HB 1904 -- MISSOURI LIFE AND HEALTH INSURANCE GUARANTY
ASSOCIATION ACT

SPONSOR:  Wilson (130)

COMMITTEE ACTION:  Voted "do pass by consent" by the Committee on
Insurance Policy by a vote of 11 to 0.

This bill changes the laws regarding the Missouri Life and Health
Insurance Guaranty Association Act to make it consistent with the
model act adopted by the National Association of Insurance
Commissioners.  In its main provisions, the bill:

(1)  Clarifies that structured settlement annuities are covered
by the guaranty association and are subject to a cap of $250,000
and specifies the rules for determining how the responsibility
for coverage of these types of annuities is allocated among state
guaranty associations (Section 376.717.1(3), RSMo);

(2)  Expands the list of areas in which the guaranty association
will not provide coverage including:

(a)  Any portion of a policy or contract to the extent that the
required assessments are preempted by federal or state law;

(b)  An obligation that does not arise under the express written
terms of the policy or contract issued by the insolvent insurer;

(c)  Certain contracts which establish benefits by reference to a
portfolio of assets not owned by the insurer;

(d)  An unallocated annuity contract;

(e)  Certain types of indexed policies; and

(f)  A policy providing any hospital, medical, prescription drug,
or other health care benefits pursuant to Part C or Part D of
Subchapter XVIII, Chapter 7 of Title 42 of the United States
Code, commonly known as Medicare Part C & D, or any of its
regulations (Section 376.717.3(7)-(12));

(3)  Increases the coverage limits on certain insurance policies
in which the guaranty association will become obligated to pay.
Coverage limits are increased from $100,000 to $300,000 for
disability insurance and long-term care insurance and to $500,000
for basic hospital, medical, and surgical insurance and major
medical insurance.  Currently, limits on long-term care policies
are not specified in statute.  The guaranty association will pay
no more than $250,000 in the present value of annuity benefits,
including the net cash surrender and net cash withdrawal value
and no more than $250,000 in the present value per payee with
respect to a structured settlement annuity benefit, in the
aggregate, including the net cash surrender and net cash
withdrawal values.  A $5 million cap on benefits is added for
corporate-owned life insurance policies with a recommendation
that coverage for a corporation purchasing these policies should
be capped at $5 million regardless of the number of policies and
contracts held by the owner (Section 376.717.5);

(4)  Defines the "principal place of business" of a corporation
for the purpose of applying the residency test that determines
which state guaranty association has coverage responsibility
(Section 376.718);

(5)  Makes several technical changes regarding:

(a)  The guaranty association's options in providing coverage
(Section 376.724);

(b)  The handling of terminated policies (Section 376.725);

(c)  The guaranty association's standing to appear or intervene
in litigation (Section 376.732);

(d)  The guaranty association's assignment and subrogation rights
(Section 376.733);

(e)  The guaranty association's general powers and the handling
of reinsurance contracts (Section 376.734);

(f)  The handling of assessments of insurers to fund the guaranty
association's operations (Sections 376.735 and 376.737); and

(g)  Additional requirements for the association's plan of
operation (Section 376.740); and

(6)  Exempts any member insurer who is impaired or insolvent
prior to August 28, 2010, from the provisions of the bill
(Section 376.758.3).

FISCAL NOTE:  No impact on state funds in FY 2011, FY 2012, and
FY 2013.

PROPONENTS:  Supporters say that the bill will increase the
guaranteed insurance amount that the Missouri Life and Health
Insurance Guaranty Association will guarantee to be consistent
with the National Association of Insurance Commissioners (NAIC)
model act.  These amounts have not been increased since 1988.
When an insurance company goes out of business, the guarantee
association takes over to cover the policies.

Testifying for the bill were Representative Wilson (130);
Missouri Life and Health Insurance Guaranty Association; and Life
Insurance Association of Missouri.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:12 pm