SCS/HCS/HB 523 - This act establishes a limited-lines insurance license to sell portable electronics insurance. This act also modifies the law with respect to motor vehicle extended service contracts and surplus lines insurance.
INSURANCE COVERAGE FOR PORTABLE ELECTRONIC DEVICES - This act establishes a limited-lines insurance license to sell portable electronics insurance. The act prohibits issuance or sale of portable electronics insurance coverage without licensure by the Department of Insurance. The act creates a licensing framework under which vendors can offer this specialized insurance. The act requires vendors of portable electronics to make disclosures about portable electronics insurance coverage to prospective customers. The act authorizes the department to suspend or revoke a license, or impose civil penalty, for violation of provisions of act. The act authorizes the department to adopt rules.
Portable electronics insurance is generally defined as insurance covering repair or replacement of portable electronics due to theft, misplacement, damage, mechanical faults or similar damage.
Under the terms of this act, portable electronics transaction vendors must obtain a license from the Department of Insurance, Financial Institutions and Professional Registration in order for an employee to be authorized to sell or offer portable electronics insurance at each location at which the vendor engages in a transaction.
The initial license fee shall not exceed $1,000, and the annual renewal fee shall not exceed $500. The act dictates that the license fees shall be deposited into the Insurance Dedicated Fund.
Under the terms of the act, vendors are required to have available at each of its locations specific brochures and actual policies or certificates of coverage available to prospective customers which disclose information about portable electronics insurance benefits, duplication of coverage, filing of a claim, and policy cancellation.
Under the act, eligibility and underwriting standards for a customer electing to enroll in coverage must be established for each portable electronics insurance program. Each insurer must maintain all eligibility and underwriting records for 5 years and designate a business entity to supervise its program. The supervising business entity will be responsible for the development of a training program for the employees and authorized representatives of a vendor.
Insurers and applicable supervising business entities offering portable electronics insurance are required to share all complaint, grievance, and inquiries regarding any conduct that is specific to a vendor and that may not comply with applicable state laws and regulations.
The act requires supervising business entities to maintain a registry of authorized vendor locations. Upon request of the director and within 10 days' notice to the supervising business entity, the registry must be open to inspection and examination. Within 30 days of a supervising business entity terminating a vendor location's appointment to sell or solicit the insurance, the entity must update the registry with the effective date of termination.
Under the act, employees or authorized representatives of a vendor are prohibited from advertising or holding themselves out as insurance producers, unless they are otherwise licensed as insurance producers.
Under the act, the charges for portable electronics insurance coverage may be billed and collected by a vendor. Charges that are not included in the cost associated with the purchase or lease of portable electronics or related services shall be separately itemized on the customer's bill. A vendor must clearly and conspicuously disclose to the customer if the cost of the portable electronics insurance is included in the purchase price of the electronic device or related services.
Under the act, licensed vendors are subject to specified provisions of the insurance code and are subject to the investigation and examination by the department. The department can suspend, revoke, refuse to issue, or refuse to renew a portable electronics insurance license for specified reasons outlined in the act and can impose penalties, issue administrative orders, or maintain a civil actions against the vendor.
The act stipulates that an insurer may terminate or change the terms and conditions of a policy if the insurer gives at least 30 days' notice to the policyholder and enrolled customers. If an insurer changes the terms and conditions of a policy of portable electronics insurance, the insurer must provide the vendor and policyholders with revised policies or endorsements. An insurer can terminate an enrolled customer's enrollment under a policy upon 15 days' notice for the discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim under the policy. The insurer may immediately terminate an enrolled customer's enrollment under a policy for nonpayment of premiums, inactivity of service, or the customer exhausts the aggregate limit of liability under the policy (provided the insurer sends notice of the termination within 30 calendar days after the exhaustion of the limit).
The act provides that if a policyholder terminates a portable electronics insurance policy, the policyholder must mail or deliver written notice to each enrolled customer advising the customer of the termination and the effective date of such termination. The written notice must mailed or delivered at least 30 days prior to the termination (Sections 379.1500 to 379.1550).
MOTOR VEHICLE EXTENDED SERVICE CONTRACTS - This act modifies the law regarding motor vehicle extended service contracts.
