SB 0597 - Fiscal Note

Fiscal Note - SB 0597 - Allows Creation of Mutual Insurance Holding Companies

L.R. NO.  1873-10
BILL NO.  Perfected SCS SB 597 and 729
SUBJECT:  Life Insurance, Department of Insurance
TYPE:     Original
DATE:     April 18, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

None

Total Estimated
Net Effect on All
State Funds                     $0                  $0                $0



                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

None

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0


                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

Local Government                $0                  $0                $0



                              FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Insurance (INS) stated that passage of this
legislation would have no fiscal impact on their agency.  However, the
passage of more than one similar proposal could require the INS to request
increased appropriations to cover cumulative administrative cost.

FISCAL IMPACT - State Government FY 1997   FY 1998   FY 1999
                                (10 Mo.)

                                      $0        $0        $0

FISCAL IMPACT - Local Government FY 1997   FY 1998   FY 1999
                                (10 Mo.)

                                      $0        $0        $0

DESCRIPTION

This act revises the law pertaining to mutual insurance holding companies.
It contains separate sections for life insurance companies organized under
Chapter 376, RSMo, and insurance companies organized under Chapter 379, RSMo.
A mutual life insurance company can become a mutual life insurance holding
company.  The mutual shall file an application and plan with the Director of
Insurance, who shall conduct an adequate review and may conduct a hearing.
The plan shall be approved unless it is not fair and equitable to the
policyholders.  The mutual holding company shall own a majority of the shares
of the stock of the reorganized life insurance company.  Any subsidiaries of
the life insurance company may remain such or become subsidiaries of the
mutual holding company.  The policyholders' membership interests shall be
transferred to the holding company.  Members are not liable for the
obligations of the company, and they may not be assessed for liabilities. The
articles of incorporation and any amendments shall be subject to approval by
the Director and the Attorney General.  Mutual holding companies shall have
the same powers granted to regular holding companies under Chapter 382, RSMo.
No holding company shall engage in the insurance business, but it may enter
into an affiliation or merger agreement with a mutual life insurance company.
A mutual holding company shall be party to any proceeding under the Insurers
Supervision, Rehabilitation and Liquidation Act involving a subsidiary of the
holding company or a subsidiary of a stock holding company created under this
act. In such an action, the assets of the holding company shall be available
to satisfy claims against the subsidiary. Any mutual insurance company formed
under Chapter 379, RSMo (property, liability, fidelity & surety, accident &
health) may form a mutual insurance holding company in the same manner as
provided above.  This was in SB 729, except life insurers are excluded.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.


SOURCES OF INFORMATION

Department of Insurance