HCS HB 777 -- REGULATION OF INSURANCE

SPONSOR:  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 insurance regulation.

INSURANCE IDENTIFICATION CARDS (Section 303.024, RSMo)

The crime of knowingly or intentionally producing, manufacturing,
selling, or distributing a fraudulent insurance identification
card is created, a class D felony.  Any person who knowingly or
intentionally possesses a fraudulent insurance identification
card will be guilty of a class B misdemeanor.

WRECKER AND TOWING SERVICES (Sections 304.143 - 304.157)

The substitute establishes provisions regarding the licensure of
operators and employees of wrecker and towing service companies.
In its main provisions, the substitute:

(1)  Requires towing companies and their employees to be licensed
by the Missouri Public Service Commission;

(2)  Requires a company to prominently display its state license
on both sides of all its wreckers;

(3)  Requires licensees to maintain liability insurance in the
amount of at least $750,000 with a deductible not greater than
$1,000 per occurrence;

(4)  Requires a licensee to pay a $200 initial licensing fee,
renewable annually on December 31 for a $100 fee;

(5)  Authorizes the commission to cancel, suspend, revoke, or
refuse to issue or renew a license;

(6)  Requires a licensee to make provisions for Internet access
if a statewide abandoned vehicle database is established;

(7)  Creates the Wrecker License Administration Fund to be used
for the administration of the provisions of the substitute;

(8)  Prohibits licensees from towing a damaged or disabled
vehicle without specific authorization from the owner or
operator;

(9)  Requires a licensee to provide the owner or operator of a
vehicle it has towed with a written disclosure stating the formal
name of the business, address, telephone number, address of the
vehicle's location, all costs and fees, and an itemized
description of the vehicle owner's or operator's rights;

(10)  Requires licensees to maintain a copy of the completed
disclosure records for at least five years;

(11)  Requires all vehicle storage facilities to prominently
display a readily visible sign explaining customer rights;

(12)  Prohibits a licensee from having any clause in its towing
contract that waives or limits liability;

(13)  Requires a licensee, upon towing an abandoned vehicle, to
report the activity to a law enforcement agency if the licensee
does not have access to the Department of Revenue's online
records;

(14)  Requires a licensee to maintain consistent storage rates on
vehicles and not to differ based on whether the owner has
insurance covering the charges; and

(15)  Requires a licensee who tows an abandoned vehicle without
authorization from a law enforcement agency to enter the
appropriate information on the statewide abandoned vehicle
database.

BAIL BOND AGENTS (Sections 374.702 - 374.755)

Beginning August 28, 2009, the substitute requires a person
licensed as an active bail bond agent to hold that license for a
period of at least four years prior to owning or being an officer
of a licensed general bail bond agent.  When applying for license
renewal, a general bail bond agent licensed prior to August 28,
2009, must have completed at least two years as a bail bond agent
and possess at least $10,000 in liquid assets along with an
executed assignment of $10,000 to the state.  For a general bail
bond agent licensed on or after August 28, 2009, he or she must
have completed four years as a bail bond agent and possess
$50,000 in liquid assets along with an executed assignment of
$50,000 to the state.  In addition, the general bail bond agent
must execute an assignment of $5,000 for each bail bond agent
licensed under his or her authority on or after August 28, 2009.

The substitute also removes the provision allowing a person to
apply for licensure as a bail bond agent after 15 years from a
final adjudication or plea of guilty or nolo contendere in a
criminal prosecution.

AUDITED FINANCIAL REPORTS OF CERTAIN INSURERS (Sections
375.1025 - 375.1057)

The substitute changes the laws regarding audited financial
reports for certain insurers.  In its main provisions, the
substitute:

(1)  Exempts insurers with less than $1 million in direct
premiums written in Missouri and less than 1,000 policy or
certificate holders nationwide in a calendar year from the
financial report auditing requirements unless the Director of the
Department of Insurance, Financial Institutions and Professional
Registration finds that the audit is necessary;

(2)  Exempts foreign or alien insurers from filing a report of
internal control over financial reporting when the insurer has
filed a substantially similar report in another state;

(3)  Specifies that a similar 30-day extension is granted for the
filing of the management's report of internal control over
financial reporting when insurers have been granted an extension
of the June 1 filing date for audit reports;

