HCS HB 599 -- INSURANCE RECEIVERSHIPS (Gunn)

This substitute makes several changes to the administration of
insurance receiverships.  The substitute:

(1)  Adds exceptions that can reduce the amount a liquidator can
recover from a reinsurer;

(2)  Requires a liquidator to make early access disbursements
to  a guaranty association and sets standards for these
disbursements; and

(3)  Prohibits a liquidator from requiring payment from a
reinsurer based on estimated incurred but not reported losses.

The substitute also excludes companies that provide insurance
for large commercial risks from the requirements to submit
policy forms and rating plans for review by the Department of
Insurance.  To be considered a large commercial risk, the buyer
of the insurance must either use the services of an independent
insurance advisor, or have their commercial operations meet 2 of
the following 6 criteria:

(1)  100 or more employees;

(2)  Net worth of over $25 million;

(3)  Net revenues or sales of over $50 million;

(4)  Paid aggregate annual insurance premiums of over $50,000,
excluding workers' compensation and  employer's liability
insurance;

(5)  Is a not-for-profit or public entity with an annual budget
or assets of at least $25 million; and

(6)  Is a municipality with a population over 50,000.

The substitute does not eliminate all oversight authority by the
Department of Insurance.  In particular, the department retains
authority to make certain that insurance rates for large
commercial risks are not excessive, inadequate, or unfairly
discriminatory.

FISCAL NOTE:  Estimated Net Decrease to General Revenue is
Unknown in FY 2000, FY 2001, and FY 2002.  Fiscal impact could
exceed $100,000.  Estimated Net Effect on County Stock Insurance
Fund of $0 in FY 2000, FY 2001, and FY 2002.  Estimated Net
Effect on County Foreign Insurance Fund of $0 in FY 2000, FY
2001, and FY 2002.

HCS HB 599 -- INSURANCE RECEIVERSHIPS

SPONSOR:  Auer

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Insurance  by a vote of 17 to 0.

This substitute makes several changes to the administration of
insurance receiverships.  The substitute:

(1)  Adds exceptions that can reduce the amount a liquidator can
recover from a reinsurer;

(2)  Requires a liquidator to make early access disbursements
to  a guaranty association and sets standards for these
disbursements; and

(3)  Prohibits a liquidator from requiring payment from a
reinsurer based on estimated incurred but not reported losses.

FISCAL NOTE:  Estimated Net Decrease to General Revenue of
Unknown in FY 2000, FY 2001, and FY 2002.  Fiscal impact could
exceed $100,000.  Estimated Net Effect on County Stock Insurance
Fund of $0 in FY 2000, FY 2001, and FY 2002.  Estimated Net
Effect on County Foreign Insurance Fund of $0 in FY 2000, FY
2001, and FY 2002.

PROPONENTS:  Supporters of the bill say that the Uniform
Receivership Law (URL) is a "best practices" approach to
handling insurance receiverships.  The URL achieves the twin
goals for a receivership of valuing claims fairly and promoting
administrative efficiency.

Testifying for the original bill were Representative Auer; and
Reinsurance Association of America.

OPPONENTS:  Those who oppose the bill say that they are
concerned about certain substantive features of the Uniform
Receivership Law, including the issues of insurance agents being
forced to pay unearned premiums, confidentiality of company
records, "stay" provisions, and immunity extended to the
receiver.

Testifying against the original bill were Missouri Association
of Insurance Agents; and Missouri Association of Trial Attorneys.

Marty Romitti, Legislative Analyst

HB 599 -- Insurance Receiverships

Co-Sponsors:  Auer, Gunn

This bill substitutes the Uniform Receivership Law (URL) for
current Missouri statutes relating to insurance receiverships.
Receiverships involve the conservation, rehabilitation, or
liquidation of financially-troubled insurers.  The URL is model
legislation developed primarily by reinsurers, property and
casualty guaranty associations, life and health guaranty
associations, and the Departments of Insurance for Illinois,
Nebraska, and Michigan.

The stated purposes of the URL and this bill are to:

(1)  Protect the interests of insureds, claimants, creditors,
and the public;

(2)  Provide a comprehensive scheme for the receivership of
insurers;

(3)  Maximize the uniformity of the insurer receivership laws in
all states in which it is applicable;

(4)  Make the administration of insurer receiverships on an
interstate and international basis more efficient;

(5)  Provide prompt corrective measures for any potentially
dangerous condition in an insurer; and

(6)  Establish a system that equitably apportions any
unavoidable loss.

To these ends, the bill details the powers of the receivership
court, administration of receivership proceedings, and the
authority of the receiver.  The bill also has provisions that
govern the collection of the insurer's estate and the filing and
payment of claims made against that estate.  Finally, the bill
tells how to end the receivership proceedings.

The provisions of this bill do not apply to ongoing
receiverships in Missouri.  However, the bill does allow the
Department of Insurance to petition the court to apply all or
part of the bill's provisions to receiverships started before
August 28, 1999.  Therefore, the bill could affect ongoing
receiverships.