Section 380.621

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 380

Effective - 28 Aug 2024   

  380.621.  Citation of law — definitions — chapter 380 sole authority, exceptions — reinsurance — mergers — confidentiality — examinations. — 1.  This section shall be known and may be cited as the "Protecting Missouri's Mutual Insurance Companies Act".

  2.  As used in this section, the following terms shall mean:

  (1)  "Adequate reinsurance", commercially available reinsurance as deemed appropriate by the board of directors of the company;

  (2)  "Unlimited aggregate reinsurance", aggregate reinsurance coverage where the losses covered by the reinsurer are not limited.

  3.  Notwithstanding any provision of law to the contrary, the authority expressly granted in this chapter shall be the sole authority granted to the department over any Missouri mutual insurance company operating under the provisions of this chapter, provided that any provisions regarding premium taxation set forth in chapter 148 that are applicable to Missouri mutual insurance companies shall remain applicable to Missouri mutual insurance companies and further provided that chapter 382 shall remain applicable to any Missouri mutual insurance company that is a member of, or is seeking to become a member of, an "insurance holding company system", as that term is defined in section 382.010, provided that any examination authorized by chapter 382 shall comply with subsections 6 and 7 of this section where a Missouri mutual insurance company owns, in whole or part, an affiliate subject to examination.  The department shall not require any company operating under the provisions of this chapter to waive any rights, benefits, or requirements specified in this chapter, nor shall it confer favorable treatment in exchange for, nor condition the granting of any exception upon, any company conceding additional regulatory oversight by the department.  If the department and any company operating under the provisions of this chapter have entered into any agreement in which the department has received concessions including, but not limited to, additional regulatory oversight beyond the authority expressly granted in this chapter, such agreement as it relates to the department's authority is void upon the enactment of this section, but such agreement shall remain in full force and effect for the stated duration of the agreement as it relates to any benefits, allowances, or exemptions granted to the company by the agreement.

  4.  (1)  Notwithstanding any provision of law to the contrary, nothing in this chapter nor any regulation promulgated by the department including, but not limited to, any regulation promulgated under sections 374.045, 380.021, 380.271, and 380.561 shall require or be construed to require any company operating under the provisions of this chapter to acquire or carry reinsurance greater than adequate reinsurance including, but not limited to, unlimited aggregate reinsurance.  Nothing in this section shall be construed to limit the option of an offer of unlimited aggregate reinsurance.

  (2)  Missouri mutual insurance companies operating under the provisions of this chapter shall annually file the following with the director no later than March first of each calendar year:

  (a)  Documentation from the reinsurer or broker of its reinsurance program, such as the reinsurance coverage summary or other similar documentation; and

  (b)  A resolution from the company's board of directors stating that:

  a.  The board has reviewed the terms of the reinsurance obtained by the company and believes it is sufficient to protect the financial stability of the company for the upcoming calendar year;

  b.  The board agrees to notify the director within fifteen days after any event, or as soon as practicable thereafter if adverse development occurs to trigger this notification, that is expected to exceed the company's aggregate or catastrophe attachment point or could cause the company's reinsurance coverage to be exhausted; and

  c.  The board agrees to notify the director within fifteen days after the company identifies liquidity concerns that could impact the company's ability to pay claims or determines that the company's surplus is less than its admitted assets minus liabilities plus the reserve fund or adequate guaranty fund required by section 380.021 or 380.271, as applicable.

  5.  Notwithstanding any provision of law to the contrary including, but not limited to, the provisions of section 380.321, the director shall not have the authority to hold a hearing regarding a proposed merger of companies operating pursuant to the provisions of this chapter unless the director has substantial and competent evidence to believe the proposed merger will prejudice the interests of the policyholders of the companies.  The director shall have fifteen business days to review the petition for merger and, upon substantial and competent evidence to believe the proposed merger will prejudice the interests of the policyholders of the companies, send a written notice of a hearing regarding the proposed merger.  The written notice of hearing shall itemize the reasons why the director believes the proposed merger will prejudice the policyholders of the companies and shall include the date of a hearing regarding the proposed merger no earlier than thirty days and no later than sixty days after the notice of hearing is received by the companies involved in the proposed merger.

  6.  All working papers, recorded information, documents, and copies thereof, produced by, obtained by, or disclosed to the department or any other person in the course of an examination made under this chapter shall be confidential and not subject to subpoena and shall not be made public by the department or shared with any other person, except as follows:

  (1)  Upon adoption, the director may open the final examination report for public inspection;

  (2)  The director may disclose the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the insurance department of this or any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time, so long as such agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this section; and

  (3)  In the event the director determines that legal or regulatory action is appropriate as a result of any examination, he or she may initiate any proceedings or actions as provided by law.

  7.  (1)  Notwithstanding the provisions of section 380.491, the department shall not charge a rate for examinations in excess of a reasonable fee. A reasonable fee is determined by the average market rate typically charged by third-party vendors for such services.

  (2)  At any time after notification of the commencement of an examination and through its completion, a company may request on a prospective basis that the department's monthly examination billing statements include the following additional details:

  (a)  Hours billed for an examination shall be recorded in a billing statement provided to the company each month that sets forth the time spent, using fifteen-minute increments, for each billing examiner multiplied by the applicable hourly rate;

  (b)  Billing statements shall include a short and concise statement of the work performed during the month to which the billing statement applies by the billing examiner for each period of time spent on the examination;

  (c)  The hourly rate for a department employee shall be listed on the billing statement and shall include the employee's salary, benefits, and other expenses of the examination;

  (d)  The hourly rate for a third-party vendor shall be the lowest and best hourly rate obtained by the department by and through the state procurement process; and

  (e)  Billing statements shall also include any other expenses or the examination, including travel expenses, as allowed by section 380.491.

  (3)  At any time after notification of the commencement of an examination and through its completion, a company may request a scheduling conference with the department to discuss the following:

  (a)  The purpose and scope of the examination;

  (b)  The estimated costs of the examination;

  (c)  The types of information that the company will be asked to produce;

  (d)  The most efficient means of conducting the examination; and

  (e)  Any alternative approaches in conducting the examination that would be more convenient, less burdensome, or less expensive for the company while still providing for an effective examination by the department.

  (4)  (a)  No more than thirty days after the scheduling conference, the department shall provide the company with a detailed written budget estimate for the examination that shall, for each forthcoming phase of the examination:

  a.  Identify the individuals or firms performing the examination and their daily or hourly rates;

  b.  Provide an estimate of travel, lodging, meal, and other administrative or supply costs; and

  c.  Estimate the length of time necessary to conduct on-site and off-site examination activities.

  (b)  Within fifteen days of receipt of a budget estimate under paragraph (a) of this subdivision, the company and the department shall have an additional discussion regarding the most efficient means of conducting the examination and producing information.  If necessary, revisions of the budget estimate shall be made.

  (c)  The time periods under paragraphs (a) and (b) of this subdivision may be extended if the company and the department mutually agree to the extension.

  (d)  At any time during the examination, the department shall hold another scheduling conference with the company in accordance with the provisions of this subsection and provide a revised budget estimate as set forth in paragraph (a) of this subdivision if:

  a.  The department determines that the cost of the examination will exceed the stated estimated budget by more than ten percent; or

  b.  There is a material change in staffing.

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(L. 2024 S.B. 1359)