SCS/SB 685 - This act authorizes the director of the Department of Insurance to determine whether an insurance company is in a hazardous financial condition. Under the act, the director may deem any property or casualty insurance company which has any policy in force with a net retained risk that exceeds 10% of the company's capital and surplus to be in a hazardous financial condition. The act also sets forth twenty factors for the director to consider when determining whether an insurance company may be in hazardous financial condition. For example, the director may consider "adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports or summaries" when determining whether the continued operation of the insurer may be hazardous to Missouri's policyholders, creditors, or the general public. If the director determines that the continued operation of an insurer may be hazardous to Missouri' policyholders, creditors or the general public, the director may issue an order requiring the insurer to take various actions. For instance, the director may require the insurer to reduce its total amount of present and potential liability for policy benefits by reinsurance, reduce its volume of business, increase its capital and surplus, or document the adequacy of premium rates in relation to the risks insured. Any insurer subject to an order from the director may request a hearing and the hearing shall be conducted in private unless the insurer requests a public hearing. This act modifies Missouri's current law regarding risk-based capital (amount of required capital that the insurance company must maintain based on the inherent risks in the insurer's operations) reporting requirements for property and casualty insurance companies. Under this act, the Department of Insurance may require a property and casualty insurance company to take action if its risk based capital fails the National Association of Insurance Commissioners (NAIC) RBC trend test. The RBC trend test for property and casualty insurance companies is stated in the act as a company action level event where "the insurer has total adjusted capital which is greater than or equal to its Company Action Level RBC but less than the product of its Authorized Control Level RBC and 3.0 triggers the trend test determined in accordance with the trend test calculation included in the Property & Casualty RBC report instructions." Risk-Based Capital tests the adequacy of an insurance company's capital to meet the risks posed by its investment portfolio and the types and volume of insurance it underwrites. Risk-based capital tests the adequacy of an insurance company's capital by comparing its actual capital to the minimum amount capital determined necessary to operate the insurance company based on the risk factors associated with the volume and type of insurance business it transacts and the types of investments it makes. These provisions may also be found in the truly agreed to version of SB 583 (2010). STEPHEN WITTE