HCS SCS SB 583 -- INSURANCE REGULATION

SPONSOR:  Champion (Hobbs)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Insurance
Policy by a vote of 8 to 0.

This substitute changes the laws regarding insurance regulation.

TRAILER DEALER LIABILITY INSURANCE (Section 301.560, RSMo)

Currently, a trailer dealer is required to provide a copy of a
current dealer garage liability insurance policy when submitting
his or her licensure application.  The substitute removes this
requirement.

NONRESIDENT MOTORIST FINANCIAL RESPONSIBILITY (Sections 303.025
and 303.040)

A nonresident motorist operating a vehicle within the state is
required to maintain financial responsibility that meets the
requirements of his or her state.  If a nonresident motorist is
found guilty of not maintaining financial responsibility, he or
she will have his or her driving privileges suspended in Missouri
and the Director of the Department of Revenue must notify the
appropriate official of his or her state.

An uninsured nonresident motorist involved in an accident in this
state and the responding law enforcement must notify the
department director of the accident, and any resident motorist
involved in an accident with an uninsured nonresident motorist
may report it to the department director.

HEALTH INSURANCE COVERAGE FOR AUTISM SPECTRUM DISORDER (Sections
337.300 - 337.345 and 376.1224)

The substitute establishes provisions regarding the diagnosis and
treatment of autism spectrum disorders (ASD).  The substitute:

(1)  Establishes the Behavior Analyst Advisory Board under the
State Committee of Psychologists within the Department of
Insurance, Financial Institutions and Professional Registration
to establish licensure and registration requirements for behavior
analysts, assistant behavior analysts, and line therapists who
provide applied behavior analysis therapies to children with ASD;

(2)  Requires all group health benefit plans that are delivered,
issued, continued, or renewed on or after January 1, 2011,
written inside or outside the state, to provide coverage for the
diagnosis and treatment of ASD;

(3)  Requires the department director to grant a small employer
who offers a group health plan a waiver from offering ASD
coverage if the employer demonstrates by actual experience over
any consecutive 12-month period that the cost of providing the
coverage has resulted in at least a 2.5% increase in health plan
premium costs to the employer over a calendar year;

(4)  Prohibits carriers from denying or refusing to issue
insurance coverage on, refusing to contract with, refusing to
renew or reissue coverage on, or terminating or restricting
coverage on an individual or his or her dependent because the
individual is diagnosed with ASD;

(5)  Limits the coverage provided by an insurance carrier for ASD
to medically necessary treatment that is ordered by the insured
individual's licensed treating physician or psychologist in
accordance with a treatment plan.  An ASD treatment plan must
include all elements necessary for a health benefit plan or
carrier to pay the claim.  Except for inpatient services, the
health benefit plan or carrier can review, at its expense, the
treatment plan not more than once every three months unless the
individual's treating physician or psychologist agrees that a
more frequent review is necessary;

(6)  Specifies that coverage for individuals younger than 19
years of age for the applied behavior analysis (ABA) services
will have a maximum benefit of $36,000 per year with no limit on
the number of visits to an ASD service provider.  No coverage
will be required for individuals older than 18 years of age.
Coverage of services may be subject to general exclusions and
limitations of the contract or benefit plan including
coordination of benefits, services provided by family members,
and utilization review of health care services but cannot be
denied on the basis that it is educational or habilitative in
nature;

(7)  Prohibits ASD services from being subject to any greater
deductible, co-insurance, or co-payment than other physical
health care services provided by the health benefit plan.
Payments and reimbursements for ABA services can only be made to
an ASD service provider with certain specified exceptions;

(8)  Requires these provisions to apply to any healthcare plan
issued to employees and their dependents under the Missouri
Consolidated Health Care Plan that is delivered, issued,
continued, or renewed on or after January 1, 2011.  These
provisions also apply to plans that are established, extended,
modified, or renewed on or after January 1, 2011, by self-insured
governmental plans, self-insured group arrangements, multiple
employer welfare arrangements, and self-insured school district
health plans;

(9)  Exempts the MO HealthNet Program and supplemental insurance
policies from the provisions of the substitute;

(10)  Specifies that a health carrier or other entity that is
subject to these provisions is not required to reimburse for ASD
services provided by any school-based service;

(11)  Requires individual health benefit plans to offer ASD
coverage as an option but will not automatically be applied to an
individually underwritten health benefit plan; and

(12)  Requires, beginning February 1, 2012, the department to
submit an annual report to the General Assembly regarding the
implementation of the coverage and specified cost analysis data
for ASD service claims from health insurers.

DISCLOSURE OF HEALTH INSURANCE INFORMATION (Sections 354.442 and
376.1450)

The substitute allows an insurer to provide health insurance
information regarding an enrollee's health benefit plan online
unless a paper copy is requested by the enrollee by written,
oral, or electronic means.  Requests for a paper copy must be
provided to the enrollee within 15 business days of the request.

