CCS SS SCS HB 259 -- LIFE INSURANCE

This bill sets standards for viatical settlements, illustrations
for life insurance policies, and administrative rulemaking.

A viatical settlement is a contract to pay a person (viator)
with a life-threatening illness to receive the proceeds from his
or her life insurance policy.  The bill requires viatical
settlement providers, brokers, and representatives to obtain
licenses from the Department of Insurance.  However, the
Department of Insurance cannot regulate the amounts paid by
viatical settlement contracts.  Viators must give informed
written consent to viatical settlement contracts and have 30
days to rescind contracts.  Payments to viators resulting from
these contracts are exempt from Missouri franchise and income
taxes.

An illustration is a depiction of the guaranteed and
nonguaranteed costs and benefits of a life insurance policy.
The bill requires life insurance companies to notify the
Department of Insurance whether their policy forms include
illustrations.  These companies must also certify that
illustration formats and scales conform to standards for
presenting illustrations.  In addition, policy owners and
applicants for life insurance must verify that they received
illustrations and policy owners can receive updated
illustrations in subsequent years.

The bill places any rule promulgated under its authority under
certain standards for withstanding a challenge, requires the
court to award reasonable fees and expenses to any prevailing
party in such a challenge, and requires that rules promulgated
pursuant to the bill expire on August 28th of the year after
they become effective unless extended by statute.  These rules
provisions have a conditional termination date.  In addition,
rulemaking authority delegated prior to the effective date of
the bill is repealed.  A statement of nonseverability applies to
this provision.

This bill also allows the Department of Insurance to change
anniversary dates for insurance agent and insurance broker
licenses.  Specifically, license anniversary dates can change to
coincide with each agent or broker's initial license anniversary
date.

HB 259 -- LIFE INSURANCE (Liese)

The bill requires persons who buy life insurance policies from a
person who has a catastrophic or life-threatening illness to be
licensed by the Department of Insurance as a vatical settlement
provider (provider). License fees are $100 per year. To license
a person, the Director of Insurance is required to find the
person is competent and trustworthy, has a good business
reputation, and has sufficient education or experience. The
director is given the power to revoke or suspend licenses.

The bill also:

(1) Requires the provider to obtain a physician's statement and
informed written consent of the insured;

(2) Allows insureds the right to rescind for 30 days;

(3) Requires the provider to disclose possible alternatives, tax
consequences, and the right to rescind within 30 days to the
insured;

(4) Requires all vatical settlement policy forms to be filed and
approved by the department; and

(5) Requires providers to file an annual statement with the
department.

FISCAL NOTE:  Estimated Net Cost to Insurance Dedicated Fund of
$15,560 in FY 1998, $45,321 in FY 1999, & $47,066 in FY 2000.

HB 259 -- LIFE INSURANCE

SPONSOR:  Liese

COMMITTEE ACTION:  Voted "do pass" by the Committee on Insurance
by a vote of 14 to 1 with 1 present.

The bill requires persons who buy life insurance policies from a
person who has a catastrophic or life-threatening illness to be
licensed by the Department of Insurance as a vatical settlement
provider (provider). License fees are $100 per year. To be
licensed, the Director of Insurance is required to find the
person is competent and trustworthy, has a good business
reputation, and has sufficient education or experience. The
director is given the power to revoke or suspend licenses.

The bill also:

(1) Requires the provider to obtain a physician's statement and
informed written consent of the insured;

(2) Allows insureds the right to rescind for 30 days;

(3) Requires the provider to disclose possible alternatives, tax
consequences, and the right to rescind within 30 days to the
insured;

(4) Requires all vatical settlement policy forms to be filed and
approved by the department; and

(5) Requires providers to file an annual statement with the
department.

FISCAL NOTE:  Estimated Increase to Insurance Dedicated Fund of
$20,000 for FY 1998, $15,000 for FY 1999, and $15,000 for FY
2000.

PROPONENTS:  Supporters say that this bill is based upon model
legislation from the National Association of Insurance
Commissioners.  The bill would protect consumers by regulating
vatical settlements.

Testifying for the bill were Representative Liese; Lieutenant
Governor's Office; Life Insurance Association of Missouri;
American Association of Retired Persons; and General American
Life Insurance.

OPPONENTS:  There was no opposition voiced to the committee.

Martin Romitti, Research Analyst

HB 259 -- Life Insurance

Sponsor:  Liese

The bill requires persons who buy life insurance policies from a
person who has a catastrophic or life-threatening illness to be
licensed by the Department of Insurance as a viatical settlement
provider (provider). License fees are $100 per year. To be
licensed, the Director of Insurance is required to find the
person is competent and trustworthy, has a good business
reputation, and has sufficient education or experience. The
director is given the power to revoke or suspend licenses.

The bill also:

(1) Requires the provider to obtain a physician's statement and
informed written consent of the insured;

(2) Allows insureds the right to rescind for 30 days;

(3) Requires the provider to disclose possible alternatives, tax
consequences, and the right to rescind within 30 days to the
insured;

(4) Requires all viatical settlement policy forms to be filed
and approved by the department; and

(5) Requires providers to file an annual statement with the
department.