COMMITTEE ACTION:  Voted "do pass by consent" by the Committee on
Financial Services by a vote of 20 to 0.

Current law requires the Director of the Department of Insurance
to disallow as an asset or deduction from liability any credit
for reinsurance unless the reinsurance is payable to the ceding
company and to its receiver if the ceding company is impaired or
insolvent.  This substitute removes the requirement that the
ceding company be impaired.

The substitute prohibits any setoff when the obligations between
the person and the insurer arise from reinsurance relationships
resulting in business where either the person or the insurer has
assumed risks and obligations from the other party and has ceded
back substantially the same risks and obligations.

The substitute removes the December 31, 2005, sunset clause on
two provisions of Section 375.1220, RSMo, which allow an
estimation of contingent liabilities to be used to correct
creditors' claims during the liquidation process.  Expert
testimony concerning estimates of incurred but not reported
losses may be received into evidence if otherwise admissible in
any tribunal proceeding by the receiver or the reinsurer.

FISCAL NOTE:  No impact on state funds in FY 2005, FY 2006, and
FY 2007.

PROPONENTS:  Supporters say that the bill makes technical
corrections to the liquidation process and the Department of
Insurance's accounting methods regarding reinsurance.  The bill
will make Missouri consistent with a majority of the states.

Testifying for the bill were Senator Loudon; and Reinsurance
Association of America.

OPPONENTS:  There was no opposition voiced to the committee.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
92nd General Assembly, 2nd Regular Session
Last Updated September 23, 2004 at 11:16 am