Senate Committee Substitute

ADMINISTRATIVE ORDERS AND REMEDIES OF THE DEPARTMENT OF INSURANCE - If the director of the Department of Insurance determines that a person has violated or is attempting to violate a provision of the insurance code, the director may issue:

(1) An order directing the person to cease and desist from engaging in the act, practice, omission or course of business;

(2) A curative order or order directing the person to take other action necessary or appropriate to comply with the insurance laws of this state;

(3) Order a civil penalty or forfeiture; and

(4) Award reasonable costs of the investigation.

The act provides that the director shall provide the alleged violator notice of the director's intent to issue an order unless summary action is needed to protect consumers. The act provides for administrative hearings so that alleged violators can contest the issuance of the administrative orders. The act requires the director to issue findings of fact and conclusions of law before an order becomes final. Under the act, the director is authorized to issue subpoenas, compel attendance of witnesses, administer oaths, hear testimony of witnesses, receive evidence, and require the production of books, papers, records, correspondence and all other written instruments or documents relevant to the proceeding and authorized in contested cases under the provisions of chapter 536, RSMo. The act modifies the penalty for violating a cease and desist order issued by the Department of Insurance.

Currently, the law provides that a person who violates a cease and desist order may be punished by a maximum $1,000 fine and up to one year in jail. The act provides for a fine up to $100,000 and a term of imprisonment of 10 years (section 374.046).

REVOCATION OF CERTIFICATE OF AUTHORITY - The act allows the director to revoke a corporation's or insurer's certificate of authority for violating a provision of the insurance code or for felony or misdemeanor convictions. The director must provide the corporation or insurer with 30 days notice before revoking the certificate of authority and must provide such entity with a hearing if so requested (Section 374.047).

PETITION OF CIRCUIT COURT - The act allows the director to seek redress in county circuit courts and the court may issue injunctions, freeze assets or take other remedial measures outlined in the act. The act creates the consumer restitution fund for the purpose of preserving and distributing to aggrieved consumers, disgorgement or restitution funds obtained through enforcement proceedings brought by the director (Section 374.048).

CLASSIFICATION OF ADMINISTRATIVE PENALTIES – The act classifies various violations of the insurance code into five categories. The act establishes maximum fines for each category or level violation. All fines shall go to public schools as required by the Missouri Constitution (Section 374.049).

ADMINISTRATIVE HEARING COMMISSION HEARINGS - Under the act, any applicant refused a license by order of the director may file a petition with the administrative hearing commission alleging that the director has refused the license. The administrative hearing commission shall conduct hearings and make findings of fact and conclusions of law. The director shall have the burden of proving cause for refusal. The act provides for hearings by the administrative hearing commission for certain revocations and suspensions of licenses (Section 374.051).

ADMINISTRATIVE HEARINGS BEFORE THE DIRECTOR - The act provides for administrative hearings before the director for persons aggrieved by any order of the director (Section 374.055).

SHARING OF INFORMATION WITH OTHER REGULATORY BODIES - Under this act, the director is authorized to share records and information with and consult with members of the National Association of Insurance Commissioners, the Commissioner of Securities, State Securities Regulators, the Commissioner of Finance, the Attorney General, federal banking and securities regulators, the NASD, the United States Department of Justice, the Commodity Futures Trading Commission, and the Federal Trade Commission to effectuate greater uniformity in insurance and financial services regulation among state and federal governments, and self-regulatory organizations. The cooperation, coordination, consultation, and sharing of records and information authorized by this act includes:

(1) Establishing or employing one or more designees as a central electronic depository for licensing and rate and form filings with the director and for records required or allowed to be maintained;

(2) Encouraging insurance companies and producers to implement electronic filing through a central electronic depository;

(3) Developing and maintaining uniform forms;

(4) Conducting joint market conduct examinations and other investigations through collaboration and cooperation with other insurance regulators;

(5) Holding joint administrative hearings;

(6) Instituting and prosecuting joint civil or administrative enforcement proceedings; and

(7) Sharing and exchanging personnel (section 374.185).

STEPHEN WITTE