(4)  Requires certain insurers to designate a group of
individuals as its audit committee;

(5)  Changes the content requirements for the financial report;

(6)  Adds several provisions regarding the qualifications of
certified public accountants for insurers' annual audited
financial reports;

(7)  Specifies that insurers can apply, in writing, to the
department director for permission to file audited combined
financial statements in certain situations;

(8)  Removes the statement of liability insurance coverage from
the required contents of the accountant's letter;

(9)  Requires the accountant to have an understanding of the
internal control of the insurer to plan the audit;

(10)  Requires insurers to provide the department director with a
written communication of any unresolved material weaknesses in
its internal control over financial reporting noted during the
audit and the completed or proposed actions to correct them,
unless the actions have been described in the accountant's
communication;

(11)  Establishes the membership requirements and functions of
audit committees;

(12)  Specifies that false or misleading statements to an
accountant in connection with any audit, review, or required
communication will be considered a level three violation under
Section 374.049; and

(13)  Requires certain insurers to file a report of internal
control over financial reporting and establishes the requirements
for these reports.

GROUP HEALTH INSURANCE COVERAGE AFTER TERMINATION OF EMPLOYMENT
(Section 376.428)

The substitute requires group policies by a health carrier or
health benefit plan to comply with the federal Consolidated
Omnibus Budget Reconciliation Act (COBRA) provisions regarding
the continuation of group health insurance coverage to an
individual who has terminated employment or membership.

LIFE INSURANCE (Section 376.502)

Life insurance companies are prohibited from denying or refusing
to accept an application for life insurance; refusing to renew,
cancelling, restricting, or terminating a life insurance policy;
or charging a different rate for life insurance based on the
applicant's past or future lawful travel destinations unless it
is based on sound actuarial principles or an anticipated
experience.  A violation of these provisions will be considered
an unfair trade practice and subject to penalties specified in
Sections 375.930 - 375.948.  The provisions of the substitute
apply to any life insurance policy issued or renewed on or after
August 28, 2009.

CAPTIVE INSURANCE COMPANIES (Sections 379.1300 - 379.1412)

This substitute changes the laws regarding captive insurance
companies and allows an association captive insurance company or
an industrial insured captive insurance company to be organized
as a reciprocal insurer.  It its main provisions, the substitute:

(1)  Requires the captive insurance company's subscribers'
advisory committee to meet at least once a year;

(2)  Removes the requirement that a captive insurance company
hold at least 35% of its assets in Missouri;

(3)  Requires organizers of a reciprocal insurer to petition the
Director of the Department of Insurance, Financial Institutions
and Professional Registration to issue a certificate finding that
the proposed association will promote the general good of the
state;

(4)  Specifies that the captive insurance company statutes will
control in cases where there is a conflict between them and the
reciprocal insurance statutes;

(5)  Requires the State Treasurer to deposit 90% of the premium
taxes collected from captive insurance companies and special
purpose life reinsurance captive (SPLRC) companies into the
General Revenue Fund and 10% into the Insurance Dedicated Fund,
subject to a maximum of 3% of the current fiscal year's
appropriation from the fund;

(6)  Allows an association captive insurance company or an
industrial insured captive insurance company to be converted to
or merged with and into a reciprocal insurer and specifies the
requirements and procedures for the conversion or merger plan;

(7)  Reduces from two to one the number of Missouri residents
required to incorporate or organize a SPLRC; and

(8)  Changes the way in which the assets of a SPLRC are valued.

The provisions regarding group health insurance coverage after
termination of employment contain an emergency clause.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of At least
$299,447 in FY 2010, Could exceed $359,807 in FY 2011, and Could
exceed $374,747 in FY 2012.  Estimated Income on Other State
Funds of At least $11,821 in FY 2010, FY 2011, and FY 2012.

PROPONENTS:  Supporters say that the bill is necessary to be in
compliance with the National Association of Insurance
Commissioners and failure to maintain this status will subject
Missouri insurance companies to stricter regulations from other
states.

Testifying for the bill were Representative Yates; Department of
Insurance, Financial Institutions and Professional Registration;
and Reinsurance Association of America.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:25 am