LIFE INSURANCE PRODUCER LICENSE EXAMINATIONS (Section 375.024)

The Director of the Department of Insurance, Financial
Institutions and Professional Registration or a vendor under
contract with the department is required to review life insurance
producer license examinations if, during any 12-month period
beginning on September 1, the overall pass rate of first-time
examinees is less than 70%.  The department must collect certain
specified demographic information, in conformance with the
appropriate privacy laws, from examinees and compile an annual
report based on the review.  The report must indicate if there
was any disparity in the pass rate based on the demographic
information.  The department director may establish procedures to
collect the necessary information to implement the provisions of
the substitute.  Beginning December 1, 2011, the department
director must deliver an annual report on the review to the
Governor, Lieutenant Governor, Speaker of the House of
Representatives, and President Pro Tem of the Senate no later
than December 1.

REGULATORY ACTIONS AGAINST INSURANCE COMPANIES OPERATING IN
HAZARDOUS FINANCIAL CONDITIONS (Sections 375.539 and 375.1255)

The Director of the Department of Insurance, Financial
Institutions and Professional Registration is authorized to
determine whether an insurance company is in a hazardous
financial condition.  The department director may deem any
property or casualty insurance company which has any policy in
force with a net retained risk that exceeds 10% of the company's
capital and surplus to be in a hazardous financial condition.
The substitute specifies the factors for the department director
to consider when determining whether an insurance company may be
in a hazardous financial condition.  The department director may
consider adverse findings reported in financial condition and
market conduct examination reports, audit reports, and actuarial
opinions, reports, or summaries when determining whether the
continued operation of the insurer may be hazardous to Missouri's
policyholders, creditors, or the general public.  If the
department director determines that the continued operation of an
insurer may be hazardous, the department director may issue an
order requiring the insurer to take various actions including
requiring the insurer to reduce its total amount of present and
potential liability for policy benefits by reinsurance, reduce
its volume of business, increase its capital and surplus, or
document the adequacy of premium rates in relation to the risks
insured.  Any insurer subject to an order from the department
director can request a hearing to be conducted in private unless
the insurer requests a public hearing.

Risk-based capital (RBC) reporting requirements for property and
casualty insurance companies are revised to allow the department
to require a property and casualty insurance company to take
action if its risk-based capital fails the National Association
of Insurance Commissioners (NAIC) RBC trend test.  The RBC trend
test for property and casualty insurance companies is specified
as a company action level event where the insurer has total
adjusted capital which is greater than or equal to its Company
Action Level RBC but less than the product of its Authorized
Control Level RBC and 3.0 triggers the trend test determined in
accordance with the trend test calculation included in the
Property and Casualty RBC report instructions.  Risk-based
capital tests the adequacy of an insurance company's capital to
meet the risks posed by its investment portfolio and the types
and volume of insurance it underwrites.

INSURERS SUPERVISION, REHABILITATION AND LIQUIDATION ACT
(Sections 375.1152 and 375.1155)

The substitute changes the laws regarding the Insurers
Supervision, Rehabilitation and Liquidation Act to allow for the
treatment of qualified financial contracts in insurance
insolvency proceedings.  The substitute:

(1)  Defines "qualified financial contract" as a commodity
contract, forward contract, repurchase agreement, securities
contract, swap agreement, and any similar agreement that the
department director determines by rule to be a qualified
financial contract and "netting agreement" as a contract or
agreement that documents one or more transactions between the
parties to the agreement for or involving one or more qualified
financial contracts and that provides for the netting,
liquidation, setoff, termination, acceleration, or close out
under or in connection with one or more qualified financial
contracts or present or future payment or delivery obligations or
payment of delivery entitlements thereunder among the parties to
the netting agreement; and

(2)  Specifies that the commencement of a delinquency proceeding
does not operate as a stay or prohibition of any right to cause
of netting, liquidation, setoff, termination, acceleration, or
close out of obligations or an enforcement of any security
agreement or other credit guarantee in connection with any
netting agreement or qualified financial contract.

LIQUIDATION OF CERTAIN DOMESTIC INSURANCE COMPANIES (Section
375.1175)

A domestic insurance company that is organized as a stock
insurance company is allowed to voluntarily dissolve and
liquidate as a corporation if the department director approves
the articles of dissolution and the company files with the
Secretary of State a copy of the department director's certified
approval along with the articles.

In determining whether to approve a dissolution, the department
director must consider whether the insurers' annual financial
statements show no written insurance premiums for five years, the
insurer has demonstrated that all policyholder claims have been
satisfied or transferred to another insurer, and a market conduct
examination of the insurer has been completed within the last
five years.

MISSOURI LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT
(Sections 376.717, 376.718, 376.724, 376.725, 376.732 - 376.735,
376.737, 376.738, 376.740, 376.743, and 376.758)

The laws regarding the Missouri Life and Health Insurance
Guaranty Association Act are revised to make them consistent with
the model act adopted by the National Association of Insurance
Commissioners.  The substitute:

(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;

(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;

(3)  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;

(4)  Makes several technical changes regarding:

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

(b)  The handling of terminated policies;

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

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

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

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

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

(5)  Exempts any member insurer who is impaired or insolvent
prior to August 28, 2010, from the provisions of the substitute.

