VOLUNTARY LIQUIDATION OF DOMESTIC STOCK INSURANCE COMPANIES -

Under this act, a domestic insurer organized as a stock insurance company may voluntarily dissolve and liquidate provided that the director of the Department of Insurance approves the articles of dissolution prior to the insurer's filing of such articles with the Secretary of State and the insurer files with the secretary of state a copy of the director's approval, certified by the director, along with articles of dissolution.

In determining whether to approve the articles of dissolution, the director shall consider, among other factors, whether:

1) The insurer's annual financial statements filed with the director show no written insurance premiums for 5 years;

2) The insurer has demonstrated that all policyholder claims have been satisfied or have been transferred to another insurer in a transaction approved by the director; and

3) A market conduct examination of the insurer has been completed within the last 5 years (Section 375.1175). This provision is identical the one contained in SCS/SB 834 (2010). This provision is also contained in the truly agreed to version of SB 583 (2010).

ADOPTED CHILDREN - Under this act, no health carrier or health benefit plan shall issue or renew a health benefit plan to a Missouri resident unless the health benefit plan covers adopted children of an insured on the same basis as other dependents (Section 376.816). This provision is contained in HB 1713 (2010). This provision is also contained in the truly agreed to version of SB 583 (2010).

APPROVAL OF LONG-TERM CARE INSURANCE RATES - Under this act, no insurance company shall issue any policy or certificate of long-term care insurance in this state, unless the classification of risks and the premium rates pertaining to such policy have been filed with and approved by the director.

Under the terms of the act, rates for long-term care insurance shall not be excessive, inadequate, or unfairly discriminatory. Rates charged to any policyholder or certificate holder shall not increase by more than 15% during any annual period, unless the insurer can clearly document a material and significant change in the risk characteristics of all of its in force long-term care insurance policies or certificates. When formulating rates for long-term care insurance, consideration shall be given to:

(1) Past and prospective loss experience;

(2) Past and prospective expenses;

(3) Adequate contingency reserves; and

(4) All other relevant factors within and without the state.

The director shall approve or disapprove a rate filing within 45 days after the filing. The failure of the director to take action approving or disapproving a submitted rate filing within the stipulated time shall be deemed an approval until such time as the director shall notify the submitting company of his or her disapproval. Reasons for disapproving a rate shall be stated in writing. Any notice of disapproval shall state that a hearing shall be granted, if requested by the insurer (Section 376.1110). This provision is also contained in SCS/SB 979 (2010).

REFUNDING OF MEDICARE SUPPLEMENT AND LONG-TERM CARE INSURANCE PREMIUMS - This act enacts various provisions pertaining to refunding of unearned premiums for Medicare supplement policies and long-term care insurance policies. Under this act, if a Medicare supplement policy issued, delivered, or renewed in Missouri on or after January 1, 2011, is cancelled 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 shall be returned to the policyholder within 20 days from the date the insurer receives notice of the cancellation. Under the act, a policyholder may cancel a Medicare supplement policy by sending written or electronic notification (Section 376.882). Under this act, if a long-term care insurance policy issued, delivered, or renewed in Missouri on or after January 1, 2011, is cancelled 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 shall be returned to the policy holder within 20 days from the date the insurer receives notice of the cancellation. The long-term care insurance policy must contain notices which inform applicants that they are entitled to a refund of unearned premiums if such policies are cancelled for any reason. Under the act, a policyholder may cancel a long-term care insurance policy by sending written or electronic notification (Section 376.1109). These provisions may also be found in the truly agreed to version of SB 583 (2010).

DETERMINING WHETHER AN INSURANCE COMPANY IS OPERATING IN A HAZARDOUS FINANCIAL CONDITION - This act authorizes the director of the Department of Insurance to determine whether an insurance company is in a hazardous financial condition. Under the act, the 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 act also sets forth twenty factors for the director to consider when determining whether an insurance company may be in hazardous financial condition. For example, the 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 director determines that the continued operation of an insurer may be hazardous to Missouri' policyholders, creditors or the general public, the director may issue an order requiring the insurer to take various actions. For instance, the director may require 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 director may request a hearing and the hearing shall be conducted in private unless the insurer requests a public hearing (section 375.539). This provision may also be found in the truly agreed to version of SB 583 (2010) and SCS/SB 685 (2010).