This act makes it unlawful for a motor vehicle extended service contract provider to fail to deliver a fully executed motor vehicle extended service contract to the consumer within a commercially feasible time period (no more than 45 days), from the date the consumer's initial payment is processed. The act also makes it unlawful for any provider, administrator, or producer who sell such contracts to fail to deliver a copy of an unsigned copy of the written contract to the consumer, if requested, prior to the time the consumer's initial payment is processed. Offerors may also direct the consumer to a website containing an unsigned copy of the service contract. (Section 385.205).
The act also modifies who may sell motor vehicle extended service contracts. The authorized employees of motor vehicle dealers, motor vehicle manufacturers, lenders, and other entities may sell such contracts. Authorized employees of an administrator under contract to effect coverage, collect provider fees, and settle claims of a registered provider may sell motor vehicle extended service contracts provided that such administrators are licensed as business entities. Vehicle owners transferring an existing motor vehicle extended service contract to a subsequent owner of the same vehicle may legally sell or transfer motor vehicle extended service contracts (Section 385.206).
Business entity producers or individual producers licensed under the provisions of this act as may sell such contracts. Business entity producers must pay an initial and renewal licensure fee not to exceed $100. Individual producers must pay an initial and renewal licensure fee not to exceed $25. Examinations for individual producers are waived. Producer licenses issued under the act are valid for a period of 2 years and must be renewed biennially. Business entities must provide a list to the director of all of their locations at which they offer service contracts (Section 385.207).
The act modifies the free look period provision for reviewing a motor vehicle extended service contract. Under the act, motor vehicle extended service contracts shall contain a free look period that allows the purchaser to return the contract to the provider within at least 20 business days of the mailing date of the contract or the purchase date if the contract is executed and delivered at the time of sale. A 10% penalty of the amount outstanding per month shall be added to the refund that is not paid within 45 days (current law 30 days) of return of the contract to the provider. If a claim is made under the contract during the free look period, the provider shall refund to the contract holder the full purchase price less any claims that have been paid (Section 385.206.14).
The act further provides that a motor vehicle extended service contract shall state that a service contract holder may cancel the contract after the free look period at any time and the provider must refund 100% of the unearned pro rata provider fee, less any claims paid. A reasonable administrative fee may be surcharged by the provider in an amount not to exceed $50. The provider of the motor vehicle extended service contract must mail a written notice within 45 days of the date of termination (current law is 15 days) (Section 385.206.13).
The act modifies the law regarding what constitutes a deceptive practice under the motor vehicle extended service contract act. The act forbids providers, administrators, and other sellers of such contracts from using the word "warranty" in their materials. In addition, such entities shall not represent in any manner a false or deceptive statement with respect to:
(1) An affiliation with a motor vehicle manufacturer or dealer;
(2) Possession of information regarding a motor vehicle owner's current motor vehicle manufacturer's original equipment warranty;
(3) The expiration of a motor vehicle owner's current motor vehicle manufacturer's original equipment warranty;
(4) A requirement that such motor vehicle owner register for a new motor vehicle extended service contract with such provider in order to maintain coverage under the motor vehicle owner's current motor vehicle extended service contract or manufacturer's original equipment warranty; or
(5) Any term or provision of a motor vehicle extended service contract.
The act also makes it unlawful for a person to use fraud in the connection with the offer or sale of a motor vehicle extended service contract. Employing fraud in connection with the sale of a motor vehicle extended service contract is a level 3 violation under the insurance code (civil penalties of $5,000 per violation, etc.). In addition, persons engaged in fraud in connection with the sale of a service contract shall be guilty of a felony, be subject to imprisonment for a term not to exceed 10 years, and be ordered to pay restitution (Section 385.208).
The act establishes the statutory reasons for which the director may suspend or revoke a license to sell motor vehicle extended service contracts. For example, the director may suspend an individual's license for having been convicted of a felony. The act also establishes the appeals process an aggrieved license holder may follow if the holder's license is suspended or revoked. Appeals shall be made to the administrative hearing commission. The act also requires motor vehicle extended service contract producers to notify the director of address changes, license revocations, or civil actions within 30 days. In addition, producers must report to the director any felony proceedings initiated by any state or the federal government within 30 days of the initial pretrial hearing date or arraignment (Section 385.209).
