HCS SB 325 -- LIFE INSURANCE CONTRACTS AND PRODUCER EXAMINATIONS

SPONSOR:  Loudon (Yates)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Insurance
Policy by a vote of 12 to 0.

This substitute changes the laws regarding the enforcement and
regulatory powers of the Department of Insurance, Financial
Institutions, and Professional Registration; life insurance
policies; discount medical plans; bail bond agents; and insurance
company examinations.

DEPARTMENT OF INSURANCE, FINANCIAL INSTITUTIONS, AND PROFESSIONAL
REGISTRATION

The substitute:

(1)  Synchronizes the penalties, administrative orders, civil
actions, and other remedies available to the department director;

(2)  Allows the department director, upon determining that a
person has violated or attempted to violate provisions of the
insurance laws, to:

(a)  Issue an order directing the person to cease and desist from
engaging in the act, practice, omission, or course of business;

(b)  Issue a curative order or an order directing the person to
take other action necessary to comply with insurance laws;

(c)  Order a civil penalty or forfeiture; or

(d)  Award reasonable costs of the investigation;

(3)  Allows the department director to suspend or revoke a
corporation's or insurer's certificate of authority for violating
insurance laws or for a felony or misdemeanor conviction.  The
department director must provide 30 days' notice and a hearing,
if requested, before revocation;

(4)  Removes the department director's authority to suspend a
prepaid dental corporation's certificate of authority if it
issues a contract without prior approval;

(5)  Allows any applicant who is refused a license to sell
insurance to file a petition with the Administrative Hearing
Commission.  The department director will retain discretion in
refusing or renewing a license;

(6)  Authorizes the department director to consult and share
information with other members of the National Association of
Insurance Commissioners, the Commissioner of Securities within
the Office of the Secretary of State, state securities
regulators, the Division of Finance and the Division of Credit
Unions within the department, the Attorney General, federal
banking and securities regulators, the National Association of
Securities Dealers (NASD), the United States Department of
Justice, the Commodity Futures Trading Commission, and the
Federal Trade Commission to effectuate greater uniformity in
insurance and financial services regulation among state and
federal governments and self-regulatory organizations.  The
cooperation, coordination, consultation, and sharing of records
and information authorized by the substitute include:

(a)  Establishing or employing one or more designees as a central
electronic depository for licensing and rate and form filings
with the department director and for records required or allowed
to be maintained;

(b)  Encouraging insurance companies and producers to implement
electronic filing through a central electronic depository;

(c)  Developing and maintaining uniform forms;

(d)  Conducting joint market conduct examinations and other
investigations through collaboration and cooperation with other
insurance regulators;

(e)  Holding joint administrative hearings;

(f)  Instituting and prosecuting joint civil or administrative
enforcement proceedings; and

(g)  Sharing and exchanging personnel;

(7)  Changes the laws regarding falsely testifying in insurance
investigations and prohibits an individual from knowingly making
a false statement under oath or affirmation in any record
submitted to the department director.  Knowingly making false
statements or making false entries on a document will be a class
D felony;

(8)  Allows the department director to seek an order to enforce
compliance if a person refuses to testify, file statements, or
produce records.  Persons are not excused from testifying or
producing records based on the grounds that the testimony or
records may tend to incriminate them.  In this case, the
department director may seek a court order to compel the
testimony or production of records, and the testimony or records
may not be used as evidence in a criminal case; and

(9)  Allows the department director to adopt rules to specify
uniform disclosure of material information on insurance policy
forms.

LIFE INSURANCE

The substitute:

(1)  Requires insurance producers, beginning January 1, 2008, to
complete 24 hours of continuing education every two years; and

(2)  Excludes life insurance coverage for suicide for one year
after the issuance of the policy.