HEALTH INSURANCE FOR ADOPTED CHILDREN (Section 376.816)

All health carriers or health benefit plans, except Missouri
Medicaid plans, which are issued, delivered, continued, or
renewed to a Missouri resident on or after January 1, 2011, are
required to include coverage for adopted children on the same
basis as other dependents of the enrollee.

MEDICARE SUPPLEMENT AND LONG-TERM CARE INSURANCE POLICIES
(Sections 376.882 and 376.1109)

When any federal Medicare supplement or long-term care insurance
policy issued, delivered, or renewed in Missouri on or after
January 1, 2011, is canceled for any reason, the insurer must
refund the unearned portion of any premium paid beyond the month
in which the cancellation is effective.  Any refund must be
returned to the policyholder within 20 days from the date the
insurer receives notice of the cancellation.  A policyholder may
cancel a federal Medicare supplement policy by sending verbal,
written, or electronic notification.

A long-term care insurance policy must contain a notice which
informs an applicant that he or she is entitled to a refund of
unearned premiums if the policy is canceled for any reason.

IDENTIFICATION INFORMATION IN CERTAIN COURT PLEADINGS (Sections
452.430, 454.515, and 525.233)

Currently, any pleadings other than interlocutory or final
judgments in divorce or legal separation cases filed prior to
August 28, 2009, will only be inspected by the parties, an
attorney of record, upon order of the court, or in certain
circumstances by the Family Support Division of the Department of
Social Services.  The clerk is required to redact Social Security
numbers from any judgment or pleading before releasing them to
the public.  The substitute changes these requirements, so that
they apply to pleadings in modification proceedings filed prior
to August 28, 2009, and a licensed title insurer or his or her
designee will be allowed to inspect the pleadings in these cases.
Any person authorized to inspect the pleadings in these cases can
also receive or make copies of documents without the clerk being
required to redact the Social Security number unless the court
specifically orders the clerk to do otherwise.  The clerk will no
longer be required to redact the Social Security number from
pleadings from cases prior to August 28, 2009, but only from any
copy of a judgment or satisfaction of judgment.

The substitute requires a lien on real estate that is obtained
based on a judgment or order for unpaid child support or
maintenance to contain only the last four digits of the obligor's
Social Security number instead of the full number and requires a
notice of garnishment and a writ of sequestration to contain only
the last four digits of a person's Social Security number instead
of the full number.

CHILDREN'S INSURANCE ELIGIBILITY (Section 1)

The Department of Social Services is required to provide all
state licensed child-care providers who receive federal or state
aid and all public school districts with written information
regarding the eligibility criteria and application procedures for
obtaining health insurance coverage through the State Children's
Health Insurance Program (SCHIP).  This information is to be
distributed to the parents at the time of enrollment.  The
Department of Elementary and Secondary Education is required to
add an attachment to the application for the free and reduced
lunch program which will require the parent or guardian to check
a box indicating whether the child has health insurance.  If the
child does not have health insurance and the parent or guardian's
income does not exceed the highest level established by federal
law, the school district must provide a notice to the parent or
guardian that the uninsured child may qualify for health
insurance coverage under SCHIP.  The Department of Elementary and
Secondary Education, in collaboration with the Department of
Social Services, must submit an annual report to the Governor and
the committee chairs of the House of Representatives Budget
Committee and the Senate Appropriations Committee on the number
of families in each district receiving free or reduced lunches,
the number of families that indicated the absence of health
insurance coverage on the forms, the number of families that
received information on SCHIP, and the number of families who
applied for coverage under SCHIP because of the receipt of the
information.

The substitute contains an emergency clause for the provisions
regarding the inspection of pleadings in divorce and legal
separation cases filed prior to August 28, 2009.

FISCAL NOTE:  Estimated Cost on General Revenue Fund Unknown
greater than $1,022,765 in FY 2011, Unknown greater than
$1,387,168 in FY 2012, and Unknown greater than $1,411,557 in FY
2013.  Estimated Cost on Other State Funds of Unknown exceeding
$180,946 in FY 2011, Unknown exceeding $317,627 in FY 2012, and
Unknown exceeding $353,594 in FY 2013.

PROPONENTS:  Supporters say that the bill will allow individuals
who wish to cancel a policy to be able to do so and get a refund
of their unearned premiums which is good public policy.

Testifying for the bill were Representative Weter for Senator
Champion; and Department of Insurance, Financial Institutions and
Professional Registration.

OPPONENTS:  There was no opposition voiced to the committee.

OTHERS:  Others testifying on the bill say that they support the
overall legislation but would like it to be stronger on the
canceling of long-term care policies.

Testifying on the bill was Silver Haired Legislature.

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