SCS/HB 585 - This act modifies various provisions relating to services regulated by the Department of Commerce and Insurance.PRIVATIZATION OF PUBLIC CORPORATIONS (Sections 287.690, 287.900 through 287.920, 375.1275, and B)
Under current law, the Missouri Employers Mutual Insurance Company (MEM) is established as a public corporation for the purpose of insuring Missouri employers against liability for workers' compensation, occupational disease and employers' liability coverage.
This act repeals the law establishing MEM as a public corporation and all connected statutes and specifies a process under which MEM may convert to a private mutual insurance corporation under the general insurance laws, authorized to write any lines of insurance permitted under Missouri law.
The company may continue to conduct business under its current name, and shall become the successor in interest to all assets and liabilities of the company as of the date of conversion.
The state shall not be liable for the expenses, liabilities, or debts of the private version of the company, the public corporation version of the company or a subsidiary or joint enterprise involving the private version of the company.
The act contains a delayed effective date for certain sections.
These provisions are identical to provisions in the truly agreed to and finally passed HCS/SB 101 (2023), provisions in SCS/HB 585 (2023), provisions in SS/SCS/HCS/HB 655 (2023), and provisions in HCS/HB 1019 (2023), and similar to HB 277 (2023).
SECOND INJURY FUND (Section 287.715)
Under current law, for calendar year 2023, the Director of the Division of Workers' Compensation is required to collect a supplemental surcharge not to exceed 2.5% of the policyholder's or self-insured's workers' compensation net deposits, net premiums, or net assessments for the previous policy year, rounded up to the nearest one-half of a percentage point. This provision expires December 31, 2023. This act extends that expiration date to December 31, 2026 and lowers the surcharge to 1% for that duration, rather than revert to 3%.
This provision is identical to provisions in the truly agreed to and finally passed HCS/SS/SB 24 (2023), SCS/SB 521 (2023), provisions in SCS/HB 585 (2023), and provisions in HCS/HB 1017 (2023).
AUTHORITY OF THE DIVISION OF FINANCE (Section 361.020)
The act stipulates that the Division of Finance is in charge of the execution of the laws relating to banks, trust companies, and the banking business of the state; laws relating to persons and entities engaged in the small loan or consumer credit business in the state; the laws relating to persons and entities engaged in the mortgage business in the state; and the laws relating to persons and entities engaged in any other financial services related to business over which the Division of Finance is granted express authority.
This provision is identical to certain provisions in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
RESPONSIBILITIES OF THE DIVISION OF FINANCE - STATE BANKING AND SAVINGS AND LOAN BOARD (Section 361.098)
The act provides that the compensation and necessary travel and other expenses of the members of the State Banking and Savings and Loan Board shall be paid out of the Division of Finance Fund.
Current law provides that a majority of the members of the State Banking and Savings and Loan Board constitutes a quorum. This act provides that three members of the board shall constitute a quorum.
The Division is permitted to provide administrative services to the Board to assist the Board with fulfilling its statutory responsibilities.
These provisions are identical to certain provisions in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
BULLETINS AND INDUSTRY LETTERS ISSUED BY DIVISION OF FINANCE (Section 361.106)
The act permits the Division to issue bulletins addressing the business of individuals and entities licensed, chartered, or regulated by the Division. Bulletins do not have the force or effect of law and should not be considered statements of general applicability.
The act also permits the Division to issue industry letters. Industry letters may be issued, in the discretion of the director of the Division, at the request of an individual or entity licensed, chartered, or regulated by the Division, and that seeks the Division's position on an application of law. The act details the requirements that must be met in issuing an industry letter. Industry letters are binding on the Division and the requesting party shall not be subject to any administrative proceeding or penalty for any acts or omissions done in reliance on an industry letter, provided there is no change in any material fact or law or the discovery of a material misrepresentation or omission made by the requesting party.
These provisions are identical to certain provisions in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
REPORTS OF EXAMINATIONS OF BANKS AND TRUST COMPANIES (Section 361.160)
The act repeals an obsolete requirement that the result of all examinations of banks and trust companies during a biennial period be embodied in a report made by the Director of the Department of Commerce and Insurance to the General Assembly, such reporting requirement having previously been repealed.
These provisions are identical to certain provisions in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
NOTICES OF CHARGES AND CEASE AND DESIST ORDERS (Section 361.260)
The act clarifies the requirements for issuing a notice of charges with respect to a director, officer, employee, agent, or other person participating in the affairs of a bank or trust company regulated by the Division under Chapter 361. Specifically, whenever the director has reason to believe from any examination or investigation made by the director or his or her examiners, that any such corporation, foreign corporation, or director, officer, employee, agent, or other person participating in the conduct of the affairs of such corporation is engaging in, has engaged in, or is about to engage in:
· An unsafe or unsound practice in conducting the business of such corporation;
· A violation of law, rule, or director-imposed written condition;
· A violation of any written agreement entered into with the director; or
· A violation of the corporation's charter,
the director may issue and serve upon the corporation or such director, officer, employee, agent, or other person a notice of charges in respect thereof.