Under the act, a provider registered to issue motor vehicle extended service contracts must maintain a register of business entity producers who are authorized to sell such contracts in this state. Within 30 days of a provider authorizing a producer to sell motor vehicle extended service contracts, the provider shall enter the name and license number of the producer in the company registry of appointed motor vehicle extended service contract producers. Within 30 days of a provider terminating a business entity producer's appointment to sell motor vehicle extended service contracts, the provider shall update the registry with the effective date of the termination. Under the act, providers having information relating to any cause for discipline under the act must notify the director of this information in writing (Section 385.211).
The motor vehicle extended service contract provisions have an effective date of January 1, 2012.
MISSOURI SURPLUS LINES INSURANCE LAW - This act adopts amendments to the insurance code to comply with the federal Nonadmitted and Reinsurance Reform Act of 2010 (NRRA) relating to surplus lines insurance. The NRRA will preempt certain state laws that are inconsistent with the act's provisions, which are designed to bring about a certain amount of uniformity in the areas of licensing of surplus lines insurance professionals, the standards under which surplus lines insurance may be sold, and the taxes that may be collected from the sale of surplus lines insurance.
The act adds definitions to "The Missouri Surplus Lines Law" (Sections 384.011 to 384.071). The act adds the terms "exempt commercial purchaser", "home state", "nonadmitted insurance" and "qualified risk manager" to the definition section of the Missouri Surplus Lines Law. The definitions for such terms are consistent with the NRRA (15 USC 8206)(Section 384.015).
Under the terms of the act, surplus lines insurance may be placed by a surplus lines licensee if the insurer is authorized to write the type of insurance in its domiciliary jurisdiction (Section 384.017).
The act modifies the requirements and qualifications for nonadmitted insurers to furnish coverage. A surplus lines licensee shall not place coverage with a nonadmitted insurer unless the licensee determines that the nonadmitted insurer:
(1) Meets the capital and surplus requirements of Missouri or $15 million (the director may waive the financial requirements if the nonadmitted insurer's capital and surplus is at least $4.5 million and the director finds the insurer is acceptable); and
(2) Appears on the most recent list or eligible surplus lines insurers published by the director or appears on the most recent quarterly listing of alien insurers maintained by the NAIC.
Under the terms of the act, a surplus lines licensee seeking to place nonadmitted insurance in Missouri for an exempt commercial purchaser shall not be required to satisfy any requirement to make a due diligence search to determine whether the full amount or type of insurance by the exempt commercial purchaser can be obtained from nonadmitted insurers if:
(1) The surplus lines licensee placing the surplus lines insurance has disclosed to such exempt commercial purchaser that the insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and
(2) The exempt commercial purchaser has subsequently requested in writing the surplus lines licensee to place such insurance from a nonadmitted insurer (Section 384.021).
This act modifies the licensing requirements for insurance producers in the surplus lines insurance market. Beginning on or before July 1, 2012, the director shall participate in the national insurer database of the NAIC for the licensure of surplus lines licensees and the renewal of such licensees. Under the act, a person selling nonadmitted insurance with respect to an insured shall be required to obtain or possess a current surplus lines insurance issued by the director only if this state is the insured's home state (Section 384.043).
Under this act, every insured or self-insurer whose home state is Missouri who procures surplus lines insurance, other than through a surplus lines broker, must file a report describing the names of the insureds, the subject of the insurance and other prescribed information (Section 384.051).
Under the terms of this act, only the home state of the insured will have the authority to tax and regulate the placement of such policies, regardless of where portions of the risk is located. The act imposes the current 5% tax on insureds and self-insurers whose home state is this state on the gross amount of the premium (current law is net amount) (Section 384.051). The 5% tax shall be levied upon and only upon the entire gross premium for nonadmitted or surplus lines insurance policies for which the home state of the insured is Missouri. The placement of nonadmitted insurance shall be subject to the statutory and regulatory requirements of Missouri law only if this state is the insured's home state. A surplus lines broker is required to be licensed as a surplus lines licensee under the provisions of this chapter only if this state is the insured's home state (Section 384.061).
The surplus lines provisions are subject to an emergency clause. The surplus lines provisions may also be found in SCS/SB 392 and HB 773 (2011).