RBC TREND TEST - This act modifies Missouri's current law regarding risk-based capital (amount of required capital that the insurance company must maintain based on the inherent risks in the insurer's operations) reporting requirements for property and casualty insurance companies. Under this act, the Department of Insurance may 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 stated in the act 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 & 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. Risk-based capital tests the adequacy of an insurance company's capital by comparing its actual capital to the minimum amount capital determined necessary to operate the insurance company based on the risk factors associated with the volume and type of insurance business it transacts and the types of investments it makes (Section 375.1255). This provision may also be found in the truly agreed to version of SB 583 (2010) and SCS/SB 685 (2010).

INSURERS SUPERVISION, REHABILITATION AND LIQUIDATION ACT - This act amends the "Insurers Supervision, Rehabilitation and Liquidation Act" (Sections 375.1150 to 375.1246), to provide for the treatment of qualified financial contracts in insurance insolvency proceedings. The central purpose of the act is to increase certainty of insurers and their creditors with respect to the enforceability of certain financial market transactions and related netting agreements in the event of an insurer insolvency. To accomplish this, this act adopts certain termination, netting, and liquidation provisions applicable to derivative transactions that are contained in the latest version of the NAIC Insurance Receivership Model Act (IRMA). These provisions may also be found in the truly agreed to version of SB 583 (2010) and in SB 978 (2010).

The act provides definitions for specific types of financial contracts commonly used in the financial markets, including commodity contracts, forward contracts, qualified financial contracts, and the related netting agreements. As defined in this act, "qualified financial contracts" encompass a range of commonly traded financial market contracts, including over-the counter and exchange traded derivatives, such as swap agreements, forward contracts, securities contracts, repurchase (repo) agreements, and commodity contracts. The act also provides a definition for the term "netting agreement". A "netting agreement" is defined, based upon IRMA, as a contract or agreement that documents one or more transactions between the parties for or involving one or more qualified financial contracts and that provides for the netting or liquidation of qualified financial contracts or present or future payment obligations or payment entitlements thereunder (Section 375.1152).

The act provides for the enforcement and recognition of the contractual rights of the insurer's counterparties under qualified financial contracts, netting agreements, and related security agreements to terminate, accelerate, and close out such contracts, to offset and net off obligations owing under such contracts, and to enforce any security rights under such agreements, free of any stay or prohibition that might otherwise apply under a delinquency proceeding (subsection 3 of Section 375.1155 and subsection 1 of Section 375.1191).

This act provides for the transfer of any net or settlement amount owing under a qualified financial contract by the nondefaulting party to the insurer to the receiver. If netting results in an amount owing to the insurer, this provision confirms that the receiver steps into the "insurer's shoes" as to that net amount (subsection 2 of Section 375.1191).

The act provides for the transfer of all netting agreements and qualified financial contracts between an insurer and a single counterparty and its affiliates together if a bulk transfer of insurer liabilities or contracts is made by the receiver (subsections 3 and 4 of Section 375.1191).

This act provides for validation of payments and transfers of money and property under netting agreements and qualified financial contracts made prior to the commencement of a formal delinquency proceeding, unless such transfers were made with actual intent to hinder, delay or defraud the insurer, the receiver appointed for the insurer, or other creditors (subsection 5 of Section 375.1191).

This act provides that if the receiver disaffirms or repudiates any qualified financial contracts or netting agreements with a counterparty, the receiver must disaffirm or repudiate all such contacts (subsection 6 of Section 375.1191). The act also establishes the amount of the counterparty's claim in the event of disaffirmance or repudiations. The amount of a claim for damages shall be actual direct compensatory damages as of the date of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract.

REVIEW OF LICENSE EXAMINATIONS OF LIFE INSURANCE PRODUCERS - This act requires the director of the Department of Insurance or a vendor under contract with the Department of Insurance, to review life insurance producer license examinations if, during a 12-month period beginning on September 1, the examinations show an overall pass rate of less than 70 percent for first-time examinees. The act requires the department to collect demographic information, including, race, gender, and national origin, from an individual taking a producer license examination. The act further requires the department to compile an annual report based on the examination review. The report must indicate whether there was any disparity in the pass rate based on demographic information. The act authorizes the director by rule to establish procedures as necessary to collect demographic information necessary to implement the act and ensure that a review is conducted and the resulting report is prepared. The act also requires the director to deliver the report to the Governor, the Lieutenant Governor, the President Pro tem and the Speaker of the House of Representatives not later than December 1 of each year (section 375.024). This provision is contained in the truly agreed to version of SB 583 (2010), HCS/HB 1824 (2010) and SB 706 (2010).