Any cease and desist order issued by the Division in response to one of the above-described charges is subject to the following:
· It may require the corporation or its directors, officers, employees, agents, and other persons participating in the conduct of the affairs of such corporation to cease and desist from such actions, violations, or practices;
· It may require the corporation or its directors, officers, employees, agents, and other persons participating in the conduct of the affairs of such corporation to take affirmative action to correct the conditions resulting from any such actions, violations, or practices;
· It shall require that, if the director determines that the capital of the corporation is impaired, the corporation make good the deficiency forthwith or within a time specified in the order;
· It may, if the director determines that the corporation does not keep adequate records, determine and prescribe such books of account as the director, in his or her discretion, shall require of the corporation for the purpose of keeping accurate and convenient records of the transactions and accounts; and
· It shall, if the director determines that wrong entries or unlawful uses of the funds of the corporation have been made, order that the entries shall be corrected, and the sums unlawfully paid out be restored by the person or persons responsible for the wrongful or illegal payment thereof.
These provisions are identical to certain provisions in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
NOTICE OF REMOVAL FROM OFFICE (Section 361.262)
The act modifies the process for serving a notice of intention to remove a person from office in a bank or trust company regulated by the Division under Chapter 361.
This provision is identical to a provision in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
FEES COLLECTED BY DIVISION OF FINANCE (Sections 361.715, 364.030, 364.105, 365.030, 367.140, 407.640, 408.500)
The act modifies the following fees collected by the Division of Finance:
· From $300 to $400, the annual fee paid by persons seeking a license to issue checks. (Section 361.715.2);
· From $300 to $400, the maximum fee that may be charged for any application to amend and reissue an existing license to issue checks. (Section 361.715.3);
· From $500 to $600, the annual license fee for each place of business of a financial institution licensed under state law. (Section 364.030.3);
· From $500 to $600, the annual registration fee for a premium finance company. (Section 364.105.2);
· From $500 to $600, the annual license fee for each place of business of a sales finance company. (Section 365.030.3);
· From $500 to $600, the fee paid by lenders of consumer credit loans when filing an application for certificate of registration. (Section 367.140.1);
· From $300 to $400, the maximum fee that may be charged a credit services organization when filing a registration statement with the Director of the Division. (Section 407.640.5); and
· From $500 to $600, the annual license fee charged to lenders, other than banks, trust companies, credit unions, savings banks and savings and loan companies, in the business of making unsecured loans of $500 or less. (Section 408.500.1).
These provisions are identical to certain provisions in the truly agreed to and finally passed SCS/SB 13 (2023) and SCS/HCS/HB 725 (2023) and substantially similar to certain provisions in HCS/SCS/SB 187, as amended (2023), HCS/HB 586 (2023), certain provisions in HCS/HB 809 (2023), SB 1096 (2022) and certain provisions in SCS/HB 2571 (2022).
AIRCRAFT INSURANCE (Section 379.316)
This act exempts aircraft liability insurance, other than employers' liability, from certain regulations on insurance premium rates and rating plans.
This provision is identical to provisions in the truly agreed to and finally passed HCS/SB 101 (2023), provisions in SS/SCS/HCS/HB 655 (2023), provisions in HCS/HB 1019 (2023), and provisions in HCS/SS/SB 181 (2023), and similar to SB 578 (2023).
LENDER-PLACED INSURANCE (Sections 379.1850 through 379.1869)
This act enacts provisions relating to lender-placed insurance, as defined in the act, with applicability as described in the act. (Sections 379.1850 and 379.1859).
The act specifies when lender-placed insurance shall become effective and terminate, and when mortgagors may be charged for the policies. (Section 379.1853).
Coverage amounts and premium amounts shall be based upon the replacement cost value of the property, to be determined as laid out in the act. In the event of a covered loss, any replacement cost coverage in excess of the unpaid principal balance on the mortgage shall be paid to the mortgagor. No insurer shall write lender-placed insurance for which the premium rate differs from that determined by the rate schedules on file with the Department of Commerce and Insurance as of the effective date of the policy. (Section 379.1855).
The act prohibits insurers and insurance producers from issuing lender-placed insurance if they or one of their affiliates owns, performs servicing for, or owns the servicing right to, the mortgaged property. The act prohibits insurers and insurance producers from compensating lenders, insurers, investors, or servicers for lender-placed insurance policies issued by the insurer, and from sharing premiums or risk with the lender, investor, or servicer. The act also prohibits payments dependent on profitability or loss ratios from being made in connection with lender-placed insurance, specifies that insurers shall not provide free or below-cost services or outsource its own functions at an above-cost basis. No insurer or insurance producer shall make any payments for the purpose of securing lender-placed insurance business or related services. (Section 379.1857).