DISCOUNT MEDICAL PLANS

The substitute:

(1)  Defines "discount medical plan" as a business arrangement in
which a discount medical plan organization (DMPO), in exchange
for compensation, provides access for plan members to medical
service providers at a discount;

(2)  Requires a DMPO to register with the department director and
pay an application fee of $250.  The organization must be a legal
entity organized under the laws of this state or authorized to
transact business in this state;

(3)  Allows the department director to examine the business
affairs of a DMPO;

(4)  Allows a DMPO to charge reasonable fees as long as the fees
are disclosed to the applicant.  Members have a 30-day, free-look
period on memberships;

(5)  Prohibits a DMPO from disseminating information that could
mislead a person to think that the plan is for health insurance;

(6)  Prohibits the restriction of access to providers including
waiting and notification periods.  A DMPO cannot collect or pay
fees for medical services unless it is licensed by the department
director to act as an administrator;

(7)  Requires a DMPO to maintain a net worth of at least
$150,000;

(8)  Requires notification to the department director at least 30
days prior to changing the organization's name or address;

(9)  Requires a DMPO to maintain a surety bond with the
department director of at least $35,000, for use by the
department director in protecting plan members; and

(10)  Allows the department director to deny or revoke the
registration of an applicant for material misstatements,
misrepresentation, or fraud.  The applicant can request an appeal
hearing.  The department director is authorized to issue
administrative orders and maintain civil actions against a DMPO
that is in violation of these provisions.

BAIL BOND AGENTS

The substitute:

(1)  Requires the department to notify any bail bond agent who is
listed as having a forfeited bond;

(2)  Requires all licenses issued to bail bond agents to include
a photograph of the licensee;

(3)  Requires all bail bond agents to provide the department with
the name, address, and telephone number of each employer for whom
they work or contract with;

(4)  Requires any newly appointed surety bail bond agent to file
an affidavit with the department stating that all forfeitures or
judgments on previously written bonds have been satisfied;

(5)  Requires all applicants for licensure to be fingerprinted
and have a criminal background check;

(6)  Authorizes the department to have a cause of action brought
against a licensee who has been found guilty of a dangerous
felony or has filed bankruptcy as an owner of a bail bond
business;

(7)  Allows bail bond agents to write bonds in municipal or
circuit courts if the general bail bond agent who employs them is
qualified to write bonds in these courts; and

(8)  Requires any bail bond agent arrested for a felony to notify
the department of the arrest within 10 days.

INSURANCE COMPANY EXAMINATIONS

The substitute revises the fee schedules for health services
corporations, health maintenance organizations, and insurance
companies and for certain document filing fees paid by these
organizations.  Assessments made against insurance companies for
examination purposes will include:

(1)  The cost of compensation, including benefits, for the
examiners, analysts, actuaries, and attorneys contributing to the
examination of the company;

(2)  Reasonable travel, lodging, and meal expenses for an on-site
examination; and

(3)  Other expenses of the examination.

The department director must pay these expenses from the
Insurance Examiners Fund, and the Insurance Dedicated Fund may be
used for the regulation of the business of insurance and the
operation of the Division of Consumer Affairs.

All domestic insurance companies subject to orders of
conservation, rehabilitation, or liquidation must reimburse the
Insurance Dedicated Fund for administrative services rendered by
state employees to the company.

Provisions regarding the Insurance Examiner's Sick Leave Fund are
repealed.

FISCAL NOTE:  Estimated Income on General Revenue Fund of Unknown
less than $311,530 in FY 2008, FY 2009, and FY 2010.  Estimated
Cost on Other State Funds of $493,147 in FY 2008, $528,397 in
FY 2009, and $528,397 in FY 2010.

PROPONENTS:  Supporters say that the bill will allow insurers to
make a one-year suicide exclusion on life insurance policies.

Testifying for the bill were Senator Loudon; Missouri Insurance
Coalition; American Council of Life Insurers; Life Insurance
Association of Missouri; and Prudential.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
94th General Assembly, 1st Regular Session
Last Updated July 25, 2007 at 11:22 am