SB 0759 Insurance & Risk-Based Capital, Mutual Holding Company
LR Number:L2443.05T Fiscal Note:2443-05
Committee:Insurance and Housing
Last Action:06/20/96 - Signed by Governor
Title:HCS/SCS/SB 759
Effective Date:August 28, 1996
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Current Bill Summary

HCS/SCS/SB 759 - This act includes property and casualty insurers in the sections regulating risk-based capital (RBC). It also allows mutual insurance companies to create holding companies.

RBC REPORTS - Property and casualty insurers shall report RBC levels annually in a manner similar to life and health insurers. RBC reports by domestic insurers shall be made by March 1st of each year (instead of March 15th). Insurers should seek to maintain capital above the levels required.

COMPANY ACTION LEVEL EVENT - Property and casualty insurers need not worry about a negative trend in adjusted capital.

REGULATORY ACTION LEVEL EVENT - It shall be a regulatory action level event if the insurer fails to eliminate a company action level event. The Director of Insurance may not determine that a challenge is frivolous.

MANDATORY CONTROL LEVEL EVENT - Property and casualty insurers which are running-off existing business need not be placed under regulatory control.

DEPARTMENT - Hearings by the Department of Insurance shall be confidential. RBC instructions, reports and plans shall not be used for ratemaking purposes. The Director of Insurance may adopt rules to implement these sections and may exempt small domestic property and casualty insurers. The Director and the Department of Insurance shall have no liability for actions taken under these sections.

FOREIGN INSURERS - One option for the maximum time for submitting an RBC report is lowered from 45 to 15 days after the request is received. An RBC plan may be required for an authorized control level event.

PHASING IN FOR PROPERTY & CASUALTY - The regulatory actions which may be taken against property and casualty insurers are reduced for the 1996 RBC reports.

MEMIC - The Missouri Employers Mutual Insurance Company shall be exempt from the risk-based capital requirements as long as it is under an order of supervision by the Director of Insurance.

MUTUAL HOLDING COMPANIES - 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. [Perfected SCS/SB's 597 & 729; see also HCS/HB's 844 & 1059]

FORMATION - 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 by the Director if it is fair and equitable to the policyholders. The reorganizational plan must be approved by a majority of the policyholders voting at a special meeting called for that purpose; a group of 100 policyholders may pay for the dissemination of information to all policyholders on the issue.

STOCK SHARES - 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.

ARTICLES OF INCORPORATION - The articles of incorporation and any amendments shall be subject to approval by the Director and the Attorney General.

POWERS - 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.

LIQUIDATION - 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.

MUTUALS UNDER CHAPTER 379, RSMo - Any mutual insurance company formed under Chapter 379, RSMo (property, liability, fidelity & surety, accident & health, use & occupancy) may form a mutual insurance holding company in the same manner as provided above.