HB 559 -- INSURANCE BONDS

SPONSOR:  Richard

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 19 to 0.

This bill repeals the bond requirement to acquire a license to
sell surplus lines of insurance.

FISCAL NOTE:  Estimated Net Reduction of General Revenue Fund of
Unknown in FY 2004, FY 2005, and FY 2006.  Estimated Net Loss to
County Foreign Insurance Fund of Unknown in FY 2004, FY 2005, and
FY 2006.

PROPONENTS:  Supporters say that the bill will make the state
compliant with federal law requiring uniformity and reciprocity
among the states in this area.  Under current law, insurance
agents located outside the state do not have to secure a bond to
sell surplus lines of insurance, while agents within the state
are required to purchase a bond.  This puts agents in Missouri at
a competitive disadvantage.  Currently, 38 states do not require
a bond.

Testifying for the bill were Representative Richard; Independent
Insurance Brokers and Agents of Missouri; and Missouri Insurance
Coalition.

OPPONENTS:  Those who oppose the bill say that surplus lines are,
by definition, unusual lines of insurance and the insurance
producer might not be registered with the Department of
Insurance.  The bond is simply security on the taxes that will be
owed by the agent.  It is evident that this is necessary, given
that the legislature increased the amount of this bond
requirement just a few years ago.

Testifying against the bill was American Insurance Association.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:12 am