HMO PROVIDER DIRECTORY ONLINE ACCESS - Under this act, an HMO's provider directory may be provided online unless a paper copy is requested by the enrollee (section 354.442).

MISSOURI LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT - This act updates various provisions of the "Missouri Life and Health Insurance Guaranty Association Act".

The act clarifies that structured settlement annuities are covered by the guaranty association and are subject to a cap of $250,000. The act also provides rules for determining how the responsibility for coverage of these types of annuities is allocated among state guaranty associations (Section 376.717.1(3)).

The act expands the list of areas in which the guaranty association will not provide coverage. Under the act, the guaranty association will not provide coverage for:

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

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

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

4) Certain types of indexed policies;

5) 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 regulations issued thereunder (Section 376.717.3(7)-(11)).

The act adds several clarifying definitions, including the definition of an "owner" of a policy, and the standard for determining 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).

The act makes a number of technical changes clarifying the guaranty association's options in providing coverage (Section 376.724); how terminated policies are handled (Section 376.725); the guaranty association's standing to appear or intervene in litigation (Section 376.732); the guaranty association's assignment and subrogation rights (Section 376.733); the guaranty association's general powers and how reinsurance contracts are handled (Section 376.734); how assessments of insurers to fund the guaranty association's operations are handled (Section 376.735 and 376.737); requirements for the association's plan of operation (Section 376.740); and clarifying that the amendments made by the act are prospective only and shall not apply to member insurers that are impaired or insolvent prior to August 28, 2010 (Section 376.758).

The guaranty association provisions are contained in the truly agreed to version of SB 583 (2010), the perfected version of SB 900 (2010) and are similar to ones contained in HB 1904 (2010).

MO HEALTHNET SUBROGATION CLAIMS - Under this act any third party payer, such as third party administrators, administrative service organizations, health benefit plans and pharmacy benefits managers, shall process and pay all properly submitted MO HealthNet subrogation claims using standard electronic transactions or paper claims forms for a period of three years from the date services were provided or rendered. However, such third party payers shall not:

(1) Be required to reimburse for items or services which are not covered under MO HealthNet;

(2) Deny a claim submitted by the state solely on the basis of the date of submission of the claim, the type or format of the claim form, failure to present proper documentation of coverage at the point of sale, or failure to obtain prior authorization;

(3) Be required to reimburse for items or services for which a claim was previously submitted to the third party payer by the health care provider or the participant and the claim was properly denied by the third party payer for procedural reasons, except for timely filing, type or format failure to present proper documentation of coverage at the point of sale, or failure to obtain prior authorization;

(4) Be required to reimburse for items or services which are not covered under or were not covered under the plan offered by the entity against which a claim form for subrogation has been filed.

Such third party payers shall reimburse for items or services to the extent that the entity would have been liable as if it had been properly billed at the point of sale, and the amount due is limited to what the entity would have paid as if it has been properly billed at the point of sale. The MO HealthNet Division shall also enforce its rights within six years of a timely submission of a claim.

Certified computerized MO HealthNet records shall be prima facie evidence of proof of moneys expended and the amount due the state (section 208.215)(SA 2). This provision may also be found in the truly agreed to version of SB 583 (2010) and the truly agreed to version of SB 842 (2010).

MCHCP PARTICIPANTS - Under this act, Missouri Consolidated Health Care Plan participants who are eligible for Medicare benefits and who are not eligible for their state employee health care coverage to be their primary plan of coverage shall be offered actuarially equivalent benefit products provided participants who are not eligible for Medicare benefits. Under current law, a participant in the state employee health care plan who is eligible for Medicare, and whose state employee coverage is not primary, must be provided the same benefits provided to participants who are not eligible for Medicare benefits (section 103.089). This provision may be found in SB 894 (2010)(SA 3).

NON-COVERED SERVICES FEES AND DENTAL PLANS - Under this amendment, no contract between a health carrier and a dentist for the provision of dental services under a dental plan shall require that the dentist provide dental services to insureds in the dental plan at a fee established by the health carrier if such dental services are not covered services under the dental plan (section 376.1226). This provision may be found in HB 1620 (2001)(SA 4).

STEPHEN WITTE