The act requires lender-placed insurance to be set forth in its own policy or certificate. Proof of coverage shall be provided in person or by mail to the last known address of the mortgagor, or in accordance with the Uniform Electronic Transactions Act, and shall include certain information laid out in the act. (Section 379.1861).
Policy forms and certificates and premium rates shall be filed with the Department of Commerce and Insurance, which shall review the rates to determine whether they are excessive, inadequate, or unfairly discriminatory, and whether expenses included in the rate are appropriate. Rates shall be filed at least once every 4 years, and all insurers shall have separate rates for lender-placed insurance and voluntary insurance obtained by a mortgage servicer on real estate owned property, as defined in the act. The act requires insurers writing at least $100,000 in lender-placed insurance to annually report certain financial information to the Department of Commerce and Insurance, and specifies that except in the case of lender-placed flood insurance, insurers experiencing an annual loss ratio of less than 35% for two consecutive years shall re-file rates. Except as otherwise provided in the act, rates and forms shall be filed as required by law. (Section 379.1863).
The Director of the Department of Commerce and Insurance shall have authority to enforce the provisions of the act, subject to judicial review as provided by law. The act shall not be construed to create a private cause of action, or to extinguish any mortgagor rights otherwise available under state, federal, or common law. (Section 379.1865).
Lastly, the act specifies potential penalties for violations of the act, including monetary penalties and suspension or revocation of an insurer's license. (Section 379.1867).
These provisions are substantially similar to provisions in the truly agreed to and finally passed HCS/SB 101 (2023), provisions in SS/SCS/HCS/HB 655 (2023), provisions in HCS/HB 1019 (2023), and provisions in HCS/SS/SB 181 (2023).
ISSUANCE OF CREDIT CARDS BY LENDERS (Section 408.145)
Under current law, lenders issuing credit cards in Missouri are permitted to contract for, charge and collect fees for credit cards that are allowed in a contiguous state. This act modifies that provision by enabling issuance of credit cards under the same terms and conditions that are allowed in a contiguous state, rather than limiting the provision to only fees.
This provision is identical to SB 12 (2023) and provisions in the truly agreed to and finally passed SCS/SB 13 (2023), HCS/SCS/SB 187 (2023), SCS/HCS/HB 725 (2023), and HCS/HB 809 (2023).
COMMERCIAL FINANCING DISCLOSURE LAW (Section 427.300)
This act creates the "Commercial Financing Disclosure Act". Under this act, any person who consummates more than 5 commercial financing products, as defined in the act, to a business located in this state in a calendar year is required to make certain disclosures to the business with regard to the product. Specifically, the provider is required to disclose the following:
· The total amount of funds provided to the business under the terms of the commercial financing product;
· The total amount of funds disbursed to the business under the terms of the commercial financing product, if less than the total amount of funds provided, as a result of any fees deducted or withheld at disbursement and any amount paid to a third party on behalf of the business;
· The total amount to be paid to the provider pursuant to the commercial financing product agreement;
· The total dollar cost of the commercial financing product under the terms of the agreement, derived by subtracting the total amount of funds provided from the total of payments;
· The manner, frequency and amount of each payment; and
· A statement of whether there are any costs or discounts associated with prepayment of the commercial financing product including a reference to the paragraph in the agreement that creates the contractual rights of the parties related to prepayment.
The act requires registration with the Division of Finance prior to engaging in business as a commercial financial broker. Specifically, the act requires filing a registration form, submitting a fee of $100, and obtaining a surety bond in the amount of $10,000. A registration renewal is required every year, not later than January 31.
Violations of this act are punishable by a fine of $500 per incident, not to exceed $20,000 for all aggregated violations. Any person who violates any provision of this act after receiving written notice of a prior violation from the Attorney General shall be punishable by a fine of $1,000 per incident, not to exceed $50,000 for all aggregated violations arising from the use of the transaction documentation or materials found to be in violation of this act.
Violation of any provision of this act does not affect the enforceability or validity of the underlying agreement.
This act does not create a private cause of action against any person or entity based upon noncompliance with this act.
The Attorney General is given authority to enforce the provisions of this act.
This act contains various exemptions.
The registration and disclosure requirements of this act take effect either (1) 6 months after the Division of Finance finalizes promulgating rules, if the Division intends to promulgate rules; or (2) February 28, 2024, if the Division does not intend to promulgate rules.
These provisions are identical to provisions in HCS/SCS/SB 187 (2023) and substantially similar to a provision in the perfected HCS/HB 809 (2023), HCS/HB 584 (2023), SCS/SB 963 (2022), a provision in SCS/HB 2571 (2022), and HB 2706 (2022).
SCOTT SVAGERA